PEST & SWOT Planning Now Is The Time
Now more than ever businesses need to adapt and ultimately survive the global health and economic crisis that has engulfed us. These are not times that we could have predicted, however, given that we are now 7-8 months into this thing, there is perhaps now enough data to dust off your plans and re-fresh them given this new environment. No business plans to fail, have too many of them fail to plan.
The SWOT and PEST are the best-known business planning tools; however, they are also two of the most under-utilised and under-appreciated – especially in SME businesses.
Against this backdrop the importance of both the SWOT analysis and its partner, the PEST analysis is being bought onto focus. Specifically, how the use of these business planning tools can help businesses better understand, adapt to and ultimately survive the current challenging environment.
Now for those that may not be familiar with either of the SWOT or PEST planning and analysis tools, they are as follows:
The PEST (Political – Economic – Social – Technological) Analysis:
This analysis looks at the large macro factors that are part of your market to better understand the key drivers that will most directly impact the marketplace moving forward. They include:
1. Political/legal and other controlling statutory bodies: those groups that determine and change the laws and rules that a business must follow to compete within a given market.
2. Economic: the state of the economy now and projecting into the future both locally and abroad.
3. Social – cultural – environmental factors: the prevailing beliefs, views, opinions and attitudes that people within a market have about any issue and the existing environmental circumstances that underpin those beliefs.
4. Technology: the ever changing and dynamic area driven by innovation that sees the application of scientific knowledge for practical purposes, especially in industry to produce better, faster and more cost-efficient machinery, equipment and processes.
The PEST analysis allows the business to analyse the marketplace and then, based on its own resources and circumstances, be able to feed those findings into the SWOT analysis as either opportunities or threats. For this reason, the PEST analysis is always conducted prior to the SWOT analysis.
The SWOT (strengths – weaknesses – opportunities – threats) analysis is the tool used to list a business’:
Internal strengths and weaknesses: these are the points of relative advantage and disadvantage that the business has in comparison to other rivals competing for those same customers within that market. Importantly these internal strengths and weaknesses are controllable by the business. In the case of strengths, it allows the business to better leverage and more fully align to market opportunities and changing positive circumstances, and in the case of weaknesses will provide greater insight into those areas of development that need to be addressed to ensure that the business is able to effectively compete within the required market, segment or niche.
External opportunities and threats: this highlights to the business the potential areas within the outside market that offer potential areas of both growth and concern. These market forces are completely uncontrollable from the businesses point of view yet remain critical in identifying the best path the business needs to pursue to survive and in time, prosper. The basis for these external factors as outlined above come from the PEST analysis.
Now, if you are the one genius that predicted the global pandemic and have had a comprehensive array of mitigating strategies and contingency plans in place to counter its devastating impacts. Please allow me to throw rose petals at your feet!
On the other hand, as of two months ago, I believe it’s fair and reasonable to say that its presence and impact was already large enough and powerful enough to warrant businesses updating their PEST analysis to include it as a key environmental factor which certainly had the potential to impact your business (either negatively or positively) – and with this update make corresponding changes to the ‘opportunities and threats’ section of the SWOT analysis.
The PEST analysis for this update would be the same for any business as a statement of fact about the impact of the virus. The variable in this situation, is how that point translates into your specific SWOT analysis. This will be specific and personal to your business, consider this carefully as it will impact the decisions to be made.
Once this has been done, your business will need to strategise on how best to adapt critical parts of your business such as: product range, unit volumes, target audience, service delivery – logistics, overall positioning, pricing strategy and core messaging. Your marketing will have to change.
Additionally, these changes will require corresponding internal business adjustments which may include restructuring, refinancing and recruitment. These types of additional resources are needed to effectively meet the changing circumstances within your marketplace.
As an example, the role of technology becomes more important as products such as: Zoom, Skype, Teams and Hangouts provide the opportunity for businesses to quickly and cost effectively adapt to changing locations of their employees. In other areas of your business technology around cloud storage and computing, access ecommerce opportunities for websites and product delivery options.
In summary
The need for all businesses to perform an annual, detailed PEST and SWOT analysis for their business and to then routinely review those analyses a quarterly basis, has not changed and most likely never will. The great SME’s do this.
The ability to innovate, renovate, invigorate, and dare I say it, PIVOT, has never been more critical. SME’s have always had the competitive advantage of being nimble. Now is the time to make sure that a well executed planned PIVOT is your new norm. This changed mindset, along with a greater commitment and focus on how the business can adapt to the dynamic market and environmental conditions is now mission critical.
Lastly, get help when you need it. As an SME, you may not have the internal resources to get this sort of detailed planning done in a meaningful timeline. This is the time to reach out to your network and get some professional assistance. What you do next can mean the difference between surviving and thriving.