Skip the whole half-empty or half-full glass. Economic news is so mixed that it is easy to paint everything with the same paintbrush. Depending on where you are, you could be optimistic that things are looking up or be convinced that the economy will never improve.
However, that’s unlikely to make your strategic plan useful. You can’t write, “It just all stinks” in big letters (even if it does). As you do a SWOT analysis, how can you get a grip on all of the factors that have an impact on your business?
Use a straightforward tool to take a snapshot of your world
That’s all a PESTEL analysis really is. You may already be familiar with this analysis as PEST, STEEP or STEP. Or maybe you do this informally within your SWOT analysis. Given all of the turbulence small to mid-sized businesses have encountered over the last 3 years, staying aware of your business environment can help you prepare for changes in regulations, respond to your customers more readily or identify emerging trends that your business is well suited to capitalize on. And like a lot of my recommendations, keeping it simple and straightforward is best.
What factors are identified in a PESTEL analysis?
Political- This is how the local and national government might intervene with tax policy, laws, trade policies, subsidies for certain industries, industry-specific regulations, infrastructure and political stability.
Economic- It’s a given that whatever economy (or economies) that you do business in is a factor. Other things to identify within the economic factor are interest rates, changes in taxation rates or policies, inflation and currency exchange rates.
Social- Spells out demographics (age, gender, race/ethnicity, location), employee/career expectations and tolerances, population growth and national cultural trends. Keeping track of these may point to customer wants/needs or finding potential markets.
Technological- This factor includes how quickly technology changes and how your customers use technology to buy from you, technological options (mobile device applications, cloud computing, collaborative tools) that make it easier for you to get the work done internally, social media, e-commerce, research and development and manufacturing practices.
Environmental- There is an increasing emphasis on using more environmentally friendly practices and products. It may be important to your business and your industry to keep track of weather or climate changes.
Legal- Awareness of consumer laws, health and safety regulations, employment law, competition laws, international law, electronic data laws and privacy laws among others may be necessary for your business.
Not all of the factors will apply to you
As you go through each area, you and your team will notice that not everything included in each factor is applicable to your business. This is to be expected but still well worth having a complete picture of the business environment in which you are involved.
Highlights questions you need to answer
Reviewing each factor supports finding what you and your team don’t know. It’s not unusual for a new regulation to be put in place and questions about compliance and potential penalties to come up in discussions with your team. When it comes time to do your SWOT analysis, you will be able to just plug the information into the Opportunities and Threats categories. This snapshot of your world will remove the emotional overtones and make it easier to design your strategic plan and determine which goals to act on.
About the author: I’m Elli St.George Godfrey, a small business coach and trainer who guides established small business owners to be comfortable in their own skin. I have a deep appreciation for learning and understanding my client’s business style and culture. Whether you are expanding in your own backyard or into another country, my 3 keys coaching process helps clients move from being excited about a new business opportunity to having the tools to make it actually happen. Curious? Schedule your complimentary coaching session here.