PEST Analysis – External
To ensure your small business remains relevant to your target market you should be constantly examining trends. Working on the business not just in it. Using the PEST model, trends in the following areas should be examined to identify the potential opportunities or challenges for your business:
Political / Legal: What is the current political situation locally, nationally and, if you are importing, internationally? Do elections have an impact on your business? Are there barriers to entry? Are there new grants available? What are the current and future legal requirements you may need to consider for your business? What laws are changing or are likely to be changed over the next few years?
Economic: What economic impacts are affecting the purchasing power of potential customers and your costs? What are the projections for economic growth, interest rates, exchange rates, inflation rates? How will this impact on your customers and your business
Social / Environmental: What are the social influences impacting on your business? Do you need to provide information in other languages? Does your target market share a specific religious ideal you need to be considerate of? Where are people moving to? Where are they moving away from? How important are the environment to you and your customers? Is there an expectation to be transparent about your carbon footprint, or your use of water? How are you placed for carbon trading?
Technological: In what direction is technology heading and how do you plan for it? How important is technology to your target market? How do they use technology? Do your customers want to learn about new products and services through Twitter or a blog? Are there new social media platforms you need to be researching?