Now that you’re going to start building your Strategic Plan, I will get into the details of each planning area. PEST stands for Political, Economic, Social, and Technological factors, and this framework can be used to evaluate the potential opportunities and threats that may arise from changes in these areas. I like to think of PEST as the external factors that can impact the business.

PEST - Political, Economic, Social, and Technological


Political factors refer to the impact of government policies and regulations on a business. These can include changes in tax laws, trade agreements, and environmental regulations, among others. Political factors can be both positive and negative. As new regulations can create opportunities for some businesses while creating challenges for others. 


Economic factors relate to the broader economic environment and its impact on businesses. Factors such as inflation, interest rates, and consumer spending patterns can all affect a business’s operations. For example, a company that sells luxury goods may be negatively affected by a downturn in the economy, as consumers may be less willing to spend money on non-essential items.


Social factors refer to changes in societal values and demographics that can impact a business. These can include changes in consumer preferences, cultural shifts, and population demographics. For example, a program to introduce new immigrants to an area may have a positive impact on grocery stores with an uptick in traffic.


Technological factors relate to advancements in technology and their impact on businesses. These can include changes in communication technology, automation, and data analytics. Technology can create both opportunities and threats for businesses, as new innovations can disrupt traditional business models while also creating new opportunities for growth. Right now, think of AI and how this could impact your franchise business.

By analyzing these four factors, your franchise business can gain a better understanding of the external environment in which they operate. This information can then be used to develop strategies and tactics that take advantage of opportunities and mitigate threats.

To conduct a PEST analysis, businesses typically start by identifying the relevant factors within each category. This may involve researching industry trends, reviewing government policies and regulations, and analyzing demographic data. Once these factors have been identified, businesses can evaluate their potential impact on the business and prioritize them based on their significance.

Once the analysis is complete, businesses can use the insights gained to develop strategic plans and adjust their operations accordingly. For example, if a company identifies a new government regulation that could impact their operations, they may need to adjust their supply chain or modify their product offerings to comply with the new regulations.

Look for the PEST Analysis document in Resources & Downloads. For the next blog post, I will discuss the SWOT Analysis as we continue the journey to building your franchises strategic plan.