A PESTLE analysis is a tool entrepreneurs use to assess external factors that could impact their business. These are:
You can do a PESTLE analysis to get a better understanding of the various factors that could impact your business. Along with a PESTLE analysis, it’s a good idea to also conduct a SWOT analysis (which assesses your businesses Strengths, Weaknesses, Opportunities, and Threats). Together, these tools help co-op entrepreneurs plan for events outside their control.
When you do a PESTLE analysis, the goal is to group ideas and information in a way that becomes insightful and useful to the organization doing the analysis. So, it’s a good idea to bring well-informed people to the table and gather as much information as you can beforehand.
Depending on the strengths of the group, it may also be worth bringing in a consultant or experienced entrepreneur to help provide insights and direction. Plus, provincial supports, such as Business Link (AB) and Square One (SK), provide (often free) market research data.
The exercise below works well as a group activity, so consider gathering your steering committee or dividing the six sections for groups/committees to complete.
Also, take your time. It’s important to do this research properly and to think through all the factors that impact your co-op (short term, medium term, and long term).
No one way is better than another for capturing a PESTLE analysis, and each group will find what works best for them. However, we suggest starting with sticky notes and the six categories/factors. For each idea or insight create a sticky note and place it under the proper category (it may apply to more than one). In addition, we recommend adding a timeline to any potential impacts identified. To keep things simple, we suggest using short, medium, and long term as a general metric. You may also wish to identify if the impact will be positive, negative, or neutral, and determine whether this impact will (for better or worse) change over time.
Once the group has exhausted the categories and available ideas and information, find a way to capture this. Take photos of the sticky notes. Collect them all, keep them together, and assign someone to enter all this into a data set of some sort. We suggest using a shareable spreadsheet (like Google Sheets). A spreadsheet is good way to keep this type of information organized and is flexible enough to add information and insights as they come in later. Plus, the file can be shared with the group.
Analyze these six factors to complete your PESTLE:
Political factors include any influence a local, provincial, or national government has on an industry and your business. Be sure to consider all three levels of government as each one will have unique impacts. Finding this information may require some research or assistance understanding legal implications. Building relationships with representatives and administrators at each level of government is a great way to maintain insights into potential policy decisions that could impact the co-op. While it’s impossible to be aware or predict every eventuality, a strong network of friends and advisors goes a long way in helping mitigate the impacts from political factors.
Political factors that could impact your business include:
A few things to keep in mind as you explore this factor:
A variety of socio-economic indicators influence an economy’s health. Consider working with a provincial business development resource centre to obtain up-to-date data on local or regional economic factors.
Economic factors that could impact your business include:
It’s important to consider local, national, and international economic factors as well as those in your co-op’s specific industry. Good sources of information for this category include news sources and Statistics Canada.
A few things to keep in mind:
Social factors describe who your potential customers are, what they do, how they think, and what might influence them to make purchasing decisions. If your business targets a certain demographic, this can have a big influence on your strategies (e.g. how you market to/reach millennial customers will be different from how you market to/reach baby boomer customers).
Social factors that could impact your business include:
While there may be some data available through public sources, like Statistics Canada, understanding social factors will often rely on your experience in an area, reaching out and talking to people, and trying to better understand the market.
Some things to consider for this factor:
Consider both the existing technology required to run your business, and the new and emerging technologies that could positively or negatively affect your business now or in the future. This is tricky — it’s difficult to predict the future. However, it’s good to think about trends like automation and how they could impact your business/industry.
Technological factors that could impact your business include:
Understanding these factors prepares a business for disruptions or advances in the market and identifies potential costs or investment opportunities. Some research on your industry, leading companies, and ongoing developments may be required.
Couple things to keep in mind:
Environmental factors include meteorological, geological, and ecological challenges and opportunities the co-op might face..
How might these larger global issues impact your business at a local level. While sometimes hard to identify, thinking about them will help you plan for possible issues or disruptions (e.g. how might increasing changes to weather patterns impact local food supply?).
Here’s a few things to consider:
Legal factors include both internal and external laws, policies, and regulations that affect the co-op.
Internal and external legal factors that could impact your business include:
Doing some research into similar organizations and government requirements will be helpful for this factor. The Co-op Creator offers a number of tools for co-ops creating internal processes and complying with government-required reporting.
A few things to consider:
Use the information from this process to identify next steps and create a to-do list (e.g. are there new costs you should add to your start-up budget? Are there licenses you need to apply for once you incorporate?). Check out our action plan resource to get organized.
Don’t let your research go unnoticed; re-work your analysis so it fits into your business plan. This analysis should help you complete several sections of the business plan (e.g. the information you’ve gathered here can help fill in sections about the marketplace, operations, sales, and marketing). Check out the Biz Plan Creator to get started.
With a clear sense of your internal and external regulatory environment, you are also better prepared to incorporate your co-op. As an incorporated entity, you can open a bank account, access grants and loans, and formalize the processes identified in your analysis. Check out our incorporation tools to start building.Was this useful?
Need a business plan? Start here. The Biz Plan Creator is an easy-to-use and helpful tool. Designed to guide you through the process, the Biz Plan Creator offers a user-friendly platform and clear advice at every stage. Plus, it includes a secure account and customized branding of your plan. So, you can leave and come back to your plan as needed. And when you’re done, a branded PDF business plan ready for investors and financiers is your reward.