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Old 11-13-2017, 10:31 AM   #1 (permalink)
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WHAT A SALON IS WORTH

How do you figure out how much a salon is worth? Im looking to buy an existing salon but i think the price is way too much.

PRO
huge parking lot
new gym in same parking lot
rent is good
only salon in area
been there 20 +
clean

CON
20+ year old equipment
no computer system
Decor is terrible
all beds need to be replaced
sales are slumping BADLY

I know i can make that place profitable but he wants way too much.
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Old 11-13-2017, 11:09 AM   #2 (permalink)
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Re: WHAT A SALON IS WORTH

Only worth what it is making plus assets plus a few $$$ for the goodwill.

So if a salon is not making any money and the equipment is old it is only worth some money for the goodwill (Customer list, lease). However if the bones (AC, Wall, Electric) are what you need then there is some value.
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Old 11-13-2017, 12:02 PM   #3 (permalink)
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Re: WHAT A SALON IS WORTH

I agree . But how do you determin value of the store? Is a there a formula? And please take off Im an idiot. Lets play nice.
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Old 11-13-2017, 04:14 PM   #4 (permalink)
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Re: WHAT A SALON IS WORTH

There is no formula in this industry. Couple of questions:

Is the salon making money?

How is the year over year trend?

Can you assume the lease?

Is it below market value?
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Old 11-13-2017, 05:33 PM   #5 (permalink)
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Re: WHAT A SALON IS WORTH

question 1 no
question 2 decreasing
question 3 yes
question 4 lease is fair
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Old 11-13-2017, 08:18 PM   #6 (permalink)
 
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Re: WHAT A SALON IS WORTH

Make a modest offer you will be happy to have accepted and do it in writing.
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Old 11-14-2017, 12:31 PM   #7 (permalink)
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Re: WHAT A SALON IS WORTH

Quote:
Originally Posted by FRANKYYY View Post
question 1 no
question 2 decreasing
question 3 yes
question 4 lease is fair

So if the salon is currently NOT profitable. And sales are going down from there --- what is the value you see?


The "buildout" technically belongs to the Landlord. The salon owner paid for it (probably) but if it is "fixed" (e.g. not portable walls), the LL "owns it" and so not really something of "value" from a business asset point of view. Sure - would be nice to walk into a buildout, elec in place etc --- but as a BUYER, you are arguing that is not "tangible"

20 year old beds? Could probably sell them on Craigslist for $500 eac for people to come pick up, but otherwise not much more "value". You would probably have to pay a vendor to take them away for you if you were going to replace. Again - it would be nice to walk into tanning beds just sitting there, but if they aren't making money for this person, no guarantee they would make money for you.
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Old 11-19-2017, 12:00 AM   #8 (permalink)
 
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Re: WHAT A SALON IS WORTH

I have purchased two salons in the last 2 years so I have some experience with this in the Southern California market. Your market may be different but I think that generally the same principles should apply.
But I have a few questions for you so I don't give my 2 cents ignorantly:

1.) Did you approach the salon owner about buying or did he approach you?

2.) Do you already own a salon and are looking to expand to a 2nd location?
A. If so, how close is it to your current store?
B. If you don't already own a salon, do you have any other experience operating your own business?

3.) How long has this store's sales trend been declining for?

4.) Does the current owner seem like he is eager to get out of the business?
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