Big Hoss Barber Shop Business Plan.docx



Big Hoss Barbershop and Lounge Samuel HenigRyan HollandToan HuynhTable of Contents TOC \t "S Heading 1,1,S Heading 2,2" Table of Contents PAGEREF _Toc260493554 \h 21.0 Executive Summary PAGEREF _Toc260493555 \h 31.2 Problem PAGEREF _Toc260493556 \h 31.3 Solution PAGEREF _Toc260493557 \h 41.4 Opportunity PAGEREF _Toc260493558 \h 41.5 SWOT Analysis PAGEREF _Toc260493559 \h 51.6 Competitive Advantages PAGEREF _Toc260493560 \h 51.7 Business Model PAGEREF _Toc260493561 \h 61.8 Team PAGEREF _Toc260493562 \h 71.9 Financials PAGEREF _Toc260493563 \h 72.0 Company Summary PAGEREF _Toc260493564 \h 82.1 Start-Up Summary PAGEREF _Toc260493565 \h 82.1.1 Start-Up Expenses PAGEREF _Toc260493566 \h 92.1.2 Start-Up Capital and Expenses Summary PAGEREF _Toc260493567 \h 103.0 Products and Services PAGEREF _Toc260493568 \h 104.0 Industry and Market Analysis PAGEREF _Toc260493569 \h 114.1 Industry PAGEREF _Toc260493570 \h 114.2 Market PAGEREF _Toc260493571 \h 124.3 Conclusion PAGEREF _Toc260493572 \h 174.3.1 Projected Sales PAGEREF _Toc260493573 \h 175.0 Feasibility Analysis PAGEREF _Toc260493574 \h 205.1 Market Analysis PAGEREF _Toc260493575 \h 205.2 Concept analysis PAGEREF _Toc260493576 \h 215.3 Conclusion PAGEREF _Toc260493577 \h 236.0 Big Hoss Barbershop and Lounge Financial Plan PAGEREF _Toc260493578 \h 246.1 Sources and Uses of Funds PAGEREF _Toc260493579 \h 246.1.1 Sources of Capital PAGEREF _Toc260493580 \h 256.1.2 Startup Expenses PAGEREF _Toc260493581 \h 256.1.3 Summary Statement PAGEREF _Toc260493582 \h 266.2 Important Assumptions PAGEREF _Toc260493583 \h 276.2.1 Business Assumptions PAGEREF _Toc260493584 \h 286.3 Projected Cash Flow PAGEREF _Toc260493585 \h 286.4 Projected Balance Sheet PAGEREF _Toc260493586 \h 296.5 Projected Income Statement PAGEREF _Toc260493587 \h 306.6 Ratio Analysis PAGEREF _Toc260493588 \h 311.0 Executive Summary1.1 OverviewBig 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 ProblemBased 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.1.3 SolutionWhat 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 OpportunityTo 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 city-, 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.1.5 SWOT AnalysisStrengthsPrice range varies from competitionIntegrates Barbershop with lounge qualitiesAll inclusive package deals availableWeekly specialsEvent nightsThreatsAlready established BarbershopsCheaper prices at other locationsSimilar concepts existingNot a chain or already established businessOpportunitiesNeed for quality men’s haircutExcitement of new businessProvide low-cost quality haircutsMultiple target markets because multiple services and amenities providedLocal pride in local businessesWeaknessesNo existing customer baseNo financial backingNot cheapest prices1.6 Competitive AdvantagesThe 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 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 ModelTo 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………………………………………. $12Taper and Style………………………………… $17Scissor Cut……………………………………….$20Shape Up……………………………………….. $9Hot Towel and Straight Razor Shave…………… $20Full Package……………………………………… $32These 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 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 TeamSamuel 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 GuyToan Huynh, Marketing Director, Product ManagerOver 3 years experience in the marketing and sales industry, Towson University Business Marketing Student, Sales expert, Finance expert1.9 FinancialsBelow 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 costsElectric bill/utilities- $300/month, Rent- $2,000/month, Comcast (TV, Telephone, Internet)- $100/monthLiquor license- $20,000/yearBarber license- $150/yearInsurance- $4,000/yearEquipment/furniture- $30,000Total: $84,600Variable costsBar materials- $16000/yearLabor - hairstylist $400/month; bartender $300/monthAdvertising- $1200/yearTotal: $25,600Overall Cost Total: $110,200How we will make MoneyChair rental- $50/day per personIndividual haircuts- average of $15/personDrinks- average of $5 a drink, Movies- $3 per movie, Music- $1 per song, Massage chairs- $3 per useProduct sales- $2,000/monthTotal: $2,000/day2.0 Company SummaryBig Hoss Barbershop and Lounge will provide any and all of the classic barber services while entertaining the customer with our various amenities. Our bar, pool table, jukebox, big screen TV, massage chairs, and video games are available to customers at their leisure and we encourage them to enjoy before, during, and after their haircut. We believe that our services and amenities will put us above the competition and ahead in the market. The location of Big Hoss Barbershop and Lounge will be within one mile from any major college campus and close to residential housing and commercial properties. This will allow us to draw from multiple market segments. 2.1 Start-Up Summary Judging by the locations that we have researched and by conducting a comprehensive analysis of what Big Hoss Barbershop and Lounge would need to begin operations, the following start-up expenses were calculated: 2.1.1 Start-Up Expenses Buildings/Real EstatePurchase$ 250,000ConstructionRemodeling15,000Other5,000Total Buildings/Real Estate$ 270,000 Capital Equipment ListFurniture$ 50,000Equipment15,000Fixtures5,000Other-Total Capital Equipment$ 70,000 Location and Admin ExpensesUtility deposits-Business License200Owners License250Barber License150Liquor License20,000Legal and accounting fees-Prepaid insurance4,000Pre-opening salaries-Other-Total Location and Admin Expenses$ 24,600 Opening InventoryBar Materials$ 16,000Hair Products200Barbershop Materials200Category 4-Category 5-Total Inventory$ 16,400 Advertising and Promotional ExpensesAdvertising$ 1,200Signage1,000Other/additional categories-Total Advertising/Promotional Expenses$ 2,200 2.1.2 Start-Up Capital and Expenses SummarySources of CapitalOwners' and other investments$ 200,000Bank loans300,000Other loans-Total Source of Funds$ 500,000 Startup ExpensesBuildings/real estate$ 270,000Leasehold improvements-Capital equipment70,000Location/administration expenses24,600Opening inventory16,400Advertising/promotional expenses2,200Other expenses-Contingency fund-Working capital-Total Startup Expenses$ 383,200 3.0 Products and ServicesHaircutsBuzz CutTaper and StyleScissor CutShape UpHot Towel and Straight Razor ShaveFull PackageDrinksDraft BeerBottom Shelf ShotTop Shelf ShotBottled BeerMixed DrinksOther OfferingsJukeboxMassage ChairBig Screen TVXboxMovies4.0 Industry and Market Analysis4.1 IndustryThe 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-). 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 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 MarketThere 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 providedThe 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, 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 , or , 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 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 petitor number one, Sportsclips is a chain that would be most competitive. This franchise, according to their website, , “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 , “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.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 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.4.3 ConclusionBased 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 SalesYear 1PriceDay(x6) Week(x4) Month(x12) YearYearly SalesBuzz Cut$1210602402880$34,560Taper and Style$17201204805760$97,920Scissor Cut$2015903604320$86,400Shape Up$97421682016$18,144Hot Towel and Straight Razor Shave$209542162592$51,840Full Package$327421682016$64,512Draft Beer$315903604320$12,960Bottom shelf shots$57421682016$10,080Top shelf shots$105301201440$14,400Rail Drinks$68481922304$13,824Bottled Beer$512722883456$17,280Massage Chair Purchases$37421682016$6,048Movie Plays$531872864$4,320Juke Box Plays$315903604320$12,960Total$445,248Year 1PriceDay (x6) Week(x4) Month(x12) YearYearly SalesBuzz Cut$125301201440$17,280 Taper and Style$1710602402880$48,960Scissor Cut$207421682016$40,320Shape Up$931872864$7,776Hot Towel and Straight Razor Shave$2021248576$11,520Full Package$3231872864$27,648Draft Beer$36361441728$5,184Bottom shelf shots$531872864$4,320Top shelf shots$1021248576$5,760Rail Drinks$65301201440$8,640Bottled Beer$55301201440$7,200Massage Chair Purchases$331872864$2,592Movie Plays$51624288$1,440Juke Box Plays$39542162592$7,776Total$196,416Year 2PriceDay (x6) Week(x4) Month(x12) YearYearly SalesBuzz Cut$127421682016$24,192Taper and Style$1713783123744$63,648Scissor Cut$209542162592$51,840Shape Up$95301201440$12,960Hot Towel and Straight Razor Shave$2031872864$17,280Full Package$325301201440$46,080Draft Beer$39542162592$7,776Bottom shelf shots$55301201400$7,200Top shelf shots$10424961152$11,520Rail Drinks$67421682016$12,096Bottled Beer$56361441728$8,640Massage Chair Purchases$37421682016$6,048Movie Plays$521248576$2,880Juke Box Plays$315903604320$12,960Total$285,120Year 3PriceDay (x6) Week(x4)Month(x12)YearYearly SalesBuzz Cut$1210602402880$34,560Taper and Style$1715903604320$73,440Scissor Cut$2011662643168$63,360Shape Up$97421682016$18,144Hot Towel and Straight Razor Shave$205301201440$28,800Full Package$327421682016$64,512Draft Beer$312722883456$10,368Bottom shelf shots$58481922304$11,520Top shelf shots$106361441728$17,280Rail Drinks$610602402880$17,280Bottled Beer$58481922304$11,520Massage Chair Purchases$312722883456$10,368Movie Plays$531872864$4,320Juke Box Plays$3211265046048$18,144Total $383,6165.0 Feasibility Analysis 5.1 Market AnalysisIn 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?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 month86.37% of those surveyed dislike the environment and wait time at their current Barbershop97% 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 haircut5.2 Concept analysisThe 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 GentlemanProprietor: Craig Martin31 South Calvert StreetBaltimore, Maryland 21202When 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 () 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 ().” 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 “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. Mandustrial401 E 25th StreetTacoma, WAMandustrial 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 ().” This, although differs in some ways from the Big Hoss 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 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 PlanThe 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 FundsBefore 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 stated in the Sources and Uses of Funds statement below, Total Startup expenses are $383,200, giving us a substantial amount of capital to work with. 6.1.1 Sources of Capital Owners' Investment (name and percent ownership)Sam Henig (40%)$ 40,000Ryan Holland (30%)$30,000Toan Huynh (30%)$30,000Other investor-Total Investment$ 100,000Bank LoansBank 1$ 200,000Bank 2$200,000Total Bank Loans$ 400,0006.1.2 Startup ExpensesBuildings/Real EstatePurchase$ 250,000ConstructionRemodeling$15,000Other$5,000Total Buildings/Real Estate$ 270,000 Capital Equipment ListFurniture$ 50,000Equipment$15,000Fixtures$5,000Other-Total Capital Equipment$ 70,000 Location and Admin ExpensesUtility deposits-Business License$200Owners License$250Barber License$150Liquor License$20,000Legal and accounting fees-Prepaid insurance$4,000Pre-opening salaries-Other-Total Location and Admin Expenses$ 24,600 Opening InventoryBar Materials$ 16,000Hair Products$200Barbershop Materials$200Total Inventory$ 16,400 Advertising and Promotional ExpensesAdvertising$ 1,200Signage$1,000Other/additional categories-Total Advertising/Promotional Expenses$ 2,200 6.1.3 Summary StatementSources of CapitalOwners' and other investments$ 100,000Bank loans$400,000Other loans-Total Source of Funds$ 500,000 Startup ExpensesBuildings/real estate$ 270,000Leasehold improvements-Capital equipment$70,000Location/administration expenses$24,600Opening inventory$16,400Advertising/promotional expenses$2,200Other expenses-Contingency fund-Working capital-Total Startup Expenses$ 383,200 6.2 Important AssumptionsThe 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:SalesYear 1:19,584 Haircuts given13,536 Drinks sold2,016 Massage Chair uses864 Movie/Show plays4,320 Jukebox playsYear 2:24,768 Haircuts given19,584 Drinks sold3,744 Massage Chair uses576 Movie/Show plays5,472 Jukebox playsYear 3:28,512 Haircuts given26,208 Drinks sold4,896 Massage Chair uses288 Movie/Show plays6,048 Jukebox plays6.2.1 Business AssumptionsAt least 5 Barbers are employedBig Hoss Barbershop is open up to 6 days a week6.3 Projected Cash FlowBig 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. 6.4 Projected Balance SheetBalance SheetYear 0Year 1Year 2Year 3AssetsCash$116,800$96,800$81,800$86,800Inventory$10,000$15,000$20,000Total Current Assets$116,800$106,800$96,800$106,800Long-term Assets$383,200$383,200$368,200$348,200Accumulated Depreciation($15,000)($20,000)($45,000)Total Long-term Assets$383,200$368,200$348,200$303,200Total Assets$500,000$475,000$445,000$410,000Liabilities and CapitalCurrent Liabilities$200,000$150,000$100,000$50,000Other Current LiabilitiesLong-Term Liabilities$200,000$200,000$200,000$200,000Total Liabilities$400,000$350,000$300,000$250,000Paid-in Capital$100,000$100,000$100,000$100,000Retained Earnings-$25,000$45,000$60,000Total Capital$100,000$125,000$145,000$160,000Total Liabilities and Capital$500,000$475,000$445,000$410,000Net Worth$100,000$125,000$145,000$160,000 6.5 Projected Income StatementBig Hoss BarbershopIncome Statement3 Year ProjectionYear 1Year 2Year 3RevenueYear 1Year 2Year 3Sales revenue$445,248$583,776$704,160Total RevenuesExpensesAdvertising$2,400$2,400$2,400Commissions$176,688$224,496$265,392Cost of goods sold$20,000$30,000$40,000DepreciationEmployee benefitsFurniture and equipmentInsurance$4,000$4,000$4,000Interest expense$17,000$14,900$10,350Maintenance and repairs$5,000$7,000$10,000Office supplies$200$200$200Salaries and wages$69,600$69,600$69,600Utilities$28,800$28,800$28,800Web hosting and domainsOtherTotal Expenses$323,688$381,396$430,742Earning before TaxNet Income Before Taxes$121,560$202,380$273,418Income tax expense$36,468$60,714$82,025Payroll taxesIncome from Continuing OperationsBelow-the-Line ItemsIncome from discontinued operationsEffect of accounting changesExtraordinary itemsNet Income$85,092$141,666$191,393 6.6 Ratio AnalysisRatio AnalysisYear 0Year 1Year 2Total Current Assets$116800$106800$96800Long-term assets$383200$368200$348200Total Assets$500000$475000$445000Current Liabilities$200000$150000$100000Long-term liabilities$200000$200000$200000Total Liabilities$400000$350000$300000Net Worth$100000$125000$145000Percent of SalesNet Income85092141666191393Sales445248583776704160Growth Margin0.20375161710.1361618155Selling, General, and administrative Expenses696006960069600Commissions176688224496265392Advertising Expenses240024002400Interest Expense170001490010350Profit Before Interest and Taxes196560287280366768Main RatiosCurrent1.1682.136Quick1.1682.136Total Debt to Total Assets0.60.52631578950.4494382022Pre-tax Return on Net Worth0.98281.27681.497012245Pre-tax Return on Assets0.393120.60480.8241977528Additional RatiosNet Profit Margin0.19111147050.24267184670.2718032833Debt RatiosDebt to Net Worth1.51.1111111110.8163265306Liquidity RatiosNet Working Capital168005680096800Interest Coverage11.5623529419.2805369135.43652174Additional RatiosAssets to Sales1.1229696710.81366825630.6319586458Current Debt/Total Assets0.60.52631578950.4494382022Sales/Net Worth2.226242.594562.874122449As you can see in the chart below, our projected Net Income and Sales Revenue have a strong positive growth rate. 9810756000757.0 SourcesWorks Cited:. Barbershops Industry Report. <. Towson, Maryland. Hairway to Steven. Hairway to Steven - Barbershop. <. SportsClips. < Art Of Manliness. Rediscovering the Barbershop. < Quinessential Gentleman. Services. <;. ................
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