My favourite Dragons’ Den lesson this week came courtesy of Carolyne Braid, founder of Pole Fit. Although pole dancing may sound titillating, essentially this was a pitch that tapped into the latest trend for getting in shape. Pole Fit offers fitness classes in Winnipeg and brought in $89k in revenue last year. Braid’s ask of $35k for 20% of her company was to finance studio space, as well selling Pole Fit franchises across Canada.
Braid did not land a deal. The Dragons’ took no issue with her business or how it’s growing. They noted that it’s still a pretty small company with a niche appeal, but their real grievance was her franchise strategy. In order to franchise, you first need to build a national brand – and Pole Fit isn’t there yet. But it was Robert Herjavec who pointed out the real issue when he said, “there is no barrier to entry.” He identified the fact that there is nothing to stop someone else from opening up a Pole Fit-style business in any other Canadian city. Basically, why would someone pay Braid a franchise fee when anyone with a pole could do the same thing?
Barriers to entry is an important concept to consider when analyzing a business idea and SWOT is a great tool to use. SWOT stands for Strengths, Weaknesses, Opportunities and Threats. When you identify the strengths and weaknesses of your business idea, you look at what’s going on inside your company, while identifying opportunities and threats provides a framework to look at what’s going on outside your company. Thinking about all four aspects of your business together will help you to create a strategy that matches your abilities with the realities of the outside business world.
Braid has a great little business that’s riding a current market trend. But if she wants to take her concept national, she’s going to have to do some SWOT analysis to demonstrate how her idea is unique and what she brings to the table.
So spend some time thinking about other companies you know and what their strengths, weaknesses, threats and opportunities might be. Now have a look at how this framework might apply to you in your business, or even for a new project you’re working on. It’s just four steps, so give it a try. A little SWOT goes a long way.
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