Q&A: Environmental Analysis

What is the environmental impact of a business?

At www.bplans.com, I answer ‘Ask the Expert’ inquiries, and every now and then, I receive a question that deserves a particular response. I had the following inquiry this morning:

What is the Environmental Impact Assessment for this kind of shoe business?

This is most likely a homework assignment. For the record, I am not omitting anything; the question is exactly as it is above, with no extra information. “This kind of shoe company” may be anything from manufacture to retail to repair to anything else, and it could operate in any market, in any region, and with any combination of strategy and resources. As a result, truly responding to the question is impossible.

That isn’t the point, however. That is not why I am writing this on my blog. What’s fascinating about this question is that it shows a frequent misconception. It is presumptively true that there is a “correct” response; that “the environmental analysis” exists, and that the individual asking the question want to get that one correct answer by consulting an expert.

This is the same fundamental worldview that has led to the odd growth of template business plan commerce, as if there could be a perfect business plan for every generic kind of company, such as a restaurant or shoe factory. As if it were a recipe, people ask for “the business plan” for a certain kind of company. It isn’t the case.

If the question is for homework, the reward to the learner is intended to be going through the process of thinking rather than obtaining the claimed correct answer.

Answer: In the context of business planning, environmental analysis usually refers to circumstances and variables outside of your company’s control that may influence its sales, market, expenses, and so on. These are often categorized into categories, such as the PEST acronym, which stands for political, economic, social, and technical aspects that may impact your business. They may be global trends, regional market trends, or anything in between.

A good analysis considers your business’s unique individual environment, including its market, strategy, and resources, and forecasts how these variables will impact your company in the future.

— Tim

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