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The buyer of this business will be acquiring a barbershop & salon setup for long term success with high revenue potential and an opportunity to revolutionize the barber industry through innovative ways to address long standing challenges the industry has faced.
The business has grown to $200,000 in revenue in under 5 years and is projected to reach $500,000 by year 2022 and $1m by the year 2025.
Below are areas of focus that the business has taken on to address the challenges facing the barber and salon industry:
• Solving the problem of poor customer service
• Solving customer wait-time through innovative technology
• Implementing strategies to help barbers and stylists achieve a productive career
1. Solving the problem of mediocre customer service.
Almost all barbers and stylists are employed as independent contractors. This provides them with the flexibility to set their own work hours, make their own rules, and not be held accountable for providing great customer service. This exposes customers to be subject to being treated poorly by their barber or stylist with very little recourse but to switch to another barber or stylist. At Klassic Kutz, we have implemented a structured system that greatly improves customer service. First, we developed an employee handbook which details the policies and procedures that must be strictly followed as a member of our team. The handbook addresses policies such as promptness for arriving to work to meet customer scheduled appointment times, no use of foul language while in the premises, and consultation with every customer prior to and at the end of each service, just to name a few. We also employed a full time receptionist who checks in customers when they arrive and also processes payments at the end of each service. Customers appreciate this level of service where someone greets them upon entering the business and collects payment at one central location at the reception desk. We also provide our customers bottled water free of charge, men's health and sports magazines to read while waiting and free breakfast of donuts, coffee and juice on the weekends. These actions have dramatically improved the customer experience and resulted in great reviews and ratings on our social media platforms(Google, Facebook, Yelp, Instagram).
2. Solving customer wait-time through innovative technology:
What we have noticed through real time research we conducted is that customers generally do not want to wait longer than 45 mins to receive service. Most are coming to the shop straight from work after working a long day or have planned to have a haircut among many errands to run on the weekends. Everyone's time is very important to them and we take that seriously at Klassic Kutz. We launched a high quality interactive website that allows customers to schedule appointments online, select a barber or stylist and make payments for the services as well. Our receptionist maintains the appointment schedule and keeps the barbers and stylists informed of appointments being set. This has greatly reduced wait times to generally 15-20 mins with great customer satisfaction. It has also eliminated the confusion many barbershops and salons experience when customers and barbers are not sure who is next in line to be serviced. We also acquired a real-time appointment alert system app that customers can download which sends them alerts in the event their appointment time is being encroached upon or in the event or a cancellation or escheduling. During the weekends, this app is used often as it allows customers to run errands while not losing their place in line via alert notification.
3. Implement new strategies to help barbers/stylists achieve a productive career
Barbers and stylists are in need of a truly rewarding and productive career, similar to any other profession. This is missing from the industry as evidenced by barbers and
stylists who are not able to collect wages when injured, have no retirement to depend on after their working years and do not advance their skills and capabilities. To address this, we have partnered with barber colleges and cosmetology schools to offer continuous education courses to our staff to learn new skills and techniques which vastly improve the level of service they can provide. Recent training courses have covered hair coloring and new techniques in hair extensions. We also
provide supplemental health insurance coverage to all our barbers and stylists which allows them to be continue to receive wages in the event of an injury or lost time from work. Part of the benefits program we offer as well is a retirement plan that allows barbers and stylists to contribute a portion of their weekly earnings into a retirement fund that is invested in mutual funds commensurate with their individual risk profiles. The business also matches up to 5% of contributed amounts. Finally, through our networks and business contacts we are also able to provide educational seminars to help increase financial literacy of the barbers and stylists as well as tax preparation and other legal services.
Our services are divided into men's haircuts and women's hair styling. Men's services range from basic haircuts to fades & tapers, to hot towel shaves. We also provide lineups beard trims and basic designs. Our women's services are comprehensive. Our stylists specialize in hair trims, hair color highlights, deep conditioner treatments, hair extensions, balayage and roller set with deep conditioner. We also provide braiding services ranging from cornrows, locs and dreads to Senegalese twists, box braids and crochet.
Our barbers and stylists use a wide range of industry leading hair care products when providing services. These products are also available for sale to customers.
Additionally, we source hair extensions focusing on Brazilian, Malaysian, and Peruvian hair. These are made available for purchase on the company's website.
Our business operates a central point of sale(POS) system that customers use to check out and pay for services received. The POS system is located at a reception desk which is covered by a full time receptionist. We accept both cash, debit cards and all major credits.
2000/month per annum
Location matters greatly as to where customers decide to go for hair care needs. Klassic Kutz is centrally located on Almeda Rd, the 6th busiest street in the city of Houston. Based on our research, we have discovered what segments within the market to cater our services to. The Houston medical district, Rice village, Midtown, 3rd ward and the Museum district are several of many small market segments that surround the business within a 15 mile radius. For clients in these markets, customer service and efficient operations are highly valued and have attracted many to our business. All districts make up the Gridiron Area that holds approximately 60,000 thousand residents with a median household income of 52,000/year. Below we break down our surrounding area.
1. College Students: Our business is within 10 miles of a number of colleges and universities namely Rice University, Texas Southern University, University of Houston,
and Houston Community College. All together these institutions enroll approx 150,000 students each year. We continue to build strong relationships with these universities working with student body governments and other on-campus associations to offer incentives for students. As students are usually on a budget while attending school, we offer discounts off products and services specifically for them.
2. Working Professionals: Our central location is highly convenient for a lot of working professionals in the area. We are 1 mile down the street from the Texas Medical
Center(TWC), the largest medical center in the world. TWC comprises 54 medical institutions including hospitals, academic and research organizations, and medical
schools. TWC employs approx 125,000 professionals and has over 180,000 visitors to the center each day. Given its landmark presence in Houston, the area boasts a vibrant business community, many of them supporting the medical center. These business are restaurants, dry cleaning services, grocery stores, hotels, and a number of retail stores. Our business benefits greatly from being in close proximity to these businesses and presents a huge growth opportunity for us. We are also located half a mile away from NRG Stadium, home of the Houston Texans. This venue hosts events all year around which brings in locals and visitors from outside the area to our barbershop and salon for hair grooming services.
3. Women ages 18-35: The reason for targeting this segment is the potential for selling products at a high rate. From our conversation with at least 30 women, they are the high end consumers when it comes to purchasing beauty products such as; hair extensions, shampoos and conditioners including apparel and small ointments to keep their look going for some time. They also fall in the category of working professionals who have to maintain a professional look throughout their careers. Compared to their counterparts, they spend 3 times the amount when it comes to health and beauty.
4. Families with children: Our market demographic also includes this segment. The Giridion area boasts about 100,000 households. Families are often looking for a safe,
clean and affordable location to bring their kids for haircuts. Our barbers and stylists cater to these families by ensuring we have a kids friendly environment. We have
invested in booster seats, kid carpes, and smaller sized clippers designed for kids. We also have a selection of kids TV programming and toys available to entertain kids
before and during their haircuts. Maintaining our kids friendly environment puts in a favorable position to continue to grow this market segment.
Klassic Kutz & Salons is located on Almeda Road, the 6th busiest street in Houston, TX. The business is situated in a 4200 sq ft facility and currently employs 4 barbers and 3 hair stylists occupying about 2400 sq ft of barber stations and private salon suites. We have an additional 6 barber stations representing growth opportunities for us to add up to 6 more barbers in the future. We also have 3 unoccupied private suites which can accommodate 3 additional stylists in the future. At its peak, the existing 2400 sq ft area of the business is forecast to have 10 barbers and 6 stylists. We hire barbers and stylists based on the demand pull from our customers. Currently, our business can only support the 4 barbers and 3 stylists we have employed. Our plan is increase the customer traffic to our business by advertising on the radio to broaden our reach and increase effectiveness of our marketing. As more customers come to our business, we plan to hire additional barbers and stylists to support the increase in demand. The barbers and stylists we currently have were hired out of barber and cosmetology schools. We have established very good relationships with Modern Barber College, Texas Barber & Cosmetology school, Trend Barber College and Franklin Beauty School. We visit these schools on a rotating quarterly basis to build a rapport with students in their junior and senior years. During these lunch visits, we provide pizza and drinks to the students and discuss the industry, the opportunities we have at our business and give them a chance to ask questions. The strong relationships we have with these colleges gives us an advantage over the competition on recruiting the best barbers and stylists who can fit into our structure especially as we expand in the future.
The remaining 1800 sq ft of the facility is currently undeveloped and underutilized and is used as storage. We have plans to remodel this area and convert into a multi-purpose center. Our research indicates meeting and entertainment spaces are a premium in the Houston market. The city of Houston has experienced tremendous growth over the past decade with the strong oil & gas and the medical industries driving lion share of this growth. This growth has also supported other industries that have also benefited from the explosive growth the city has seen. With a strong economy projected to experience even more growth in the future, event facilities have not kept up with growing demand. Most event centers charge between $250-$500/hr for renting space and having access to their amenities. The market for hosting hair shows, barber battle competitions, dance shows, training classes and the like is closed to those who cannot afford current market prices. We intend to make this remodelled space more affordable at a price range of$100-$250/hr depending on intended use, size of group and duration needed. Unlike 80% of barbershops and salons which only operate 5 days a week(Tuesday -Saturday), our business is open 6 days out of the week, including Mondays. This provides us with an advantage over our competition in providing additional operating hours convenient for the busiest professionals to self-employed business owners. More and more customers are now scheduling appointments with our business given the difficulty in finding barbershops and salons open on Mondays.
We view the use of technology as an integral part of our business model and a real competitive advantage. We have a start of the art Point of sale(POS) system in
partnership with Clover and FirstData. The Clover Station hardware is a slick touchscreen tablet fitted with a cash register, print receipt station, and credit/debit card
machine. The tablet also features multiple apps we use to run our business efficiently. Our Salon scheduler app lets us schedule appointments for customers who call our business or walk-in. The app is also tied into our online website appointment scheduling system and has a built in alert system that notifies customers of upcoming
appointments or changes to set appointments. Another frequently used app is our Customer Connect app which is tied to a database of customer information - name,
address, phone number, email, birthdays. The app allows us to engage with our customers in unique ways. Using the app, we reach out to our customers with discount
offers on their birthdays, and other special occasions such as Mother's day, Father's day, Veteran's day, and Back-to-school. The Customer Connect app also administers our customer loyalty program as it integrated with our Order fulfilment system. For each dollar a customer spends with our business, a point is earned under the loyalty program. With each visit, customers accumulate points that they can redeem after reaching certain tier levels. These perks range from discount off products and services to free merchandise. Our transactions app tracks all financial data related to our business. We are able to track each customer transaction with details such as the breakdown between cash payments, credit card and debit card payments. We even get detail on the type of credit card used(Visa, Mastercard, American Express, Discover) and the amount of tips given out to barbers and stylists. Both the transactions and Customer Connect apps also come with a dashboard that is accessible via mobile devices and allows managers and owners to view customer data and revenue detail anywhere, anytime.
Our website is highly interactive and displays who we are as a business, the services we offer and an e-commerce page which allows customers to purchase our line of products we sell. The website contains our appointment setting system which allows customers to choose a day and time for a service, and also select a specific barber or stylist to perform the service. The website also has links to our social media platform(Facebook, Yelp, Instagram).
While word of mouth marketing has helped our business grow, we rely on marketing platforms such as Google, Yelp, Facebook, Instagram to promote our brand and expand our customer base. We have also increased our online presence with a state of the art interactive website(www.klassickutzhouston.com) which allows customers to see who we are, the products and services we provide, and access to setup appointments, make purchases or be connected to our social media platforms.
Today, Klassic Kutz has over 1000 customers with customer details such as name, phone number, email address and birthday information all stored in our Customer
Connect database. We average about 100 new clients each month, with almost 80% of new customers finding us on one of our social media platforms, and the remaining through word of mouth. We have a solid following on Facebook and Instagram of over 3000 followers and regularly post photos of the work performed by our barbers and stylists. Our Yelp score averages 4.7 out of 5 with customer reviews consistently highlighting high quality service, great customer service, clean and professional environment as the reasons for their ratings. Each month, we purchase advertising through Yelp Biz which allows us to feature on competitor pages and other search results. This drives user views and generates customer leads for our business. We have also invested in ignite digital marketing through web.com that provides enhanced search engine optimization. This has resulted in Klassic Kutz appearing close to the top of search results from premier search engines such as Google and Bing. This has given us the ability to attract customers as far as 30-50 miles away from our business. In a recent example of this, a new customer visited our business after travelling from Katy, TX a distance of about 40 miles simply because of a google search that showed us on the top of the listing which allowed the customer to then visit our website and yelp pages and determined it was worth the drive.
While we have experienced success via these platforms, our business still has a lot of room to grow. To further increase market share and expand our brand beyond our immediate geography, we plan to engage in radio advertising to reach a wider audience. The Houston metro are had a population of 6.5 million residents and the target market we plan to pursue is approx 10% or 650,000. This avenue represents a huge opportunity for us to promote our Klassic Kutz brand, significantly expand our
customer base and increase revenues.
Another area of revenue expansion for the business is through the sale of hair extensions. This is the fastest growing segment within the hair industry. In the past
three years, the buying and selling of hair extensions accounted for $40 million per year in growth and growth is projected to increase another $200 million by 2020. The market within this industry is wide open and big enough to develop a profitable niche and budding segment within a given generated market. We plan to market our brand of hair extensions called Privy hair under the Klassic Bundles family of hair products, at hair shows as well as via radio ads.
Our competitors are scattered far and wide within the Houston metro area. Beauty supply stores, barbershops, and salons are located on every major road and intersection. Again, the fragmented nature of the industry usually means there is usually either a standalone barbershop or salon and rarely a combination of the two. Working in these store fronts requires that barbers and stylists be licensed. However, some choose to not pursue the education training required for licensing and in those cases, provide services in the convenience of their homes. Therefore, barbers and stylists working in their homes are also viewed as competitors to ours. Based on our research of competitor prices of products and services, Klassic Kutz offers competitive prices that places our business in a position to effectively compete with these alternatives. The offering from competitors within 15 miles are similar to what we offer. For example, a man's hot towel shave or a facial may have price difference of $5 to $10 which gives the customers alternatives based on their disposal income spending. There are also franchise salons and barbershops namely Super cuts, Great clips, Fantastic Sams that are considered competitors. These franchises operate under a different business model, one designed to provide low price options but basic services with a limited menu. These franchises together have approx 50 locations spread out across the Houston area.
One of the major advantages that we have over our competitors is that although we provide similar hair care services, we have an "all-in-one" structure which gives us a
strong base to build upon. We often have entire families visit our shop with the ladies being serviced by our stylists while the men are taken care of by our experienced
barbers. This helps families with planning their day knowing they can all come into one shop for all their hair care needs. Our customer loyalty program is a point-tier system that gives customers the feeling of appreciation for spending their dollars with our business. As customers accumulate points based on the amount spent, they redeem these points for discounted services and products, or free merchandise such as Klassic Kutz t-shirts. We also offer a referral program where customers can qualify for free gift cards from Subway and Starbucks for referring new customers to our business. The customer waiting area has plush seating, big screen TV, and magazines to make the wait time comfortable and enjoyable. Our state of the art appointment setting structure gives customers the ability to set appointments at their own choosing based on their busy schedules. These amenities that we offer customers in addition to free beverage, snacks, wifi access, and a comfortable environment gives us an advantage over our competition. We have a truly customer-oriented business model.
Selling the business in preparation for relocation.
Mon: 1pm - 7pm
Tue-Fri: 10am - 7pm
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