Jonpaul's

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Men's Salon Business Plan

Market Analysis Summary

Jonpaul's will focus on the professional male. An Internet study revealed that 85% of professional men had personal hair grooming services performed during the workday. The space at The Mall fits the demographics for our business. Applied Geographic Solutions estimates that 59,251 people live within a three-mile radius of our facility and 42,759 work there. They estimate 161,848 live within a five-mile radius and 109,867 work there. There are 15 business parks totaling 6,206 businesses located within a seven-mile radius.

4.1 Market Segmentation

Our target market will be barber shop services for the professional male. Based on our Internet survey, 80% of our services will be associated with hair, hair color, shaves, shoe shine; 15% will come from facial, massage, nail, and tanning services; and 5% will come from products. Thus, our target market will be male professionals and retirees, from the age of 25, with individual and household incomes greater than $75,000.

The following table and chart depict our potential customers with a conservative annual growth rate of 4%. The annual growth rate for the area has been 7.5% since 1990.

Market Analysis
Year 1 Year 2 Year 3 Year 4 Year 5
Potential Customers Growth CAGR
$75K to $100K 1mi. Radius of Facility 4% 3,816 3,969 4,128 4,293 4,465 4.00%
$75K to $100K 3 mi. Radius of Facility 4% 10,403 10,819 11,252 11,702 12,170 4.00%
$75K to $100K 5 mi. Radius of Facility 4% 18,140 18,866 19,621 20,406 21,222 4.00%
$100K to $150K 1mi. Radius of Facility 4% 9,352 9,726 10,115 10,520 10,941 4.00%
$100K to $150K 3 mi. Radius of Facility 4% 10,224 10,633 11,058 11,500 11,960 4.00%
$100K to $150K 5 mi.Radius of Facility 4% 20,540 21,362 22,216 23,105 24,029 4.00%
$150K + 1 mi. Radius of Facility 4% 19,432 20,209 21,017 21,858 22,732 4.00%
$150K + 3 mi. Radius of Facility 4% 10,045 10,447 10,865 11,300 11,752 4.00%
$150K + 5 mi. Radius of Facility 4% 20,229 21,038 21,880 22,755 23,665 4.00%
Total 4.00% 122,181 127,069 132,152 137,439 142,936 4.00%

4.2 Target Market Segment Strategy

The members of these market segments have luxury money on hand, and lead professional lives filled with very busy schedules. All persons usually need hairstyling regardless of income level, and make the effort to find money available to style their "look."

In spite of the massive growth in residential and corporate complexes and substantial employment within 7 miles of The Mall, a gap currently exists in the retail trade and entertainment area. The shopping center is strategically located between two major malls, each occupying more than 1.2 million square feet. Virtually no high-end restaurants or commercial support services existed in the Gigaburb vicinity until The Mall was developed. Our facility will be located in this center, which provides a huge competitive advantage.

A population of nearly 205,000 people, consisting of young, upper-class families with an average household income of $92,247, exists within a seven-mile radius of the center. The immediate area surrounding The Mall has impressive demographics as well, with an average household income of $119,423 within a three-mile radius. The average new house sale price in The Mall area in 1998 was $377,249, up from $227,000 in 1990. It is also important to note that many companies are locating their corporate headquarters in the Gigaburb vicinity, not just administrative offices. Another plus is that several office buildings, and hotels, are located within a short drive of our gentleman's shop.

4.2.2 Market Growth

Our gentleman's shop's trade area's best growth potential is in terms of daytime employment. The total daytime business population in a three-mile radius is 42,759 with the residential population at 59,251. The total daytime business population in a five-mile radius is 109,867 with the residential population at 161,848. The nearby business parks also have an ample supply of land for future office development. An even more predictable source of daytime employment growth is the planned expansion of existing companies.

The Mall is the only shopping and entertainment center site within an 8 mile radius. Jonpaul's is the only gentleman's shop exclusively for men at The Mall. The future look very promising for a thriving business with a continual presence of clients.

4.2.3 Market Needs

The traditional barbershop of years past have been traditionally been replaced by unisex salon's and spa's which focused mainly on women. Professional men are more health and style conscious, especially men who have achieved a modicum level of professional success. They are willing pay for products and services that are geared specifically toward men. They are looking for an environment that consistently offers quality service, products and camaraderie. They look for a gathering place where they can openly discuss politics, watch sports or stock market news on TV, read the newspaper, network, get a cup of gourmet coffee, buy an imported cigar, and get a shoe shine.

The surrounding area of The Mall and Country County has become a bastion for the successful, having consistently been the fastest growing areas in our state. This has created a community of wealth, mobility, and growth. State Highway is a major north/south highway that connects the northern suburbs to midtown Gigaburb. The section of State Highway near our site is two lanes in each direction and includes an interchange at Metro Road. In 1998, the State DOT recorded an ADT volume on State Highway of 46,082 vehicles per day up from the 1997 traffic count of 38,375. This number is expected to continue to increase substantially over the next few years.

4.3 Service Business Analysis

We are part of the retail health and beauty industry which has four major types:

  1. Salons: Stores with only hair styling services and products.
  2. Day Spas: Stores specializing in body health maintenance through a variety of services and products.
  3. Day Spa & Salon: Stores combining the services of the two aforementioned.
  4. Health & Beauty Products: Stores selling only merchandise product covering the wide range of products available but not inclusive of those sold by salons and spas.

The industry is now starting to realize that the traditional barber shop needs to be added to their list of major types. The European market has catered to men since their first barber shop in 1805. The traditional barber shop in Europe is starting to expand its services to include massage, facials, manicures and pedicures based on the suggestions of the "progressive gentleman". High standards of grooming has always been a tradition in Europe. U.S. professionals who travel abroad have experienced these services and are looking for similar services here in the U.S.

4.3.1 Main Competitors

The main competitor is VanAstorBilts located across town. Strengths of VanAstorBilts are its wide array of spa services. The weaknesses of VanAstorBilts are the limited number of services dedicated specifically to male clients, i.e. hair grooming, shaves, shoe shines. VanAstorBilts services and products cater more toward the female professional. We feel the presence of Jonpaul's is not a direct competitor to VanAstorBilts and visa versa.

Our market advantage is wide open, and will give us the opportunity to service a large population base of professional males that is not currently being well served.

4.3.2 Competition and Buying Patterns

Clients choose men's grooming services based on proximity to their daily travels from home and work, reputation for high quality service, and good pricing. With our combined services and catering to the male professional, we don't feel we have competition. Any competition will mainly be from unisex salons or combination unisex spa-salons.

4.3.3 Business Participants

Industry participants are those whose services include salon and spa offerings. Salon services concern hair styling, while spa services concern body relaxing and rejuvenating offerings such as massage, nail, and face works.

No one industry participant has focused specifically toward men only.