Your business is a complex creature: sometimes it seems like there are no limits. Other times, you’re hoping to cover rent costs.
Being an entrepreneur means you wear many hats - being ahead of the game and innovative is a necessity.
This can leave you feeling frustrated, confused, or anxious - or everything at once. It can feel like there’s too much to do and not enough time to do it.
If you want to grow your business without burning out, you need to stay organized and set priorities. That’s where a gap analysis comes in!
What is a Gap Analysis and why should you care?
The term “gap analysis” is more complex sounding than it actually is.
Completing a gap analysis is easy. You just have to answer three main questions:
- Where is your business now?
- Where do you want your business to be?
- How are you going to get it there?
This article will teach you exactly what to do and how easy it is to close the gaps in your business without feeling overwhelmed or burnt out.
A stupidly easy 3-step Gap Analysis process
There are three simple steps to performing an actionable Gap Analysis:
- Identify the gaps in your business.
- Figure out where you want to be.
- Close the gap with an action plan.
Let’s dive in!
As a starting point, you need to identify where your business is today. In some instances, this could be a painful or scary process, but it’s a reality that needs to be faced in order for real growth to take place.
Here’s the gap analysis process:
First, look at the numbers. Are your sales numbers below your goal? Is employee or customer turnover higher than it should be? Is your supplier charging more than you can afford? Are your marketing costs rising?
The difference between your goal and your actual current numbers is your "gap".[*]
It's also a good idea to compare your numbers to your industry's benchmarks.
This can be done by Googling "[your industry]" plus statistics, benchmarks, etc. Or, you can find your publicly owned competitors and look at their numbers.
Once you've identified the gap, create a spreadsheet with the following columns:
For example, it might look like this:
Once you’ve filled in your current state for the analysis you decided to do, it's time to figure out where you could potentially be in the future. This is where the benchmarking and industry standards come in.
Three questions to ask yourself at this point are:
- What is my company's potential?
- Why is my company falling short of its potential?
- What steps do we need to take to close the gap?
First, figure out your potential using industry standards, comparing yourself to competitors, and looking at some of your best sales months. What could you be making each month? (Again, this process doesn't have to be about sales numbers - you can do the same thing for marketing costs, employee turnover rates, etc.)
Next, why are you falling short? What are the reasons for the gaps in your sales numbers (or whichever KPI you're measuring)?
Add a column to your spreadsheet:
Note that you don't have to come up with five reasons - this is just an example. It could be one, or it could be a dozen. Use as many rows as you need.
Once you've figured out your company's potential and why there's a gap, it's time to come up with ideas to fix that gap. These can be as simple as increasing your marketing spend, to as complex as optimizing your website for conversions or putting more effort into SEO.
When all is said and done, your gap analysis spreadsheet might look like this:
How do you determine YOUR steps to close the gap?
Hold a brainstorming session, either by yourself or with your team, on how you can hit your goals. Open a notepad or spreadsheet and just start writing things down. Ask yourself: Why is this happening?
Why am I losing sales? Perhaps customers don’t trust the company - try adding trust badges and getting more reviews.
Why are products late to being delivered? Perhaps our supplier is overwhelmed and things are getting slowed down - try adding another supplier or changing suppliers altogether.
You get the idea. Find the gaps in your business, brainstorm why they might be happening, then come up with some solutions to close the gap.
Once you've determined the gaps, why they might be happening, and come up with some ideas to reach your potential, it's time to turn those ideas into actionable goals.
Remember: A good goal is specific, measurable, attainable, realistic, and timed (SMART).
Break lofty goals (like doubling sales revenue) down into smaller milestone goals. For example, if I were trying to double sales, I would set mini goals like:
- Increase PPC ad spend 10% every week until conversions decrease
- Test three new ads every week until you reach the goal
- Join two forums (or Facebook groups) and post at least once a day until you build enough trust to promote your products or blog content
You get the idea. Set small, actionable goals you can check off one at a time.
If you need to optimize your site, break it down to take on one page at a time. If you need to improve your email campaigns, set a goal to read a guide and create one new email nurture campaign.
I like to track these things in a spreadsheet. You can create the overall goal, break it down into subgoals, give them due dates, and track your progress. You can also implement a project management software (I personally like Asana).
And that’s all there is to it - you’ve got your plan, just execute it!
A free Gap Analysis template to put this to use NOW
So now you know exactly how to make a gap analysis on your business, and you've seen the template I used above.
Click here to get that spreadsheet for free - no strings attached!
Once you open the spreadsheet, click "File" then "Make a copy" to create an editable version you can use on your own business.
Performing a gap analysis makes it glaringly obvious where the holes in your business are - and how to fix them.
Whether you’re struggling to pay the bills or you’ve just hit a plateau in your business and want to grow, a gap analysis can get you where you want to be.
As Pablo Picasso once said, “Our goals can only be reached through a vehicle of a plan, in which we must fervently believe, and upon which we must vigorously act. There is no other route to success.”
Find the gaps, create a plan, and go get ‘er done!
What areas are you trying to bridge the gap in your business? Share them in the comments below!