{"id":1103,"date":"2022-03-16T00:00:00","date_gmt":"2022-03-16T00:00:00","guid":{"rendered":"https:\/\/www.simplybusiness.co.uk\/knowledge\/articles\/what-is-a-pestle-analysis\/"},"modified":"2025-05-22T13:17:11","modified_gmt":"2025-05-22T13:17:11","slug":"what-is-a-pestle-analysis","status":"publish","type":"knowledge","link":"https:\/\/www.simplybusiness.co.uk\/knowledge\/strategy\/what-is-a-pestle-analysis\/","title":{"rendered":"How to do a PESTLE analysis for your business"},"content":{"rendered":"<p class=\"wp-block-paragraph\">What are the external factors that could affect your business, both now and in the future? Taking stock of these issues can inform your strategy and decision-making.<\/p>\n\n<p class=\"wp-block-paragraph\">One of the most effective ways to identify potential threats to your business is to carry out a PESTLE analysis. <\/p>\n\n<p class=\"wp-block-paragraph\">Read on to find out the PESTLE analysis meaning, how to do one, and why they\u2019re important.<\/p>\n\n<ul class=\"wp-block-list\"><li class=\"wp-block-list-item\"><a href=\"\/knowledge\/strategy\/how-to-write-a-business-proposal\/\" data-type=\"knowledge\" data-id=\"1003\" ><strong>How to write a business proposal<\/strong><\/a><\/li>\n\n<li class=\"wp-block-list-item\"><a href=\"\/knowledge\/cash-flow\/what-is-a-cash-flow-forecast\/\" data-type=\"knowledge\" data-id=\"972\" ><strong>What is a cash flow forecast?<\/strong><\/a><\/li>\n\n<li class=\"wp-block-list-item\"><a href=\"\/knowledge\/staff\/paying-paye-tax-guide-for-employers\/\" data-type=\"knowledge\" data-id=\"1493\" ><strong>A guide to paying PAYE<\/strong><\/a><\/li>\n\n<li class=\"wp-block-list-item\"><a href=\"\/business-insurance\/faq\/what-type-of-business-insurance-do-i-need\/\"><strong>What type of business insurance do I need?<\/strong><\/a><\/li>\n\n<\/ul>\n\n<h2 class=\"wp-block-heading\">What is a PESTLE analysis?<\/h2>\n\n<p class=\"wp-block-paragraph\">The PESTLE analysis definition is an activity which helps you to understand the external challenges facing your business. <\/p>\n\n<p class=\"wp-block-paragraph\">Why is PESTLE analysis important? Because these factors can influence your business strategy and impact future decisions such as expansion, recruitment, and <a href=\"\/knowledge\/marketing\/tips-for-developing-a-product-a-simple-guide\/\" data-type=\"knowledge\" data-id=\"1072\" >product development<\/a>.<\/p>\n\n<p class=\"wp-block-paragraph\">A successful analysis will relate the potential impact of external factors to your business and the sector you operate in.<\/p>\n\n<h2 class=\"wp-block-heading\">What does PESTLE stand for?<\/h2>\n\n<p class=\"wp-block-paragraph\">PESTLE is an acronym. Here\u2019s an overview of what each letter stands for:<\/p>\n\n<ul class=\"wp-block-list\"><li class=\"wp-block-list-item\"><strong>Political<\/strong> \u2013 the political stability of the country you\u2019re operating in, considering things like <a href=\"\/knowledge\/business-tax\/self-employed-tax-changes\/\" data-type=\"knowledge\" data-id=\"1514\" >tax changes<\/a>, industry regulations, and <a href=\"\/knowledge\/business-structure\/eu-to-uk-imports\/\" data-type=\"knowledge\" data-id=\"1063\" >trading rules<\/a><\/li>\n\n<li class=\"wp-block-list-item\"><strong>Economic<\/strong> \u2013 the impact of exchange rates and economic growth on your business, as well as things like the cost of living, consumer spending, and interest rates<\/li>\n\n<li class=\"wp-block-list-item\"><strong>Social<\/strong> \u2013 what are people\u2019s attitudes to things like work\/life balance, <a href=\"\/knowledge\/business-news\/small-business-owner-wellbeing-report\/\" data-type=\"knowledge\" data-id=\"962\" >wellbeing<\/a>, and remote working? How do buying habits such as sustainability affect your business?<\/li>\n\n<li class=\"wp-block-list-item\"><strong>Technology<\/strong> \u2013 looking at innovation in your sector, alongside global tech trends such as automation and the growth of social media. You\u2019ll also need to consider <a href=\"\/knowledge\/tech\/cyber-security-guide-for-small-business\/\" data-type=\"knowledge\" data-id=\"1076\" >cyber security<\/a> and data storage<\/li>\n\n<li class=\"wp-block-list-item\"><strong>Legal<\/strong> \u2013 analysing shifts in the legal landscape, including employment and <a href=\"\/knowledge\/staff\/health-and-safety-guide\/\" data-type=\"knowledge\" data-id=\"1281\" >health and safety laws<\/a>. How have laws like <a href=\"\/knowledge\/business-structure\/data-protection-act-principles-for-small-business\/\" data-type=\"knowledge\" data-id=\"1011\" >GDPR<\/a> affected your business and what incoming law changes \u2013 like the introduction of a plastic packaging tax \u2013 might affect you?<\/li>\n\n<li class=\"wp-block-list-item\"><strong>Environmental<\/strong> \u2013 what impact does your business have on the environment? How do environmental issues affect your ability to source new products and manage supply chains? You can also consider Corporate Social Responsibility and the benefits of becoming a B-corp<\/li>\n\n<\/ul>\n\n<h2 class=\"wp-block-heading\">What is PESTLE analysis used for?<\/h2>\n\n<p class=\"wp-block-paragraph\">A PESTLE analysis can be useful for businesses of all sizes, from companies just starting out to those looking for funding such as <a href=\"\/knowledge\/funding\/what-is-venture-capital\/\" data-type=\"knowledge\" data-id=\"1029\" >venture capital<\/a>.<\/p>\n<div id=\"nba-body-001\">\n<\/div>\n\n\n<p class=\"wp-block-paragraph\">The purpose of PESTLE analysis is to inform you about what&#8217;s happening in the world around your business, and use that to plan for the future.<\/p>\n\n<p class=\"wp-block-paragraph\">Here are some of the things you can use a PESTLE analysis to plan for:<\/p>\n\n<ul class=\"wp-block-list\"><li class=\"wp-block-list-item\"><strong>marketing<\/strong> \u2013 analyse consumer spending and what\u2019s popular with your audience to develop your <a href=\"\/knowledge\/marketing\/how-to-write-a-marketing-plan\/\" data-type=\"knowledge\" data-id=\"1456\" >marketing plan<\/a><\/li>\n\n<li class=\"wp-block-list-item\"><strong>product development<\/strong> \u2013 identify customer habits and environmental factors to help you decide what to launch and when<\/li>\n\n<li class=\"wp-block-list-item\"><strong>staff<\/strong> \u2013 decide when to take on new staff, while using research on the social landscape to assess what type of skills are available and people\u2019s working habits<\/li>\n\n<li class=\"wp-block-list-item\"><strong>organisational development<\/strong> \u2013 if you\u2019re looking to diversify or expand your business, use the information you gather to develop your <a href=\"\/knowledge\/management\/how-to-create-an-organisational-structure\/\" data-type=\"knowledge\" data-id=\"1425\" >org chart<\/a><\/li>\n\n<\/ul>\n\n<h2 class=\"wp-block-heading\">How to do a PESTLE analysis<\/h2>\n\n<p class=\"wp-block-paragraph\">A PESTLE analysis is a research project, so it could be worth putting a team together to complete it, with one person responsible for bringing everything together.<\/p>\n\n<p class=\"wp-block-paragraph\">You could give each person in the team an area to research, playing to their individual strengths such as legal matters or technology.<\/p>\n\n<p class=\"wp-block-paragraph\">You\u2019ll then need to gather the information on each area of PESTLE. Here are some of the key points to consider:<\/p>\n\n<ul class=\"wp-block-list\"><li class=\"wp-block-list-item\">how will the information initially be presented \u2013 perhaps in slides or a long form document?<\/li>\n\n<li class=\"wp-block-list-item\">make sure the research focuses on both the present and future impact of PESTLE factors on your business<\/li>\n\n<li class=\"wp-block-list-item\">are there areas of PESTLE that are more relevant to your business, such as environmental factors if you import products?<\/li>\n\n<li class=\"wp-block-list-item\">make sure the team use reliable sources of information that are relevant to your business and sector<\/li>\n\n<\/ul>\n\n<p class=\"wp-block-paragraph\">Once you\u2019ve gathered all the research together, you\u2019ll need to analyse the findings. These are the steps you\u2019ll need to take:<\/p>\n\n<ol class=\"wp-block-list\"><li class=\"wp-block-list-item\">Identify and prioritise the risks to your business<\/li>\n\n<li class=\"wp-block-list-item\">Work out how you can address these issues through preparation or prevention<\/li>\n\n<li class=\"wp-block-list-item\">Circulate your findings to key stakeholders and discuss them<\/li>\n\n<li class=\"wp-block-list-item\">Agree on actions and make sure they\u2019re assigned to a team or individual to increase accountability<\/li>\n\n<li class=\"wp-block-list-item\">Review and update the PESTLE analysis regularly, accounting for any new risks or changes to existing ones<\/li>\n\n<\/ol>\n\n<h2 class=\"wp-block-heading\">PESTLE analysis examples<\/h2>\n\n<p class=\"wp-block-paragraph\">A PESTLE analysis allows you to explore external factors influencing your business that are outside of your control.<\/p>\n\n<p class=\"wp-block-paragraph\">By understanding what&#8217;s going on around your business, you can make strategic management decisions that can minimise risks and help your company to grow.<\/p>\n\n<p class=\"wp-block-paragraph\">For example, a PESTLE analysis could help a <a href=\"\/knowledge\/retail\/how-to-start-a-clothing-brand\/\" data-type=\"knowledge\" data-id=\"1447\" >clothing business<\/a> to decide whether they should launch their services in a particular country. If the analysis finds that the country has low economic growth and an unstable political situation, it could be best to wait until conditions improve before entering that market.<\/p>\n\n<p class=\"wp-block-paragraph\">If a <a href=\"\/business-insurance\/catering-insurance\/\">catering business<\/a> uses plastic coffee cups and its research shows that consumers want cups made from more sustainable materials, they can start planning for how to replace their existing cups and consider the factors that could influence the replacement.<\/p>\n\n<p class=\"wp-block-paragraph\">Meanwhile, an <a href=\"\/business-insurance\/accountancy-insurance\/\">accountancy firm<\/a> may use a PESTLE analysis to prioritise the risk of cyber threats if they\u2019ve seen an increase in ransomware attacks and fraudulent tax returns.<\/p>\n\n<p class=\"wp-block-paragraph\">The CIPD has a <a href=\"https:\/\/www.cipd.co.uk\/Images\/7583-PESTLE-template-2020_tcm18-27107.pdf\" rel=\"noopener noreferrer\" target=\"_blank\">free pestle analysis template<\/a> that you can download for your business, as well as a <a href=\"https:\/\/www.cipd.co.uk\/Images\/PESTLE-example-for-retail-industry-2021_tcm18-27108.pdf\" rel=\"noopener noreferrer\" target=\"_blank\">completed analysis template<\/a> to give you an idea of how yours should look.<\/p>\n\n<h2 class=\"wp-block-heading\">\nWhat are the PESTLE analysis advantages and disadvantages?<\/h2>\n\n<p class=\"wp-block-paragraph\">A PESTLE analysis can be an effective exercise, but it won\u2019t always give you the full picture. That\u2019s why it\u2019s important to complement a PESTLE analysis with a <a href=\"\/knowledge\/strategy\/how-to-do-business-swot-analysis-template\/\" data-type=\"knowledge\" data-id=\"944\" >SWOT analysis<\/a> and <a href=\"\/knowledge\/marketing\/how-to-do-a-competitor-analysis\/\" data-type=\"knowledge\" data-id=\"1229\" >competitor analysis<\/a>. <\/p>\n\n<h3 class=\"wp-block-heading\">Advantages of PESTLE analysis<\/h3>\n\n<ul class=\"wp-block-list\"><li class=\"wp-block-list-item\">it encourages critical thinking within the business and focuses on preparing for the future<\/li>\n\n<li class=\"wp-block-list-item\">it\u2019s a simple framework that\u2019s easy to understand and implement<\/li>\n\n<li class=\"wp-block-list-item\">an understanding of wider external factors can lead to innovation<\/li>\n\n<li class=\"wp-block-list-item\">it helps to manage risks and gives businesses a greater chance of capitalising on new opportunities<\/li>\n\n<\/ul>\n\n<h3 class=\"wp-block-heading\">Limitations of PESTLE analysis<\/h3>\n\n<ul class=\"wp-block-list\"><li class=\"wp-block-list-item\">assumptions and qualitative research can be difficult to analyse and plan for<\/li>\n\n<li class=\"wp-block-list-item\">it can take up a lot of time for employees who have other roles to focus on<\/li>\n\n<li class=\"wp-block-list-item\">it needs to be done regularly and won\u2019t work on a one-off basis<\/li>\n\n<li class=\"wp-block-list-item\">external factors change quickly, so it can be difficult to present and analyse up to date information<\/li>\n\n<\/ul>\n\n<p class=\"wp-block-paragraph\"><strong>Do you have any unanswered questions about creating a PESTLE analysis? Let us know in the comments below.<\/strong><\/p>\n\n\n\t\t\t\t\t<div class=\"wp-block-group has-azure-200-background-color has-background has-global-padding is-layout-constrained wp-container-core-group-is-layout-94e519ba wp-block-group-is-layout-constrained\" style=\"padding-top:var(--wp--preset--spacing--80);padding-right:var(--wp--preset--spacing--40);padding-bottom:var(--wp--preset--spacing--80);padding-left:var(--wp--preset--spacing--40)\"><h3 class=\"wp-block-heading has-text-align-center\">Ready to set up your cover?<\/h3>\n\n<p class=\"has-text-align-center wp-block-paragraph\">As one of the UK&#8217;s biggest <a href=\"\/business-insurance\/\" data-type=\"page\" data-id=\"5152\" >business insurance<\/a> providers, we specialise in <a href=\"\/business-insurance\/public-liability-insurance\/\">public liability insurance<\/a> and protect more trades than anybody else. Why not take a look now and build a quick, tailored quote?<\/p>\n\n\n\t\t\t\t\t<div class=\"wp-block-buttons is-content-justification-center is-layout-flex wp-container-core-buttons-is-layout-a89b3969 wp-block-buttons-is-layout-flex\">\n\t\t\t\t\t<div class=\"wp-block-button\"><a class=\"wp-block-button__link wp-element-button\" href=\"https:\/\/quote.simplybusiness.co.uk\/business\">Start your quote<\/a><\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t\n<p class=\"wp-block-paragraph\"><em>AYAimages<\/em><\/p>\n<div id=\"nba-body-end\">\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>What is the PESTLE analysis definition? Read on for PESTLE analysis examples, the advantages and disadvantages, and how to create one for your business.<\/p>\n","protected":false},"author":3,"featured_media":3450,"comment_status":"open","ping_status":"closed","template":"","meta":{"sb_hreflang":"","sb_hreflang_url":"","disable_breadcrumbs":false,"sb_breadcrumbs":[],"sb_reviewed_by":"","sb_review_date":"","sb_enable_content_gating":true,"footnotes":""},"categories":[341,110],"hidden-category":[],"coauthors":[20],"class_list":["post-1103","knowledge","type-knowledge","status-publish","has-post-thumbnail","hentry","category-strategy","category-business-news"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v27.2 (Yoast SEO v27.2) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>What is a PESTLE analysis and how do you create one?<\/title>\n<meta name=\"description\" content=\"What is the PESTLE analysis definition? 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