People develop business plans for many reasons — it could be to seek funding for a project, evaluate future growth potential, or perhaps establish a new business partnership. So a business plan is essentially a formal framework for gaining the support you need for your business idea or project.
A situational analysis helps you identify factors that will impact your company’s performance. You consider how your idea might work in different contexts.
Conducting an internal analysis
The purpose of an internal analysis is to identify the potential of your company. A robust internal analysis should point out the significance and impact of external factors on your business.
You’ll then be in a better position to respond to them. Assessing strengths and weaknesses should then highlight your company’s potential to grow, compete effectively in the marketplace, and be commercially viable.
An internal analysis can help you evaluate an existing business plan. Alternatively, you can carry out an internal analysis to develop a new business idea. Regardless, an internal analysis will help determine whether or not your plan or idea might work in actual practice.
There are four steps you can take when conducting an internal analysis — although the steps don’t need to be carried out in any particular order. You should assess the company’s market strategy and its resources.
You also evaluate the organizational and management strategy, as well as your organization’s financial position. Taking these steps can provide useful insights for a business plan or idea.
Assessing the market strategy is an important step in your internal analysis. A good place to start is to use company data on customer sales, product revenue analysis, and the geographic distribution of your target customers. You can then extrapolate trends over time to support your evaluation.
You can continue your evaluation by asking a number of questions about the data related to your customers’ profiles and purchasing habits.
In answering these key questions, you’ll gain valuable information about the strengths and weaknesses of the company’s current market strategy. You can then use the results to examine your portfolio of products or services to determine the best strategies for you to follow going forward. This type of information will inform the development of your business idea or plan.
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