Many entrepreneurs fall into the temptation of starting up without a prior business plan. With these 6 tools you can do it
Many entrepreneurs fall into the temptation of starting up without a prior business plan and simply cross their fingers hoping it turns out well. And it could be yes, but most likely no. The ideal is to carry out a detailed prior analysis of the sector and the market in which we plan to enter.. There are numerous free strategic analysis tools that can help us identify what distinguishes our brand from the rest and develop a good business plan for our future company. These are some of them.
With this strategic analysis tool we can analyze the environment in which we want to create or establish our company, business or project. It allows us to identify possible changes in the scenario in our sector or in the region to detect and take advantage of possible growth opportunities. The name is an acronym of four factors:
Politicians: political stability, the possibility of a change of government that gives rise to changes in fiscal or subsidy policies, possible changes in trade agreements, existence or not of pressure groups…
Economical: economy in growth or recession, consumption trend, situation of confidence or instability, exchange rates, inflation level…
Sociocultural: social habits, changes in people's tastes or fashions, habitual forms of communication, demographics, health, values…
Technological: current technology, possible advances, ongoing developments, knowledge, investment in R&D, information…
We must analyze to what extent each of these macroenvironmental factors could positively or negatively influence our company.
It is a variation of the previous one that adds two more factors to the four of the PEST analysis. In addition to taking into account the factors political, economic, social and technologicalthe factors will also be analyzed:
Ecological: For example, climate change can have consequences in various sectors such as tourism or insurance. Environmental protection laws or regulations regarding waste or energy management can also influence a company.
Legal: anti-discrimination laws, consumer protection laws, antitrust laws, licenses, labor legislation, health protection laws, sectors with special protection…
Henley Business School in the United Kingdom has developed a graphical method for this strategic analysis tool, called “PESTLEWeb” and which, according to user opinions, is much easier to understand.
It is a strategic analysis tool that allows you to analyze the internal and external situation of a company or project. It's like taking a photograph of the situation of our company. Therefore, given that this situation is not static, but rather continually evolves over time, in addition to using it to develop our company's business plan, It is good to repeat it later from time to time.
The objective is to know the real situation in which the organization, company or project finds itself at all times and, based on this, plan the most appropriate future strategy.
The name of this analysis tool is a acronym for Strengths, Weaknesses, Opportunities and Threats.
Strengths and weaknesses are part of the internal analysis, that is, things that we can control, while opportunities and threats are part of the external analysis, that is, things that are external to our company that we cannot control because they do not depend on we.
To analyze the data, a matrix is created:
| Internal analisis | |
| STRENGTHS | WEAKNESSES |
| Identify what our company stands out for, what our strengths are. For example, professional and personal skills: Knowledge, information, experience, etc.; What differentiates us from the competition… | Recognize where we are failing or what makes us vulnerable with respect to the competition. These are critical factors that we must eliminate or, at least, try to reduce.
For example, having little knowledge or experience about something we need to improve our situation as a company. In that case we must acquire them as soon as possible or hire someone who has them. |
| External analysis | |
| OPPORTUNITIES | THREATS |
| Identify external elements that can benefit us or that we can take advantage of in our favor at a given time. Market salaries, supply / demand of the profession, growth of the economy, business trend…
We cannot control these external elements, but if we identify them and are proactive we can take advantage of them and get the most out of them. |
Identify possible threats that are beyond our control, but that could occur. Once again, these are external elements that we cannot control, but identifying these risks or threats before they occur will allow us to be prepared and we will be able to better defend ourselves. if they occur.
For example, legal problems or high competition. |
You can see more information in the following video:
Once the analysis is completed, it is necessary make the corresponding strategic decisions and put them into practice sooner.
Unlike most strategic analysis tools that tend to focus on external analysis, the 7 S Model, developed in the early 1980s by Tom Peters and Robert Waterman, two consultants at the firm McKinsey & Company, aims directly within our company.
The model analyzesspecifically, 7 factors, whose names in English begin with S (hence the name of the tool, the 7 S) and which, according to their authors, are the 7 fundamental factors of any organizational structure:
Strategy (Strategy)
Structure (Structure)
Systems (Systems)
Style (style)
Shared values (Shared values)
Staff (Staff)
Skills (Skills)
The idea of the model is that organizations do not operate as a set of watertight silos, but rather as a network of interconnected pieces. That's why It is essential that the seven factors included in the model are aligned for our company to be successful..
In this sense, when implementing any new strategy, it must be previously verified that all of them would maintain their alignment, once implemented. If the answer is no for all or part of the factors, it will be necessary to rethink part or all of the strategy before proceeding with its implementation.
To see it more clearly, it is best to draw an octagon and place each of the S's at one of its vertices. Except for the shared values that, since they are shared, we will place them in the center of the octagon. Then, we will draw lines that go from each vertex to the others.
This strategic analysis tool, devised by engineer and professor Michael Porter in 1979, is still in force. The model delimits a framework that allows us to analyze the level of competition within a sector in order to devise, thus, a business strategy that makes our company profitable.
In this sense, it is ideal for developing a business plan, since it is essential to analyze the competition before creating a companyso this model is especially interesting for entrepreneurs.
Porter's five forces are the following:
Bargaining power of buyers or clients
Bargaining power of suppliers or sellers
Threat of new competitors
Threat of substitute products
Rivalry between competitors
The following video explains in more detail how to carry out this analysis:
This tool, more than for developing our business plan, is ideal for making us think and see how we want to focus our company. A blue ocean strategy is what can lead our company to success. That is why every entrepreneur should know this tool and, before setting up their dream company, spend some time thinking about what their blue ocean strategy could be.
This video explains perfectly what a blue ocean strategy consists of. If you see it, you will understand why it is so important:
