Mastering External Assessments: Steering Your Business Through the Road Ahead

You wouldn’t just jump in the car and start driving without checking a few things, would you? You’d check the weather, use Google Maps, look up road conditions and maybe even catch up on the news to avoid any surprises along the way. Running your business is no different. Before you plan your next move, you need to understand what’s happening outside your company. That’s where external assessments come in, helping you understand the bigger picture so you can plan your journey more effectively.

In business, assessing the external environment is just as important as evaluating what’s going on inside your company. By keeping an eye on factors like market trends, competition, regulations and the economy, you can spot new opportunities and avoid potential risks. Two great tools for this are PESTLE and Market Analysis, which can help you take a deeper dive into the external forces that affect your business.

Why External Assessments Matter for Your Strategy

Let’s stick with the road trip analogy. Your business is like a car driving toward a destination (your goals), but you need to be aware of external factors such as road closures, weather or traffic that could impact your journey. If you’re not checking the external environment regularly, you could find yourself stuck in a situation that you weren’t prepared for.

By analyzing external factors, you’re able to:

• Spot new opportunities before your competitors do.
• Mitigate risks that could derail your progress.
• Adapt to changes in the market or industry, ensuring your strategy remains relevant.

When Should You Do an External Assessment?

Just like checking the weather before your road trip, external assessments shouldn’t be a one-time thing. Ideally, you should conduct them at least once a year. However, you might need to do it more often if there are significant changes in your industry or external environment. For example:

• When entering a new market: You need to understand the landscape before you take the plunge.
• When launching a new product or service: Analyzing trends and customer needs can help ensure it’s the right time.
• When facing a crisis: Whether it’s a pandemic, economic downturn, or a shift in consumer behaviour, external assessments can help you pivot quickly.

What is PESTLE and Why Does It Matter?

PESTLE stands for Political, Economic, Social, Technological, Legal and Environmental factors. It’s a well-known framework that helps you analyse the external forces that could impact your business. Here’s how it works:

• Political: Changes in government policies, taxes or regulations can have a big impact. For example, if there’s a shift in healthcare regulations, it could affect your compliance requirements.
• Economic: This looks at the overall economic environment. Is the economy growing or slowing down? Are interest rates rising or falling? For instance, if inflation is high, your business might face higher costs.
• Social: Changing consumer preferences or demographic shifts can affect your market. Are people becoming more health-conscious? This might mean more demand for wellness-related services.
• Technological: Advances in technology can create new opportunities or disrupt existing business models. Think about how digital tools and automation are changing industries.
• Legal: Legal changes, such as new regulations, can affect how you operate. If there’s a change in labour laws, for example, it could impact your hiring or payroll processes.
• Environmental: Growing concerns about sustainability and the environment are important to consider. How does your business impact the environment, and are there opportunities to make it more eco-friendly?

By keeping an eye on these areas, you’ll be able to spot opportunities and threats that you might not have noticed otherwise.

Market Analysis: Understanding Your Industry and Competition

Alongside PESTLE, conducting a market analysis helps you get a clear picture of your industry’s landscape. This involves looking at your competitors, customer preferences and industry trends. Are there new players entering the market? Is there a shift in consumer demand? Are certain products or services gaining popularity?

Market analysis gives you a better understanding of your position within the industry and where there might be gaps in the market that you can capitalize on. For example, if you run a café and notice a growing demand for plant-based options in your area, but few local cafés offer them, you could introduce a new line of plant-based menu items to attract customers seeking those choices. This could give you a competitive edge and help you tap into an underserved market.

Don’t Drive Blindfolded

Just as you wouldn’t embark on a road trip without checking the weather, you shouldn’t proceed with your business strategy without first assessing the external environment. Tools such as PESTLE analysis and market research provide the essential insights to make informed decisions, allowing you to navigate your business journey with greater confidence.

So, take the time to look at the bigger picture, understand what’s happening around you, and adjust your strategy accordingly. Your business’s success depends on how well you respond to the ever-changing world outside your door.

Happy travelling (or strategizing)!

The above article is part of the Make Growth Happen Series which is tailored to empower business owners like you to develop the right strategy, structure and skills needed to take your business to the next level. .

Janice is a Certified Business Coach whose extensive knowledge and experience in various aspects of business has set her on a mission to help business leaders turn their Vision into Reality. She works with them to develop the right strategies, structure and skills needed to take their business to the next level. She is the Author of The Ten Commandments of Crisis Management. Janice also works with Christian business owners who desire to run their businesses based on Biblical Principles.

For full bio and coaching inquiries, go to https://www.way2betterbusiness.com