Opening up a Beauty Supply Store despite Korean Domination

Discussion in 'Hair Care Tips & Product Review Discussion' started by Froreal3, Jul 28, 2013.

  1. Froreal3

    Froreal3 haulin hard in the paint

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    I'd post this in the finance forum, but I know I'll get more responses here.

    Ok, so I'm looking at my five year plan and it includes starting a business. I am interested in a beauty supply store since that is my obsession...er interest. :look: I was all excited until I read about the strong hold that the Koreans have on the market. I read a few articles about it including this one. I already knew that they own most of the beauty supply stores in America, but I did not know that the major distributors of these supplies are all Korean and refuse to do business with blacks. I did not know that this was the reason that the very few blk owned stores that do exist don't seem well stocked.

    Customer service would be a top priority as that is what I hear is missing from many black owned businesses. With that being said, I don't understand how less than stellar customer service can be worse than being followed in a Korean owned store. :nono:

    Does anyone have any more information about black distributors or even how to become one?

    Another question is do you think blk ppl would be open to buying our own brands, especially of hair (since hair is big business)?

    Do you think you could get an Asian figure head to simply take the orders for your store?

    I know I can get black handmade brands in there and I definitely would want to stock them. However our handmade brands are more expensive than the regular stuff, so the store that I want would also stock regularly priced items. I would probably have a section just for hand made brands.

    Anyway, what are some thoughts on this?
     
  2. Froreal3

    Froreal3 haulin hard in the paint

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    Full article for those that won't click:

    The Ugly Side Of the Beauty Supply Market

    Study: About 9,800 beauty supply business nationwide; but only 300 black-owned.
    Posted by Kimathi Lewis , May 18, 2011 at 10:04 AM

    Frank Mohadou closed the door to the beauty supply business he was struggling to keep, in the slice of space he obtained from his sister.

    The still night held no comfort for the African native as he slid behind the wheel of the $250-a-month car he could barely afford.

    He ignored the thought of going home; knowing soon he would have to find another place to live since the people he was staying with were drifting apart.

    Instead, he sat; his anxiety and frustration combed into a manageable silence as he contemplated ways to grow his business. Just then, a Korean-American stepped up through his thoughts and across his path to stop at his storefront.

    They often waited until he was gone to peek inside his store, Mohadou said. He knew he was an outsider. He didn’t speak their language. But he was trying to break into their world – a billion dollar market that primarily services black hair.

    For almost 50 years, the Korean-American community has dominated the black beauty supply market by opening large stores, buying out smaller black-owned ones and using the faces of black celebrities on their products and black employees in their stores to grow their businesses in the black community.

    Mohadou—who declined to speak further with a Cascade Patch reporter after an initial interview, citing a fear of retaliation—said “The little thing I was doing, they were trying to stop me,” said Mohadou, then a father of two with another child on the way. “There is no way back. I was able to learn English and put a little business together. I can’t quit.”

    Mohadou didn’t know it, but things were about to get worse.

    The Ugly Side of Beauty

    Mohadou left the Ivory Coast in 1997 with the intention of going to school in America and then returning home. But his plans changed.

    He learned English through a church group in New York before leaving to attend Georgia State University where he earned degrees in chemistry and finance.

    He was unemployed the day he walked into his sister’s braiding salon and discovered a pack of human hair cost $80. Professionals got it for $50.

    “I just got laid off, so I said let me find out where the hair came from,” Mohadou said.

    What he discovered was a closed market.

    Between manufacturing, distributing and selling hair care products, Korean-American entrepreneurs appeared to control all major components of the beauty supply business, he found.

    He learned there were four central distributors serving a large portion of the beauty supply stores in the country, all Korean-owned. Aron Ranen,who produced a documentary in 2006 on the beauty supply business, reported that these distributors only worked with other Koreans in order to dominate the market.

    Devin Robinson, owner of Atlanta’s Beauty Supply Institute, said about 9,800 beauty supply business existed nationwide; but only a little more than 300 were black-owned.

    “The Koreans strategically make it harder for us to get into the business. They have the supplies the customers want,” Robinson said. “They sell it to us at higher prices or they deliver the products late to the black-owned stores. Sometimes they don’t allow orders from us at all.”

    Beauty Masters is one of the larger Korean-owned beauty supply stores with seven locations in Atlanta.

    Lucien Poko, general manager for Beauty Masters, said 90 to 95 percent of the stores’ customers are black; and so are the store’s employees.

    He balks at the idea that Koreans dominate the market.

    “It’s just business," said Poko, who is from Senegal. "Everybody is free to open what they want to open. It’s the way you handle your business. Koreans dominating the business, this doesn’t make sense. You can open up your business. You are free to do what you want.”
     
  3. Froreal3

    Froreal3 haulin hard in the paint

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    Making the Cut

    Mohadou couldn’t find anyone to sell to him when he first started more than eight years ago. Then he met an American-born Korean distributor in New York who would sell him hair at $14 a pack.

    Mohadou traveled by MARTA to deliver the hair door-to-door to his customers. After a while, he established a trust with the owner who increased his orders, decreased his price and sold him hair on credit.

    Still, his customers had a preference. They wanted the name brands; the Korean brands. And there were about 25 to 30 of them.

    Many beauty salons said they often go to the Korean stores because they can’t find what they need at the black-owned stores.

    That's because they can't get the supplies, Ranen and Robinson said.

    Mohadou found out that Koreans were getting their hair from Jinny United. But a Jinny representative refused to sell him hair.

    “’You can’t be within 5 miles of one of our customers,’” she told him.

    Mohadou wasn’t convinced.

    When he found several Korean stores less than 5 miles apart from each other, he threatened to sue and attempted to get other black owners to join him.

    They recoiled at the idea.

    Mohadou went back to Jinny. This time, he spoke to another representative who allowed him to place an order.

    Then Mohadou went to a Korean store to sell the hair. When the woman told him to wait a moment, Mohadou thought she was off discussing the price.

    But then the woman returned.

    “Where did you get the hair? Who sold it to you?”

    Mohadou froze, puzzled.

    “We all worked together to make this hair, so I know you stole it?”

    Mohadou then realized: “I was a little black boy trying to sell hair to Koreans. That was not possible.”

    He handed the woman a business card and left.

    He obtained the space in his sister’s salon and started selling the hair. Now, Koreans were popping up at his store front, hoping to find out where he got the hair.

    He later discovered that someone complained to Jinny that he was selling the hair at gas stations.

    Mohadou never got a chance to defend himself.

    When he returned to Jinny, the representative who thought he was working for a Korean store when she allowed him to place his orders, would no longer sell to him.

    Then the New York distributor, who he now called brother and to whom he often sent presents, told Mohadou he was leaving the business.

    Mohadou had seen it happen before. Another Black owner had to close her store when her contact went out of business. And still, many others closed because they weren’t able to buy quality hair, he said.

    “It’s a very ugly business,” Mohadou said.

    Making It Grow

    About six years earlier, Jinny United also refused to do business with for the same reason, Owner Robbie Conwell said.

    A manager with Jinny United declined to comment on their policies in selling to beauty supply stores.

    Poko with Beauty Masters said he has never had any problem getting supplies from Jinny.

    “They have their own rules. I don’t know what their rule is, but I don’t have any problem with them,” Poko said.

    The Korean president of the Georgia Beauty Supply Association said through an interpreter he didn’t know anything about the issue. The 12-year-old association has 50 members who are all Koreans.

    When Jinny turned down Conwell, she found an Indian company that would sell her human hair. She urged other black owners to find a different path.

    “They have to do something different,” Conwell said. “Show (the customers) something the Koreans don’t have.

    “The biggest money is in hair. They are not going to succeed if they don’t make contacts the Koreans don’t have.”

    Robinson said Korean stores dominated the business because they do better at business than Black owners.

    “They do better as a group. They live together. They live their lives frugally and they are committed to long and intense labor, which is necessary for success.”

    And, there was one other reason: “We give power to the owners instead of power to the customers,” Robinson said.

    As a result, “There are 96 percent Black customers and only 3 percent black owners," he said.

    They find the Koreans’ control intimidating, he said.

    If Mohadou was intimidated by their control, he didn’t let that stop him. And eventually, he found a way inside the network.

    His New York contact didn’t forget about his loyal customer who relied so heavily on him; who often asked about his family and had befriended his girlfriend. He had another contact for Mohadou.

    “How much money do you have?” he asked Mohadou.

    Mohadou had $7,000. It wasn’t enough. His contact told him to get more money and don’t worry about the $900 he owed him.

    Mohadou started Sou-sou, an informal savings plan popular in the Caribbean, to raise more money. He asked 12 people, including his sister, to provide $1,000 a month with each person collecting $12,000 monthly. His sister gave him her share and Mohadou was able to send the $24,000. Normally, it took about $400,000 to open an account, Mohadou said.

    A week later, a sales representative confirmed the receipt of the money. They would work with him. But he had to create his own line.

    “They couldn’t sell me the same brand name. So I had to think of a name, find a picture, come up with my own graphics and design.”

    Mohadou, who went on to open on Lee Street with the help of two partners, designed African Poney, Compassion and Carmen.

    But not many customers were willing to take a risk on an unfamiliar brand. He sold his first brand for $40 a pack and gave away the second pack.

    “I had to work on the hair for a year before I made a profit,” he said.

    Then, Mohadou saw a change.

    “People would come to the store, sit and wait or they would come back,” Mohadou said. Some drove from as far away as Marietta. They wanted to support the Black-owned business.

    When a woman in Conyers wanted to drive to the store, Mohadou drew the line. She would be spending more in gas than on the product, he said. Still, Mohadou was touched by the support.

    “I wish things work well so I can come back and help,” Mohadou said.
     
  4. chucktownqt

    chucktownqt Well-Known Member

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    I think that is a great and lucrative business to go into. Lord knows we need more black-owned businesses! I have only been into one black BSS and that was a couple weeks ago and he sure DID NOT have much inventory. However, I will be going back as I REFUSE to go into another asian-owned BSS because they are rude as hell, watch you like a hawk in their stores, and don't like to give military discounts. Ok, I digress. I'm sure there has to be black distributors out there. Look at the AA celebrities who have haircare lines. Anyways, I would suggest you just google black haircare distributors. There are probably some here in ATL or even NY or LA to name a few cities. I'm sure AA women would be more than happy to buy from our own, I know I would. I hope that your "obsession" really does turn into a successful business venture for you.
     
  5. virtuenow

    virtuenow Well-Known Member

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    I wish someone would open a black owned beauty supply store in my area. I already focus on buying my hair products from black owned businesses only. Their products are the best anyway; best organic, best customer service, and most in tune to what we want and need. I avoid the Asian owned stores. They are a joke and so are their products. Terrible customer service-- they do not communicate w/black people well, and are very untrusting of us (i.e., racist)...We put up w/a lot)...I wish black people would boycott them. We are a smart people. The boycotts of the '50's sent the buslines in a frenzy when they realized how much our dollar/worth meant to the survival of their company/lines. How much more would the hair industry be affected. This, of course, would work better if black women weren't so reliant on weaves...Some can't seem to survive w/o the weave! ON the same token, I know people thought they couldn't survive w/o the bus-lines...risked losing their jobs and their only mode of transportation...But the cause was bigger than our wants...we needed equality. Likewise, we need equality...equal footing in the hair industry...and equal respect. We are not getting it. So, do something.
     
  6. virtuenow

    virtuenow Well-Known Member

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    What I'm saying is, we can shut the hair care industry down if we wanted to.^^^^
     
  7. Ogoma

    Ogoma Well-Known Member

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    As I understood it, they dominated the extension/wig market. I don't think they dominate the market for products.

    Question for you: what is your angle? If you are in a market already dominated by Korean beauty supply stores selling extensions/wigs, what is the need you want to meet that they do not? and how would you best go about doing that?
     
  8. Froreal3

    Froreal3 haulin hard in the paint

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    That's a good question to ask. I think it would be the actual shopping experience...from look of the store to customer service...free samples, nice boutiquish atmosphere...something to differentiate...IDK

    ETA: @Oogma what are some of the things that you would look for that would make you want to shop at the blk owned place over the other places?
     
    Last edited: Jul 28, 2013
  9. Froreal3

    Froreal3 haulin hard in the paint

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    When I get the capital to do this, I want to have already researched thoroughly for a couple years and have the people who I will do business with already lined up. This is the very beginning of that research.

    I try to shop at blk owned beauty supply stores as well and most tend to be very small hole in the walls and with hardly any stuff. Now I see why....smdh.
     
  10. Froreal3

    Froreal3 haulin hard in the paint

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    You bring up some excellent points virtuenow. Even though the Korean place I shop at is decent with customer service, I can't in good conscious shop with them any longer. We need our own. I agree with risking losing our weaves for better treatment and more equal footing. I think it is utterly outrageous that so little of these business are owned by the ppl that they are geared toward. Makes 0 sense.
     
  11. ajargon02

    ajargon02 Well-Known Member

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    Send kimmaytubea tweet, go to oyin handmade site to ask them. Hopefully some of the business owners on this site will give you their input:)
     
  12. cutiebe2

    cutiebe2 Well-Known Member

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    I think if you want to have a succesful beauty supple stores, make sure to separate yourself from the crowd. I think where the AA stores I've seen have gone wrong is they are trying to do what Asians do and fail. Koreans open a store and stuff it with every product imaginable. SOME I see look upscale, most don't. So when you go into an AA one it looks empty.

    I think an upscale stores that carries many hard to find online vendors, black owned businesses, but also has enough of the popular products that people think they can get everything there is key. Some that is clean and elegant. Something that stays on trend with what is popular in the AA hair world right now, i.e selling steamers, dryers, henna etc. I would love a store like that.
     
  13. RocStar

    RocStar Well-Known Member

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    It is almost impossible to open and be able to keep open a BSS. Koreans have the market on it. It is like a mom and pop store going against Wal-Mart.

    There is an association you can look into:
    http://bobsa.org/

    Good luck.
     
  14. Froreal3

    Froreal3 haulin hard in the paint

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    I totally agree. Thanks for the input.
     
  15. wavezncurlz

    wavezncurlz LHCF addict

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    There was one here in MD that focused on natural hair care. Most black owned. I loved that place. I went all the time and was able to try new lines without dealing w shipping and handling. About a year in, they closed shop. The owner said people didn't want to pay for high end natural products like a lot df us hair obsessed ladies do. They'd rather go to their drug store and get some Cantu or something similar (nothing wrong w that but the price point and quality is not same). She also told me that the natural hair product makers were notoriously late sending their orders, never sent enough, and the shelf life was shorter so if product didn't sell, she lost money.

    I was sad to see her close. I wish there was a way for us to take back our stuff!
     
  16. GeorginaSparks

    GeorginaSparks Well-Known Member

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    where is he located?
     
  17. Froreal3

    Froreal3 haulin hard in the paint

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    shockolate Girl I have no clue. That article is kind of old. For all I know, he is no longer in business.

    However this is new information to me and I want to do something about it. I'm thinking why couldn't have Chris Rock highlight this in his documentary? I think if more Black ppl were aware of what is really going on, we wouldn't be so keen to shop at these places. We need more awareness. I feel like I'm an educated person and I didn't know about this until I researched further. If there were more blk owned stores, I'd patronize them and I think other ppl would too. There seriously needs to be a nationwide movement. It's not even the fact that there are a lot of Korean owned places. It's the fact that they won't even allow anyone else to penetrate or share the 9billion of black money...not even the black ppl themselves. That is ludicrous.
     
  18. ilong

    ilong God's Own

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    @Froreal3 - as a business owner I can give you my perspective.

    • First research, research, research
    • Second business plan, business plan, back-up plan, back-up plan
    • Third capital, capital, capital
    • Fourth - hard work, hard work, hard work, hard work
    • Fifth - patience, patience, patience,
    How and where you do your research is critical before you are able to formulate a draft of your business plan.
    A business requires SIGNIFICANT capital investment, especially a business which requires leased (purchased) space, security, displays, staffing, insurance,etc. in addition to inventory. It is recommended that a business has on hand at least a year of working capital at their immediate disposal (accounts, lline of credit, promissory notes, etc.) to sustain the business for the first year. This capital should cover leasing, payroll, administrative fees/costs, inventory maintenance, etc. It takes months, sometimes years before a business shows a profit. In addition to the capital for the business, unless you are working another full time job or have a spouse/SO maintaining your household, you will need funds to sustain your livlihood, During the first year you will, more than likely, not earn a salary.

    If you are seeking a small business loan, financing from a financial institution or private parties, a BUSINESS Plan is mandatory. And the results from the first bullet (Research) will determine the quality and viability of your business plan. Included in that business plan will be your competitive strategy on how you plan to compete successfully in a very controlled market. You will also need to assure the investors (SBA, banks, private parties) that their investment is secure and will yield a return. A forecasted date of expected profitability will also be required. There are statistics which indicate when certain types of business begin to show profitability.

    I recall some years back a black own distributor of hair appliances being "targeted" by the Korean market in an attempt to shut the business down.
    They succeeded. You are attempting to enter a very very tough market. Your business plan and strategy will be heavily scrutinized. And the emplasized requirements for credit - makes it even more challenging.

    Not sure if you saw the movie "American Gangster"? If not, you should see it - although "his" product was on the wrong side - his business accumen was on point. Cut out the middle man and go straight to the source :wink2: :yep:.

    Offering great customer service and an aesthetically appealing environment is is great but I promise you, customers fail to consider and factor in the amenities your business provide. They only remember that the BSS down the street "only charges $5.99" and you're charging $7.99!!
    Only a small segment of the customer base will purchase the "HIGH END" products. The larger segment is looking for the most for the least and if you can't meet Walmart's price and convenience then ...

    The efforts, thought and hard work you put forth before embarking on this journey will save you money and disappointment in the long run.
     
    Last edited: Jul 28, 2013
  19. Subscribe

    Subscribe Well-Known Member

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    Good luck!
     
  20. HanaKuroi

    HanaKuroi Well-Known Member

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    Take Korean language classes. Set up the business with a Korean name. Have a "silent Korean partner". Say that you have a Korean Aunt. Something like that.

    I can't see any mentions on my IPhone. PM me if it is a must see. Allons y
     
  21. Froreal3

    Froreal3 haulin hard in the paint

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    I agree HanaKuroi...that's what I meant by the figure head thing. :sekret: I think it's doable with the right amount of capital. It can't be all doom and gloom.
     
  22. ellebelle88

    ellebelle88 Well-Known Member

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    OP, I wish there was some way LHCF could support you. I feel like we have too many people here who are passionate about black haircare to not be interested in owning/starting a Black owned BSS or black owned natural hair line.

    I really wish black people/women could take back the haircare market from those rude a$$ asians. They are totally playing us. Getting rich off of black people on one hand then looking down on us on the other hand. While we struggle, they are bringing over entire generations and amassing major wealth.
     
  23. RainyDaze

    RainyDaze Well-Known Member

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    Luckily, there's a black-owned BSS (Knight's Beauty Supply in Northwest Philadelphia) not far from my home. I mainly shop there for my hair products. They only sell quality products and their customer service is excellent.
     
  24. larry3344

    larry3344 Well-Known Member

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    FroReal, I am thinking why not create a fund for anyone LHCF member that one to starts a business kinda like helping someone pool resources together. I will gladly any black woman with starting capital, granted I am not rich but if many of us contribute with word of mouth and family connections we can turn this around. I live in Canada but have famly in the States (depending on where you plan on being located). Whenever, I come to the States I can come and support . Stuff like that, trust me if we can gather a significant amount of like minded people anything can be turned around, the situation is not bleak. This goes for anyone who wants to open a BSS I'm willing to support anyway that I possibly can. I also like HanaKuroi said that is also another way to break into the business, I think your longterm should be distribution the more of us there is at the source the better we can retake this market. Good luck, I wish you the best!
     
  25. JaneBond007

    JaneBond007 New Member

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    They actually do dominate the market for products but not probably for ayurvedic, home-made upstart small companies. I wouldn't say they don't do business with Blacks, they just don't allow anyone into the clubs who can't speak Korean and those clubs offer the best bulk rate for products.

    To get an idea about the distributors, you might just want to call some like Texas Beauty Supplies or Black-owned ones like Blankenship's in Kansas City.

    Call this lady and see if she can give you pointers:

    I Support Black Owned Beauty Supply Stores

    And to fill the shelves with regular things that aren't high-end (don't know how large of a store you will open) but you might want to try:

    http://www.dollardays.com/wholesale-ethnic-bath-and-body-pg3.html

    Have you thought also about Dominican products?:

    http://www.aerosupplyandservice.com/

    http://www.livio.com/directorio/negocios-y-economia/belleza/productos-de-belleza/

    Good luck and I wish you much success.


    ETA: Check with the U.S. Dept of Labor ..there might be grants for starting a business.
     
    Last edited: Jul 29, 2013
  26. Abibi

    Abibi Well-Known Member

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    Is the Korean monopoly on black hair supply distribution legal?
     
  27. NaiyaAi

    NaiyaAi New Member

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  28. candie19

    candie19 Well-Known Member

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    Hey OP! I think it it's awesome that you want to open a beauty supply store. This is also on my 2do list as well.

    I'm home for the summer and I went in to a beauty supply store that was black owned. It was big and well stocked. The owner was there working behind the corner and I asked him like 10+ times, "is this really a black owned store?" I literally stared tearing up when he showed me his business card. Once I saw the card I realized I grew up with his kids and knew his wife.

    I told him I always wanted one, blah,blah,blah. He told me I would need $500k worth of inventory just to compete with the Koreans. Which is what he had in this store. I asked if it was difficult to break into the market and he said "yes!". The hardest was getting the top line hair weave. The Koreans don't want "us" in. He told me if I was serious about getting my own store he would help me and would not mind investing, I'm all on board but I need to find 500k!

    There is a competitor that is 2 buildings down from his that is Korean owned. I asked if that store has cut into his business and he said they have helped. They are assholes and treat "us" any kind of way so he gets he the business. I plan to go back while I home and buy more products and pick his brain. Let me know if there is anything specific you want me to ask.
     
  29. MileHighDiva

    MileHighDiva A+ Hair Care Queen

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    FroReal, maybe you can use this black hair trade association to help. B.O.B.S.A (black owned beauty suppliers association)

    Watch this and this.

    Also, here's the Proud Lady's website

    My local black owned beauty supply store Hunter's Beauty Supply used to have three locations. The original spot, a location in a popular mall, and another spot. Slowly, but surely other supply stores started opening up with our people as the worker bee's, but they were really Asian owned, but people were not paying attention, because of all of the black cashiers and floor/sales staff. Mind you, the cashiers always have two security camera's on them :rolleyes:.

    I have watched them go from three thriving locations to only one spot over the years. :nono:

    I have a recommendation for you but I'll share it underground where everyone can't see.:lol:
     
    Last edited: Jul 29, 2013
  30. Froreal3

    Froreal3 haulin hard in the paint

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    Thanks for all the suggestions, links, and encouragement ladies! I don't think the situation has to be this way forever. There are a ton of businesses that I could invest in in the next few years when I get my money up. However, after reading about this situation, it makes me want pursue this even more than a franchise of an already established business. The fact that we do not even represent 1% in a business that caters to us is very disconcerting. I want to do something about that. If no one ever tries, there will never be any change.


    larry3344 I totally agree with the bolded!

    Abibi Girl I don't even know. Even if it is legal, it isn't right. There were/are plenty of things that were/are legal but weren't/aren't right.
     

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