Welcome to part 3 of building a business plan. If you would like to see part 1 and 2, please download our newsletters from May and July!
This part of your business plan will consist of the environment that your business operates in.
1) Environmental analysis
This is an examination of the various environments that the organisation operates within and will provide opportunities and restrictions on the entity’s operations.
These environments can be broken down into:
a) The economic environment;
For example: what is the current and future state of the national and local economy? i.e. boom, recession, slump or recovery and how is this affecting the business sectors in which the business operates?
b) The political and legal environment;
What laws affect the business? For example: companies acts, taxes acts, employment law, food hygiene, consumer protection, etc. An example of the political environment might be the way the sector or products are viewed following news coverage.
c) Social trends; examples of social trends may be the increased use of mobile and social media, or less formal dressing.
d) Business ethics; what standards of behaviour are expected or not expected but needed.
e) Technological environment; the need to keep updating how the work is done will change the way in which the business will operate and the products and services it can offer along with the speed of delivery and costs associated.
f) The Competition; other firms, products and services will be competing for the same business and this will affect the price and work carried out to ensure you can maintain a competitive advantage. The business may have already responded to this environment by specialising in areas where it can be more effective.
g) The physical environment; a good example is how well is the business and its prospective customers served by roads or Internet connection?
You will notice that all these headings are outside the control of the organisation but have a direct impact on its operations and the way it does business. You can use this analysis to identify threats and opportunities later in your plan.