How To Sell My Hair Salon Business
Selling a hair salon or hairdressing business is not dissimilar to selling any business. Hair salons are often run by the owner plus they have some staff including qualified hair dressers and or apprentice staff.
In addition, hair salons often prefer NOT to reveal their business name or address when selling their business. This is because they offer such a personalised service and would prefer that their customers are not aware of their business sale. On top of this, they sometimes prefer that their staff do not know either! This is totally OK and is entirely possible.
A good business should ALWAYS BE FOR SALE especially for the right price! It is often best to sell when your business is ‘on the up’, or prior to your busy season. When selling for a good reason, you are often in a better negotiating position to get the best price possible for your sale. But don’t be hard on yourself. If you are not ready, perhaps timing is more the issue. No matter what the reason, the decision has already been made!
When preparing to sell your hair salon/hair dressing business, it is important to know the benefits of your business.
- Years of trading – (this can include your time and any previous owners demonstrating longevity of the salon).
- The specialties of your salon; like hair colouring or hair extensions, contemporary or traditional hair styling, your service, your point of difference!
- Talk about your staff, the achievements of the shop, the type of customers.
- The benefits of the location like: ‘great foot traffic’; ‘surrounded by other excellent businesses’, or very reasonable rent!
- Talk about your competition. There is nothing wrong if there are several hair-salons in your area, this often attracts more customers to come to your location. If you don’t the prospective buyer will!
- Further potential is also worthwhile including, as it demonstrates to the buyer that there are other things they can try. This could be as simple as setting up or updating your hairdressing salon website, add a shopping cart so that your loyal customers can purchase products on-line. Its OK if you don’t have a website, just point this out to the new prospective buyer as further potential.
- Future growth and/or development of the area. Many salons are suburban based and many suburbs are forever-expanding. This is a positive thing to demonstrate.
Know the benefits of your hair salon business.
There are many reasons why someone wants or needs to sell their salon. Perhaps its just the right time, or perhaps you have lost your best staff member, or perhaps your personal circumstances have changed. Alternatively, you’ve had the best year or business ever! No matter what the reason, you probably already know why! Don’t make the mistake of putting it off so far ahead that it doesn’t get done. The most common mistake of business owners not achieving the right price for their business is because they left it too long before putting the business onto the market.
It is not healthy to keep the business longer than you wanted because more often than not you will get tired and lose interest in the business and possibly have less profits and more stress!
List all of your assets.
This is easy to do. Just list all the items that you have in your salon, right down to how many stations you have, sinks, chairs, reception desk, laundry and kitchen items. Assets also can be ‘soft assets’ like your computerised database of clients, your cash register software or point of sale equipment. It can also be your website, domain name, your social media platforms. Once you start realising all of your assets, this helps towards achieving a better sale price for your business.
Some salons also have certain equipment or software that is leased, so these should be included on your list with any financial commitment details.
Tip: Check with your accountant.
Get your documentation ready.
If you are renting the premises your salon is in, then get a copy of your lease. The buyer will want to see these arrangements. Often a business has plenty of options (i.e. 5×5 years), or even if you have a month by month lease. No matter what type: put yourself in a buyer’s shoes, wouldn’t you want to know that when buying your business that a secure lease is, or can be put in place. If you are fortunate enough to own the premises, then consider whether or not you are selling the premises with the business. Alternatively, you may want to keep the premises and just sell the business and lease the premises to the new owner.
Profit and Loss
No matter what the financials are, a prospective new buyer will want to see them. Usually the last 3 years of trading are acceptable and depending on the time of the year you are selling, it is acceptable to only have up to the previous financial year. If you are like most small businesses, then your financials will be up-to-date or just over 12 months old. Your financials should not be shown until you have a genuine interested buyer. The buyers are initially interested in what they see and what you are telling them, like the benefits and the future opportunities.
Is it hard to sell my hair salon without a broker?
No it’s not. Remember, you have owned and operated your salon for a while now and you know your business inside and out. Certainly, better than any Broker would. If you have done all the above, then you are well on your way and ready to market your salon for sale. Until you start advertising your business for sale, then you won’t know who is interested. Getting the right advertising exposure to attract the buyers to sell your hair dressing business is very important. A broker would use major sites to list your business for sale, but you can too. The main differences are that you have control over who is looking at buying your business and when you sell, you won’t be paying any commissions whatsoever. The benefits of selling privately far out way selling those through a broker. Of course, Business Brokers may tell you differently. You have worked a long time in your business and brokers often charge very hefty commissions, like 10%. 10%!!!! of the whole business sale price. That is 10% of your equipment, 10% of your good name and 10% out of your pocket. You may have already purchased your business previously, or even paid for a new set-up. So be well informed how much it is really costing you to sell through a broker.
Example: Example: In 2017 you purchased your business for $130,000. During the running of your business you have replaced equipment items (value $30,000). You have also increased the revenue. Today your business may be worth $260,000. So if a broker is charging 10%, then you will need to pay them $26,000 + advertising costs (lets round it to $30k). Your profit from the sale is the sale price ($260k) less your original set-up and extra expenditure ($160k) – profit is $100k. So $30,000 to your broker is 30%! YOU are the one who deserves this, not the broker.
Be aware 10% does not mean 10% it is more likely 30%.
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