How to do a PESTLE Analysis for Your Service Business

What is a PESTLE analysis? 

A PESTLE analysis is a type of business analysis that evaluates outside factors that could affect a company based on the following six categories:  

• Political
• Economic
• Social
• Technological
• Legal
• Environmental

Businesses use PESTLE analyses to identify potential opportunities and threats related to their industry so that they can either take advantage of them or mitigate them. 

For example, if your business loan interest decreases, that would have a positive impact on your business. Whereas a change in water usage regulations may be difficult for your landscaping company to navigate.

Which service businesses should do a PESTLE analysis?

Since all service businesses are affected by laws and regulations, PESTLE analyses aren’t specific to any one industry or type of service. 

Virtually every type of service business can benefit from conducting a PESTLE analysis, including: 

• Plumbers
• Handymen and handywomen
• Landscapers
• Lawn care specialists
• HVAC professionals
• Residential cleaners
• Pressure washers

How to do a PESTLE analysis

To do a PESTLE analysis, you need to consider each category separately to determine whether it includes external influences relevant to your service business. The best way to do this is to conduct market research based on: 

• Your industry. Different industries are subject to different laws, regulations, and technological advancements. 
• Your location. Your state, city, or town will be influenced by unique geographical factors, including the environment and local laws.
• Your business structure. For example, a sole proprietorship may have different opportunities or threats than a limited liability company. 
• Your business goals. Your long-term growth is dependent on being able to pivot and adjust when necessary so understanding your goals helps you to be proactive. 
• The purpose of your PESTLE analysis. What are you hoping to learn from your PESTLE analysis and why are you doing it? For example, are you using it to inform your business goals, or are you doing it as part of a business plan before you start a service business?

Keep these factors in mind as you evaluate the following sections in your PESTLE analysis to make it relevant to your industry and the services you offer. 

PESTLE analysis example for service businesses

Putting a PESTLE analysis into practice is challenging, especially since every service business is unique. 

While you should add as much detail as you can to your PESTLE analysis, it’s fine to start with a basic list, as with this landscaping PESTLE analysis example. 

Landscaping PESTLE analysis

Political factors:

• Regulations for pesticide use
• Water usage restrictions
• Zoning law changes

Economic factors: 

• Cost of living increases or decreases
• Inflation impacting costs and pricing
• Recession reducing business

Social factors: 

• Home vegetable garden trends
• Urbanization, resulting in increased demand for outdoor living spaces
• More interest in sustainable landscaping practices, like native plants

Technological factors: 

• Smart tools and landscaping equipment 
• New CRM software to automate business management
• Lead generation platforms to bring in new prospects

Legal factors: 

• Changes in worker safety laws when using certain chemicals and pesticides
• Updates to licensing requirements 
• Contract law changes that impact your quotes and contracts

Environmental factors: 

• Seasonality and off-seasons
• Environmentally-friendly products
• Drought-resistant plants

What to do with a PESTLE analysis

After your PESTLE analysis is done, it’s time to review the data you collected and consider how to move forward.

Evaluate which threats and opportunities are priorities based on: 

• How time-sensitive they are
• What the opportunity or threat means from a practical standpoint
• Whether they require financial investment
• If they’re optional (like a software upgrade) or required (like a licensing change)
• How much time and effort they’ll take to address

It’s also important to remember that, like a business plan, a PESTLE analysis is a living document that you should revisit at least once a year. It should change and grow with your business to continue providing you with relevant, actionable information. 

For example, with the popularization of home vegetable gardens, a landscaping business would need to decide how to take advantage of that trend by analyzing the opportunity. Here’s what their answers to the questions above may look like: 

• While not as time-sensitive as a changing law or regulation, taking advantage of trends as they hit peak popularity maximizes their potential
• Adding products to what we offer, like raised garden boxes and beds and vegetable seeds or starter packs
• We would need to buy the materials or wholesale products to start offering home vegetable garden products and services
• Yes, this is an optional opportunity
• While we’ll need to gauge interest and find a supplier, adding garden boxes and beds to our products won’t require additional training, licensing, or special materials or skills

Why you should do a PESTLE analysis

A PESTLE analysis doesn’t just identify threats to your long-term business goals, but opportunities as well. By doing a PESTLE analysis for your service business, you can take advantage of these benefits: 

1. It supports long-term planning

A PESTLE analysis gives you the chance to plan for the future, helping you to act proactively to prevent threats from harming your business. But it’s also a good way to develop long-term goals that will allow your business to grow. 

For example, if one of the factors you identify in your PESTLE analysis is that more clients are requesting environmentally friendly products, you can set a goal to make the switch within the next year. 

2. It keeps you informed

If you don’t find out about a new law, regulation, or licensing requirement until it’s already in place, it could prevent you from doing business. By staying in the know, you’re prepared for upcoming changes and you know what you need to do to keep your business running smoothly.

3. It identifies threats

Threats to your service business come in many forms, from legal changes and economic factors to social trends and environmental fluctuations. Knowing what they are helps you to plan for them, giving you a chance to act proactively instead of reactively. 

4. It shows you opportunities

A good PESTLE analysis doesn’t just focus on threats, it also lists opportunities. For example, in a landscaping business, trends related to home vegetable gardens might open a door to explore new products, services, and target markets. 

5. It keeps you relevant

Technological advancements change how service businesses do everything from booking appointments to getting reviews. By staying up to date with trends and customer preferences, you ensure your business maintains a competitive edge and doesn’t fall behind. 

New and established businesses focused on growth can use a PESTLE analysis to set goals, navigate potential threats, and find new customers and income streams. By staying aware of the factors that could impact your business, you’ll have a better chance of weathering storms in the future. 

Set your business up for long-term success by running a PESTLE analysis at least once a year, and update it as new threats and opportunities are identified.

Originally published in June 2016. Last updated on September 5, 2024.