Doc's Barbershop

4 Pages Posted: 30 May 2017

See all articles by Luann J. Lynch

Luann J. Lynch

University of Virginia - Darden School of Business

Paul J. Simko

University of Virginia - Darden School of Business

Abstract

Stoker has a decision to make: he has been offered a job in a successful barbershop that has retained its old-fashioned atmosphere, or with a small loan, he could open his own shop. Students are asked to prepare a projected annual income statement and answer some questions about what it would take to run a barbershop.

Excerpt

UVA-C-2376

Rev. Jul. 5, 2017

Doc's Barbershop

Ralph Stoker never thought attending his sister's Fourth of July party would turn into a life-changing event. But indeed it had. Stoker was a barber in Iowa City, Iowa, employed by a popular unisex salon on the north end of town. He had worked there just two years and earned a modest hourly wage along with commissions and tips. At the party, he met Donald “Doc” Jacobsen, who was in the same line of work but also happened to own a barbershop in Davenport, Iowa, about 60 miles to the east. Jacobsen's shop was a traditional old-style barbershop. It had no frills and offered only regular men's haircuts and the occasional beard trim or shave. Stoker and Jacobsen struck up a conversation about the business, and to Stoker's surprise Jacobsen offered him a job on the spot. One of Jacobsen's barbers was moving south to warmer weather, and there was an opening that Stoker could fill. Stoker was ready for a change in scenery, and the prospect of making more money in a bigger city was appealing.

But the conversation meant more to Stoker than just a job offer. He was impressed that Jacobsen had been in business all these years, and even more impressed that he had made so much money in the process. Jacobsen shared with him the basics of running and managing a traditional men's barbershop. Stoker thought the traditional barbershop was a relic of the past, but Jacobsen convinced him otherwise. “If you do it right, it's a money-maker, Stoker,” said Jacobsen. “I've been doing this for four decades now, and it's supported me all the way through. You could do it yourself, you know.”

Stoker was intrigued. During his afternoon conversation with Jacobsen he learned most of what it would take financially to open his own shop. With a small loan he could be on his way. He was certainly ready to make a move but first had a decision to make: Work for Jacobsen? Or open his own barbershop in a town of his choosing?

. . .

Keywords: small business, income statement, variable costs, fixed costs, break-even analysis, cost behaviors

Suggested Citation

Lynch, Luann J. and Simko, Paul, Doc's Barbershop. Darden Case No. UVA-C-2376, Available at SSRN: https://ssrn.com/abstract=2974091

Luann J. Lynch (Contact Author)

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States
434-924-4721 (Phone)
434-243-7677 (Fax)

HOME PAGE: http://www.darden.virginia.edu/faculty/lynch.htm

Paul Simko

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States
434-924-1391 (Phone)

HOME PAGE: http://www.darden.virginia.edu/faculty/simko.htm

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