Is your business stuck in a rut and failing to flourish? Successful business leaders know that inward-looking organisations tend to stagnate. Environmental scanning can help you break through that barrier to discovering new opportunities and practices which can give you the edge over competitors.

SMEs are critical to the UK’s economy – yet because they are vulnerable to market forces their failure rate is high. The second quarter of 2017 has seen slower revenue growth, rising spare capacity and an increase in bankruptcies, according to the SME Health Check Index, June 2017. When the health of UK SMEs is said to have fallen to its lowest level in three years, its important businesses use every tool available to ensure they stay ahead.

What is environmental scanning?

Environmental scanning is simply a method for bringing together data and building a picture of the environment in which a business operates. It’s a form of external appraisal that systematically surveys and interprets relevant data to identify information about the external world, its competitors and itself. This allows businesses to learn about opportunities and threats. Firms can then respond to the information gathered by changing strategies and plans when the need arises. It may be a reactive process – perhaps you’re losing out to competitors – or a proactive one where you’re looking out for market trends to enable you to diversify, adapt or grow.

Factors that could potentially affect your business might come from a variety of directions:

  • Technical – advances in technology may mean you should look at how you can harness and adopt new technologies to make your business more efficient and competitive, for example, new machinery, products or information technology relevant to your business.
  • Economic – a downturn, or upturn, in the economy may mean that you reassess your business in terms of range, services, offers and pricing.
  • Legal – many business sectors are affected by legislative changes with which they need to comply. For example, your HR and payroll staff will need to keep abreast of changes in the National Living wage and National Minimum Wage, and other legislation such as the Equal Pay Act.
  • Social – social scanning includes being aware of how your business might be affected by factors such as changing demographics (e.g. an ageing population), changes in family life (e.g. increased shared parenting) and immigration (e.g. effect on staff recruitment and wages).

In fact the ability to ‘scan the environment’ is seen by some as the first stage of being able to identify opportunities – it’s seen as part of what truly defines the entrepreneur. Of course all this will be combined with the good business intuition which many business-owners have themselves developed.

How can it help your business perform better?

Someone once said that the best way to predict the future is to create it.  No-one can predict the future but firms are more likely to succeed if they prepare for likely eventualities and take account of early warnings.  A survey of the views of 132 CEOs in the British electronic manufacturing industry on environmental scanning in SMEs concluded that, “there is a significant relationship between increasing the environmental scanning of the firm, and the success of the firm’s performance in small and medium sized manufacturing firms in electronic industry.”  Whatever your sector, you should consider environmental scanning an important prerequisite to forming your business strategy.

When you take time to look at the bigger picture it can have a positive and significant effect on your business in a number of ways:

 it equips your business to respond appropriately and on the basis of evidence rather than guesswork

  • It enables you to be aware of new products, new technologies in your sector and to stay abreast of changes in the market.
  • It encourages you to identify threats and challenges while taking advantage of strengths and opportunities.
  • It enhances the survival chances of your business, increasing your adaptability and leading to greater profits and growth rate.

Chronologic’s workforce management system gathers clocking-in and other data about the internal workings of your company, which can be used to generate reports and be combined with other data as part of environmental scanning to help make the best of your resources.

For more information about our solutions and products call 01761 410015 or email