What do you think about when you see the image above? Pharmacists? Fresh herbs? The crushing of the economy due to COVID-19? Okay that one is a bit much….
Here’s what I suggest you should consider: right now is a good time for a quick PESTLE analysis. Are you familiar with this acronym? A PESTLE (or PESTEL) analysis looks at external factors that can influence your business. It is often used to drive the O and T parts of a SWOT analysis (Internal Strengths & Weaknesses, External Opportunities & Threats). With the global pandemic and shutdowns going on in every community, perhaps it’s time to take (at least) 10 Minutes of Market Research time to do some exploring of the external environment for threats we can try to protect against and opportunities we can take advantage of in this current situation.
Let’s take a look at each letter and consider where your business stands now and how it is currently being affected – or could potentially be affected – letter by letter.
P = Political
The P here is misleading as perhaps it really should be a G, as in “How is the government inserting itself into the economy or into your industry right now?” And how does that affect your business in particular? Consider some of the key P influencers: tariffs or trade restrictions, the regulatory environment, taxes, new laws impacting businesses, employment law, health insurance changes, public education or pandemic restrictions. It could be local, state or federal government.
The better question might be how is the “P” not impacting your business at this point? Are you required to be shut down? To pay your non-working employees? Is your business in the same situation as others in your industry? Who has the advantage here? Is there any way you can turn things to your advantage in a situation like this? For example, a local restaurant in my town that is forced to close down is promoting its plan to surprise local businesses that cannot shut down (medical professionals, convenience and grocery stores) with a free dinner each night. Local residents will hopefully remember this act of kindness when restaurants are able to open back up again.
E = Economic
Economic indicators can be used to help your business predict upturns or downturns in business. For example, the residential construction industry is closely tied to mortgage rates and housing starts. What economic indicators are used in your industry? Do you monitor them? If you know changes are coming (like the predicted jump in unemployment due to coronavirus-related shutdowns), what can you do about it? How you can take advantage of a leading indicator to protect your business?
S = Social
This external category is a bit harder to define – as it encompasses a wide variety of “social” aspects, including changes in demographics, population growth, and general trends in culture and lifestyle. While this is more relevant if you are selling to consumers, consider the connection between your product/service and the end consumer. Some social factors that could influence your business include the differences among generations (Millennials, Gen X, etc.), shifting demographics in your town (age, ethnicity, education level), trends (communicating with family members by Zoom, sharing your Netflix viewing with friends) and any other consumer lifestyle shifts.
T = Technological
IoT. Need I say more?
How does shifting technology affect your business? What do you need to change to stay current and competitive? Where can you find technology to give yourself a competitive advantage? How can you anticipate what the next big thing will be? Consider the famous Henry Ford quote: “If I had asked people what they wanted; they would have said faster horses.” Always be looking for ways that technology is shifting and what that might mean for your customers, competitors and suppliers.
L = Legal
Every business must obey federal, state and local laws, but some of these laws are constantly changing. Can you stay up with the legal and regulatory environment with regard to discrimination, consumer protection, antitrust, and other issues? Are there any TIF or Opportunity Zones in your region that might influence location selection for your business? How do you stay up to speed with these changes?
E = Environmental
How does the weather, climate change, carbon footprints, waste management, recycling, using rare raw materials, and anything else to do with our world’s environment impact your business? Do your customers care? Have you made efforts to address this? Could these efforts help you stand out from the pack?
Take (at least) ten minutes to reflect on all of the PESTLE factors as they relate to your business. Have you considered how each of these might impact your bottom line? Can you start tracking any new sources of information? Plan for shifts in the economy? Improve your messaging by age group? The key goal here is to maximize opportunity and minimize threats with PESTLE analysis. Take a moment and think about how PESTLE impacts you.