Introduction
For most men, venturing to the barbershop is a weekly ritual that goes beyond just grooming. The staying power of the local groomer, particularly the barbershop, is rooted in its position as the epicenter of candid discussions or debates about politics, sports, race, pop culture, and relationships, among other hot-button topics. Be it comical or poignant, such dialogue is the reason the barbershop has long been a revered spot in African American communities. What may be surprising is that it is a growing industry. According to the Census Bureau, the barbering industry grew from $500 million to $2 billion between 2002 and 2005. As this growth continues, the demand for service is high. But only those entrepreneurs who are able to combine barbering excellence with sound business insight are poised to succeed.
Startup costs are roughly $150,000, depending on construction costs. Gross revenues for a six-chair shop in a strip mall can average between $200,000 and $350,000, depending on location, after about three years in business, says Joe Grondin, a barbering business consultant and CEO of the 23-store barbershop franchise Roosters Men’s Grooming Centers (www.roostersmgc.com). He adds that a barbershop can offer an enterprising barber or other investor returns of 15% to 20%.
“Even in the worst economic times, you have a strong chance of survival in the hair business,” Grondin says. “There’s so much room to grow and expand. I’m proof that you can take this business to whatever level you want.”
Smooth Operator
Corey Lee Bell Jr. offers a new business approach with The Renaissance Barbershop. Located in Durham, North Carolina, Renaissance is Bell’s third barbershop. His others, Lewayne’s and The Campus Barber, are located in surrounding areas.
The 29-year-old, who graduated from University of North Carolina-Chapel Hill with bachelor’s degrees in African American studies and communications, pays barbers 50% of the profits they generate month to month, rather than renting out chairs. “While [the first two] businesses were making as much as $120,000 [annually], I was still collecting only $31,000 in rent from my barbers, recalls Bell, who chose to abort this structure since launching Renaissance in October 2007.
“Under this model, my barbers make about 50% more than the average barber that rents.”
For 2008, Bell anticipates total revenues for all his operations to approach $400,000, with Renaissance generating nearly 60% of that figure. Intent on remaining debt free, Bell got creative in securing capital for Renaissance. He negotiated a five-year contract with his landlords, with one year rent-free. “You’ve got to be as proactive, creative, and as out-of-the-box as possible.
“In the beginning, I didn’t want to take too many risks,” continues Bell, who got his start cutting hair for friends. “Now, I have no problem taking risks because that’s where the most potential comes from.”
Things To Consider
1. Accounting: To chart growth and as a safeguard against theft, impeccable bookkeeping is essential, says Leaha Crawford with Nevada-based MR Bookkeeping and Tax Services. Hire accounting and legal experts to ensure proper filing requirements for your business. “In a small business with a lot