How to Do a Gap Analysis

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When you want to improve your business or create a project, a gap analysis can help you understand the obstacles you need to overcome. Before you embark on making changes to the way you do business, a gap analysis lets you evaluate your objectives to make sure you are headed in the right direction. You also can evaluate your strengths and weaknesses as well as the effort needed to build a bridge to the success you want.

Starting with the End in Mind

Your gap analysis begins with an assessment of where you want your business to be. You probably have some idea of changes you'd like to make, but clarifying what those changes will do for your company can go a long way toward helping you focus. You can write a detailed description of your company the way you envision it after you make the changes, including sales figures, types of new customers, new products or services, and market share. This is the stage of a gap analysis where you let your creative vision take over.

Finding Out Where You Are

Your appraisal of where your company stands now should include sales, profitability, current expertise, customer service ratings, return on investment and any factors that you want to see improved by making changes. For example, you may discover that your shipping department takes 10 days to ship the average order. This can be a good starting place for addressing changes you'd like to make in the delivery of your products. To give another example, you might notice that your sales volume is rising while your profitability is dropping. Make note of this problem in your analysis to help identify inefficiencies.

Identify the Tasks Between Here and There

When you look at where you are and where you want to be, you can benefit from asking yourself what obstacles lie in the way. The gap between your current state and your future one contains problems you must solve. For example, if you want to gain market share, you might need to evaluate whether your marketing and advertising are adequate. Similarly, doubling your sales could require you to address space limitations in your current facility that keeps you from adding personnel, equipment or products.

Creating a Strategy to Bridge the Gap

Before you charge into the gap, create plans to address the vital tasks that will have to be accomplished. A comprehensive strategy to overcome obstacles and put new practices in place can help you succeed in making the transition you have envisioned. For example, if you want to increase sales, you might not need to hire more salespeople. Instead, you may need to add a bonus system that motivates your current sales staff, or you may need better product quality. Your strategy can address specific deficiencies rather than randomly trying methods to achieve your goals.