STEPP Analysis
Know the environment
you are working in.

STEPP Analysis, part of the External Analysis in the strategic business planning process is a crucial part of starting a small business. You must know your industry.

STEPP Analysis

• Social-Cultural/Demographic
• Technological
• Economic
• Political – legal
• Physical/Environmental

You may look at the above factors and think that they are out of your control, which is most cases they are. However, if you can monitor these, you can plan how your business will react to them.

With these, don’t limit yourself to your own country, start thinking globally. What we are looking to achieve is a table of potential opportunities and threats which could affect your business.

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STEPP Analysis

Factor:	Name the factor
Threat	Explanation of the Threat and how it is possible to combat that threat.
Opportunity	Explanation of the opportunity and how you can best use it to your advantage.

Lets look at some of the issues you may wish to consider:

1.Socio-Cultural/demographic issues affecting your business.

Think about growth in society, religion, lifestyles, cultural diversity, social trends etc. Would any of these affect your business?

For example, if you are selling baby products, is the birth rate likely to increase or decrease, thus effecting demand for these products. What are the ethnicity trends within these groups – are your products culturally diverse?

Look at the demographic factors also. This looks at what is happening to the population. These changes over a period of time could affect your business. A classic example of this is that the baby boomers are now coming up to retirement age, what will they be need or spending their money on?

Think also about the age/gender of the population, its ethnicity, birth rate, death rate, household occupancy, marital status, religion, education, employment etc. This is by no means an exhaustive list, so have a think about what applies to your business.

2.Technological Factors

List any technological facts that are and could affect your business. What technological opportunities and threats are there?

3.Economic factors

Think about how the following could impact your business. Don’t just think of your business directly, think about economic impact on your customers or consumers.

Some things to consider are:

• The economic cycle – for example are we in a boom period or a recession and what impact does that have on your customers, do they have more money to spend or less?
• Inflation
• Unemployment
• Interest rates
• Trade Agreements
• Global economy.

4.Political and legal factors

Are there any potential law changes that could act as an opportunity or threat to your business? For example, a change in government could have an impact on the taxes, minimum wage requirements, health and safety laws etc.

5.Physical/Environmental Factors

Think about some of the current issues at present such as climate change, recycling, pollution – do any of these present an opportunity or threat – is your product or service “green”, if so can this be promoted.