Big Hoss Barbershop and
Lounge
Samuel Henig
Ryan Holland
Toan Huynh
Table of Contents
Table of Contents....................................................................................................................... 2
1.0 Executive Summary ............................................................................................................. 3
1.2 Problem ............................................................................................................................ 3
1.3 Solution ............................................................................................................................ 4
1.4 Opportunity ....................................................................................................................... 4
1.5 SWOT Analysis ................................................................................................................ 5
1.6 Competitive Advantages ................................................................................................... 5
1.7 Business Model ................................................................................................................ 6
1.8 Team ................................................................................................................................ 7
1.9 Financials ......................................................................................................................... 7
2.0 Company Summary ............................................................................................................. 8
2.1 Start-Up Summary ............................................................................................................ 8
2.1.1 Start-Up Expenses ........................................................................................................ 9
2.1.2 Start-Up Capital and Expenses Summary.....................................................................10
3.0 Products and Services ........................................................................................................10
4.0 Industry and Market Analysis ..............................................................................................11
4.1 Industry ...........................................................................................................................11
4.2 Market .............................................................................................................................12
4.3 Conclusion.......................................................................................................................17
4.3.1 Projected Sales ............................................................................................................17
5.0 Feasibility Analysis ..............................................................................................................20
5.1 Market Analysis ...............................................................................................................20
5.2 Concept analysis .............................................................................................................21
5.3 Conclusion.......................................................................................................................23
6.0 Big Hoss Barbershop and Lounge Financial Plan ............................................................24
6.1 Sources and Uses of Funds.............................................................................................24
6.1.1 Sources of Capital ........................................................................................................25
6.1.2 Startup Expenses .........................................................................................................25
6.1.3 Summary Statement .....................................................................................................26
6.2 Important Assumptions ....................................................................................................27
6.2.1 Business Assumptions..................................................................................................28
6.3 Projected Cash Flow .......................................................................................................28
6.4 Projected Balance Sheet .................................................................................................29
6.5 Projected Income Statement............................................................................................30
6.6 Ratio Analysis ..................................................................................................................31
2
1.0 Executive Summary
1.1 Overview
Big Hoss Barbershop and Lounge is an old school Barbershop in the modern world. We will
take the style, environment, and community of the classic American Barbershops of the 1920’s
and place it in the middle of a modern day lounge. Big Hoss provides all of the classic barber
services including: haircut, scissor cut, buzz cut, straight razor shave, line up/shape up, beard
and mustache trim, and neck shave, at an affordable price. We also provide a comfortable and
relaxing environment that welcomes you to sit down, watch TV, order a drink, play a game of
poker, or enjoy any of our amenities after getting the best haircut of your life. It is our mission to
ensure you have the best experience and come back again.
1.2 Problem
Based on our research conducted for the area, Big Hoss Barbershop will be like nothing the
consumer has seen thus far. We have established that when looking for somewhere to get a
haircut, men tend to go to places that are convenient, provide quality, and are affordable.
However, when they do find a place that they like, or at least like enough, they spend countless
time sitting in the waiting room wondering what they’re going to ask for, and stare awkwardly at
the ground. These Barbershops and salons might boast about quality, but because of high
turnover rates with employees, it is inconsistent. They may only have two chairs available,
which extends the waiting period up to at least an hour. They may only have a magazine for you
too look at while you wait. All of these things do the opposite of what a true Barbershop should
do; create a community.
3
1.3 Solution
What Big Hoss Barbershop aims to do is create an environment where men form a community
and relationship with the other patrons as well as the employees. We realize that getting a
haircut should not be simply and ‘in and out’ errand, but a enjoyable experience that brings
them back even when they don’t need a haircut. Big Hoss Barbershop brings a whole new
experience to the consumer, as it is something they have never seen before. By providing
entertainment while waiting, and even during the haircut, this will create an environment that
people will look forward to visiting each an every visit. Not only will they be receiving the haircut
they came to get; they will be able to play games, watch a movie, listen to music, and even
enjoy some drinks at the bar. Rather than going to a traditional Barbershop where you sit and
wait until your turn; you can partake in a number of different types of entertainment including:
shooting pool, play Xbox, watch television, watch a movie, play poker, play arcade games, etc.
It is our aim to make you stay past the haircut and enjoy the rest of your day in a fun and
accepting environment.
1.4 Opportunity
To fully appreciate how Big Hoss Barbershop will fit in and take hold of the local market, we
evaluated the existing market. Based on the Economic Census Industry Snapshot from citydata.com, total sales in the United States for this industry was $568,000,000 Nationally in 2007
and the number of competitors in Maryland ranged from 57-116. To evaluate Big Hoss’s
situation further, a SWOT Analysis was conducted to establish the strengths, weaknesses,
opportunities, and threats in the target market.
4
1.5 SWOT Analysis
Strengths
● Price range varies from competition
● Integrates Barbershop with lounge
qualities
● All inclusive package deals available
● Weekly specials
● Event nights
Opportunities
● Need for quality men’s haircut
● Excitement of new business
● Provide low-cost quality haircuts
● Multiple target markets because
multiple services and amenities
provided
● Local pride in local businesses
Threats
● Already established Barbershops
● Cheaper prices at other locations
● Similar concepts existing
● Not a chain or already established
business
Weaknesses
● No existing customer base
● No financial backing
● Not cheapest prices
1.6 Competitive Advantages
The current market that Big Hoss Barbershop and Lounge would be entering into is one of
extremes. There are high-class Barbershops that tend to be expensive because they offer
quality and a luxury environment like the Quintessential Gentleman in downtown Baltimore.
There are chain Barbershops that tend to be cheap with less quality and a focus on themes and
novelties, like SportsClips all over the country. And there are smaller Barbershops that have a
focus on quality and moderate prices, but lack space and environment, like the Hairway to
Steven on York Road.
What Big Hoss Barbershop and Lounge will offer is a unique experience that combines the best
aspects of the competition while eliminating their flaws. Not only do will we provide the most
professional staff of barbers, but we will also make sure that you are given the appropriate
amount of time for your haircut. We will make this possible by having numerous chairs staffed
so that wait time is minimal but also that no haircut is rushed and you receive consultation by
your barber. It is their mission to make you look and feel your best and therefore is a specialty
5
service. It is also the mission of Big Hoss to make you feel comfortable while waiting for,
receiving, and after your haircut. We will do this by setting an environment that reeks of
manliness—from the staff, to the big screen televisions, to the game tables, to the bar. Each
form of entertainment was chosen to reflect the style scheme of the classic 1920’s American
Barbershop in the modern world. Going along with the theme, we offer all of the classic barber
services as mentioned previously. The experience at Big Hoss Barbershop and Lounge will be
unrivaled by any of the competition in the area and thus draws in customers of all age groups
and social status’s.
1.7 Business Model
To capitalize on Big Hoss’s target markets, providing competitive and reasonable prices is a
necessity. Based on the segments that were chosen to target, a combination of Prestige and
Bundle pricing approaches was deemed most profitable. Finding a comfortable pricing medium
for the target market would convince them that because of the quality of the haircut,
environment, and overall experience, spending a few more dollars for a haircut while enjoying
the atmosphere and amenities would be acceptable. Big Hoss’s would attract customers who
are looking for a good deal and are willing to pay a reasonable price for a good time and good
haircut. Using these approaches, the following prices were determined for services:
●
●
●
●
●
●
Buzz Cut………………………………………. $12
Taper and Style………………………………… $17
Scissor Cut……………………………………….$20
Shape Up……………………………………….. $9
Hot Towel and Straight Razor Shave…………… $20
Full Package……………………………………… $32
These prices were chosen to be affordable and a good deal for the customer. Skimming or
penetration pricing would not be feasible for the introduction of Big Hoss. Going below the price
6
of the lowest competitor would take away from its quality appeal and going too high with prices
would make the reduction in price make customers question quality.
1.8 Team
● Samuel A. Henig, Manager, Co-Owner:
Over 6 years experience in the service industry, Towson University Business
Entrepreneurship Student, Barber enthusiast.
● Ryan Holland, Bar Manager, Security:
Over 5 years experience in service industry, Towson University Business
Management Student, Whisky Connoisseur, Big Guy
● Toan Huynh, Marketing Director, Product Manager
Over 3 years experience in the marketing and sales industry, Towson University
Business Marketing Student, Sales expert, Finance expert
1.9 Financials
Below we have listed some relative values of all the finances that are involved with Big Hoss
Barbershop. We predict we will break even sometime between our second and third year. From
then on we will begin to accumulate cash. With this accumulated cash we will look into
expanding the size of our facility along with purchasing more entertainment for our customers
enjoyment.
●
Fixed costs
○
○
○
○
○
●
Electric bill/utilities- $300/month, Rent- $2,000/month, Comcast (TV,
Telephone, Internet)- $100/month
Liquor license- $20,000/year
Barber license- $150/year
Insurance- $4,000/year
Equipment/furniture- $30,000
Total: $84,600
Variable costs
○
○
○
Bar materials- $16000/year
Labor - hairstylist $400/month; bartender $300/month
Advertising- $1200/year
7
Total: $25,600
Overall Cost Total: $110,200
●
How we will make Money
○
○
○
Chair rental- $50/day per person
Individual haircuts- average of $15/person
Drinks- average of $5 a drink, Movies- $3 per movie, Music- $1 per song,
Massage chairs- $3 per use
○ Product sales- $2,000/month
Total: $2,000/day
2.0 Company Summary
Big Hoss Barbershop and Lounge will provide any and all of the classic barber services while
entertaining the customer with our various amenities. Our bar, pool table, jukebox, big screen
TV, massage chairs, and video games are available to customers at their leisure and we
encourage them to enjoy before, during, and after their haircut. We believe that our services
and amenities will put us above the competition and ahead in the market.
The location of Big Hoss Barbershop and Lounge will be within one mile from any major college
campus and close to residential housing and commercial properties. This will allow us to draw
from multiple market segments.
2.1 Start-Up Summary
Judging by the locations that we have researched and by conducting a comprehensive analysis
of what Big Hoss Barbershop and Lounge would need to begin operations, the following start-up
expenses were calculated:
8
2.1.1 Start-Up Expenses
Buildings/Real Estate
Purchase
$ 250,000
Construction
Remodeling
15,000
Other
5,000
Total Buildings/Real Estate
$ 270,000
Capital Equipment List
Furniture
$ 50,000
Equipment
15,000
Fixtures
5,000
Other
-
Total Capital Equipment
$ 70,000
Location and Admin Expenses
Utility deposits
-
Business License
200
Owners License
250
Barber License
150
Liquor License
20,000
Legal and accounting fees
-
Prepaid insurance
4,000
Pre-opening salaries
-
Other
-
Total Location and Admin Expenses
$ 24,600
Opening Inventory
Bar Materials
$ 16,000
Hair Products
200
Barbershop Materials
200
Category 4
-
Category 5
-
Total Inventory
$ 16,400
9
Advertising and Promotional Expenses
Advertising
$ 1,200
Signage
1,000
Other/additional categories
-
Total Advertising/Promotional Expenses
$ 2,200
2.1.2 Start-Up Capital and Expenses Summary
Sources of Capital
Owners' and other investments
$ 200,000
Bank loans
300,000
Other loans
-
Total Source of Funds
$ 500,000
Startup Expenses
Buildings/real estate
$ 270,000
Leasehold improvements
-
Capital equipment
70,000
Location/administration expenses
24,600
Opening inventory
16,400
Advertising/promotional expenses
2,200
Other expenses
-
Contingency fund
-
Working capital
-
Total Startup Expenses
$ 383,200
3.0 Products and Services
Haircuts
●
●
●
●
●
●
Buzz Cut
Taper and Style
Scissor Cut
Shape Up
Hot Towel and Straight Razor Shave
Full Package
10
Drinks
●
●
●
●
●
Draft Beer
Bottom Shelf Shot
Top Shelf Shot
Bottled Beer
Mixed Drinks
Other Offerings
● Jukebox
● Massage Chair
● Big Screen TV
○ Xbox
○ Movies
4.0 Industry and Market Analysis
4.1 Industry
The Industry that Big Hoss Barbershop and Lounge would fall under is the NAICS Code
812111, identifying Barbershops. However, for the analysis, we also looked at statistics for
722410 Drinking Places (Alcoholic Beverages). Based on on the Economic Census Industry
Snapshot, total sales in the United States for this industry was $568,000,000 Nationally in 2007
and the number of competitors in Maryland ranged from 57-116 (city-data.com). But if we were
specifically looking for locations that were also under both categories, the number of
competitors would fall dramatically. The only true competitor for a business of this nature would
be The Quinntessential Gentleman, located in Baltimore, Maryland. The QG, claims to be
“reinventing the Barbershop” with their membership offerings, spa, tailoring, shop, shoe shines,
and lounge areas. They also offer the option to stock your private bottle or you can simply have
a complimentary beverage.
Showing promise for the industry, other areas of the country have shown growth of businesses
of this category. Through Internet research and traveling, we have found a few different
businesses that have not only been successful in one location, but have been able to expand to
11
numerous locations. The Gents Place, located in Frisco and Dallas, Texas, and Leawood,
Kansas, claim to be “putting the Bar back in Barbershop” with events that feature whisky cigar
tastings, club memberships, shoe shines, and numerous other services.
If this area is anything like the rest of the country, businesses like Big Hoss Barbershop and
Lounge have great potential for success and growth. And judging by 8% growth from 2008 to
2009, during the economic recession, for Barbershops in Prince Georges County, Maryland.
And according to Sabrina Tavernise, of the New York Times, “It seems that getting a haircut is
one expense that consumers are reluctant to give up,” in reference to the economic recession.
This is clearly a good sign for the industry because it means that regardless of the economic
condition, Barbershops have continued to be profitable and have even increased growth
through the recession.
4.2 Market
There are two main market segments that Big Hoss Barbershop and Lounge appeals to. The
first is men looking for an upscale Barbershop that provides quality barber services in a
convenient and comfortable location. The second is men looking for a place to hang out with
friends and enjoy the amenities provided
The main market segment for Big Hoss Barbershop and Lounge would be men in the area,
anywhere from 18-50 years old, looking for a slightly upscale location to get a haircut and be
able to relax with friends while they get theirs. We appeal to this segment by providing multiple
barber chairs run by professional and skilled barbers all in a relative location near each other so
that conversation is possible and friendly interactions are encouraged.
A second market segment for Big Hoss Barbershop and Lounge would be men in the same age
range looking for a location to come hang out, watch sports, movies, or shows with their friends,
12
while enjoying a drink or some snacks, and the option to have some fun on our pool table or
play video games. We appeal to this segment by providing multiple big screen televisions along
with a movie projector for special events. There are also numerous La-Z-Boys, massage chairs,
and a comfortable sofa to choose from while enjoying what is being shown.
As stated earlier, the male population in Towson, Maryland is roughly 46% of the total
population, which comes out to about 25,358 men, with a median age of 34.6 years old. This is
the perfect location for Big Hoss’s target market because of the age and average household
income as also stated previously.
When it comes to growth of the barber industry, conditions seem to be steadily increasing when
it comes to sales, and constant when it comes to industry growth. According to
www.bplans.com, or businessplans.com, sales for the barber industry have been on a steady
incline since 2011. However, the growth for the industry has flat-lined since 2011. This would be
a bad thing but since the sales for the industry overall are continuing to grow, the industry
growth could be considered a good thing because it means that the number of competitors has
ceased to grow at such a rapid pace, making entry to the market at this point ideal.
Our target market is perfect when it comes to growth. The area around Towson is constantly
growing and more and more people are moving to the area. Towson University over the past 10
years has had enormous growth as a school. Each and every year more and more people
come to Towson to become students. Based off a study by Dr. Maravene Loeschke, Towson is
estimated to increase its total amount of students by 3,000. This taking Towson’s total amount
of enrolled students from approximately 22,000 to 25,000. If we estimate that about half of
these new students are male; that is another 1,500 people that are potential customers of ours.
The growth potential of our target market is on a constant incline, and will most likely always
remain this way.
A competitive analysis is essential for a marketing plan because it helps establish who Big
Hoss will be attempting, as a new business, to take customers from and how to do it. There are
13
several competitors in the general area that Big Hoss would be competing with. They range
from chain Barbershops to upscale privately owned Barbershops. Each has its own strengths
and weaknesses that Big Hoss would have to work around and capitalize on respectively. To
determine how to approach the market in which these businesses have already established
themselves, individual SWOT Analysis’ were conducted for each competitor.
Competitor number one, Sportsclips is a chain that would be most competitive. This franchise,
according to their website, sportsclipsfranchise.com, “offers men and boys more than just a
haircut – we offer them a unique, sports-themed experience they can’t get anywhere else.
Clients can drop in any time without an appointment and be greeted by MVP-treatment from a
friendly, professional stylist while sports play on television (SportsClips).” This male (The Art Of
Manliness) (The Quinessential Gentleman) (Hairway to Steven) salon, if you will, has prices
similar to Big Hoss. They offer three services: MVP, Triple Play, and Varsity. MVP offers a
Consultation, Haircut, Steamed Towel, Shampoo, and neck and shoulder massage; Triple Play
offers a Consultation, Haircut, Steamed Towel, and Shampoo; and Varsity offers Consultation
and a Haircut. The prices are $24, $21, and $18 respectively. SportsClips, being a franchise,
has two locations in the relative area. However, the general theme of SportsClips is sports
themed and not everyone is a sports fan. This makes it unattractive to those who are not looking
to be bombarded by sports from the minute they walk in. Also, according to their website, no
experience is required to own and run a SportsClips. This means that not every location will be
run the same. This variance between locations might prove to be non-professional. Finally, one
major weakness of SportsClips is that they do not employ barbers, simply hairstylists and
according to ArtofManliness.com, “The problem (with chains like Supercuts/SportsClips) is that
many of the people who work at salons are not trained barbers. They’re cosmetologists. The
difference between the two can spell the difference between a dopey-looking haircut and a great
one.” This might be unattractive to customers who were looking for a real Barbershop
experience.
14
Another competitor would be The Quintessential Gentleman, an upscale Barbershop located in
Baltimore, roughly twenty minutes down 695 from Big Hoss. This Barbershop offers a wide
variety of services including: haircut, scissor cut, grey and color blending, buzz cut, straight
razor shave of face or head, line-up/shape-up, beard and moustache trim, and neck shave,
along with a few different packages that include any of the previous. They also have a full
service spa, boutique, lounge, pool table, and shoeshine station, and massage therapy.
However, The Quintessential Gentleman’s target market is clearly upper business class judging
by their location, prices, and atmosphere. This leaves out anyone who does not wish to pay up
to $45 for a haircut. Another threat they may have is that their location has extremely scarce
parking opportunities and is further than most would want to travel for a haircut. One of the
biggest weaknesses that The Quintessential Gentleman has is that it is almost exclusively by
appointment only. This makes it difficult for people to drop in and get a quick haircut on their
own schedule. The need for planning ahead would take away that availability.
The final competitor for Big Hoss would be Hairway to Steven. This is a local Barbershop,
located within walking distance from Towson University. One of the strengths this Barbershop
has is its location. Being located within walking distance from Towson University makes it
available for any of the students on campus or in the near area. It is also owned and run by a
master barber, which gives it strong credibility for quality of haircuts. It has an old school local
Barbershop feel to it, which caters to those looking to return to the classic style Barbershop for a
haircut. It also offers the classic Barbershop services including: single guard-buzz cut, style,
shape-up, shave, and shave and a haircut. Going along with these services, Hairway to Steven
offers them at a relatively lower price: $15, $17, $9, $20, and $33 respectively. However, it is
poorly marketed. The website is extremely simple and doesn’t use social media or any other
form of advertising. This limits the number of customers that come in to either hearing about it
by word of mouth, or by actually seeing the location. They do not accept appointments at all and
strictly run by a walk in, first come, first serve policy. This might prove difficult for people who
15
are running on a schedule because you never know how many people are in front of you in line.
Going along with this, Hairway to Steven only has two seats available. This creates a slow
process of going through customers. Finally, Hairway to Steven is an extremely small location
with limited parking. The only available parking is on the street and requires you to pay the
meters to avoid a ticket.
Based on the Competition in the area, Big Hoss Barbershop and Lounge would fit in the mix by
providing the services and amenities of The Quintessential Gentleman at a price relative to
Hairway to Steven and SportsClips. It would also attract customers looking for an actual barber
to cut their hair, in a larger and more widely appealing to different social classes. Along with the
cheap pricing and services of a barber; our bar and numerous forms of entertainment would
provide us a definite advantage over our competition. Providing drinks and entertainment create
an environment that men of a wide range of ages will look forward to. Big Hoss will not simply
be known as the place for great haircuts, but also as an enjoyable environment.
16
4.3 Conclusion
Based on the analysis of the industry and market, we were able to conclude the following
projections of the first three years of business at The Big Hoss Barbershop. From speaking to
local barbers and researching online, we decided that the following number of services would be
performed, drinks sold, and amenities purchased daily, weekly, monthly, and yearly:
4.3.1 Projected Sales
Year 1
Price
Day
(x6) Week
(x4) Month
(x12) Year
Yearly Sales
Buzz Cut
$12
10
60
240
2880
$34,560
Taper and
Style
$17
20
120
480
5760
$97,920
Scissor Cut
$20
15
90
360
4320
$86,400
Shape Up
$9
7
42
168
2016
$18,144
Hot Towel
and Straight
Razor Shave
$20
9
54
216
2592
$51,840
Full Package
$32
7
42
168
2016
$64,512
Draft Beer
$3
15
90
360
4320
$12,960
Bottom shelf
shots
$5
7
42
168
2016
$10,080
Top shelf
shots
$10
5
30
120
1440
$14,400
Rail Drinks
$6
8
48
192
2304
$13,824
Bottled Beer
$5
12
72
288
3456
$17,280
Massage
Chair
Purchases
$3
7
42
168
2016
$6,048
Movie Plays
$5
3
18
72
864
$4,320
Juke Box
Plays
$3
15
90
360
4320
$12,960
17
Total
Year 1
$445,248
Price
Day
(x6) Week
(x4) Month
(x12) Year
Yearly Sales
Buzz Cut
$12
5
30
120
1440
$17,280
Taper and Style
$17
10
60
240
2880
$48,960
Scissor Cut
$20
7
42
168
2016
$40,320
Shape Up
$9
3
18
72
864
$7,776
Hot Towel and
Straight Razor
Shave
$20
2
12
48
576
$11,520
Full Package
$32
3
18
72
864
$27,648
Draft Beer
$3
6
36
144
1728
$5,184
Bottom shelf
shots
$5
3
18
72
864
$4,320
Top shelf shots
$10
2
12
48
576
$5,760
Rail Drinks
$6
5
30
120
1440
$8,640
Bottled Beer
$5
5
30
120
1440
$7,200
Massage Chair
Purchases
$3
3
18
72
864
$2,592
Movie Plays
$5
1
6
24
288
$1,440
Juke Box Plays
$3
9
54
216
2592
$7,776
Total
Year 2
$196,416
Price
Day
(x6) Week
(x4) Month
(x12) Year
Yearly Sales
Buzz Cut
$12
7
42
168
2016
$24,192
Taper and
Style
$17
13
78
312
3744
$63,648
Scissor Cut
$20
9
54
216
2592
$51,840
Shape Up
$9
5
30
120
1440
$12,960
Hot Towel and
Straight Razor
$20
3
18
72
864
$17,280
18
Shave
Full Package
$32
5
30
120
1440
$46,080
Draft Beer
$3
9
54
216
2592
$7,776
Bottom shelf
shots
$5
5
30
120
1400
$7,200
Top shelf shots
$10
4
24
96
1152
$11,520
Rail Drinks
$6
7
42
168
2016
$12,096
Bottled Beer
$5
6
36
144
1728
$8,640
Massage Chair
Purchases
$3
7
42
168
2016
$6,048
Movie Plays
$5
2
12
48
576
$2,880
Juke Box Plays
$3
15
90
360
4320
$12,960
Total
Year 3
$285,120
Price
Day
(x6)
Week
(x4)Mont
h
(x12)Year
Yearly Sales
Buzz Cut
$12
10
60
240
2880
$34,560
Taper and
Style
$17
15
90
360
4320
$73,440
Scissor Cut
$20
11
66
264
3168
$63,360
Shape Up
$9
7
42
168
2016
$18,144
Hot Towel and
Straight Razor
Shave
$20
5
30
120
1440
$28,800
Full Package
$32
7
42
168
2016
$64,512
Draft Beer
$3
12
72
288
3456
$10,368
Bottom shelf
shots
$5
8
48
192
2304
$11,520
Top shelf
shots
$10
6
36
144
1728
$17,280
Rail Drinks
$6
10
60
240
2880
$17,280
19
Bottled Beer
$5
8
48
192
2304
$11,520
Massage
Chair
Purchases
$3
12
72
288
3456
$10,368
Movie Plays
$5
3
18
72
864
$4,320
Juke Box
Plays
$3
21
126
504
6048
$18,144
Total
$383,616
5.0 Feasibility Analysis
5.1 Market Analysis
In order to better understand the market and to learn where The Big Hoss Barbershop and
Lounge could fall when it comes to it’s target market. To learn this information, we created a
survey that asked the following questions:
●
●
●
●
●
How often do you get your hair cut?
What are some things you dislike about your current Barbershop?
What is the most you are willing to pay for a haircut?
Which of the following amenities would make you want to get your hair cut more often?
On a scale of 1-10, how willing would you be to try a new establishment if the amenities
in the previous question were provided?
20
30 surveys were submitted by males in the greater Baltimore area. From the results of these
questions, we were able to conclude the following:
●
●
●
●
●
73.33% of those surveyed get their hair cut at least once a month
86.37% of those surveyed dislike the environment and wait time at their current
Barbershop
97% of those surveyed are willing to pay the prices of a haircut within the price range
that Big Hoss Barbershop has to offer. The majority of prices for a haircut at Big Hoss
are $10-20.
The top 3 things that would attract those surveyed to a new Barbershop are massage
chairs, a big screen TV, and a bar. All of these, along with the other amenities would be
provided while getting a haircut at Big Hoss.
86.67% of those surveyed rated a 7 or higher on the willingness to change where they
currently go for their haircut
5.2 Concept analysis
The Big Hoss Barbershop and Lounge, although a unique idea, has similarities to a few other
establishments. Some local and some on the opposite side of the country. By speaking to
owners and researching the history, motives, and operations of these similar establishments, we
were able to get an understanding on what these owners have done to be successful in the
market, and it gave us an opportunity to see what could be improved upon.
●
The Quinntessential Gentleman
Proprietor: Craig Martin
31 South Calvert Street
Baltimore, Maryland 21202
When we spoke to Mr. Martin, he gave us some background on his shop and explained how he
continued to change his business to accommodate the target markets needs and to branch off
of his own interests. When Craig opened his shop in 2005, his “intent (was) to reinvent the
Barbershop experience (theqg.com) and he believed that his concept of “merging the best of the
old techniques and bringing respect back to the profession with the latest equipment and
technology blended to change the landscape of a man’s haircutting experience (theqg.com).”
Mr. Martin continued on with a story about how he thought there should be a barber in the
locker room at the golf club his father went to and how it was this idea that became the
21
“cornerstone” for his business today. His fascination “by seeing straight razor shaves or
Barbershop scenes in old movies” mixed with his interests of community and fashion provided
for the spark necessary to make his dream happen, despite his trouble with finding investors,
banks, or landlords.
Based on what we heard from Mr. Martin and what we could see from the shop itself, we
concluded that his business, although it had a rough start, was able to find success in their
target market. However, we also determined that The Quinnetessential Gentleman’s target
market, was not necessarily the target market we were interested in pursuing. The QG certainly
aims for a more businessman type clientele, based on the interior design, prices, and
atmosphere, where they could walk over on lunch break of after work to get a haircut and relax.
What we decided was that to appeal to a much larger customer base, we should make it a more
casual and less formal atmosphere. This would allow us to appeal to businessmen, students,
working class men, and all in between.
●
Mandustrial
401 E 25th Street
Tacoma, WA
Mandustrial in Tacoma, Washington is another establishment that has aspects that The Big
Hoss Barbershop and Lounge seeks to implement. Unlike the Quinntessential Gentleman,
Mandustrial has a much less formal environment, which we decided to be both positive and
negative. When speaking to the employees, we were able to conclude that both Mandustrial
and The Big Hoss Barbershop have extremely similar mission statements. Mandustrial was
“Conceived by a man who needed a way to relax without being womanized at his wife's salon,
MANdustrial has taken a hybrid approach to the Barbershop, salon and spa experience gearing
it towards men (mandustrial.com).” This, although differs in some ways from the Big Hoss
22
Barbershop and Lounge’s intent, is very similar. From this information, we were able to
conclude that Barbershops like ours are becoming popular throughout the United States.
Overall, by speaking to owners of Barbershops and doing research on similar ventures across
the country, we were able to conclude that not only are similar establishments becoming
successful, but they are the tip of the spear for a new type of Barbershop. One that
incorporates aspects from salons, Barbershops, spas, clubs, and lounges. The Big Hoss
Barbershop and Lounge would fit into this revolutionary new category of establishment perfectly
and we believe that it could be a strong competitor in the selected region.
5.3 Conclusion
Following our survey and research conducted with experts, we have a lot of useful information
that can help The Big Hoss Barbershop and Lounge’s business plan. We discovered out that
more than 96.66% of those who completed our survey get their haircut once every month or
more frequently and most of them get their hair cut at local Barbershop (76%). This is helpful to
know because it will help us understand the frequency of our customers. We also learned that
more than a half of those surveyed do not like their current Barbershop because of the wait time
(54.55%) or the environment (31.82%). This is good for The Big Hoss Barbershop and Lounge
because with the number of chairs that are available would keep the wait time short and the
customers would be interested in being entertained during their wait time. If The Big Hoss
Barbershop and Lounge had massage chairs, big screen TVs, and a bar, they would not feel
like they are wasting their time when waiting for their turn. Also, most of those surveyed would
be willing to pay $15 to $20 (48%) and over $20 (28%) for their haircut. This is good for The
Big Hoss Barbershop and Lounge because it’s price range falls in those categories. Finally, we
23
found out that more than 85% of those surveyed would be at a level of 7 or higher on a scale
from 1-10 to change where they currently get their hair cut if the amenities listed were provided.
Through this information, we were able to conclude that the target market is unhappy with their
current Barbershop because of the wait time and environment and we believe that if we
provided amenities such as those listed, the customers in the area would be very much willing
to come to our shop and even look forward to their visit. We have also concluded that
establishments like The Big Hoss Barbershop and Lounge are becoming more and more
common throughout the country. There is demand for a place where men can relax and not feel
womanized, like at a salon or spa. We believe that The Big Hoss Barbershop and Lounge can
fulfill these needs based on the survey we conducted.
6.0 Big Hoss Barbershop and Lounge Financial Plan
The following Financial plan was conducted for Big Hoss Barbershop and Lounge. The
numbers and information were based off of other competitors in the industry and projections that
the owners believe to be feasible.
6.1 Sources and Uses of Funds
Before operations can begin, Big Hoss Barbershop and Lounge must first have a location,
employees, equipment, and other materials necessary, ready to go. In order to make this
happen, we decided that two loans from Bank of America, one for $200,000, and the other for
$200,000, along with the $100,000 we believe we could collect from owners, investors, family,
and friends, would give us $500,000. This would be more than sufficient for startup because as
24
stated in the Sources and Uses of Funds statement below, Total Startup expenses are
$383,200, giving us a substantial amount of capital to work with.
6.1.1 Sources of Capital
Owners' Investment (name and percent
ownership)
Sam Henig (40%)
$ 40,000
Ryan Holland (30%)
$30,000
Toan Huynh (30%)
$30,000
Other investor
-
Total Investment
$ 100,000
Bank 1
$ 200,000
Bank 2
$200,000
Total Bank Loans
$ 400,000
Purchase
$ 250,000
Bank Loans
6.1.2 Startup Expenses
Buildings/Real Estate
Construction
Remodeling
$15,000
Other
$5,000
Total Buildings/Real Estate
$ 270,000
Capital Equipment List
Furniture
$ 50,000
Equipment
$15,000
Fixtures
$5,000
Other
-
Total Capital Equipment
$ 70,000
25
Location and Admin Expenses
Utility deposits
-
Business License
$200
Owners License
$250
Barber License
$150
Liquor License
$20,000
Legal and accounting fees
-
Prepaid insurance
$4,000
Pre-opening salaries
-
Other
-
Total Location and Admin Expenses
$ 24,600
Opening Inventory
Bar Materials
$ 16,000
Hair Products
$200
Barbershop Materials
$200
Total Inventory
$ 16,400
Advertising and Promotional Expenses
Advertising
$ 1,200
Signage
$1,000
Other/additional categories
-
Total Advertising/Promotional Expenses
$ 2,200
6.1.3 Summary Statement
Sources of Capital
Owners' and other investments
$ 100,000
Bank loans
$400,000
Other loans
-
Total Source of Funds
$ 500,000
Buildings/real estate
$ 270,000
Startup Expenses
26
Leasehold improvements
-
Capital equipment
$70,000
Location/administration expenses
$24,600
Opening inventory
$16,400
Advertising/promotional expenses
$2,200
Other expenses
-
Contingency fund
-
Working capital
-
Total Startup Expenses
$ 383,200
6.2 Important Assumptions
The numbers below were decided on by comparing prices with our competition. We went with
the median prices compared to our competition. We understand we may lose some customers
because we do not offer the lowest prices, but our reasoning for this is because we offer the
highest quality haircuts. This is further explained in the Market and Industry Analysis section,
and off of the assumption that Big Hoss Barbershop has up to 5 Barbers and respective chairs.
In order to project the first three years of operation for Big Hoss Barbershop and Lounge we had
to make the following assumptions:
Sales
Year 1:
● 19,584 Haircuts given
● 13,536 Drinks sold
● 2,016 Massage Chair uses
● 864 Movie/Show plays
● 4,320 Jukebox plays
Year 2:
● 24,768 Haircuts given
● 19,584 Drinks sold
● 3,744 Massage Chair uses
● 576 Movie/Show plays
● 5,472 Jukebox plays
27
Year 3:
● 28,512 Haircuts given
● 26,208 Drinks sold
● 4,896 Massage Chair uses
● 288 Movie/Show plays
● 6,048 Jukebox plays
6.2.1 Business Assumptions
● At least 5 Barbers are employed
● Big Hoss Barbershop is open up to 6 days a week
6.3 Projected Cash Flow
Big Hoss Barbershop and Lounge plans to maintain a positively growing cash flow over the next
three years and therefore will be able to cover its expenses within that time period.
28
6.4 Projected Balance Sheet
Balance Sheet
Year 0
Year 1
Year 2
Year 3
Assets
Cash
$116,800
Inventory
$96,800
$81,800
$86,800
$10,000
$15,000
$20,000
Total Current
Assets
$116,800
$106,800
$96,800
$106,800
Long-term Assets
$383,200
$383,200
$368,200
$348,200
($15,000)
($20,000)
($45,000)
Accumulated
Depreciation
Total Long-term
Assets
$383,200
$368,200
$348,200
$303,200
Total Assets
$500,000
$475,000
$445,000
$410,000
$200,000
$150,000
$100,000
$50,000
Long-Term
Liabilities
$200,000
$200,000
$200,000
$200,000
Total Liabilities
$400,000
$350,000
$300,000
$250,000
Paid-in Capital
$100,000
$100,000
$100,000
$100,000
Retained Earnings
-
$25,000
$45,000
$60,000
Total Capital
$100,000
$125,000
$145,000
$160,000
Total Liabilities and
Capital
$500,000
$475,000
$445,000
$410,000
Net Worth
$100,000
$125,000
$145,000
$160,000
Liabilities and
Capital
Current Liabilities
Other Current
Liabilities
29
6.5 Projected Income Statement
Big Hoss
Barbershop
Income Statement
3 Year Projection
Year 1
Year 2
Year 3
Revenue
Year 1
Year 2
Year 3
Sales revenue
$445,248
$583,776
$704,160
Advertising
$2,400
$2,400
$2,400
Commissions
$176,688
$224,496
$265,392
Cost of goods sold
$20,000
$30,000
$40,000
Insurance
$4,000
$4,000
$4,000
Interest expense
$17,000
$14,900
$10,350
Maintenance and
repairs
$5,000
$7,000
$10,000
Office supplies
$200
$200
$200
Salaries and wages
$69,600
$69,600
$69,600
Utilities
$28,800
$28,800
$28,800
$323,688
$381,396
$430,742
Net Income Before
Taxes
$121,560
$202,380
$273,418
Income tax expense
$36,468
$60,714
$82,025
Total Revenues
Expenses
Depreciation
Employee benefits
Furniture and
equipment
Web hosting and
domains
Other
Total Expenses
Earning before Tax
Payroll taxes
Income from
Continuing
Operations
30
Below-the-Line
Items
Income from
discontinued
operations
Effect of accounting
changes
Extraordinary items
Net Income
$85,092
$141,666
$191,393
6.6 Ratio Analysis
Ratio Analysis
Year 0
Year 1
Year 2
Total Current Assets
$116800
$106800
$96800
Long-term assets
$383200
$368200
$348200
Total Assets
$500000
$475000
$445000
Current Liabilities
$200000
$150000
$100000
Long-term liabilities
$200000
$200000
$200000
Total Liabilities
$400000
$350000
$300000
Net Worth
$100000
$125000
$145000
Net Income
85092
141666
191393
Sales
445248
583776
704160
Growth Margin
0.2037516171
0.1361618155
Selling, General, and
administrative Expenses
69600
69600
69600
Commissions
176688
224496
265392
Advertising Expenses
2400
2400
2400
Interest Expense
17000
14900
10350
Profit Before Interest and
Taxes
196560
287280
366768
Percent of Sales
Main Ratios
31
Current
1.168
2.136
Quick
1.168
2.136
Total Debt to Total
Assets
0.6
0.5263157895
0.4494382022
Pre-tax Return on Net
Worth
0.9828
1.2768
1.497012245
Pre-tax Return on Assets
0.39312
0.6048
0.8241977528
0.1911114705
0.2426718467
0.2718032833
1.5
1.111111111
0.8163265306
Net Working Capital
16800
56800
96800
Interest Coverage
11.56235294
19.28053691
35.43652174
Assets to Sales
1.122969671
0.8136682563
0.6319586458
Current Debt/Total
Assets
0.6
0.5263157895
0.4494382022
Sales/Net Worth
2.22624
2.59456
2.874122449
Additional Ratios
Net Profit Margin
Debt Ratios
Debt to Net Worth
Liquidity Ratios
Additional Ratios
As you can see in the chart below, our projected Net Income and Sales Revenue have
a strong positive growth rate.
32
7.0 Sources
Works Cited:
bplans.com. Barbershops Industry Report.
<http://www.bplans.com/industry_reports/report/barber_shops/7241>.
city-data.com. Towson, Maryland.
Hairway to Steven. Hairway to Steven - Barbershop. <http://www.hairwaytosteven.com/>.
SportsClips. SportsClips. <http://www.sportclips.com/index.html>.
The Art Of Manliness. Rediscovering the Barbershop.
<http://www.artofmanliness.com/2008/05/20/rediscovering-the-barbershop/>.
The Quinessential Gentleman. Services. <http://www.baltimorebarbershop.com/>.
33