SWOT Analysis of a New Business Venture

Growing up, I always enjoyed the Sunday afternoons when I would go to the barbershop with my father. It always felt great being at such a cool and relaxed place with familiar people, the talks were captivating and the best part; the haircut. This is one of the main reasons that I have always wanted to venture into the barbershop business. When I was chatting with my barber, he mentioned that one day he would like to own his barbershop instead of being an employee in one. I told him that I also wanted to own one and we decided to team up, and open one in the near future. Barbershops are one of the leading small businesses in America. Unlike other businesses, barbershops focus on one major thing: giving haircuts. They do not focus on many other services rather, all their focus is on male grooming, and this ensures quality service. 

I plan to open my barbershop (The Gentleman) in the next one year. It will be located in my neighborhood because I would like my barbershop to be a place where my childhood friends and neighbors can walk in for a haircut and catch up. I believe that there is sophistication in simplicity. Therefore, my barbershop will be a simple shop that offers haircuts and head massages only. It will have a sporty theme for the interior design, a big flat screen, and a shelf with magazines for my clients. I intend to make my barbershop the haven of the well-groomed gentleman. 

For any business to be successful, one has to do a market research first. This research is meant to gather and analyze information about the target market, and about the product or service that one wants to offer. The research provides the business owner with a wealth of knowledge from which they can deduce the feasibility of the business venture. According to my research, the number of barbershops has risen by 11.4% in the last three years (Pahl and Ritcher, 2007). This is because this kind of business requires a relatively lower startup capital as compared to other businesses. It is also easy to staff your barbershop because barber and hairstyling courses are affordable and they take a shorter time to learn. This means that it is easy to keep up with the new trends in the business because the courses for that are short, affordable and readily available; hence, the quality of the services rendered is always top-notch unlike in other businesses where the quality of services and products declines over the years. Quality services = happy clients = booming business. 

SWOT Analysis 

Another important thing that all business owners are encouraged to do is to do a SWOT analysis for their business venture. A SWOT analysis helps a business owner identify areas external and internal factors that may affect the performance of the business venture either positively or negatively (Fine, 2010). The SWOT analysis then helps the business owner to evaluate how business can perform and compete effectively in the market (Pahl and Ritcher, 2007). Below is a table of the SWOT analysis of my barbershop. 

From the SWOT analysis above, it is very easy to evaluate the feasibility of the barbershop’s performance. Our greatest strength is that there is no barbershop in our neighborhood. The nearest barbershop is two blocks away hence by opening one in the neighborhood; we shall save the people a long trip to the barbershop. One of the biggest problems in the area where people go to get haircuts is the lack of ample parking space. However, our barbershop is located near a very spacious parking lot near the neighborhood shopping center. My partner has also been working in the barbershop business for a long time unlike me; hence he has the experience and knows the ropes of the business. All these factors favor the new business venture, and if exploited well, the business will be a success. 

The business venture also has great opportunities in the market. The barbershop business is a fast-growing industry in the United States, and there is a constant demand for the services rendered. There is no time that people will stop getting haircuts. Therefore, there is an available market for our services, and the demand is guaranteed. Starting up a barbershop does not require a lot of capital, and this is another opportunity that is in our favor. By combining my savings with my friend’s, opening the barbershop will be an easy task. 

Every business has its weaknesses and threats. However, it is how the business owner deals with such weaknesses and threats that make the difference (Fine, 2010). The major weakness of our business is the fact that we do not have an established client base, unlike the nearby barbershops. We also have the threat from the other barbershops that people from the neighborhood have been going to for years. However, these threats and weaknesses will not be a setback for our business. We plan to offer incentives that will attract clients to our barbershop. For instance, for the first three weeks, we shall offer a 50% discount to all our clients. We shall also provide branded t-shirts and caps to our clients as a token of appreciation, and as a way of advertising our new business. By taking these measures, we will be combating the threats and weaknesses of our business to ensure that our barbershop is successful (Fleisher and Bensoussan, 2015). 

Financial analysis 

Like every other business venture, we also did a financial analysis of the capital required to start the business, run the business and keep it afloat. Below is a table of the capital requirements. 

Although the capital costs for the business are not that high, it is our goal to achieve the desired profit margins and break even within the first few months of our operation. We plan to achieve this by ensuring that every haircut contributes to 90% profit and 50% profit for every product sold. For example, the cost of giving a haircut is $1.2; so if the client pays $12 for a haircut, the profit will be $10.8 which is equal to 90% profit. Hair products such as gel cost $2.5, and the clients will buy them at $5. This will earn a 50% profit for the barbershop. By keeping up this trend, the barbershop is expected to make the desired profit. 

According to our financial analysis, our fixed costs which include the capital cost and other expenses (insurance, wages, etc.) is estimated to be $22,000, and the variable costs are estimated to be $54,000. 

Break-even point = total fixed costs/ contribution margin (%) 

Therefore: $22,000/.28% = $78, 571 

Therefore in order to break even, the barbershop will need to generate $78,571 in sales for the first year. 

Conclusion 

In conclusion, the barbershop business venture seems promising as per the analysis above. Every business has its challenges, and we do not expect everything to run smoothly always, but we shall tackle all the challenges that come our way with bravery and professionalism so that the savings that we put in this business may not go to waste. The barbershop is a business venture that I will pursue, and hopefully, I can own a chain of barbershops in the future. 

References 

Fine, L. G. (2010). The SWOT analysis: using your strength to overcome weaknesses, using your opportunities to overcome threats . S. L: Kick It. 

Fleisher, C. S., & Bensoussan, B. E. (2015). Business and competitive analysis: Effective application of new classic methods . Upper Saddle River. NJ: Pearson Education. 

Pahl, N., & Ritcher, A. (2007). SWOT analysis: idea, methodology, and a practical approach . Munchen: Green Verlag.