Key Learning Outcomes

  • Implement a gap analysis that will allow you to identify the desired outcome of a business, idea or project, the current reality and assess if there is a gap between the two.
  • Use the gap analysis tool in your business or personal life when you feel there is a need for change.
  • Apply the Absolute Best worksheet to perform a gap analysis as part of the business planning process.
  • Refer to the case study business for examples of areas that can be addressed in a gap analysis.

Article

A gap analysis is a simple but highly effective tool that can be used as part of the business planning process. A gap analysis helps identify the current and future state of a business or project. We have also used this tool effectively with teams and individuals to identify potential areas of improvement in their skills and knowledge base.

To compete the gap analysis you can use the worksheet provided or simply draw up your own spreadsheet. The first step is to identify all of the areas that you want to analyse and insert these on one side of the sheet. We find it easier to look at the broader areas first and then break these down. So for example, if we look at our case study business, The Best Beauty Salon, the following are some of the areas that can be analysed:

Gap Analysis

[wlm_ismember]The next step is to determine the current performance level. This is one of those times when you need to try and look at things objectively, taking a helicopter view so that you can be as accurate as possible. It is sometimes wise to do the task and then leave it for 24 hours and re-do it when you gain a little more perspective. If you are doing the exercise as a team, getting everyone to do the scores individually and coming up with a team average can give a good overview of the current performance level.

We find scoring out of 10 is the easiest way to do this analysis. So a 10 out of 10 is perfect –the activity or task is done on time every time; a 1 out of 10 means the task is not done at all; and then there are the scores in between. The ideal score is a 10. However, this is probably unrealistic for most businesses and we always like to leave some room for improvement. So before doing the exercise, determine what you believe is a pass mark. In the example below, anything that is an 8 or above is marked green, so the team is performing to an acceptable level in those areas. Anything below a 4 is marked red, and the average performing areas are marked orange. The colour coding gives a visual of which areas are in need of immediate attention.

Gap Analysis

The final step is to look at those areas in red and orange, one by one, to determine why you are underperforming and what can be done to improve these areas. For areas or activities that have scored a 6 or 7, there may be some simple finetuning, a commitment to be more disciplined, or implementing an accountability system that can move these areas up to the 8/10 pass mark.

For anything that is in red, you need to determine why this activity is not being done or not being done very well. It is likely that these activities will impact on your ability to successfully achieve the goals in the business plan. Ask yourself the questions below.

Do we need to do it?

Sometimes we continue to do things in a business, just because we have always done them, even though over time they have become obsolete. If this is the case, delete the activity and put the time and energy into more important and higher impact initiatives. In the above example, we can see in the team section that the six-monthly meetings score only a 1 because they are not being done. However, with the monthly one-on-one meeting scoring 6, it may be that the six-monthly reviews have become a redundant task.

Do we have the skills to do it?

Often activities or tasks get put off when we do not have the ability or the confidence to complete them. For any area that is under performing, make sure that you and your team are fully trained and skilled for the task. If not, determine if the task can be outsourced to a specialist or look for solutions to upskill. Again, when looking at our case study, we can see that the follow-up of non-regular clients has scored a three, as this activity is not being done regularly. This is probably because the team does not feel comfortable making the calls rather than because it is not an effective source of business.

How do we do it?

The next step is to determine how to do it. There should be nothing left in the gap analysis that is not important and does not need to be done, but there may be some things that are long-term projects and may take some time to implement. Try to break these down into smaller chunks so that you are able to see progress and improvement. It is important to be very clear on what needs to be done to bring the activity up to an acceptable level of performance and what success looks like. It is worthwhile reviewing your gap analysis on a regular basis – perhaps every three months in order to maintain a focus on those areas that need improvement.

A gap analysis can take any format and this example is just one of them. Don’t forget you can use the theory just as well when you are looking at only one or two aspects of your business or life. It is simply a matter of assessing your current reality, where do you want it to be and thinking about how you can get there.

The final research step in developing your new business plan is to complete a SWOT analysis.[/wlm_ismember]

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