What Is The PESTEL Exercise?
The PESTEL exercise is a strategic business planning tool for small business owners to identify, analyze, and monitor key factors that impact their business now and in the future. Global business conditions are not how they were just a few months ago; most people before the lock-down were able to get a job if they were looking for one, compared to now when there are less total jobs available.
The PESTEL framework goes over six main factors that small business owners should apply to their business strategy plan. The six factors are:
- Political Factor | Based on the actions of the government and political parties’ current conditions.
- Economic Factors | Include tax rates, interest rates, law, that influence value in the future.
- Social Factors | Include topics such as demographic characteristics and trends, norms, customs, and even the values of the people in the country or countries you operate or intend to operate in
- Technological Factors | Are variables that relate to the existence, availability, and development of technology.
- Environmental Factors | Include taxation, tariffs, trade agreements, labor regulations, and environmental regulations.
- Legal Factors | Can intercept when governmental bodies introduce legislation and policies that affect how businesses operate.
There isn’t a better time than right now to slow down as a business owner and take time to review these six key factors and apply them to your business.
Why Use The PESTEL Exercise?
The PESTEL exercise is a strategy created for all business owners to use., It is a cost-effective exercise that’s simple and allows business owners to optimize their operations with a PESTEL evaluation. Utilizing this strategy puts business owners in a strategy-thinking mindset that brings together owners and key employees with a common goal.
As a business owner, you should have a plan for the future. The PESTEL exercise allows you to identify opportunities for your business as well as threats. Once you identify these factors, it is time to take action and start utilizing this strategy to see its effectiveness first hand in your business!
- Learn how to be more effective and profitable
- Understand the position your business is in
- Create a plan to avoid costly mistakes
- Better awareness of environmental factors for business owners.
Overall, this is creating a business plan for yourself and your company, showing you how to identify threats or possible risks and showing you how to eliminate them with strategic documentation.
How To Use The PESTEL Exercise
As described, the PESTEL exercise was built and designed to help small business owners understand all of the environmental factors that affect their business and their decisions. Business owners should gather information on all the listed factors and apply them to their small business and see how it affects their growth and profitability, this will allow them to see where opportunities or risks lie in their business.
Also, set priorities for each factor based on the situation and position your company is in. Rate the level of impact they have and based on that priority list, point your business in the direction you want it to go. If you come along realizing there are some threats in your business, take the appropriate steps to get rid of them and similarly, develop action plans for opportunities.
The PESTEL analysis is an exercise for all small business owners to utilize and to identify how to make their business stronger, resilient, and profitable taken in the global environmental factors.