When running a business, every decision and choice you make can have an impact on the company’s bottom line. Sometimes, the changes a business faces is not made of choice but from a situation that they have no control over. In these scenarios, the smart thing to do is to run an Impact Analysis report, which can be used to see how different reactions will affect the outcome.
What Is Impact Analysis?
Impact analysis is used to determine the consequences of an aspect of your business being disrupted. It’s used to thoroughly determine whether certain choices will be good or bad for the business’s future. This is done by gathering the pros and cons of a situation and how decisions will affect things. It can create a sound recovery strategy, take preventative measures, and lessening the impact a decision or change has on the company.
Why an Impact Analysis Report is needed
Disruptions to business can come in a variety of ways, from having a long used supplier suddenly go out of business, to business being affected by a natural disaster. All disruptions, large or small, have an impact on your business. This is why an Impact Analysis is crucial to making sure your company can recover.
Some circumstances may give you a bit of time to lessen the impact, where others happen all at once. For example, one of your main suppliers tells you they are going out of business in a couple of months. Or your business/area is hit by severe weather with no warning.
In both situations, having done an impact analysis before these things happened would be the best step forward. It allows you to make a plan for future issues. It’s better to have plans in place and not need them than to have none in place when you do need them.
Mainly, impact analysis is done when some hardship or negative impact confronts a business, and they are looking for resolutions to help recover or lessen the blow. It shows you exactly how things will affect your business financially and gives the clarity needed to make the best decision possible.
Things you need to look for in Impact Analysis
There’s a lot to consider when creating an Impact Analysis report, but you also want to make sure that you don’t go overboard and spread your data too thin. One step is to divide the impact into a quantitative and a qualitative effect.
Quantitative would be any impact that affects the company’s profit and loss perspective. This would include things like a rise in operating expenses, loss of revenue, fines, sanctions, and penalties that come as a result of the impact.
Qualitative would be about how your customers will be affected, how the change will make the public view your business and reputation.
Any impact assessment should include revenue loss, operating expense increases, and damage to brand and company reputation. However, you should also consider the business’s core mission and how that will be impacted. The parameters of your Impact Analysis will vary depending on the type of business you have.
Picking 3 to 4 categories for each for qualitative and quantitative assessment and making detailed notes is the first step. Make sure any data you are using is current and collaborate with staff and departments to gain some broader insights.
3 main categories of impact
An impact on your business usually comes from one of three areas:
- A loss that affects a store or building and disrupts business.
- A technology or data impact, either from losing a computer system, a breakdown in technology, or loss of data that is needed to run day to day business.
- Loss resources or staff, caused by something such as transit strikes or widespread illness.
Non-Emergent Impact Assessments: Impact Assessments are best done as a non-emergent proactive plan, meaning, not when an emergency situation is looking. While running an impact assessment before anything happens is the best step to take, sometimes you are left doing Impact Assessments after the impact. Even these can be helpful because you have fresh data on the outcome that you can use to plan better should the impact happen again. Having a plan in place will help you get going on disaster management rather than standing around trying to figure out what the best course of action is during a time of duress.
Impact Analysis Templates
You can download one of our free templates and samples to get an idea of what an impact analysis report looks like for a variety of situations.
Impact Analysis Report Template 01
Change Impact Analysis Template 02
Business Impact Analysis Template 03
Impact Analysis Template 04
Impact Analysis Template for Excel 05
Frequently Asked Questions
These are measures of how well you have achieved your objective and gaining the outcome you were aiming for.
This is an assessment of how the action/intervention you are evaluating will affect the outcome, and whether that outcome is unintended or intended.
This is a defined standard of measurement used to track the progress of changes you have made based on your impact assessment report. Organizations will use either a custom metric or standard metric for tracking changes.
