How to Sell a Hair Salon Business?
SELLING A HAIR SALON BUSINESS
Service based business, including hair salons, are particularly attractive to purchasers. Purchasers want good location, no competition, attractive demographic, multiple income streams and reliable profitability. However, you must understand that a buyer will be nervous that the clientele could walk out when the owner does. The more you can do to counter this possibility, the more the salon will be worth.
PREPARING YOUR SALON FOR SALE
- Assets: Identify key assets, both tangible and intangible. List and value your tangible assets such as chairs, washing stations, equipment, furniture, dryers both movable and fixed, grooming equipment, towel racks, hair styling tools, product inventory and licences.Valuation should be the figure at which the assets could be bought for in their current state. This is replacement cost.
List all intangible assets which include client list, logos, intellectual property, including business name registration and trademark.
- Financials: Present an overview of historical financial performance and potential future earnings. Provide a document for buyers so that they can analyse cash flow, assets, liabilities and profits at a glance. Be ready to show the purchaser which staff members are responsible for the income in salon.
- Renters: It is attractive if you have other service providers “renting” a chair or desk. This includes nail artists, beauty practitioners or other hair stylists.
- Lease: The buyer will either take over the lease or seek a new lease from the landlord. As an owner, you need to know whether the landlord is prepared to grant a new lease and under what terms.
- Employees. It is the purchaser’s decision whether to retain current staff. The owner will have to pay any outstanding entitlements owed to the staff member. However, a prudent purchaser will continue the employment of key staff members to ease the transition of ownership and make it more likely the goodwill of the salon comes across.
- Training and Assistance. The buyer usually comes in for a period of time prior to settlement, and the vendor in return stays on after settlement for further assistance. In this period, the buyer is introduced to clients, staff and suppliers. Generally no money changes hands for this time spent. It is a swap.
- Handover. Be prepared to offer a longer handover of the salon beyond the training and assistance period. This will be where the owner stays on for a wage. percentage of income generated, or by way of a “rent a chair” arrangement.
- A non-compete clause in the contract of sale guarantees the buyer that you will not set up a salon around the corner to compete with the buyer.
- Website: If the website is coming across it will add value.
- Business Name. If you decide to include the salon’s business name in the contract of sale you are required to notify ASIC of the transfer.
- Business Broker. A business broker knows all the above and can present your salon to buyers in the most attractive light.
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They opted for BCI:
Founder and M.D. - Jump Start
" I sold my business for the price, terms and hand-over that I wanted, and it was all because of Tony. His decades of experience and excellent people skills gave me confidence, reassurance and guidance throughout the entire process. He had ... "
M.D. - Sherlock Consulting
"For 20 years plus I have seen the results of Tony’s business and the professional way he handles his clients….. He is a man of action and stands behind his words….. It’s nice to see and meet a person who is courteous, honest and willing to go the ... "
Director - Fields of Beauty
" Tony, Thank you, for your commitment, professionalism, and dedication to selling my business . I could not have asked for a better broker to sell it! ... "
Director - PALMERBIZ
" If you are considering selling your business, don’t waste your time shopping around for a broker that doesn’t even understand business. Go straight to BCI Brokers and get the professional service that you deserve ... "
Director, Franchise Systems Grp
"Tony puts the interests of his clients at the forefront. He takes a proactive approach to each project and helps his clients understand the reality of the situation. He knows what is required to get a positive result and has proved to be a longstanding colleague ... "
Pro. Services Franchisor
" I have worked with Tony over a number of years in different capacities, firstly as a Franchisor with Tony brokering the sale of a franchisee in our system and then as an advisor to our system. On all occasions I have found Tony to be well informed and ... "