The Profitability of Hair Weaves

In this episode, John explains how lucrative it is to sell hair!

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Episode Transcript

Speaker 1 (00:00):
Welcome the Money and Wealth with John Hobryant, a production
of The Black Effect Podcast Network and iHeartRadio. Yo Yo,
this is John Hope Bryant, and every week I come
to you with a new prescription to unpack our economy

(00:25):
and repack it with you and mind breaking this down.
So that's not intimidating or overwhelming, and you're there's nothing
to fear. In fact, there's everything to embrace. And so
we're going to have some fun or we're not gonna
pick it. We're not gonna pick on anybody. It could
be a lot of laughter and a lot of jokes

(00:46):
for this this segment that we wanted to including my own.
I used to have a shag. I had a hair
extension when I was nineteen years old. I think I
had long hair back in the day. The Jerry curls
were that and I wanted I wanted the hair extensions.

(01:06):
I had it down to my collar right. It was
two inches or whatever, but I got it done. Yeah,
So I'm not hating non it. Members of my family
growing up part took in the consumer product called hair waves,
and so it's all good. I just want you to
benefit from it. I want you to benefit from the
business model. I want to break down what's going on

(01:27):
in our communities. So the name of this, the topic
of this week's podcast is do you know how the
profitable hair weaves store business model actually works and who's
working in it? And here's the answer. I'm going to
break it down for you and take you from the

(01:49):
streets to the suites and then return you back to
the streets as in the consumer market, with you in mind,
so that you can take control of your in your destiny.
Before I get into this, why did I do this?
I'm going to break down a range of store business
models or business models that affect our community that we

(02:10):
see all the time and we walk pot basted, drive
by it, par take in it, pay it no mind,
don't think about it. But it has everything to do
with our quality of life and the lack of wealth
creation maybe that we could be participating in because some
of this stuff is almost market bulletproof, like hair care products.

(02:35):
But before I get there, let me tell you how
I've been thinking about doing this topic for years now
and why I was in Africa had to be ten
years ago. I was in Uganda, I believe it was
I was giving a speech on economic empowerment. And on
the way back to the airport, the hosts, We're trying

(02:59):
to get to the airport, and there was no real
traffic coordination or traffic laws. It appears that I could
discern there and this is more than ten years ago.
They might have gotten better since. But on the way
there that my life was flashing in front of me
from cars zipping in every direction. I noticed to the

(03:23):
right there was a fruit and vegetable stand. And in
the middle of this African country, this fruit and vegetable
stand was run by an Asian family or an Asian group.
They look Chinese to me. Now let me start by saying,
I'm gonna mention Asians a couple of times in this podcast.

(03:44):
I'm not hating on them. I think that this is
brilliant that they found a way to take advantage of.
My question was, how in the heck did my Chinese
brothers and sisters. And I'm gonna do a whole podcast
on China and Africa, by the way, so hold on
for that one. But how in the heck did my
Chinese brothers and sisters find a way to sell you

(04:07):
your own fruits and vegetables? On a street corner in Uganda.
I think it's brilliant. I just and know if people
walked her was walking by them like it was normal
and clearly taking advantage of the opportunity to buy from them,
and no one said a word. I did, I asked

(04:30):
my driver, who seemed quite befuddled. And I had come
there to talk about economic development, economic empowerment, so I
was a little I'm choking on. I'm choking myself because
this is such a fascinating topic for me, and so
coming closer to home, how many hair weave stores now

(04:51):
we all know, I mean you see them everywhere you see.
Sisters are sisters? Why am I picking on sisters? No?
They look beautiful and it's it's some of this. I mean,
this is true art form. So this is this is
I'm just simply asking a question of how big do
you think this market is for harroweave stores? And let

(05:17):
me see if I can unpack where the customers are
for these stores. Number one Atlanta, Georgia, the Black Mecca
they call it. Number two Houston, Texas, Number three Los Angeles, California,

(05:39):
Number four in New York City, five Chicago, Illinois, six
Detroit Michigan seven, Dallas, Texas eight, Washington, d C. Now
I've already given this away a little bit. I've already
mentioned that Atlanta was a black mecca known for its
vibrant cultural scene, and it has of course numerous beauty

(05:59):
so lines and beauty supply stores and yes, Harroweve specialty stores,
et cetera, and most notably in places like Decatur in
southwest Atlanta. But all over the city you have Houston,
which has a large black population, and LA with a
diverse but notably most of the stories are in South

(06:23):
LA at Inglewood in Los Angeles. So wherever you are,
Hello the third ward by the way in Houston, Texas
and other inner city neighborhoods and hubs for beauty supply stores.
New York City, Harlem, Brooklyn, Queens and notable areas with
high concentration of beauty supply stores. And South Side and

(06:46):
West Side of Chicago. Same my yeah, my family actually
is in that business. In Chicago, East Detroit in neighborhoods
like Midtown have significant numbers of beauty supply stores. Give
me shout outs for these places where you live, and
you know where I'm talking about, Dallas, Texas. South Dallas

(07:07):
and oak Cliff are prominent areas for beauty supply stores. Washington,
d C. Anacostia in Northeast d C of numerous beauty
supply stores. What's consistent about all of these places? Black people?
We are several billion dollar market billion with a B

(07:32):
for hairweave stores. I didn't say beauty supply. I didn't
say the beauty industry. Just to give you some context
the beauty industry. The American economy is twenty six twenty
seven trillion dollar a year economy. The whole economy, they
call it GDP gross domestic product, largest economy in the world.
The haircare beauty broader segment is about ninety three billion

(08:00):
big several billion, at least two and a half the
three billion alone is this submarket I'm about to tell
you about, and of hair weave stores, most of which
we don't own. So we're buying it, but we don't

(08:22):
own it. The fact that we don't own it is
my issue, not the fact that we're buying it. And
so be very clear on what I'm talking about and
why I've decided to focus on this area. The target
audience are primarily women of various age groups who are

(08:42):
interested in the hair, weaves, extensions, and related hair care products,
although men partaking this as well. I tell you I
had a hair extension when I was nineteen twenty years
of age. Bill shag in the back. I've already mentioned that.
So I'm owning my piece. Location of high traffic areas
near other couple of businesses like beauty salons, barber shops,
fashion stores, accessible and highly visible. Now, one of the

(09:07):
reasons why Black communities are targeted is because we have
such value for culture and cultural looks, and we put
a high index. We underscore the different fabulous looks that
we can can create, and that includes hair texture, and

(09:32):
we changed up our looks and we're as a result
of that a pop culture. We are, you know, interesting
as relates to look, feel, fashion, music all around the world. Again,
are we owning it? Is the question I'm asking here now?
Who owns these businesses? Many Asian immigrants, particularly Koreans, have

(09:55):
established strong networks and business knowledge and the busy beauty
supply industry, including sourcing and distribution. Over time, these businesses
have developed a deep understanding of the preferences and needs
of Black consumers, which help in tailoring their offering. They
started in the sixties and the seventies actually coming into

(10:17):
these neighborhoods and specializing and God bless them again. They've
done a brilliant job. And I'm going to talk to
you about how we can potentially join them in dominating
this industry within ten years. Sharing in the industry or
dominating it, I mean, I mean it's we are the customers.
For God's sakes, we should haven't shot it at least

(10:40):
having a share of the market, if not owning the market.
One of the reasons that Asians have done such a
great job up until now is that they have a
great network to source the product from the factory, particularly
the synthetic product, all the way through the upward distribution change.

(11:01):
So let me talk about some of the structural issues.
The imports come from places like China, India, and South Korea.
They again, these are long time relationships where they get
preferred pricing bulk orders at low per unit costs, enabling

(11:24):
competitive pricing and high profit margins. I'm gonna get to highrofit.
I'm gonna get to the profit margins in a minute,
and make sure you sit down when I tell you
what the profit margins are. Leveraging their low cost base
from direct imports, they can offer competitive prices while maintaining
good profit margins. Stocking a wide range of products in
various price points caters to different customer budgets, from affordable

(11:46):
synthetic hair to premium human hair extensions. High turnover frequent
demand for hair products combined with a high customer base,
and sure is steady cash flow and high turnover rates.
Turnover rates meaning that the that the inventory keeps turning
over quickly, right, they don't have to hold it for long.

(12:07):
It comes in, It doesn't shit on the shelf for long.
It's come in. They buy it and they don't need
lines of credit and bank loans all that stuff because
it turns over. It moves really quickly. Large stores or
chain chains benefit also from economies of scale, reducing the
costs even further. And again I'm gonna get to that

(12:29):
in just a second family run businesses. Many of these
stores are family operated, reducing labor costs even more than
not paying their family members for some of the labor.
I'm not gonna deal with the labor law issues there,
but you know, folks work their stuff out the way
they work it out. They tend to have built, you know,
build strong relationships in the community. That's really smart. Now

(12:50):
let's talk about the profit margins. Gross margins hair weaves
and extensions. These products often have gross margins ranging from
So we get this out. Keep in mind the grocery
stores have a margin profit margin of three to you know,
three to four five percent on average or some of
the stuff on their on their shelves grocery stores. Okay,

(13:11):
so hold on. The profit margins range from fifty to
one hundred percent or more. For instance, a human hair
weave that costs fifty dollars wholesale might sell for one
hundred fifty dollars synthetic hair. Generally these have lower margins

(13:31):
than human hair, but they can still offer forty to
seventy percent gross profit margins. Then they have other products
that they, you know, sell ancillary to the hair weaves
in these stores. That includes combes brushes, styling tools, which
can of margins between forty and sixty percent. Now let's

(13:51):
get into the actual revenues again. There are thousands of
these stores across the country. As you're listening to this podcast,
you might draw I buy some of these stores. You're like,
oh there, right there, right, don't go in chastising to
people about their business model. You could have done it,
and you still could do it. Just you know, salute them,
God bless them, and don't go and asking them all

(14:14):
the details about their business. They're not going to tell you.
And they ever you know, they're they're not give you
their special sauce. But I'm going to give it to
you so that you can compete on a fair basis. Right,
maybe even partner with them even better. I love joint ventures.
I'll get to that in a minute. Revenue small stores
annual revenue can range between one hundred thousand to five

(14:35):
hundred thousand dollars. This is a small store one store,
medium to large stores. These stores can generate between five
hundred thousand over one million dollars in annual revenue. Did
you hear me per store. I've already told you. The
turnover rate of the inventory is expeditious, is quick, quick, quick,

(14:57):
so they don't even have to hold inventories for long
periods of time. Chains and franchises. Large chains or franchise
stores can be can see revenues in the millions. Net
profit net profit margin typically ranges between ten to twenty
percent after accounting for all expenses rents, utilities, payroll, employees, inventory, marketing,

(15:22):
et cetera. For a store with say five hundred thousand
dollars in annual revenue, a net profit margin of say
fifteen percent, would result in about seventy five thousand dollars
in profit. And if you wanted to have one hundred
and fifty thousand dollars annual net profit for your family
in this example, you'd have to have two of those

(15:46):
small to medium size stores. Here's some of the cost structures.
And I'm gonna get into some different business models between
small stores, medium sized stores, and large stories. And I'm
gonna get into some other fun facts about this business.
Fixed costs rent can vary significantly buy location, but it

(16:07):
typically ranges between a thousand and five thousand dollars per
month for you know, a retail storefront. You see them
in the strip centers, the corner malls. Sometimes even what's
going on with commercial real estate. You can get very
good deals in even prominent shopping centers these days, right,

(16:27):
so shop around. No pun intended utilities generally between two
hundred and five hundred dollars per month. I hope you're
taking notes on everything I'm saying, and pick up my book,
Financial Literacy for All, which is now a national bestseller
in economics and business finance, number one for the last
three and a half months on Amazon. You can also
find it in black bookstores. You can find it at Walmart,

(16:48):
Barnes and Nobles, etc. It's number one. They had to
reprint it already, and I thank my publisher and all
those who sought it, supported the book when it came out,
and all of you who've now giving it almost five
star reviews online. Get the book, underline it and began
to put notes like this as a fold in to

(17:10):
what becomes a business manual for your life. You know,
how are you going to build wealth? Is you make
money during the day, you build wealth in your sleep.
Maybe you're making money by having a job. You're nine
to five, Maybe financis you're five to nine. Maybe this
is your five to nine hustle. Maybe this is your
dream to build generational wealth and have some fun at

(17:30):
the same time. Because maybe you're a lady listening to
this and you love hair. Maybe you're a guide listening
to this and you love the science of hair. Are
you you know or or you love the hair business.
My brother Lands Triggs, my brother and friend Lands Triggs.
Not my brother brother, but my brother brother, who runs
the program division at Operation Hope. He was in the
haircare business. That's where I met him actually years ago,

(17:54):
when he and I both danced on Soul Train in
American Bandsage. Yes, I dam on Soul Train and American
Bandstand me and or Lance and I did that, which
is where I needed the brooch on my scarf and
my big leather jacket and my little hair extension, my hair,
my hair situation for my my shag. You know that's

(18:17):
back in the day. Yeah, you can go and try
and find the episodes if you like. Good luck. I'm
not going to help you. But so, the haircut business
is a big is a big business, and I'm breaking
it down to small bite size consumable business plan for you.
So rant between one thousand and five thousand dollars per

(18:37):
month on average, General utilities about two hundred to five
hundred dollars per month. Insurance and licenses can range between
five hundred to two thousand dollars annually. Okay, you are
to check on any licenses that you might need, and insurance.
You definitely want to have insurance you would have a
business like this or any business. Variable costs. Inventory. The
largest variable costs, comprising fifty percent of the revenue, is

(19:02):
the you know, the inventory itself, which is both the
synthetic and the real hair. Labor employees can variable. For
a small store, labor costs might range you, you know,
two thousand dollars to maximum of about ten thousand dollars
per month, depending on the number of employees and local
wage rates. Marketing costs, you know, that'll range from a

(19:24):
few hundred dollars to several thousand dollars depending on how
you do it. But social media. You do a lot
of your marketing through social media and through community, your clubs,
you know, organizations you're part of, et cetera, et cetera,
et cetera. I will get to that before we finish
on how you can possibly dominate this industry. Examples for

(19:44):
financials for a small store. This is a medium small store, Okay,
about three hundred thousand dollars in revenue. Again, I hope
you guys are writing this down. You can always go
back and take some notes, you know, and write it
down later. Costs of good solds COEGS, COG, cost of
good sold on a three hundred thousand dollars store. What
did I tell you? It's a fifty percent profit margin? Okay?

(20:06):
So the cost of goo good sold is going to
be about one hundred and fifty thousand dollars in this example. Okay,
gross profit? What's that going to be? About one hundred
and fifty thousand dollars fifty percent operating expenses a total
of about one hundred and five thousand dollars in this example.
Let me break this down. Rent thirty six thousand dollars
in this example, Utilities three thousand dollars in this example,

(20:30):
Labor forty eight thousand dollars in this example, marketing five
thousand dollars in this example, miscellaneous insurance licenses, et cetera
thirteen thousand dollars in this example. And so in this
particular example, you're going to make a profit, a net
profit of forty five thousand dollars. You see how that worked.

(20:53):
So you had your cost of good sold, which is
the product itself, right, that's half of your revenue. So
now you get one hundred and fifty thousand dollars left.
And of that you have operating expenses of about one
hundred and five thousand dollars in this example, and so
you have a net profit of about forty five thousand dollars.
And this is not a very efficient business model. This
is one of the least efficient. It's a small, single

(21:15):
soul standing store they call it. But it's still not bad.
That's still even paying really the highest you know, in
each segment. You're still making you know, forty five thousand
dollars a year, call it fifty thousand dollars a year
before taxes. And you should have a reasonable tax ride
Austin if you're running a business like this. And so

(21:35):
if you want to make you know, two hundred and
fifty thousand dollars a year with this model, you need
five stores and you want to have it in your
local areas. You can drive around and visit them all.
Scalability and growth. Successful stores can expand by opening additional
locations or franchising. Of course, online sales. I'm a big
booster for that. You should go to our one million

(21:57):
Black Business one MBB platform, our partnership with shopify and
open an e commerce business. As an example, it's a
low cost way you want to have rent and all
that stuff in the traditional model I talked about. So
your profit margin should go up one mbb one million
Black Business Initiative Again. I'll come back to that in

(22:19):
more detail before we finish. Product diversification is introducing new
product lines, exclusive brands, our customized services can enhance customer loyalty,
increase your sales. This is a really profitable business models
that we are not taking advantage of. And I'm not

(22:41):
gonna say people are taking advantage of us. I think
that people are just targeting a great customer base that
has one point five, give or take trillion dollars an
annual consumer spending. And we over index on beauty and health.

(23:11):
So we already talked about the biggest the biggest cities.
Now let's talk about real hair versus synthetic. Now. I
don't know anything about the science of this, lady, so
don't get down on me. I'm talking about just the economics. Right,
you don't know what you're talking about. I only like
it human hair, Okay, cool. I have no opinion here

(23:33):
other than I want you to own what you own.
If you can parse that message, maybe I shouldn't have
done this episode. I could have found an easier topic,
less culturally sensitive. Of course I'm gonna do it. Synthetic
hair affordability. Synthetic hair is generally more affordable than real hair,
making it accessible to a wider range of customers. This

(23:56):
affordability contributes to its popularity amongst individuals who are cost effective,
are cost sensitive, and they're looking for, you know, a
cheaper option. Now you'll find a lot of these stories. Now,
these stores are everywhere you find black people. Black people
are the number one. If I didn't mention it, we
are the number one customer for hair weave, for the

(24:18):
hairwaf sector of hair weave extensions wigs in the country.
Isn't that crazy? Number one? Uh? Number one customer uh.
And we don't own it. And a lot of these
stores you're gonna find in five hundred, six hundred credit
score neighborhoods. And it doesn't mean they're targeting you because
you know of your of your credit score. I'm just
saying that for some reason, they there's a super concentration,

(24:41):
probably just because there's a super concentration of African Americans
in these neighborhoods. There's a there's a super concentration of
these stores. There are some stores that I think are predatory.
Check cashiers paid some of some check cashers, payday loan lenders,
rental own stores, title lenders, liquor stores. I do believe
a praying on certain neighborhoods and communities. I don't think
that hair web store is a predatory. I think they're

(25:03):
targeting it very smartly. So the synthetic is just less expensive.
Synthetic hair comes in a wide variety of colors, styles,
and textures, allowing for more versatility and styling. It also
is more readily available than real hair. Uh low maintenance.
Synthetic hair requires less maintenance than real hair and retains

(25:23):
its style better in various weather conditions. Again, ladies, don't
start arguing with me on this or guys right, I'm
just telling you. You know, from a marketing perspective and
a buying perspective, you know, if you want lower cost
product that you know is more flexible quotation marks, and

(25:44):
you do synthetic that more people buy, and it's cheaper
real hair, you know, natural it has more of a
natural appearance. Real human hair is often prefer preferred for
its natural look and it's feel. It can be styled, colored,
and treated just like a regular natural hair, making it
a popular choice for those seeking a more authentic appearance. Translation,

(26:05):
those who got some money are not so price sensitive
and want to have a more authentic look will spend
more money for natural hair. Real hair extensions tend to
last longer than synthetic ones, especially with proper care. This
durability appeal to customers looking for a longer term investment
seat investment. Real hair can be heat styled and permed,

(26:29):
offering more styling options compared to synthetic hair, which can
be limited in terms of heat tolerance. Profitability. My favorite topic,
higher markups for synthetic hair. Despite the lower price points,
synthetic hair can be sold at a higher or high markup.
Retailers benefit from high volume sales and relatively low hosts

(26:51):
sale costs. So there you are right there like that,
you can just stop right now at minute of twenty eight.
If you want to know why this business has taken
off off, You've got the synthetic hair, which is high turnover.
It comes in and sits on the shelf very short
pair of time and it is gone. It's low costs
you can mark it up to bijeebers and back and
sell it pretty quickly. It's pretty dependable as a sales product.

(27:14):
And then you have repeat purchasers who because you have
dedicated this sort of dedicated customer base. Real hair is
a higher price point, it's soda, a significantly higher price
point than synthetic hair, resulting in higher revenue per unit sold. Okay,
so quality over quantity and of course benefits from also

(27:34):
this loyal customer base who says I want only to
get human hair. There is a noticable shift in demand
and customer demand towards real hair due to the natural
appearance and durability. However, synthetic hair remains popular. It's affordability
and variety, so it's never the there's a flight to quality,
so to speak. Right when investment community starts having trouble

(27:56):
on stocks and bonds, all the flicky stocks go away.
People and companies tend to investors tend to go to
do a flight to quality, to go to to the
standard bearers, the most dependable companies and invest there. And
so there is a shift by some consumers to higher
quality or natural hair. But this low cost option is

(28:19):
not in my opinion going to ever go away because
it's lower cost period. And there's also advances and technology
has led to the production of higher quality synthetic hair
that more closely mimics the look and feel of real
hair of real hair. Do you know this is going
to be just for black folks? A ten billion dollar industry?

(28:41):
I mean, this is crazy now. Sourcing is one of
the reasons why our Asians brothers and sisters have been
able to control this market, and they've been sourcing it
primarily from traditional Asia like China. You can just say
China basically and stop there. But I want you to

(29:01):
think now about India in Brazil, Okay, expand your mind.
You've got temple hair donations in India. India is one
of the largest exporters of human hair. This is natural
hair primarily sourced from temple donations. Devotees of Hindu temples,
especially in South India, donate their hair as an offering.

(29:23):
This hair often referred to as as Remi hair. I
hope I'm saying that right. Remi here remy hair or
eat and why it is highly valued because the cuticles
are aligned, making easier to manage and style. After collecting
the hair is process cleaned and sort it before being

(29:45):
exported in Glad is clean. Indian hair is popular for
its texture and quality, and it is used extensively in
the global hair extension market. Now, Brazil. Do you know
that one of the large its populations of Africans outside
of Africa is Brazil. Slaves stopped there or they were

(30:10):
laid let off there, and it unfortunately became a huge
slave trading place all the Caribbean islands, by the way,
but Brazil in particular, so there is a there's a
real exotic sort of blend of hair in Brazil. Brazilian
hair is also highly sought after for its texture durability.
It is known for its thickness and ability to blend

(30:33):
well with various hair types. I was just talking about
the diversity that sort of emerged in Brazil because of
all the mixing of of of the racist with with Africans. Uh,
get this one. Russia and Eastern Europe. Hair from Russia
and Eastern Europe is often considered premium due to its

(30:53):
fine texture and natural light color, which are in high
demand in certain markets. China. We know that story, Indonesia
and the Philippines, and there are other places that are emerging.
But I want you to think about if you think
about going into this business, I want you to think
about going into markets and building relationships with manufacturers and

(31:18):
manufacturing sources that are not controlled by those who already
control the market. So what I'm saying is going outside
of China and maybe Brazil is an option, maybe India
is an option for you. And the business is extraordinarily lucrative,

(31:39):
and we don't own it because we don't have the
historical context and market entrenchment. Because I mentioned that our
Asian brothers and sisters started this business in the nineteen
sixties and nineteen seventies, they're able to build very strong

(31:59):
supply chain change create, meaning that from the manufacturer all
the way through through shipping to in this case the US,
they created an intense can create loyal community, can networks
established these distribution channels that have remained robust over decades.

(32:19):
And I'm going to give you a suggestion of how
you can work with them in a moment to supply
chain control. Just sort of touched on that. Already capital
and financing barriers, you know, starting a business can be
capital intensive, and African Americans have been discriminated against in
lending practices. We all know that, so we've not really
had access to capital. The Freeman's Bank, as you've heard

(32:41):
me talk about extensively, Abraham loin Get created after the
Civil War to teach free slaves about money, and the
Freeman's Bank was upended. We never were taught financial literacy,
never given the memo and how money, capitalism and free
enterprise works. That was my fourth book, the memo, uh
number Love Leadership and Banking on Future of my book
of Leadership, How the Poor Can Save Capitalism, the Memo

(33:03):
yet number four up from nothing, number five, and now
this book Financial Literacy for All. Go and read all
of them. But in this example, I talk about the
memo and how we never got the memo. We're not
done and we're not stupid. It's what we don't know
that we don't know this killing is but we think
we know, and no one ever taught us about free
enterprise and capitalism and how it works. Which is why
this podcast is so important. It's not for just black people,

(33:24):
it's for everybody. But I super index, I over index,
I overemphasize how African Americans need to come up and
gain our rifle position on the economic stage because we
are breed and wherever the rules of published and the
playing fielders level, we absolutely kill it. What did we
do recently to break the mode of a misperception because

(33:45):
we were the rules of published and the playing fielders level, Arts,
professional sports, government service, faith community, we absolutely dominate. And
even in sports, we've got professional tennis and f one
race singing all this stuff. Now we've just won a leg,
our first leg in the Twitter France cycling brother just

(34:06):
one first time ever Afghan person of African descent and
one won his won a leg of the race they
call it well in the Twitter France overall race. He
just won what's called a stage. So this is a
new stage that we can perform on. It's the stage
of business and capitalism and free enterprise, and we can

(34:33):
find ways Operation Hope can help you. We've directed four
point seven four point five billion dollars in capital to
people to start businesses and own and build wealthy home
ownership and other mechanisms. So go to one MBB one
million Black business get your in kind grant that's worth
up to twenty five thousand dollars, which includes a shopify
e commerce account for free, a website, a domain name,

(34:56):
a business plan, all this stuff to help you start
your business. You can start this business as an example
of you like or a range of others that I
will unpack on this podcast. Network or you can do.
You can research on your own. So number four for
the barriers and why we haven't done this community and
network support. We we you know Asian entrepreneurs have benefit

(35:18):
from a strong community and network amongst their own for
business advice and financial backing and logistical support. And we
can do the same thing again. I'll get to that
in a minute. Business practices, UH and relationships. Over the years,
Asian business owners have developed strong relationships with manufacturers and wholesalers,
securing better pricing and exclusive deals. These long term business

(35:41):
relationships create a competitive edge it's difficult for new entrants
to overcome. Now, don't be mad at them for one
to keep you out. I'm going to suggest to you
a way to get you in, But don't be mad
at them for trying to keep you out. Business is
a is a gladiator. Capitalism is a gladiator sport. They're
not not trying to be your best friend, are trying

(36:01):
to sell your product and take home a profit. They
don't want you to be a salesperson competing with them,
but that doesn't mean you shouldn't do it. You know,
market perceptions and consumer behavior. Consumers often associate certain stores
with quality and reliability based on their long standing presence
in the community. As owned business, beauty supply stores have

(36:23):
built reputations over time, which can influence consumer behavior and loyalty.
So some people look at that come into a store
or a beauty supply store or a hairwave specific store,
and if it's Asian owned, oddly enough, we trust it more.
I think that we need to reimagine that and think that, well, clearly,
if somebody, if if there's a black owned business serving

(36:46):
a market that is dominated by black people and we're
running it with excellence, which I'm convinced we can and
we will, that that should now become a new standard.
There are ongoing efforts to increase American ownership in the
beauty supply chain, which I'm going to end the podcast with,
But I really want you to sort of focus on

(37:08):
the fact that you drive by these stores all the
time and you don't notice that they're not owned by you,
and you're the customer and the industry's bulletproof. I mean,

(37:29):
we're going to always want to look good as we should, right,
So then why wouldn't we partake in this business as
an owner? So what if I said to you that
African American Americans could dominate the hairwave market in ten years?
What have I said that to you? Right? So, here's

(37:51):
some things that we would need to do. We need
to have a multifaceted strategy, not emotions, not anger, not protesting,
not drama. Don't go protesting the Asian businesses because they
were smart enough to buy in your neighborhood. You know,
if you see some if you see some white folks

(38:12):
peddling through your neighborhood with T shirts and short pants
and flip flops on, that's not a tourist. That's an owner.
And don't be mad at them. Because they were smart
enough to buy a house in the hood, which is
typically near transportation, near places of work, near economic activity,

(38:37):
and low costs. And they like a shoot. I love
hanging around, good food and good people. So they bought
it at low costs, much lower than they could have
bought in their own neighborhood, which they would have to
drive an hour in the suburbs to get to They
bought it, rehabbed it, and lived in it. And we,
you know, we call that gentrification, but in reality, all

(38:59):
gentrification really means is a movement to middle class values.
That is the Dictionary definition of it. So we could
do that same thing. We could own our own homes,
and we could own our own businesses. So don't hate
on somebody who was smart enough to see your our
community as valuable and we didn't. Hello, I mean the
clues of clans not running through the neighborhood with torches

(39:21):
and saying good all the neighborhoods. You know, we're voluntarily
moving out, are letting grandma's house fall into disrepair. I'm
going to do a whole podcast on tax uh defaults
and how that's both a major problem and a major opportunity.
Tax defaults, property tax defaults on real estate, and what

(39:43):
it is and how to do it. It's a business,
but in this particular example, I don't want you negatively
approaching Asian owned businesses who've been smart enough to come
in our neighborhoods. And it's not just business, just this business,
you know, it's nail salons, it's let me think about it,
it's quite fascinating, and they've done a really good job
and they provide great value, and you know they should

(40:08):
be supported. Now you can compete with them and create
your own strategy, but it has to be non emotional
and it has to be serious business. A multifaceted strategy
focuses on ownership, community support, education, and innovation. And here
are some pieces. Write this down number one. So if
somebody's listening to this podcast, they only want to know

(40:30):
the business approach of how African Americans can approach this,
this multi billion dollar soon ten billion dollar industry where
the number one customer is and are black folks is
or depending on how we're talking about the singular person
as a customer type or the group the community that

(40:51):
the customers that are being targeted or black folks. Why
would we not want to see this as a major opportunity.
They have a strategy whatever you make it. Whenever you
make a decision emotionally, it's a bad decision. So make
this intelligently from the neck up, knock the shoulders down.
I mean, don't fight, don't get angry, get smart and
create a business plan. One increase ownership and control over

(41:15):
the supply chain. Invest in manufacturing and distribution, established manufacturing facilities.
By investing in or establishing hair manufacturing facilities, African Americans
can control the quality and pricing of products that can
reduce reliance on Asian suppliers and create jobs within the community.
Building robust distribution channels will ensure products are widely available

(41:38):
in competitively priced Now you can think about doing synthetic
hair right here in the US, or in Africa or
in Brazil. Be creative. You can also go and go
to India and cut deals with your Indian brothers and sisters,
or go to Brazil and cut deals with your Brazilian
brothers and sisters around their menu manufacturing to either do

(42:01):
a preferred deal with them based on volume and consistency,
or have them co to partner with you joint venture
to manufacture with you. You provide the customers and they
provide the capital to start manufacturing, and maybe you have
an earn out over time when you buy them out
of the manufacturing over time. There are a number of
ways for you to go about this, but in all

(42:23):
these examples, you want to go to Operation Hope are
the Urban League or whoever has a training program or
one million Black Business program at Operation Hope, it will
help get you trained up to do this business plan
if you're interested so investing manufacturing and support black owned businesses.
I've already said that this does not mean. I don't

(42:43):
mean put a black owned business sign in your window.
I mean because that may turn customers away, who may
feel that you don't want a black customer. You want everybody.
The color of currency is green. You want everybody to
come in your business, but you might if you want
to support black hairweave and beauty supply stores. Look at

(43:05):
your business chambers. The Black Business Chamber here in Atlanta
is a great example. They do a great job. And
there are other organizations and the Russell Center here, and
there's all these organizations around the country, but most cities
have a Black chamber. See who's a member. If there's
any black owned haircare businesses that are members of the chamber,

(43:29):
If there's a black beauty salon or a barbershop, start
there and ask them if they know anybody who's black owned,
and support those businesses or their dollars. Recycle number two.
Access to capital and financial resources, leverage community banks and
credit unions. If you're a member of a credit union,
then you have a preferred access to the capital of

(43:50):
that credit union. Did you know that you actually own
part of the credit union. If you're a member of
a credit union, Community banks also reinvest in their local community.
Operation Hope can help you find the bank that will
most likely get you access to capital and will help
you get bank qualified. Most of these loans are going
to be tied to your personal credit profile because most
black businesses are sole proprietorships, and when you get started,

(44:12):
the business does not have a credit profile. You have
a credit profile, it is probably your credit score, so
I want you to get your credit score up. You
can also do crowd funding and try to get grants,
try to get an SBA guarantee. Look for SBA eight
a business Development Program offices, and there's a whole range

(44:34):
of options, options and opportunities to try to raise capital.
I raised capital with my credit cards. I put my
I started my first businesses on credit cards when I
first started. So it's everything from the unsophisticated to the sophisticated,
and my team at Operation Hope can help you do
that financial education. As you know, I'm big on that
financial literacy is what we do at Operation Hope, the
one MBB program once again, innovation and product development. This

(44:57):
is someplace where African Americans can absolutely lutely i'd you know,
like be stars because we're we're the most creative people
on the planet. Uh So innovate new products that cater
specifically to the needs and preferences of African American consumers. Underscore, underscore, underline, underline.
Maybe our Asian brothers and sisters can outdo you on

(45:20):
you know, uh, manufacturing in China and the prices for
this and all that, and yes, you can't compete with
that very easily. But but if you come up with
a different style or a different approach or a different
way or different you know, manufacturing style for synthetic hair
or or making synthetic here look like more human hair,
or or different kind of human here. I mean again,
maybe you specialize in brazil fashions or Brazil Brazilian here,

(45:44):
maybe it's Brazilian in India. I'm just riffing here. I'm
just saying, come up with your niche and and then
just innovate around it and then tied into e commerce
that's selling online digital whatever business you have, you should
have an e commerce system. You have a restaurant should
be an e commerce restaurant. You have a beauty salon

(46:06):
and e commerce beauty salons. You can sell online twenty
four hours a day. You make money during the day,
you build wealth and your sleep. Artificial intelligence and data
analytics AI is going to be big, and this can
help you get a leg up on the local hairwe
business that probably is not using any technology at all,
and I'm sure they're not using any artificial intelligence, and

(46:28):
that gives you some market understanding and data analytics to
understand customer preferences, predict trends, personalized marketing strategies, and maybe
just outsmart somebody who's been doing business for ten years.
And by the way, maybe just go buy their business
from them, Like, don't protest them, buy them right, just
make a proper offer. Pay them. They've already done all

(46:49):
the work for you. They've already done the market of research,
they've already created a customer base. Don't hate on them.
Joint venture with them. By the way, another option opportunity
is to joint venture with the businesses that are there
so you bring in new customers. Maybe you bring in
a different Maybe you start so if there's a beauty
supply shop that doesn't do hair weaves, then maybe you

(47:10):
start the hair weaves department of the beauty supply stop shop.
Or if there's a beauty supply shop there that doesn't
do maybe there's a hair weave shop but doesn't do
hair styling, maybe you start that as a joint venture
with them, with the little some of the real estate
they are unusing, they're not using unusing, they're not using

(47:32):
there on site. Or maybe you they're doing all synthetic hair.
Maybe you propose to do natural hair. And you have
now pioneered, in this example, relationships in Brazil, in India
that they don't have because their relationships are just in China.
And so you're bringing in value add it. And as
my friend Robert Grew would say, ten to one is
equal ten. So if they're doing, you know, five hundred

(47:53):
thousand dollars in business, you don't want. You're not trying
to take their business, but you're saying, look, if I
can raise revenue to seven fifty seven fifty thousand dollars
a year in business, can I join venture with you
and you give me half of the profits above five
hundred thousand dollars has called a joint venture or strategic
alliance in this example, and that's in this example, you're
using your hustle and your your your game, your ability

(48:15):
to talk and to sell, and your network of women's
clubs and churches and nonprofits and community groups that you
are connected to to bring in more business, new kinds
of business to this existing store. So a strategic alliance,
a joint venture, or purchase the shop. And because the
shop already has existing revenue, you can get bank financing

(48:38):
and traditional financing because it's not based on you as
a person or your credit score. It's based on the
revenue of that business. So in some a big way
for us to start businesses actually is to buy businesses.
R and D, research and development, innovate again new products,

(48:58):
eco friendly and ethnically source products UH to attract a
broader customer base concerned with sustainability. I've already mentioned e
commerce UH in an artificial intelligence UH, professional training cosmatology
schools established and I don't use you know, I don't.
I don't use controlled notes. I'm just riffing here. I'm

(49:21):
talking about heart establish and support cosmatology schools that focus
on African American hair care, training professionals who can innovate
and lead in the industry. You create a strategic alliance
with them, UH workshops and seminars, conduct workshops and seminars
to educate consumers and entrepreneurs about the hair care industry
and specifically do workshops and seminars on hairstyling and all

(49:44):
that stuff. And you can get customers by doing that.
And partner with churches, big big I would I would
do a whole network partnering with with churches. And the
churches have an economic development department or the housing department.
They've already shown them to go beyond church on Sunday.
They want to be a seven day a week experience
for the black community. Imagine parting with you know, some

(50:08):
of the church denominations or some of the megachurches or
and bringing this piece again is another joint venture strategic
alliance example where they bear the cost of products and
all that stuff, and the leases and all that stuff,
and you just bring in your ability to hustle and
innovate to the game. Leverage cultural influences, highlight the cultural

(50:32):
significance of hair and the africaaer community through marketing and
branding efforts, use media and influencers to celebrate and promote
black beauty standards, encouraging pride and support of black owned
hair care brands. And I mean think about the Essence Festival.
I mean imagine if you could get all the black

(50:52):
owned hair weave businesses to come together and sponsor some
boosts at the Essence Festival as an example, isn't more
than it becomes more than a party, becomes a huge
revenue source once a year for you. But think about
all the conferences and events that happen. You know, maybe
I'm going too far, Maybe women are not going to
buy here we use at the Gallas and not maybe

(51:16):
going maybe going a bit too far, but you get
my point. Build strong community ties, a host community events,
hair shows, and exposed to engage with consumers directly and

(51:38):
build brand loyalty. An influencer strategy there you go right.
Partner with influencers and celebrities to reach a broader audience
and create buzz around black owned haircare products. Why aren't
these celebrities? I think if you want to get a
partner in this business, and I'm not telling you to
do this, right, I'm just saying, it's just if you're

(51:58):
a new ballplayer at a new basketball player, football player,
money is burning a hole in your pocket, right, they
wasted on nothing. Maybe you can convince one of these guys,
you know, to invest in your business. Or if you
see some celebrities or singers or whatever, they understand the
value of this product, right, so maybe you can convince
one of them to partner with you. And if they

(52:20):
don't put any money in it, maybe they just agree
for a percentage of the business to promote it. I mean,
how valuable could that be? I mean that that has
to be extraordinarily valuable just to have them promote the business.
So we've we've covered a lot, a lot of ground
in this podcast. I hope it's been helpful. I hope

(52:41):
it's been inspiring. I want you to be positive. I
want you to understand that it is not racism or
you know, sexism or whatever else that you know has
us buying this product from somebody else. It's that they

(53:02):
saw market benefit and emotionalism from us that we were
just so excited we're going to go buy this product,
and they invested time, energy, resources to sell it to
us at a price point that we would embrace. You know, again,
Black communities have a very strong cultural and esthetic emphasis

(53:23):
on hairstyling, including weaves, extensions, and wigs, creating a consistent
and lucrative market for what has been up until now
Asian mostly Asian entrepreneurs, and these underserved markets. Historically, mainstream
beauty supply chains did not cater adequately to the specific
hair needs of Black consumers, creating an opportunity for specialized stores.
And these specialized stores up to now have been Asian immigrants,

(53:47):
particularly Koreans, who have again these strong networks and business
knowledge and the beauty supply industry including sources and distribution
and contacts back at home, and are willing to work
long hours and sacrifice and not get paid right up front,
and have a humble spirit and build trust in our relationships.
And they again a low barrier of entry, meaning that

(54:08):
the stores are not that expensive to start. I've already
talked about that. You can, you know, you can really
start one of these stores with a few thousand dollars
online and you know it appears, you know, I mean,
my guess is twenty five thousand dollars would get you
going on a retail store, and it appears if you

(54:28):
if you worked it really, really well, you'd be profitable
within a year. It's unheard of for a business profitable
within a year. So think about this. Don't be mad
at folks for doing it, Salute them, applaud them. See
if you can joint venture with them, See if you
can do a strategic alliance with them. See if you
can buy their shop, Because maybe they're just tired and
ready to get out and there's no excess strategy so

(54:48):
that all they've got is to that revenue for the
rest of their life. But if you can buy the
store front and give them a check to leave to bounce,
and you get evaluation on the store, so you know
what you're paying for, or you know you're paying a
fair price, and now you're the owner of the store.
You don't have to go start from scratch. But make
sure if you buy the store, you want a contract
which includes an assurance that their suppliers are going to

(55:11):
give you a long term contract for the cost of
goods from the same suppliers they're getting it from. So
if you want a customer list, you want a supplier list,
you want a vendor list. You want longtime contract with
those suppliers and those vendors. You want the owner to
send notices several to their customer lists letting them know

(55:34):
that they should trust the new owner and that you're
they're endorsing you. There are certain things. Again, my team
at Operation Shop can help you walk through this, not
just Operational. There's tons of other organizations that can help you.
But I'm the founder of Operation Hope, so I'm endorsing
this as a strategy. Go to our small Business Programming,
our entrepreneurship programming, go to our one MBB programming, One

(55:56):
Me and Black Businessness Shift. Get the book Financial Literacy
for All as a pro and go back and listen
to this podcast over and over and write down all
the notes and then you can ask my coaches specific
questions if I walked past something too quickly. I hope
that you've enjoyed this. This has been John O'Brien and

(56:18):
this is a Black Effect Network podcast series. This is
John O'Brien on money and wealth. This is my weekly
poll pit of finance and my place for the silver
rights movement are the third reconstruction opportunity for all. Whether
the new color is not black or white or red

(56:39):
or blue. It's green as in the color of US currency.
And this is a global movement. And yeah, we shouldn't
be asking some We shouldn't be having to go to
Uganda and wonder why some Chinese brother, very nice person
and selling fruits and vegetables to our own people in Uganda.
I mean, I love that that's happening, but we should

(57:01):
at least say we don't want to sell fruits and
vegetables to our people in Uganda. We've looked at it.
It's not profitable enough or whatever the thing is. It's
not something we want to do. We want to go
in another business industry. But we shouldn't just be consumers
wherever we go. Can I get an amen? All right?
This is a church of what's happening now? And what
have you done for me lately? This is John O'Brien.
I'm out spread the word Money and Wealth with John

(57:37):
O'Brien is a production of the Black Effect Podcast Network.
For more podcasts from the Black Effect Podcast Network, visit
the iHeartRadio app, Apple Podcasts, or wherever you listen to
your favorite shows. P