What Is Gap Analysis, and How Does it Work?

If you run a business, you probably have a general sense of your goals – increase your revenue, expand your market share, or reduce your overhead. But without a clear understanding of the areas where you need to improve, you may end up wasting time and resources on inefficient strategies.

A gap analysis is a method of comparing your company’s expected performance against its actual performance. This assessment can help you find processes or tools that will improve your outcomes. Simply put, a gap analysis identifies the difference between where you are and where you want to be.

What Is a Gap Analysis Template?

A gap analysis template is a visual representation of your current state and your target goals. While there are different types of templates you can use when completing a gap analysis, they can all help your stakeholders understand where your enterprise is succeeding and where you have room to grow.

Reason to Use a Gap Analysis Template

In the most general terms, using a gap analysis template helps your organization understand how to improve. Whether you’re looking to improve your staff capacity, expand your product offerings, or identify new markets, a gap analysis template can help. Performing a gap analysis can help you better understand:

• Profits: A gap analysis can work like a post-game analysis. If your quarterly profits weren’t as high as you expected, you can review your strategy and find out where you may have gone wrong, or if there were external factors that you can address differently in the future.
• Internal processes: You can use this analysis to look at your existing business processes and find areas for improvement.
• Company portfolio: Using a gap analysis to examine your company’s existing portfolio of products or services, you may be able to identify new complementary products, promote products that aren’t selling well, or eliminate products that aren’t a good fit.

When to Conduct a Gap Analysis

While you can perform a gap analysis at any time, it’s most often used in the broader context of a strategic planning process. The insights that a gap analysis provides can help your organization tailor its strategy to close performance gaps and meet its goals. It can also be useful to complete a gap analysis regularly at the end of each quarter at the close of the fiscal year. An ad hoc gap analysis may be needed when a team or department underperforms unexpectedly.

How to Do a Gap Analysis

While you should tailor your gap analysis to your company’s specific needs, there are four basic steps:

1. Assess the current state of your team, department, or organization.
2. Decide on your “desired state” – where you want your team to be in the future.
3. Identify the existing gap between your current and desired state, and why it exists, whether because of personnel, technology, processes, or other resources.
4. Decide on a course of action to close the gap.

Using the Right Tools

If you’re looking for a concrete method for setting goals, a gap analysis can be a great place to start. And to help you track and meet your business goals, choose Spider Impact from Spider Strategies. Our KPI software helps organizations of all sizes and scopes create and manage their organizational strategy. For more information, schedule a free test drive or demo