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:

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.