Prelude: Dollar Shave Club

Dollar Shave Club's SWOT Razor's Edge In 2011, Michael Dubin was frustrated with the high cost and inconvenience of buying razor blades. He envisioned a subscription service that would deliver high-quality, affordable razors right to customers' doors. But before launching Dollar Shave Club, Dubin conducted a thorough SWOT analysis to assess his business idea's potential.

On the strengths side, Dubin identified his simple, compelling value proposition, lean business model, and the opportunity to build direct customer relationships. For weaknesses, he recognized his limited brand awareness and the challenges of competing against established razor giants with deep pockets.

Looking externally, Dubin saw a significant opportunity in the growing subscription e-commerce market and consumers' openness to buying grooming products online. However, he also acknowledged potential threats, such as low barriers to entry for other subscription startups and the risk of retaliation from incumbents.

Armed with this SWOT insight, Dollar Shave Club devised a strategy to accentuate its strengths and seize market opportunities. They invested in humorous, viral video marketing to rapidly build brand awareness and excitement. They also focused on delivering exceptional customer service to drive loyalty and word-of-mouth growth.

By understanding their unique SWOT landscape, Dubin and his team built a business that not only disrupted the razor industry but also became a beloved consumer brand. Dollar Shave Club's story illustrates the power of proactive self-assessment in carving out a defensible niche and delivering outsized value to customers.

The rest of the lesson, including the "How to Conduct a SWOT Analysis" section and the assignment, can remain largely the same, as the overall principles and steps of SWOT analysis are applicable across businesses and industries. The Dollar Shave Club example effectively replaces the previous stories while still demonstrating the key concepts of SWOT in action.

Lesson Overview

  • Understand what a SWOT analysis is and why it's important for your business
  • Learn how to conduct a thorough SWOT analysis step-by-step
  • Discover how to use SWOT insights to improve your business strategy and operations

What is a SWOT Analysis and why is it important when setting up a new business?

I have spent the best part of 30 years working in the corporate sector, as a business leader and later a consultant. In almost every new role or project, I undertook SWOT Analysis in the ‘kick-off’ stage or shortly thereafter. I always found a SWOT Analysis to be a great ‘tool’ to baseline what I was getting myself into.

The whole process of setting up and running a SWOT session would result in me getting a reasonably clear picture of the business environment (external and internal); the challenges of delivering what I was there to do; a rough approach on how to deliver it; and of fundamental importance, get some insight into the ‘team dynamics’... the skills, abilities, attitudes and politics of the people I’d be working with to make it happen. Finally, the SWOT workshop was often a starting point to for me to build a relationship with the Team!

So, let's start with the basic question - what is a SWOT Analysis as it relates to setting up a new business?

In a nutshell, SWOT analysis is a strategic tool for assessing a businesses


  • Strengths (S): Internal advantages and standout qualities. This could be a key point of differentiation from competitors, superior skills and/or resources.
  • Weaknesses (W): Internal challenges or areas for improvement. A new business with no market ‘presence’ would be an obvious one here!
  • Opportunities (O): External factors for potential growth. For example, new uses for existing products, advancements in technology or changing customer needs.
  • Threats (T): External elements posing risks to the business. This would include things such as government regulation, a weakening economy or growing competition.

The goal is to gain a comprehensive, realistic view of your business's current state and future potential. With these insights, you can make more informed decisions, allocate resources effectively, and adapt your strategy to shifting market dynamics.

Here are some specific outcomes you can expect for a SWOT analysis on setting up a new business:

  • It helps you figure out what you're great at (your strengths) and what might need some work (your weaknesses).
  • Pinpoints potential issues early on so you can tackle them head-on, knowing what risks should be addresses first, second etc.
  • Shows you where to focus your energy and resources for maximum impact. No wasting time on things that seem important, but do not help sales growth.
  • Helps you understand and respond to market trends and customer needs. You'll be in sync with what people want.
  • Sets you up with realistic and achievable goals.
  • Great for talking to investors or partners. It shows you've got your business game plan in a quick, universal format.

How to Conduct a SWOT Analysis

  1. Assemble a diverse team Involve people from different functions who can provide well-rounded perspectives. Include frontline employees up to senior leadership.
  2. Brainstorm each SWOT category Start with strengths - what do you do well? What unique resources or capabilities do you have? Then move to weaknesses - where do you struggle? What do customers complain about?

For opportunities, look at market trends, unmet customer needs, and emerging technologies you could harness. For threats, consider disruptive startups, regulatory changes, and economic volatility.

  1. Prioritise and analyse Not all factors are equal. Rate each item based on its potential impact and your ability to act on it. Dig deeper into high-priority issues - what's driving them and how could you address them?
  2. Translate insights into action The real value of SWOT is using it to inform your strategy. Play to your strengths, correct weaknesses, seize opportunities, and counter threats. Set specific goals and plans to act on key insights.
  3. Revisit regularly Your SWOT isn't a one-and-done exercise. Assess it regularly to check your progress and identify new developments. Treat it as a living tool to keep your business nimble.

IdeaFloat will do this all for you instantly and for free

IdeaFloat’s free SWOT analysis generator takes your business information and uses Large Language Models to build out a comprehensive and adaptible SWOT for you, within seconds.

Bringing It All Together

Dollar Shave Club’s SWOT story illustrates the analysis in action. They took an honest look at their internal capabilities and limitations, from their innovative model to their lean resources. At the same time, they scanned the competitive landscape for opportunities to delight customers and sidestep rivals.

By probing each area, they positioned themselves to deftly navigate the evolving entertainment space. They played to their storytelling and busines model strengths to pioneered a stale industry. They took advantage of booming e-commerce within an untouched market.

As you conduct your own SWOT, embrace Dollar Shave Club’s approach. Be comprehensive yet prioritized in your analysis. Use it to sharpen your strategy with surgical strikes on the most critical issues. And keep refreshing your assessment to turn industry change into your competitive edge.

Further Reading

If you're interested in learning more about a SWOT Analysis, here’s a great starting point.

  • Forbes Article “Is A SWOT Analysis Worthwhile For Businesses?” Sergej Derzap Former Forbes Councils Member, Forbes Business Council, COUNCIL POST| Membership (Fee-Based), Sep 3, 2021Council Post: Is A SWOT Analysis Worthwhile For Businesses? A quick read providing a clear example of how to prepare for and run a SWOT Analysis workshop. 
  • HBR Article, “Are You Doing the SWOT Analysis Backwards?” by Laurence Minsky and David Aron, February 23, 2021  Are You Doing the SWOT Analysis Backwards?

An interesting perspective on the approach to undertake a SWOT analysis, which I think makes a lot of sense. They recommend starting with Threats and Opportunities first (external conditions) before moving onto Strengths and Weaknesses (internal attributes). “By looking at the external conditions first and internal attributes second, you will generate a better set of clear-cut and supported ideas for moving forward.”

An excellent paper that clearly explains all the necessary steps to undertake a SWOT successfully, then apply the SWOT outcomes to create a targeted strategic response. Also includes some great case studies and some learning exercises. Do yourself a favour and check this one out!

Assignment

Conduct a SWOT analysis for your own business or business idea. Either use IdeaFloat, or conduct it yourself manually with the below steps:

  1. Assemble a team of 3-5 people who can provide diverse insights. Include yourself, any co-founders, and people knowledgeable about your market.
  2. Brainstorm lists of your strengths, weaknesses, opportunities and threats. Aim for 5-10 items in each category. Think broadly about internal capabilities, customer feedback, competitive landscape, and industry trends.
  3. Prioritize the top 3 items in each category based on their potential impact on your business. For each one, dig into root causes and sketch out possible ways to address them.
  4. Craft 2-3 strategic goals stemming from your SWOT - how will you use this analysis to drive your business forward? Consider moves to double down on strengths, patch up weakness, capture opportunities, and buffer against threats.
  5. Schedule a recurring SWOT check-in 3-6 months out to revisit your analysis and adapt to any changes. Treat this as an evolving tool to keep you steering in the right direction.

Knowledge Check

If you can successfully answer these questions, you’re ready to move on to the next section:

  1. What are the four elements of a SWOT analysis and what does each one encompass?
  2. Why is it important to involve a cross-functional team in SWOT brainstorming?
  3. What's the key to translating SWOT insights into tangible strategic impact for your business?