Strategic Analysis – An Entrepreneur’s Best Friend

When you are disappointed by anything, what are your tactics for overcoming that feeling? Not so long ago, my grandson answered that random question in this way:

“Oh … I just look out the window and take some action.”

My curiosity was satisfied through further inquiry. The action that this astute 6-year old boy takes is to imagine that he has gotten what he wanted to have. Without thinking too hard, he knows how to do something that many people have paid money and invested many hours to learn. My grandson mentally rewrites the story so it ends in a way that he can feel happy. He shifts his mindset!

Whether this is intuition or instinct remains a curiosity but there is no doubt that my grandson’s method works. Envisioning a desired outcome enables you to see, hear, and feel it in such a way that it can become real. It is the basis of the popular Law of Attraction philosophy.

Envisioning what you want to go after is only the beginning, however. After you’ve imagined it, you need to perform some soul-searching that measures your personal readiness to operate in that niche, as well as performing due diligence about the future you have envisioned.

Two models are used for strategic analysis in business; PEST and SWOT.

A PEST analysis should always occur first. It measures a market, including competitors, against four external factors; Political, Economic, Social, and Technological. When conducting this phase of due diligence, it is critical to be crystal clear about the market aspect you are addressing so you can observe the external factors from any of the following standpoints:

• a company looking at its market
• a product looking at its market
• a brand in relation to its market
• a local business unit
• a strategic option, such as entering a new market
• a potential acquisition
• a potential partnership
• an investment opportunity

Within each of the aspects of a PEST analysis, there are several details that need to be evaluated. This analysis may seem more useful and relevant for larger propositions, but very small businesses can use it to locate significant issues that might otherwise be overlooked.

A SWOT Analysis evaluates the Strengths, Weaknesses, Opportunities, and Threats. This tool measures a proposition or idea, including competitors, and assists with understanding and decision-making for many business situations. Here are some examples of what a SWOT analysis can help you assess:

• a company (its market position, commercial viability, etc.)
• a sales distribution method
• a product or brand
• a business idea
• a strategic option, such as entering a new market or launching a new product
• an acquisition
• a potential partnership
• supplier changes
• outsourcing services, activities or resources
• an investment opportunity

Strategic Planning may not seem essential but, even if you are the only one at the party, careful evaluation of any business action prior to making an investment is prudent. In a small way and somewhat unconsciously, we perform these analyses every time we go to the grocery store so it makes perfect sense to do so when considering a business, doesn’t it?

At internet speed, the pressure to act quickly is always a factor when deciding whether or not to pursue something. Whether the decision involves $5 or $5,000, the result is the same if that business doesn’t pan out and there is no one to blame but yourself if you have taken no time to investigate it.

Using PEST and SWOT templates to evaluate your plans will force you to think through all the aspects of whatever you are investigating.  The internet is a remarkable asset in this research but it should not be your only resource. And, if your research reveals that your idea is not all that you had originally envisioned, young children also teach us something else. When they are interested in what they’re doing, a fall rarely causes them to stop playing the game.