SWOT Analysis is a strategic planning method used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a project or in a business.  

Strengths and weaknesses focus your business to look internally at what your business can do. Many businesses are great at looking inward but fail to look outside their company. Threats and opportunities are external; focusing on the conditions of the real-world. This is where a SWOT analysis is helpful. It challenges you to see beyond your company walls to determine what opportunities are open for your company and how to capitalize on your strengths.

While most of your analysis will be subjective, the SWOT can provide multiple benefits to your small business. These benefits can include:

Insight into where your business can focus to grow.
Understand the industry structure by using a SWOT in your business plan.
Focus your advertising and marketing on areas that give you a competitive advantage in the marketplace.  
The foresight to see looming threats and react proactively.