Business for Sale Industry Economics
2003 - 2020
2020 - 2026
Barber Shops are businesses that specialize in cutting, trimming, and styling men’s and boys’ hair and beards. The sector fared well throughout the five years to 2020, with sales increasing at an annualized pace of 5.3 percent to a projected $4.9 billion, including a 1.3 percent growth in 2020 alone. While demand for industry services has not increased significantly or noticeably over the last five years, the growing population has contributed to revenue development by giving barber shops a wider client base.
Additionally, barbers will earn more money per person in 2020 than they did in 2015, as demand for specialized services increases, contributing to revenue growth. Additionally, the industry’s income has increased as a result of the usage of social media to sell its services. Consumers may be enticed to see a high-end barber after seeing a new hairstyle on social media platforms such as Facebook or Instagram.
Over the five years through 2020, industry participation has fallen at an annualized rate of 0.6 percent. Barbershops are mainly located along demographic lines, with the noteworthy exception of the Mid-Atlantic area. Although the area accounts for just 15.1% of the US population, it is home to 33.8% of all industrial firms.
New York City, Long Island, and New Jersey have a high concentration of industry operators since these locations are home to very diversified populations that often demand specialized services, creating greater opportunity for smaller, specialist operators to join the market and compete effectively.
The sector is predicted to continue growing over the next five years, but at a somewhat slower annualized pace of 1.2 percent, reaching an anticipated $5.2 billion in 2025. While disposable income is predicted to expand, the number of individuals between the ages of 20 and 64, the industry’s core consumer, is likely to expand at a modest pace, leading to revenue growth decreasing over the next five years. Additionally, profit margins could improve modestly as operators cope with decreasing labor costs as a percentage of sales.
Revenue for the Barber Shops business is predicted to expand at an annualized pace of 5.3 percent to $4.9 billion during the five years to 2020. Revenues in the business are expected to increase by 1.3 percent in 2020 alone. Revenue has increased for industry operators as a result of the opening of high-end barbershops.
Additionally, the US population continues to rise, expanding the barbershop client base. Additionally, disposable income per capita has increased over the last five years, providing clients with more money to spend on specialized services.
Barber Shops have historically been a very stable sector, seldom impacted greatly by macroeconomic events. For instance, industry income has increased significantly since 2012, owing to the nondiscretionary character of industrial services. Numerous customers are required to adhere to a dress code at work, which may include grooming rules defining permissible hairstyles that need regular care.
Additionally, societal standards encourage males to maintain short hairstyles, which helps to stabilize demand for industry services. While consumers have the option of conducting industry services on themselves or their friends, the majority of the public, regardless of the status of the economy, prefers to pay for services.
While the sector is seldom impacted by unfavorable macroeconomic events, the converse is true for favorable occurrences. For instance, a significant rise in disposable income does not always translate into an increase in expenditure on barbershop services, save potentially for those clients who choose specialized services or high-end barbershops.
This happened in 2018 when a 3.3 percent rise in per capita disposable income contributed to an expected 18.0 percent growth in industry revenue in the same year. Such rapid rise is not reflective of the industry’s overall revenue growth tendency. The next year, 2017, had the highest rise in industry growth during the present time, at 5.9 percent. 2017 was the largest single-year rise since before 2004, showing a rise in high-end barbershops, which bolsters industry income.
Apart from 2017 and 2018, growth was quite modest over the present time, ranging between 1.0 percent and 2.5 percent in a single year. In general, the business depends heavily on an expanding client base to fuel revenue development, particularly in its core regions. Adults aged 20 to 64 years old have increased in number during the last five years, boosting the industry’s client base and contributing to revenue growth.
The Barber Shops business is predicted to continue growing over the next five years, with sales predicted to climb at an annualized rate of 1.2 percent to $5.2 billion in 2025. The US population is predicted to continue expanding at a modest yearly pace of 0.7 percent, however, the number of persons aged 20 to 64, who account for the bulk of industry income, is likely to decline relative to the present period. Additionally, growth in per capita disposable income is expected to decline during the following five years, expanding at an annualized pace of 1.9 percent. As a consequence, revenue growth is likely to be slower.
The internet’s usage, particularly social media platforms, is predicted to continue to grow, benefiting the business. Over the next five years, internet traffic volume is predicted to grow at a 25.0 percent yearly pace, almost triple its present level, as social media use increases. This growth will assist the business in attracting clients seeking specialist services, as images of unconventional and creative haircuts are shared globally.
As more individuals become aware of new haircuts, some may be persuaded to pay industry operators to recreate them for them and maybe ready to pay a premium, further increasing industry income. Additionally, highly talented barbers may use social media to market their services and demonstrate their expertise to a large audience. Barbers that develop a following for their extraordinary services will be sought out by clients who read their web material on a regular basis.
As differentiated barbers become more in demand, they will be able to increase service prices as surplus demand from clients exceeds the barber shop’s possible production. As a result, higher premium product prices are predicted to increase industrial demand for industrial goods.
While the new government has adopted a tough position on immigration, there is little indication that migration to the United States would drastically reduce over the next five years. Areas that attract new immigrants would see an increase in diversity of client base, necessitating the establishment of new operators to cater to unique cultures and hair needs.
Additionally, low entry hurdles and startup costs may tempt new immigrants to begin a barber business. This is particularly true for metro regions since these geographies draw the majority of newcomers to the nation. When a consequence, established businesses in these areas might anticipate higher revenue or higher rivalry as new cultures and trends arrive.
Profitability (defined as profits before interest and taxes) is predicted to improve modestly over the next five years to 2025, accounting for an anticipated 17.9 percent of sales in 2025. Employer businesses will benefit from gradually dropping pay expenditures as a part of industry income since salaries are expected to account for 51.4 percent of sales in 2025.
Additionally, the growing use of social media to distinguish barbers is likely to boost profit margins over the next five years. Due to the great demand for highly qualified barbers who provide outstanding service, increasing the price does not imply an increase in input costs. Differentiated barbers often utilize the same instruments as the normal barber, such as clippers and razors; hence, increasing prices benefits industry operators’ profit margins.
However, the number of new businesses is expected to grow at an annualized rate of 0.3 percent to 131,921 over the next five years, while employment is expected to grow at an annualized rate of 1.0 percent to 159,588 workers, indicating that employer firms will enter the industry at a faster rate, most likely due to emerging franchises.
This industry comprises salons for men’s hairstylists that specialize in cutting, trimming, and styling men’s and boys’ hair. Barbershops also shave and trim men’s beards. This sector does not include businesses that specialize in barbering or hairstyling instruction. Barber Shops are nearing the end of their life cycle.
Industry value-added, which quantifies an industry’s contribution to the economy, is predicted to rise at a 3.6 percent annualized pace during the next decade to 2025, outpacing US GDP growth, which is predicted to expand at a 2.1 percent annualized pace over the same time.
However, this gain is mostly attributable to the outlier year of 2018, when sales increased dramatically. The industry’s growth is mostly determined by population changes in the United States and its surrounding areas, which increase or diminish the industry’s consumer base.
Unlike many other services, barbershop services might be considered necessary. While some consumers may visit barbershops more or less often depending on the state of the economy, the majority of consumers continue to use industry services at the same frequency regardless of macroeconomic events. Finally, no new technology is anticipated to fundamentally alter the sector, nor are new goods or services anticipated.