In the ever-evolving world of business, staying ahead means not just knowing where you are, but also where you need to be. For SMEs, this understanding is crucial, and that’s where gap analysis comes into play. It’s a strategic tool that helps you pinpoint the differences between your current business operations and your ideal goals.

What is Gap Analysis?

Imagine you’re on a road trip. Gap analysis is like your GPS, guiding you from where you are to where you want to be. It’s about assessing your business’s current state, envisioning the desired future, and then mapping out the route to get there.

For instance, a retail business may find that while their current state is a local customer base, their desired state is to expand nationally. The gap analysis would then focus on strategies to achieve this expansion.

Gap analysis isn’t just for grand-scale strategies; it’s equally effective in pinpointing growth opportunities in specific departments. In human resources, for example, gap analysis can shine a light on areas where your team might need a boost in skills or knowledge. By identifying these gaps, you can tailor training programs to elevate your team’s performance. This targeted approach ensures that every part of your business is moving forward, in sync with your overarching goals.

It’s not just about identifying shortcomings; it’s about uncovering opportunities for growth and improvement. This approach is echoed in the book The Space Between Strategy and Execution, which discusses aligning operational strategies with business goals.

Why is Gap Analysis Important?

As highlighted in our  , “most projects, initiatives, and companies often don’t realize their aspired goals.” In fact, HBR’s research suggests “that companies on average deliver only 63% of the financial performance their strategies promise.”

How, then, can businesses set themselves up to overcome these dismal odds? The solution is in getting clear on the discrepancies between current operations and strategic objectives through gap analysis. This methodical approach helps businesses identify specific areas where they are falling short and provides a clear roadmap for improvement.

The benefits of conducting a gap analysis are manifold, including improved strategic planning and enhanced operational efficiency. Visme’s in-depth article on gap analysis details many other reasons, from pinpointing performance gaps to aligning resources effectively to identifying new market opportunities. By thoroughly understanding and addressing these gaps, businesses can significantly increase their chances of achieving and even surpassing their strategic goals.

Types of Gap Analysis

Understanding the importance of gap analysis leads us to explore its various applications. Different types of gap analysis can be employed depending on the specific needs and goals of a business.

  • Strategic Gap Analysis: This type focuses on aligning business strategies with market opportunities. For example, a small tech startup might discover a gap in their market penetration strategy when trying to compete with larger, established companies. Strategic gap analysis would help them identify new market niches or innovative product offerings to gain a competitive edge.
  • Operational Gap Analysis: Here, the focus is on streamlining processes for efficiency. A manufacturing company, for instance, might use operational gap analysis to find inefficiencies in their production line, leading to cost savings and faster production times without compromising quality.
  • Skill Gap Analysis: This is about ensuring your team has the skills needed for success. A digital marketing agency might conduct a skill gap analysis and realize the need for more expertise in emerging areas like AI-driven analytics or voice search optimization, prompting them to invest in training or new hires.

Tools for Conducting Gap Analysis

Conducting a gap analysis is surprisingly straightforward, as outlined in a Forbes four-step template. It starts with identifying your current operational state and setting goals. Then, analyze the gaps between where you are and where you aim to be, and finally, establish a plan to bridge these gaps. This process helps businesses pinpoint areas for improvement and strategize effectively.

To achieve this, you’ll need some tools in your toolkit:

  • SWOT Analysis: Helps in identifying internal strengths and weaknesses, and external opportunities and threats.
  • Data Analysis Framework: Utilizes data to pinpoint areas needing improvement.
  • The 5 Whys Technique: A method to drill down into the root causes of a gap.
  • Fish Bone Analysis: Also known as Ishikawa or cause-and-effect diagram which helps in identifying the sources of gaps.

Common Pitfalls in Gap Analysis

Navigating the process of gap analysis can be tricky, and it’s easy to veer off course. A frequent oversight is the failure to involve all relevant stakeholders, which can result in a limited perspective of the business’s actual needs and challenges. For instance, a tech company that concentrates exclusively on product development might overlook critical gaps in customer service. This narrow focus can lead to significant operational shortcomings.

A real-world example of such a pitfall is illustrated in a case study by Visual Paradigm Guides. It details how a company’s gap analysis fell short due to insufficient risk assessment in their product development strategy. This oversight led to the development of products that failed to meet market needs, underscoring the critical importance of comprehensive stakeholder involvement and thorough risk analysis in gap analysis. Read the full case study here to understand the complexities and potential missteps in gap analysis.

Self-Reflective Questions for Businesses

As you embark on this journey, ask yourself:

  • Are we playing to our strengths and addressing our weaknesses?
  • How does our current performance measure up against where we want to be?
  • Are we keeping pace with market trends and technological advancements?


Embarking on a gap analysis is like setting out on a journey of self-discovery for your business. It’s about understanding where you are, where you want to go, and how to bridge the distance between the two. As The Space Between Strategy and Execution highlights, recognizing and addressing these gaps is key to your business’s success. Dive into this e-book for more strategies and insights to guide your journey.