Once you’ve answered the questions posed for your PEST analysis in last week’s blog, you need to know what to do with them.
Opportunities
The first thing you need to think about is what opportunities you can find in the changes that may take place in your business environment. It’s often the case that people think that change will lead to a negative outcome, but that’s not true. A change may open up a whole world of opportunity for your business and focusing on what these can be first is a good way to start. For example, if you currently don’t ship overseas you might find that a change in government policy regarding export and import taxes make it easier for you to sell and send your goods worldwide. So, you could expand your customer base massively.
Threats
Of course some changes are going to be detrimental and it’s important that you address those too. So you should spend some time looking at the threats that changes may also pose. This will allow you to plan ahead hopefully making the negative effect as minimal as possible for your business. For instance, would a change in the law undermine your business in any way? If so, what are you going to do about it? Can you work your way around the issues or do you need to rethink your whole business? Say for example, you realise that a key set of your overseas customers are going to be prevented from buying from you because of a new export policy, it’d be prudent for you to try to open up new markets for yourself before it happens so that your business can continue to survive and grow.
Action
And the last part of the PEST analysis is to take action on what you’ve discovered. Now that you have this valuable information you should make the most of it, making the most of the opportunities and preparing for the threats revealed to you. You should incorporate these ideas into your business plan. As you’ll quickly realise, a business plan is not something that you only use at the beginning of the process of starting a business. It’s something that you’ll refer to on a regular basis. It needs to re-examined and updated frequently, so that any changes you might encounter that could affect your business are addressed.
Other Versions of PEST
There are some other versions of PEST analysis that include additional factors for consideration. These include:
STEEPLE – which requires that you include social/demographic, technological, economic, environmental, political, legal and ethical issues in your analysis
PESTLE – which takes political, economic, socio-cultural, technological, legal and ethical factors into account
LONGPESTLE – which is the same as PESTLE, but also includes local, national and global issues. This is more for international companies.
However, the standard, simple PEST analysis is perfectly adequate for most businesses to use.
Have you used this tool? If so, how did you find it? Was it useful? If you have any other tools you use and prefer, let me know so I can pass the information on.
