Barber responds to new competition

Share This Post

Share on facebook
Share on linkedin
Share on twitter
Share on email


A well-established barber shop in a small town was hit hard when a new barber moved into the area and set up shop. Having held a monopoly prior to the arrival of the competitor, the barber had become complacent and benefited from false loyalty.  This sense of false security was disrupted by new competition.

The established barber’s accountant raised a red flag when she noticed that sales were down, margins were being squeezed and cash reserves were dwindling. The accountant worked with her client to figure out what was happening.  By focusing on just two key performance indicators (the number of haircuts per day and the average sale price) they soon found out that volume had dropped off significantly. The barber’s initial response to this had been to cut prices. The results of that tactic did not work out as expected. The decrease in pricing did not result in an increase of sales but instead squeezed the profit margin even tighter than before.

In a short planning session, the accountant and barber brainstormed what they could do to differentiate his business from the competition. The accountant suggested that the barber run a loyalty program to retain his customers. This would remove the need for the barber to cut prices and would reward loyal customers. On a fun side, they decided to install a beer fridge and put a sign on the door.  ‘Have a cold beer on us while you’re waiting for your haircut. Help yourself from the fridge.’

The results were spectacular. Suddenly customers started returning in droves.  Not everyone had a beer.  In fact only a small number of people took advantage of the offer.  What it did generate was a word of mouth promotion.  Lots of people talked about ‘having a free beer’ to their friends. The barber continued with this strategy by buying some vintage equipment and making a feature of the history of the profession in the shop. The accountant continued to work with the barber to monitor results, hold the barber accountable and offer more ideas to grow the business even further.

This is a great example of an accountant working with a client to grow their business.  Get in touch if you would like to talk about how we might help you.

Subscribe To Our Newsletter

Get updates and learn from the best

More To Explore