What is a gap analysis?
A gap analysis is a study on how you close the gap between your business’s current activities and plans. It is a comparison of your goals and reality. There are few reasons why companies conduct such analysis, like an error that caused a complaint or some leaders want to figure out how to make a strategy successful. Anyone from large or big businesses can raise a gap analysis in any area, such as sales, quality control, finance, human resources, or employee satisfaction that failed to meet a target.
The four main types of gap analysis
- Performance or strategic analysis. It seeks to understand the failure to meet a goal.
- Market or product analysis. It understands the position of a company to figure out the gap between the actual and budgeted sales.
- Workforce analysis. It assesses how many needed workers are there versus the existing number of workers.
- Profit analysis. It understands the gap between actual and target profit.
Gap analysis importance and examples
Gap analyses maximize a company’s potential. Listed below are examples of how it can help when used:
- Product portfolio opportunities. A gap analysis can help you figure out what else your customers need from your products if you wish to create a new one and meet a target revenue.
- Process enhancements. The gap analysis seeks the reason why a company is lacking in performance and operation.
- Profit improvements. A gap analysis can identify why the company or business did not meet a specific profit or if the profit expectation target is not correct.
Step by step guide
Below is a gap analysis template to help a company improve and know where aspirations meet reality. It applies to any area that needs it.
- Step one — knowing your weak points. A company must identify an area of improvement or a gap where the analysis is needed. If the problem is obvious, a gap analysis may be useful in looking for solutions. For example, you want to understand why you did meet your target profit, you can use a profit gap analysis.
- Step two — understanding the current situation. After identifying your weak points and what you want to get out of a gap analysis, evaluate your current state by scanning through information and all related data that put you in your current condition. It is better to be detailed. You can use KPIs (key performance indicators) or qualitative feedback from employees and customers.
- Step three — outline an objective. With the current state analyzed, it’s time to visualize the goal. This goal should have a specific limit so that you’ll know if you’ve succeeded. Visualize the future state where you want to be. You can look at how far along are more successful competitors from you or can look at your records. For example, if your 15% sales growth declined to 9%, you may set a goal of bringing it back or even surpassing it. What can help you define your end goal? You can gather feedbacks or think of actions to make it happen.
- Step four — comparing current and desired future state. Understand and document your present problems. Learn from previous mistakes.
Step five — putting everything into action.