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5 Simple Steps On How To Do A Gap Analysis

Gap Analysis is a strategic planning tool to help you understand where you are, where you want to be and how you’re going to get there.

Here’s a simple Gap analysis chart:

Gap Analysis Template: Profit

Here's an example of a GAP analysis for profit

Here’s the Gap Analysis process:

Step 1: Decide the topic you’re going to do the Gap Analysis on? This is the challenge you’re trying to tackle.

Gap Analysis sample topics include:

  • Revenue
  • Profit
  • Market Share
  • Product Functionality/Features

Step 2: Identify where you are right now based on metrics or attributes.

Examples:

  • Revenue — We’re at $10 million in annual sales right now
  • Profit — We’re at $1.5 million in annual profit right now
  • Market Share — We have 7% of the market share right now
  • Product Functionality/Features — Our product has was just launched so it has limited features

Step 3: Identify where you’d like to be over a specific time frame?

Examples:

  • Revenue — We’d like revenue to grow to $35 million in annual sales by 2012
  • Profit — We’d like profits to grow to $12 million per year by 2012
  • Market Share — We’d like to own 15% of a particular market by 2012
  • Product Functionality/Features — We’d like our product to have industry leading features by 2012

Step 4: Identify the gap between where you are and where you want to be.

  • Revenue — They gap is $15 million per year in annual sales by 2012
  • Profit — The gap is $5.5 million in annual profit by 2012
  • Market share — The gap is 8% market share by 2012
  • Product Functionality/Features (let’s use Web site as an example) — The gap is that you’d like to have the following features by 2012: a blog, a sign-up form to let visitors follow your business on Facebook and Twitter and a way for customers to buy products directly.

Step 5: Determine how the Gap should be filled.

  • I recommend using the “6 M’s” from my Fishbone Analysis Article:
    • Manpower — The people resources you need.
    • Methods — The processes you need.
    • Metrics — The measurements you need.
    • Machines — The automation or technology you need.
    • Materials — The material items (such as physical goods or marketing collateral) you need.
    • Minutes— The time you need.
  • Or you could use a SWOT Analysis and simply list out your:
    • Strengths, Weakness, Opportunities and Threats related to filling your Gap.

Some other related Gap Analysis definitions:

  • Usage Gap = Market Potential minus Existing Usage
  • Product Gap = The part of the market that your missing because of your product features.

Fore more on the Gap Analysis model, check out Gap Analysis Wiki.

Note: There’s a separate “GAP” used in business related to how to run meetings. Read The 3 Simple Steps To An Effective Meeting: The GAP Approach for more.

17 Comments

  • porpoise42

    I've been searching for Gap analysis tools for days. These are the first directions that are clear, concise and meaningful. Thank You

  • porpoise42

    I’ve been searching for Gap analysis tools for days. These are the first directions that are clear, concise and meaningful. Thank You

  • porpoise42

    I’ve been searching for Gap analysis tools for days. These are the first directions that are clear, concise and meaningful. Thank You

  • porpoise42

    I've been searching for Gap analysis tools for days. These are the first directions that are clear, concise and meaningful. Thank You

  • http://robdkelly.com/blogging/google-wonder-wheel-tool/ How To Use The Google Wonder Wheel Tool To Generate More Traffic | Rob Kelly

    [...] example, I ended up writing separate articles about Gap Analysis and Porter’s Five [...]

  • ICUNurse

    This was very helpful to me!! Thanks so much for making it simple for those of us in graduate school who need a little refresher on direction!

  • Jason Hecker

    I know this is an older post, but I wanted to let you know that I found it very useful in preparation for a department retreat. Thanks for sharing!

  • User

    Good job in explaining the process in detail.  Thanks a bunch.

  • Sudhir Ray85

    Awesome

  • Gp_sm

    good one
    thanks

  • http://theaaronwade.wordpress.com/2012/02/08/more-of-kobos-phase-2/ More Of Kobo’s Phase 2! « the aaron wade

    [...] Today, I going to talk about where Kobo is and where Kobo wants to be, this is called a gap analysis. This is essentially is the answer to “?” in underpants gnome economics (see last post). My gap analysis’ style is based off on Rob Kelly’s 5 Simple Steps On How To Do A Gap Analysis. [...]

  • Ljdavid56

    Something written in plain English!  Thank you

  • Zippieraw

    Here are some additional details:
    http://professional-businessanalysis.blogspot.com/

  • Veronicazulu71

    Thank you so much for the clear and very easy to understand GAP analysis.

  • Ash Hosein

    Excellent and very easy to understand. Great job, it helped me a great deal ,thanks very much

  • Collins

    Nice 1, you really broke it down

  • Rudeen Monte

    Thank you for your generosity in making this reference tool available!