Men s Barber Shop. Blue Cuts. Business Plan. Alex Koulous, Clayton Burnett, Deavis Johnson, and Hunter Bailey

Transcription

1 Men s Barber Shop Blue Cuts Business Plan Alex Koulous, Clayton Burnett, Deavis Johnson, and Hunter Bailey

2 1 Table of Contents Executive Summary..2 Industry Trends.3-5 Competitors Market Potential.9-11 Marketing Plan Company Description 20 Business Opportunity...21 Legal Structure...22 Management..23 Management Chart 24 Compensation Strategy.25 Financials Year Exit Strategy.31 Resources...32

3 2 Executive Summary Men s barbering has been steadily increasing throughout the U. S. for the past decade. Blue Cuts, located on Millikin s campus near Jimmy Johns, will be a great asset to the Millikin Community and surrounding areas of Decatur by creating a sports themed atmosphere that men will prefer over the competition. Blue Cuts is going to be targeting men of Decatur between the ages of 18 and 55. With this demographic, we find approximately 35,000 males to be potential customers. Blue Cuts will appeal primarily to these males through a sports theme that is centered and seen throughout the business. With everything from sports television playing during all hours to stadium-style chairs being placed in the waiting area, a sports ambiance will be felt throughout. $60,000 of the $72,000 needed to start up the company will be acquired through raised capital. With sales through haircuts having no cost for the goods sold since it is a service, the amount of sales goes straight to profit after making up for expenses. A small share of our profit will stem from hair-care products being sold, but these have a relatively low cost of good sold at 40%. After figuring in expenses of $303,790 and a Gross Amount of sales totaling $482,400, a net profit of $173,810 will occur. This is an approximate 37% profit. Even if sales were to dip by an amount of 40%, the company would still have cash flow because it is well capitalized.

4 3 Industry Trends Barbers and men only salons are once again becoming more popular. During the 1900 s a barbershop was a place to go and hang out. Barbershops were the places where men could go to play cards or watch/listen to a sporting match. Some barber shops offered food and drink, a cold beer for the men or a candy for the children. However, in the 1960's barber shops suffered from their first major decline in business as many barbershops and haircutteries began to increase their prices for their service and men began to let their hair down. The hippy movement saw people shun the skills of a barber in favor of growing facial hair and long hair. The barbershop never recovered from the decline in the 1960's even when the clean cut look became popular once again. This is because unisex hairdressing salons became a dominant player in the hairdressing market. With men becoming more metro sexual they went to the same salon as their mother, wife or sister. The barbershop tried to move with the times by offering services for women and sometimes-female barbers, but this never took off on a large scale. The graph below explains the decline based on how price increases doomed the industry during this time and thus saw a decline in the amount of men going to get their haircut or go to the barbershop.

5 4 Today, American s are seeing an increase in barber and men only salons. Men today are proud of their barbers and don t want to change easily. The main reason for not wanting to change happen to be the little things that the barbers today still offer, which goes back to having an experience that can t be offered in a normal everyday unisex or female salon. The following chart explains how over the time period of there has been a gigantic increase of Sports Clips, which is a leader in the men s haircutting industry. Barbers give their customers many reasons to come back. In today s society, the men in the family can go to a barber and get a cut or trim for a low price. The feel of going back to a time where getting a professional cut or style brings back many childhood memories. Men would rather go somewhere that is cheaper, but still get a good cut and quality time with the barber or stylist and be able to relax and hang out with friend as opposed to going to a women s or unisex hair salon and paying high prices for something most could do themselves.

6 5 Chart A below shows the increase of men getting haircuts since 2006 through 2011 and also the money made in Decatur for men s haircuts. Chart B below that shows a steady growth in the years (primarily when Sports Clips began to see a success in growth of franchises) of the men s hair cutting industry and the potential customers along with it. Chart C shows how during the time period of that the male market for the haircutting industry was the fastest growing compared to women and women with children. A) Number of Men Getting Haircut (in millions) Revenue potential in Decatur (in millions) B) C)

7 6 Competitors The following salons and barber shops constitute the greatest competition for Blue Cuts. Hairstyles for Men Only (9 miles from campus) Competitive Edge (1.3 miles from campus) Jerry s Men s Styling (1 mile from campus) J & R Barber Shop (.4 miles from campus) Northgate Barber Shop (1.1 miles from campus) SmartStyle (Wal-Mart) (5.9 miles from campus) Great Clips (5.2 miles from campus) Hairstyles for Men Only Competitive Edge Jerry s Men s Styling J & R Barber Shop Northgate Barber Shop SmartStyle (Wal- Mart) Great Clips Shears X X X X X X X Hot towel X Beard/ X X X X X X X Mustache Trims Eyebrow Waxing/ shaping X X X X Scalp Massage X Shampooing X X X X X X X Manicure X Pedicure X Coloring X X X Complementary X X beverages Appointment X X X X X Walk-in X X Pricing $20+ $10- $15 $10- $15 $10- $15 $10-$15 $8-$15 $8-$15 Time minutes minutes minutes minutes minutes minutes minutes

8 7 Hairstyles for Men Only is an upscale men s hair salon located 9 miles from campus that is devoted to giving their client a relaxed setting and provide just about anything that men today could require. Hairstyles for Men Only offers several options such as shampooing, drying, styling, hot towel, mustache/beard trim, scalp massage, use shears, provide manicures and pedicures, eyebrow waxing and shaping, and hair coloring that all 4 stylists are experienced in. Hairstyles for Men Only offers a complementary coffee bar and other drinks such as water and soda. It is important to Hairstyles for Men Only to spend quality time with their clients; they take minutes on average with each client. Pricing for an average men s wash, cut and style cost around $25. Hairstyles for Men Only are a walk-in only salon. Competitive Edge is located 1.3 miles from campus. Competitive Edge salon offers the traditional cuts for men. They provide services such as shampooing, beard and mustache trims, use shears, and provide eyebrow waxing and shaping. Competitive Edge provides complimentary beverages such as water and soda. Competitive Edge s average hair cut cost is $15; they are a walk-in only salon. A cut here takes about minutes. Jerry s Men s Styling is a small salon located 1 mile from campus that specializes in the traditional cuts that any average man would need. Jerry s specializes in shampooing and styling, use shears, and provide beard and mustache trims. They do offer some walkins, but are primarily appointment only. Jerry s Men s Styling s average cost of a cut is $15 and takes about 20 minutes.

9 8 Northgate Barber Shop is a more traditional barbershop that specializes in the oldtimey barber feel. Northgate Barber Shop provides a casual hangout for many loyal customers. The Northgate Barber Shop is located.4 miles from campus and offers services such as shampooing and styling, use of shears, and provide beard and mustache trims. Northgate Barber Shop s average traditional cut cost $12 and is primarily an appointment only barber. An average cut takes about minutes. SmartStyle, located 5.9 miles from campus is located in the Decatur Wal-Mart. This salon is walk-in only and provides clients with quick cuts. SmartStyle offers shampooing, coloring, eyebrow waxing and shaping, mustache and beard trims, and they use shears. The average cut cost is $10 and the client is there for an average of 10 minutes. Great Clips is located 5.2 miles from campus and also offers shampooing, coloring, eyebrow waxing and shaping, mustache and beard trims, and use shears. They are a walkin only salon and also provide quick cuts. The average cost of a cut is $10 and takes about 10 minutes

10 9 Market Potential Blue Cuts is a modern version of the art that once was a men s barber shop. It provides men with a relaxing and sports themed environment located on Millikin University s campus on Wood Street. Since Blue Cuts is on Millikin University s campus, the focus will be strongly on male college students, local men, and sports lovers from the Decatur area. Blue Cuts will be very effective in this area and will offer several sports themed tournaments such as Fantasy Football and March Madness. Our target customer profiles are males between the ages of and sports enthusiasts. Today, the average male that Blue Cuts will target gets his haircut every 4 weeks. Our customers in the Decatur area are in this average, and need haircuts about once per month. With 35,000 men living in Decatur compared to the total living in the county, there are a significant amount of men who would be available to get their haircut once per week. Population of Potential Clients 40,000 35,000 35,000 30,000 25,000 20,000 15,000 People 10,000 5,000 0 Resident Males in Decatur 1300 Millikin University Males Students

11 10 While approximating potential sales within the market of Decatur, IL, population and averaging the amounts of haircuts per year of this population came strongly into effect. With 35,000 males in Decatur in addition to the 1,300 approximate male population of Millikin University, there is an average estimate of ten haircuts per year for each one of these males. With this meaning that approximately 363,000 haircuts are done per year for males in Decatur, IL and the average price of those haircuts being $15, there is a sale potential for $5,445,000 in the Decatur market yearly. As displayed by graph below, the daily, monthly, and yearly sales potentials are displayed. 6,000,000 5,000,000 Sales 5,445,000 4,000,000 3,000,000 Sales 2,000,000 1,000, , ,750 Daily Monthly Yearly

12 11 Addition Trends and Successful Models The average time between haircuts for males in the United States is 4 weeks The fastest growing segment for the private hair-cutting industry is the male segment, seeing a 9% growth in the past few years, compared to a 4% growth by the female market o This number is derived from those who are utilizing a private service for the first time, or becoming a break-through customer With successful business models such as Sports Clips being a leader in the menspecific hair cutting industry growing at a rapid pace (franchises of these national brands), the success has been proven in markets even less populated and trafficked. Compared to a branch of Sports Clips in Bradley, IL for example, Blue Cuts potential market and traffic area is much higher. Bradley s total population is approximately 15,000 people whereas Decatur itself possesses approximately 35,000 males, which is the primary market for the business. This shows that no matter the location, there are people that will buy into the service and product. Success has been found in places that have less of a market of Decatur, but still have been open for years (Bradley, IL s branch is going on 3 years of business).

13 12 Marketing Plan Price Below, you can find the menu for Blue Cuts. We price the regular cut, which includes a shampoo, cut, and style for $15. We also offer our MVP Hair Cut at a price of $25. The MVP includes everything the regular cut has to offer, but also includes a steamed towel and a scalp massage. For $15, males can also purchase the Hot Lather Face service or the Hot Lather Head service. These two services include a steam towel and a hot lather foam shave of either the head or the face. Clients of a elder generation can opt for the Grey Hair Removal service, which will help get rid of pesky grey hairs for a price of $20. Blue Cuts also offers services such as Nose Hair Removal, Eyebrow Shape-up, and Ear Hair Removal. All three are priced at $10 per service and continue with our trend of manscaping in a modern way.

14 13 Product We will be offering numerous hair care services through our business. Our regular men s haircut is valuably priced at $15. We also offer the MVP Cut, which includes extra services such as a shampoo, a steamed towel, and a scalp massage all for $25. Other services include a hot lather face shave, a hot lather head shave, gray hair coloring, brow waxing, ear waxing, and nose waxing. All of these are being offered because of the growth in the popularity of manscaping. Also being offered and carried in our business will be different hair care products from shampoo to hair gel. All of these will have a flat price of $11 per product. Manufacturers and distributors will be sought after to find similar sized packages for all the products we will sell in order to ensure continuity with the sales. Promotion Prior to opening, we are going to invite close friends and family to come try out Blue Cuts. These will primarily be males and during the pre-opening event, there will be food available to these exclusive customers (to ensure mingling and hanging around during the event) and sports games playing all around to ensure the atmosphere being promoted and planned is communicated to potential clients. Beside the event, we will also be making sure a big sign that reads Blue Cuts. Sports-themed haircuttery is displayed right outside the proposed location to create 1) a buzz around those who frequent the area of the location and 2) communicate to potential customers what the jist of the business is and what we will be bringing to the table. While finishing up the last few things before the opening, a blitz advertising scheme will come into effect, as temporary billboards, flyers, and radio ads will be on display to

15 14 attract customers and bring them to a point where they would really want to come into the business to check it out. Starting with the first week of business, those who listened to our different radio ads and saw out flyers/billboards will become aware of our plan to incorporate social media. We will offer a $3 dollar discount to those who bring in their smartphone and display to us a copy of a tweet we sent out specifically saying that we will give them a discount if they show us that tweet. To guarantee swift service to keep customers coming back in the future, all staff will be on deck for the first week of opening to handle all potential traffic that could be coming in. With this, our goal is to set the bar high with the average cut taking 15 minutes. This equals out to 3 cuts per hour per worker, which means we will have a sufficient amount of workers to account for a maximum of 216 cuts per day during the opening week. To continue on with penetrating the market for out business, we will be continuing on with the ads on the radio, billboards, and flyers. This will continue to create a buzz around the business and drive more and more people to see 1) that we are not going away quickly and 2) that we are a new business that is unique to the area. Our ads will consist of three primary keys 1) Who We Are (i.e. making sure we get across the fact we are male/sport oriented). 2) What We Offer (i.e. the hair cutting services we have such as the average cut to the MVP Cut)

16 15 3) Why We Make Your Experience Better Than Any Place Else (i.e. communicating how we our customer service and experience is different than any other place in the area) After penetrating the market, we plan out sustaining our customers as well as gaining more customers by continuing on with advertising but in a much lighter dose. We also plan on a word-of-mouth campaign being started up because of the popularity we plan on generating in the first few weeks of being open. Part of the word-of-mouth campaign will be incorporated through our use and constant updating of out Facebook and Twitter pages. With successful use in these two modes of communication, we will be able to communicate in a unique form unbeknownst to the Decatur area haircutteries. Our website will be a key place for our business launching and maintenance of it as well. The website will off numerous things including the ability to book an appointment, take a look into what events the shop has planned for the future, and check out other things that are going on in the shop. There will be numerous pictures showcasing what is going on in the shop to not just people a talking to of what is going on, but a literal picture that will give them a clear idea as to what the shop is up to.

17 16 Through our use of social media, we will also be setting up a way for people to book an appointment by tweeting at us or even Facebook messaging us a time they may want to come in that day. An example would Billy tweeting us at noon on Tuesday that he wants to come into the shop around 3 for a haircut, Hey@BlueCuts1, I need a haircut and am free around 3 o clock this afternoon anything open? Thus, our managers on duty would respond promptly to this tweet by saying, Come on in, Billy! You re booked for 3 this afternoon! Our managers can constantly keep updated with people who are on the go through social media use and gives us another medium for people to come in and utilize Blue Cuts for their haircut.

18 17 Inside of our store, we will also be utilizing social media even more with the use of a television turned landscape that will display different tweets and trending topics for the day in sports as well as in the shop for that day. This board will help keep the conversation going for those who are in the shop that day and give it that old-school type of barbershop feel, but in a modern way because people will be talking about local and national sports, not just community issues. This plays right into the hand of our business because there will be those people in Decatur that will come into Blue Cuts for the day to talk to their fellow locals and while in there, may need a cut and thus contribute to the business. The television will also display people tweeting at or about Blue Cuts, showing people who are in the shop in the moment are never out of the conversation since they too can tweet while they aren t in the shop and talk about the subject at hand in the shop.

19 18 Place Our location choosing was vital to the essence of our business. We have chose to be located at 1140 Wood Street, Decatur, IL This location is key because it has a high volume of people frequenting the area at all times. With Decatur males being found on Oakland Avenue at the local businesses, they will constantly be in the area of Blue Cuts, giving us more traffic than other locations. The location is also very close to Millikin University s campus and is an easy walk from all of the residence halls and apartment complexes. This place a big role into out motivation behind the spot we chose because of the high traffic of Decatur males as well as the ease of a walk it is from Millikin University s campus.

20 19 Found above is the floor plan Blue Cuts is envisioning for the store. We see a simple, yet effective design that will get customers in and out of the door in an efficient and effective way, but guarantee that feel of an old barbershop that is inviting. In the waiting area, found in the front of the store, there will be two televisions for out customers in line to be entertained by sports being played. There is a front counter found immediately to the right of the entrance so clients can immediately walk in, find out if a chair or hair cutter is available. The location of the counter is very key and works very well for Blue Cuts because it gives the person working the front counter command over the television screens and has a clear line of vision to those customers patiently waiting. After entering the shop and going in to the hair-cutting floor, there are eight chairs found for cutting hair. Between each chair, there will be a television to ensure that each client getting a haircut will be able to watch sports while getting their haircut. In the rear of the building, there are four wash stations. There are also two restrooms located in the rear, one for males and one for females. This floor plan is very simple in how it goes from entrance/check-in to the haircutting floor, to the rear with shampoo stations and restrooms.

21 20 Company Description Blue Cuts is a modern, sports themed, state of the art barbershop located on the edge of Millikin University s campus near Jimmy Johns. The sports theme will help create a must-go barber shop where a man can go to get a MVP haircut while watching his favorite team at the same time. Clients will appreciate the one-on-one time that each barber dedicates to each and every client. Blue Cuts uses the best products and tools out there so the client will get the best haircut that they could possibly receive at a barbershop. Blue Cuts offers services such as: MVP Cuts, Regular Cuts, Hot Lather Face Shave, Hot Lather Head Shave, Gray Hair Coloring, and Brow, Ear, and Nose Waxing as well as complementary beverages (pop and water). Blue Cuts will feature sports tournaments year round such as March Madness and Fantasy Football Leagues. Customers in the Millikin University community demand value, because they have limited expenses and income. Therefore, Blue Cuts plans to offer the usage of flex dollars for students to use rather than pay with cash. Blue Cuts will market to students and the rest of the Decatur Area through social media sites such as Facebook and Twitter, and also through radio advertisements on three of Decatur s most popular radio stations. The Decatur male also offers potential, because if you look at places such as Buffalo Wild Wings and Hooters, many men are attracted to dine there because it offers a man cave like atmosphere where men can sit back and relax to enjoy watching their favorite sports teams. This is what Blue Cuts aspires to become by providing clients with a unique experience from our MVP Cut to the appealing theme of sports.

22 21 Business Opportunity Blue Cuts is a men s haircuttery that has a focus in appealing towards sportsenthusiasts. The men s segment of the haircutting industry is the fastest growing segment and through the growing popularity of manscaping, the industry itself is firmly supported by those who are starting to enjoy such services. According to industry trends, the male market was the fastest growing segment for those first entering the private marketplace of haircutting. This shows that more and more men are going to get their haircut, and what better place to get their haircut than a place with a theme that appeals to them such as Blue Cuts. With the location being Decatur, Illinois and very close to Millikin University s campus, the demographic will support the business well based on statistics. With a male population in Decatur of 35,000 and a male population at Millikin University of approximately 1,300, there are potential sales totaling $5,445,000. This solely includes the amount of sales that are accounted for the average price a client would spend at a haircuttery in Decatur and does not include the many other thousands that can be made off of the sale of shampoos and hair gels. With a low startup cost for a business like Blue Cuts and the financial structure that ensures good capitalism, Blue Cuts profit margins are higher than competitors and will still be financially stable even if a large dip in sales takes place.

23 22 Legal Structure Blue Cuts has elected to form as a Limited Liability Company (LLC) for numerous reasons. The first reason for forming into an LLC is the ability to attract investors. With Blue Cuts, an investor will only lose the money they give to the company and nothing else, thus keeping the risk relatively low. Another advantage to an LLC for Blue Cuts is the ability to choose whether or not to be taxed. If the choice is made to not be taxed, then earnings amounts will be paid out to owners to cover their income tax expenses. The ease of forming an LLC is also a distinct advantage, as it only costs $650 in the state of Illinois to fill out paperwork associated with the formation of an LLC such as the Articles of Organization and the Certificate of Formation. The following chart lays out how Blue Cuts will look as an LLC and the advantages associated with it. Ownership As many as needed, as investors become owners as they give money Virtually none, as the only money lost Liabilities of Owners is the only money pledged to the business Taxes No taxes unless the LLC chooses to pay them The owners select who manages (can Management either be a specific owner or an outside person may be hired

24 23 Management General Manager: The General Manager oversees all operations of the business. The General Manager s main duty is to make a profit. The GM will maintain all financial and tax documents, manages marketing and promotions, make bi-weekly schedules, hire all new employees, train workers in proper procedures and functions. The GM will keep others engaged/busy and oversee all employees, report to owners daily, collaborate with other staff members about promotions and events, and resolve customer complaints Barbers: The barbers are in charge of providing excellent customer service and a quality experience for clients. Barbers are also in charge of cleaning and sanitizing all tools, recording services, keeping records of cuts and services, cleaning the shop, and staying informed with the newest/ latest hair trends and products.

25 24 Management Chart Owners General Manager Barbers

26 25 Compensation Strategy Blue Cuts employs two levels of staff: a General Manager and eight barbers. The general manager is responsible for managing financials, keeping up to date with customers and their appointments, documents and delegating responsibilities, as well as administrative tasks such as scheduling, bill paying, and inventory management. The General Manager will be paid $35 an hour pay and work an average of 33 hours per week (we are open a total of 72 hours per week). Under the General Manager are eight barbers, who are in charge of operating the shop on a shift-by-shift basis. Their duties include opening and closing the store and performing any duties necessary to benefit and satisfy the clients. The barbers will be compensated $25 per hour plus tips from each cut. The barbers will all pool their tips and then split the pot for the day they work to ensure equality. We find this the best strategy for out female barbers because it does not put one above the other and still keeps them motivated to work hard for tips so they can up the pot and this make more money.

27 26

28 26 Financials Start-Up Costs

29 27 Beginning Balance Sheet Starting cash will be approximately $6,707 dollars to account for business emergencies in the first month or so. We will need to raise $60,000 in capital and take out a loan of $12,000. The start-up costs are relatively low and appeal to investors because of the ease to get a return on their investment.

30 1 28 Income Statement

31 2 29 Cash Flow and Sales Estimate Based on our sales levels, amount of starting cash, and expenses, our sales would have to dip by approximetely $342,000 or 40% for us to still be making money. Based on projections, we see the business breaking even approximately 5 and a half months into business.

32 3 30 Ending Balance Sheet Halfway through the first year, we will break even and the only things seperating us from our sales will be expenses. We will finish our first year with $186,000 because of a projected net profit of $173,000.

33 31 5-Year Exit Strategy Before entering into the business, we will sign a contract with investors that will read as follows. 1. After 5 years, there will be an attempt to sell the business. Withdrawn cash will be retained by the owners as well as a portion of the sales going into the owners pockets. The sales portion going to the owners will be broken down in this manner: a. $0-$250,000 = 20% b. $250,000-$500,000 = 25% c. >$500,000 = 30% i. The amount of money that goes to the owners will be staggered in this manner to keep owners and workers motivated to make more money in order to leave with more money after 5 years. 2. To offset personal income tax expenses, the amounts will be distributed yearly. 3. If additional barbershops, brand extensions, or any other form of the business expanding is to occur, a 20% equity stake in all of these endeavors will be taken due to the extension using our business plan/model. 4. If owners or investors at some point must make changes during the 5-year period then they are allowed to do so. This includes, but is not limited to selling the company earlier than expected and increasing investments.

34 32 1 Resources 0WSo