A STEPC analysis is one of the many skills needed to grow a successful small business. It helps you to understand the environment in which your company operates, which is just as important as understanding its daily operations. Let’s take a look at what’s involved.
What is a STEPC analysis?
STEPC stands for:
Social;
Technological;
Economic;
Political; and
Competitive analysis.
All of these components together will help you to get a broad view of the industry your small business operates in.
The components of a STEPC analysis
Social
Business is about relationships, so it’s important to understand the society in which your business operates. Society means family, friends, influencers which have a bearing on how we behave, and ultimately on what we buy.
Different groups or people have different needs, likes and dislikes, which are influenced by their demographic characteristics — age, sex, income, social status — as well as by their psychographic characteristics — lifestyle, attitudes, opinions, beliefs. These characteristics change over time, so successful small businesses keep tabs on society and changing trends.
Technological
Technology contributes to the success and growth of small businesses. A focus on technology, and technological changes, helps organizations cater to customers’ needs and wants more efficiently and effectively.
Conduct a review of hardware, software, social media strategies and tools, peripheral devices (printers, cash registers, debit card machines), personal productivity tools. What changes are coming? Which ones may impact your business? What can you do to take advantage of changes in technology before your competitors do?
Economic
All organizations are affected by existing economic factors, both here at home and on the other side of the world. The economy shapes behavioural patterns of consumers, buyers, suppliers, creditors and investors. An economy in a recession will likely see consumers with lower purchasing power, higher unemployment, lower interest rates and decreasing numbers of risk-takers and creditors.
A growing economy will likely produce lower unemployment, higher purchasing power, higher interest rates and more risk-takers. It’s important to anticipate how changes in the economy will affect your small business in both the short- and long-term.
Political
Knowledge of political factors is important. Small businesses don’t operate in a vacuum — they are affected by what goes on around them. Changes in the political scene, nationally and globally, may impact your business. You don’t need to be an expert, but you do need to be aware. Anticipate how changes in any political factors may impact your business, and think about how you would respond.
There are quite a few political factors you’ll need to get acquainted with, including:
- Elections
- Employment law
- Consumer protection
- Environmental regulations
- Industry-specific regulations
- Competitive regulations
- Inter-country relationships/attitudes
- War
- Terrorism
- Political trends
- Governmental leadership
- Taxes
- Government structures
Competitive
A review of the business environment wouldn’t be complete with a look at what your competitors are up to. Consider a systematic review of your main competition around the following factors:
- Background
- Financials
- Products
- Marketing
- Facilities
- Personnel
- Corporate or marketing strategies
Wherever possible, become a customer of your competitors’ businesses. Experience what their customers experience — the good, the bad and the ugly. Check out your competitors’ websites, advertisements, and posts on social media outlets. You can learn a lot by being a passive observer of your competitors’ behaviours. Compared to your competitors, how is your business performing? Are there ways in which you could improve your business? How?
We know – that’s a lot! But understanding all the components of a STEPC analysis will help you answer important questions. What’s happening to interest rates, currency, inflation, social trends, regulatory changes, income tax rates, technology? How will these changes affect your business? How can you capitalize on these trends before your competitors do? What are your competitors up to? Getting a handle on these factors will help you prepare for changes in the business environment – whether you have control over them or not – so you’re not caught unaware.
