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Old 07-18-2011, 10:46 AM   #6 (permalink)
sunsally
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Re: Tips to know BEFORE you buy a salon!!

Switching Gears -- some DO'S


1. DO count your hours worked as part of the "investment" -- as well as the price you pay. And factor in full time hours as an "expense" of the business you are looking at buying -- even if the seller doesn't include it as part of the equation!


Many, many, many times buyers or prospective buyers come on here with the "expenses" side and it only shows rent and maybe electric. There are a LOT more expenses than that. And the number one NOT included - is payroll.

EVEN IF YOU ARE NOT GOING TO TAKE A CHECK AT FIRST FOR "CASHFLOW REASONS" -- you MUST COUNT PAYROLL AS PART OF THE EXPENSES IN DETERMINING IF THIS IS A GOOD INVESTMENT!

The rule of thumb to use -- $3k/month or $36k/year.

This is approx $8/hour, for the typical hours a salon would be open in a year, single staffed (e.g. only one employee working at a time), including payroll and other taxes, plus some minimal commission.

NOBODY SHOULD INVEST EVEN A $1 TO WORK FOR FREE! And if you get hurt, tired, etc etc and can't work for "free" - you have to hire someone else. Bottom line - payroll is an 'expense' and needs to be part of the equation to see if this is a good INVESTMENT or not -- even if you don't take a check at first.

Any PROFIT - is AFTER all expenses -- including payroll AND the cost of paying back yourself the money you paid to buy the business.
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