What is Gap Analysis?

Business gap analysis can be used to help achieve certain goals. This analysis includes a description of the company's current situation, and what the company wants to achieve in the future. The difference between these two items is the gap. The analysis includes specific action steps the company must complete to close this gap and achieve its goals.

For example, Company X is the top doll distributor in New York state. Company X wants to be the top doll distributor in all of the United States. Company X completes an analysis illustrating how it got to be the top New York doll distributor. This would include an overview of every aspect of the business that contributes to the Company X's success, including marketing, accounting, information technology, management, and other departments.

Company X would then outline the advantages of achieving its goal of becoming the top distributor in the country. Goals should be specific and measurable. In this case, Company X will become the top nationwide doll distributor within three years. Company X would then study what it needs to do to arrive at this goal. The outcome of Company X's analysis would be a complete plan, or gap analysis document, that includes information on how to become the top nationwide doll distributor.

The analysis can include a review of business documents, files and financial information, as well as interviews with staff members in various departments. Once all information has been gathered, a gap analysis report is created. This document usually includes an introduction that states the purpose of the analysis and the methods used to complete the study.

The introduction is typically followed by a summary of the current situation, the goals the company wants to achieve, and the detailed plan to achieve these goals. This plan would include detailed action steps for each area of the business, a schedule to complete each step, and a budget that outlines how much the plan will cost. An appendix of documents supporting any claims or statistics in the final document may also be included.

The next step would be for management to approve the action plan and budget. If approved, the plan is put into action. Tracking of each step is required to ensure that the plan remains on schedule and within budget. If successful, the company will achieve the goal stated in the gap analysis report.

Businesses can use gap analysis to achieve company-wide goals, or those for a specific department or area. For example, a company that wants to lower overhead costs could complete a financial gap analysis. Or a firm that wants to expand its product distribution may create a marketing analysis. Gap analysis can help businesses remain competitive and help measure the potential profitability of a goal. This can help management and staff to understand, and be enthusiastic about, plans outlined in the analysis.