Small businesses in Puerto Rico: The barbershop case study

Abstract

Many people have opted for creating small businesses as a way to survive the economic crisis in Puerto Rico. When it comes to service businesses there are two options, you can either own it or you can work for the person who owns it. This is the case of the barbershop business: option one - owning and working the barbershop, option two - renting a chair in the barbershop. There are some questions when deciding between these two options: which option has a larger profit margin both short and long term? how to maintain customers when competing with a coworker? A detailed cost analysis is presented to generate recommendations to improve profits. A case study is presented comparing two barbers: the owner of the barbershop and the barber renting a chair in the barbershop. The results observed may be used in the future to guide professionals trying to decide which option is the most profitable career move in the short and long term, and for entrepreneurs to understand the impact their daily decisions have on their profit margin. Results will also be used as a case study to validate a general model for entrepreneurs of small businesses.