Starting a Business in 7 simple steps

Data collection and analysis is also known as a situational analysis and is a vital part of business planning, involving the collection and evaluation of data about your own business, those of your competitors and the wider sector. Completing this particular element of the business plan will:

provide you with the evidence you need on which to base your forecasts.

help you to decide which opportunities to pursue, along with the strengths and weaknesses of your business or products.

enable you to identify any competitive advantage you have.

The situational analysis enables you to evaluate the position of your business, idea or products. There are various tools that can be used but the following are the four key tools.

PEST analysis

PEST is an acronym for political, economic, social and technological factors. A PEST analysis generally looks at external factors and can help you to understand changes or developments in the market and the position of your business in it by looking at the ‘bigger picture’. It’ll help you to identify external opportunities or threats and take proactive action. We look at each factor in turn here.

Political factors

Political factors relate to Government and include anything related to the law or legislation, for example, employment law and health and safety. Each country has its own set of legislation. Information on UK legislative acts can be found at: www.legislation.gov.uk (http://www.legislation.gov.uk). How might these affect your business?

Economic factors

Economic factors relate to things like interest rates or changes in inflation. How might the way the economy is performing affect your business?

Social factors

Social factors relate to consumer spending habits and trends. These are, of course, linked to economic factors as you’re likely to find that people’s spending habits go down in a recession and up in a boom. How might they affect your business?