What is an Environmental Scan?

An environmental scan is a type of structured research that business leaders conduct to find opportunities inside and outside of a business.

Most organizations do an environmental scan at least once a year, while others run the report quarterly or monthly. Environmental scans help businesses respond better to changes and trends.

Since nothing stays the same forever, an environmental scan helps organizations pivot in the right direction so they can respond to change before it’s too late. 

The 3 benefits of environmental scans

External circumstances and internal situations influence a business’s trajectory. For example, Covid-19 led to a huge demand for e-commerce products.

Businesses that do environmental scans regularly can make their operations more resilient, planning for potential changes (and catastrophes) well in advance. Businesses will usually conduct environmental scans because they:

  • Address customer needs: Customer issues might not affect you personally, but they do affect consumer buying behavior. Environmental scans help you pivot so you can deliver more of what your customers need right now.
  • Anticipate competitors’ moves: What are your competitors up to? Environmental scans provide ongoing analysis and reporting on your competitors’ performance. Instead of simply keeping pace with the competition, you can use an environmental scan to be a trend-setter in your industry.
  • Are proactive: Environmental scans make businesses more proactive and resilient; after all, nobody wants to run a reactive business. Environmental scans help you predict potential problems in your business so your team can fix them before it’s too late.

Factors that affect environmental scans

Environmental scans look at a business’s trends, both internally and externally, to see how those trends will affect the business’s performance.

Internal factors

While you can’t control the global economy, you do have control over internal issues. An environmental scan will look at these internal factors to find a company’s weak points:

  • Financial trends (sales, expenses, ROI, etc.)
  • Employee retention
  • Leadership changes
  • Long-term goals

External factors

Businesses have less control over external factors, but they’re an important wild card for a business’s profitability. An environmental scan also looks at external factors such as:

  • Customer changes
  • Regulation
  • The economy and labor market
  • Technology
  • Competition

How to do an environmental scan

Environmental scans analyze internal and external factors for both threats and opportunities. The goal is to fix any identified weaknesses and take advantage of opportunities. Here’s how to conduct an environmental scan:

  • Interview industry experts: Hire outside experts to share their thoughts on industry trends, your competition, and how your business can come out ahead.
  • Conduct customer focus groups: You can’t understand your customers’ needs unless you speak with them. Include focus group data in your environmental scan to make sure your business and its products or services are still relevant to your audience.
  • Compile market research data: Everything from industry publications to magazines to news stories is vital data for your environmental scan. Your team should also look at industry statistics, benchmarks, research and analyst reports, and trends to spot potential opportunities.
  • Interview internal leadership: Include leadership’s thoughts in your environmental scan. Ask everyone from the C-suite to lower-level management to share their thoughts on what’s working and what you need to fix.

Businesses can’t operate in a vacuum. They have to serve their customers, but outside factors like regulation and competition make it difficult to succeed. Rely on regular environmental scans to understand the challenges your business is facing and how to overcome them.