Business Basics: Which way is the wind blowing?


iS40230486dandelion-blowThere’s an often repeated saying that “strategy should not be created in a vacuum.” That means before you decide on a course of action, it’s best to consider what’s happening around you.

This concept may seem obvious, but I can assure you that very few companies in our industry employ a formal process for conducting external analyses. Some do a decent job of informally assessing what’s going on around them; the rest have blinders on, although they would never admit it. Let’s take a closer look.

External analysis is the process of assessing the world around us to determine trends, threats and opportunities that exist mostly due to circumstances beyond our control. The thought of “assessing the world” may seem like a daunting task, especially for a small business with limited resources. However, it’s possible to do so by learning how to use existing analytical tools. In fact, it’s possible to do so in a comprehensive and logical manner—which is much better than just winging it or following your gut instincts.

A road near my home was under construction last year. The signs went up, the road was closed on one side at a time and, of course, everyone avoided the road the entire time it was being worked on.

When it reopened, I noticed many of the small businesses located on this road had closed down. However, there was a gas station that took advantage of the downtime created by the road construction. It replaced its underground tanks and refurbished the building. When the road was finished, the gas station was enjoying its own grand reopening with an all-new, larger facility.

The gas station owner likely conducted an external analysis well before the road closed. Upon learning about the closing, he or she formulated a plan to not only survive but take advantage of the closing. Apparently, the other business owners were caught off guard by the road closing or couldn’t devise a plan to remain viable.

I recently facilitated a strategic planning retreat for a large, active local service club. Prior to the retreat, the club board arranged a series of town hall-style meetings with special guests who agreed to be panelists so the club could learn more about local and regional issues. This is a great example of the club conducting its own version of external analysis—learning about trends, threats and opportunities. Armed with knowledge, the club made informed decisions at its strategic planning retreat.


One tool we use for external analysis in our strategic planning process is called the PESTEL Analysis. PESTEL is an acronym for the following external influences: political, economic, social, technological, environmental and legal. For each influence, ask your team to identify the trends, threats and opportunities that exist, accompanied by at least one possible action step for each item identified. This is exactly what the service club members accomplished in their town hall meetings to gain a deeper understanding of the world around them. In addition to the PESTEL analysis and several other tools, we use the SWOT (strengths, weaknesses, opportunities and threats) format to summarize the best of the best from all other tools.

In addition to using analytical tools, another great way to conduct informal external analysis is by subscribing to great publications like Landscape Management, its social media feeds and newsletters to stay current on news, trends and ideas. Attending industry conferences, actively networking with others in the industry and joining peer groups are other ways to conduct external analyses.

Within the context of a peer group, formal external analysis is possible if the group members agree to embark on this journey. As a facilitator of several peer groups, I’d say this environment is one of the best places to engage in these discussions. Those who join peer groups are often some of the sharpest and most knowledgeable people in the industry. They are well-read, up to speed on trends and developments and have much insight to share.

So, which way is the wind blowing? Do you know? How might the direction of the wind affect you? Do you care? The gas station owner seemed to care. Not sure about the others, but I can tell you the gas station is thriving, but the other businesses are gone.

Photo: ©istock.com/MarinaRazumovskaya

Avatar photo

Phil Harwood

Phil Harwood is a Senior Advisor with Tamarisk Business Advisors. Contact him at phil.harwood@tamariskadvisors.com.

To top
Skip to content