Ever heard of a PESTLE? If you are looking for business funding, the lender may ask you for one. Be prepared. 

If you’re drawing up a business plan, or looking for funding, don’t be surprised if you’re asked for a PESTLE. It’s one of a number of important business analysis tools and frameworks that are designed to take you out of your comfort zone and to critique your business or business idea from an external perspective.

With no more than a flipchart, a few markers and a number of people to brainstorm the issues you can extract great value from using a PESTLE and other tools like a SWOT.

So, what’s a PESTLE?

This is a way of looking at a business from an external perspective and allows you to consider the key influences and the implications. Done properly, a PESTLE analysis can test your business’s sensitivities to the business environment. A PESTLE is probably the most used ‘macro-economic’ analysis tools in business.

What does PESTLE stand for?

Each of the letters in the term ‘PESTLE’ stands for a factor:

  • Political – this can cover developments at national and international levels of markets and customer behaviours. Government stability, regulation and political ethos are among many factors that can impact on a business. An impending election, for example, could create uncertainty and a drop in consumer confidence
  • Economic – policies on currencies, inflation and a host of other factors have far-reaching consequences. For instance, an increase in the inflation rate would mean that prices of products or services might have to increase
  • Social – demographic, behavioural and attitudes need to be considered. An example might be how well a business can adapt to an ageing population
  • Technological – rapid changes in technology adoption, as well as increased automation, present opportunities (a chance to take costs out of a business) as well as challenges (customer expectations can be higher)
  • Legal – from HR and regulatory compliance to health and safety and data protection, there are a range of laws that impact on businesses and affect day-to-day operations of business
  • Environmental – climate change, pollution and waste management are among a number of factors that impact on how businesses operate

Lately, two more factors – G for Globalisation and D for Digital – have been added to the mix.

How should a PESTLE be displayed?

Here’s a simple way of way of showing a PESTLE in a document or in a slide. Three factors are shown under each category but there’s no upper or lower limit on a PESTLE analysis but remember that less is often more.

Also you might find that similar factors and implications are common across a number of categories which is understandable.

  Factors Implications
Political

1.

2.

3. etc

1.

2.

3.etc

Economic

1.

2.

3. etc

1.

2.

3. etc

Social

1.

2.

3. etc

1.

2.

3. etc

Technological

1.

2.

3. etc

1.

2.

3. etc

Legal

1.

2.

3. etc

1.

2.

3. etc

Environmental

1.

2.

3. etc

1.

2.

3. etc

Anything else of note?

Don’t rush a PESTLE analysis but at the same time keep it focused and snappy. Note as many specifics under each perspective as you like but remember that more content does not equal more interest. Here’s a simple PESTLE Template

Also, consider using the PESTLE analysis in combination with a SWOT analysis. Here is how to do a SWOT analysis

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