Keep An Eye on the PESTs
There is a lot going on in the world at the moment; from volcanoes and tsunamis, through to disputes over who can play in the Australian Open, through to the threat of War in the Ukraine - just to name a few of the current topics grabbing headlines.
When you are running a business the news can be a distraction and an energy drain, but it is also worth keeping an eye on because it can be a predictor of factors beyond your control that will impact your business. While there is nothing you can do about war breaking out and the impact that might have on your business, all the current supply crises that are gripping the world you can look at what you are able to do and plan and be prepared for that.
Last week we looked at a SWOT analysis which helps you to be aware of what is happening in your immediate vicinity, and use this information to make more informed and better decisions. This week I want to cover off a tool that helps you to look beyond the immediate business influencing factors. The tool was originally called PEST. It was expanded in recent years to be called PESTEL and what it does is it gets you to look at five key factors that impact your business outside of your circumference of control. Doing this allows you to be as well prepared as you can be or at the very least to have a plan in place should something arise that impacts your business.
P - focuses on the Political aspects of what's happening. This can include local, national or international politics. For example what impact would there be on your business should war break up between Russia and the Ukraine or China and Taiwan? Do you need to look for alternative/backup suppliers now?
E - is about Economics. Foreign currency exchange rates, the move towards Bitcoin currencies interest rates etc.
S - looks at the Social impact. This is an area that needs considerable attention as we see the power of social networks and social media apps. Also the growing trend for social up swells and areas of public concern like environmental issues, racial issues, and freedom of rights for all people. Are you sure that within your business you and your team are aligned with the current social expectations around corporate responsibilities?
T - looks at the Technological impacts and as we see the growing rise of Artificial Intelligence, Augmented Reality, Virtual Reality, Robotics, companies moving to the cloud, the increase in online hacking and attacks - it is important to ensure that you are both aware of the risks and the opportunities that technology presents.
E - looks at Environmental. Much like the social pressure there is a growing need for businesses to be environmentally responsible and to ensure they're doing all they can to leave the world a better place. If your business had an environmental responsibility audit would the report be favourable?
L - covers the Legal aspects - laws that are passed that you have to comply with. If Three Waters went ahead what impact could that have on your business? The announcement of a minimum wage increase or tax bracket changes, changes to bright line test, building codes - all these legal aspects need to be complied with but often come at a huge cost.
Take some time to think about what might happen and how you can be prepared and/or position yourself and your business to make the most of the many changes this year will bring.
