Steve Underhill

There seems to be a great number of people looking to purchase an existing salon. Here are some things that should be considered.

Typically if a salon is for sale it is failing or at least struggling. You should do all of the site evaluation that the current owner probably did not do. Approach it just as though you wanted to open a new salon at that location.

Evaluate the demographics of the location connected to a particular marketing program, so you can establish how much business should be done at that location.

You must identify all of the things that are causing this salon to struggle. You must also establish the cost of fixing the salon. If you don't have a very specific plan for operating the salon, you will just end up with a failing salon. I am sure that you might think that buying an existing salon you are by-passing the business plan process. The purpose of a business plan is not just secure funding. It is a map to reach your goal of success.

There is just a few of the things that must be considered before establishing the value of the salon.

sunsally

Very Good post Steve!

I agree - over the past 2 weeks there must be 10 different posters who have come on here, out of nowhere, all with a VERY similar story. Existing owner wants to sell, it isn't making any money now, but they can see SO many reasons why it isn't that they are ready to pull the trigger and buy. Oh - and they have very little cash right now, the owner is asking a pretty penny -- and it's August.

There is a REASON it is for sale. And PLEASE do not be swayed by "owner wants to move, owner is in poor healthy, owner has other interests, owner is going through a divorce, ....". Yes - those things MAY be true! But if it was THRIVING, I'll bet they wouldn't have it on the block. 90% of the time.

To reiterate:
1. Identify ALL the things that are causing this salon to struggle and the costs to fix it. Not what you "think" - what you can verify. You think they "don't advertise much". How much? Did you know their advertising expenses? Have you investigated what the costs are to do this? Put together what you think would be a "good" advertising plan for a year -- and price it out. Ask the people giving you the costs what THEY think would be a "good" advertising plan (yes, they may be biased, trying to sell you, but they also should know a little something about this). Ditto everything else you THINK they do wrong. Not much inventory - how much would it cost to have as much on hand as YOU think? Short hours - how much more in payroll per year to stay open the hours they SHOULD? Poor equipment? How much to replace it? Needs to be "re-decorated" - how much is that? Etc etc

2. Have a VERY specific business plan. EVERY aspect of the business should be mapped out - time, cost, strategy, etc. WHO will work the salon? How MUCH will they be paid? Commissions - on what? Using a payroll service or doing it yourself? If yourself, who will do that paperwork? Offering EFTs? How? On-site, using a provider, which provider? What will your pricing be? Based on what? If it is different from the existing pricing, how will you "sell" that to customers? Who will be in charge of maintaining the equipment? If they don't already know about tanning beds, how will they learn? Do you have an attorney to represent your interests in the purchase of the salon? In the negotiation of the building lease?

In general, if you don't have "time" to do all of these things BEFORE buying an existing salon --- then don't buy it. There will be another, or you can build your own - if it makes sense. Anything other than that is financial suicide - and you will be the "victim" rather than the person you are buying the salon from unless you can get some other "victim" to buy it from you!!

Best of luck!

Neon Beach

Quote:
On 2005-08-04 12:19:00, Steve Underhill wrote:
There seems to be a great number of people looking to purchase an existing salon.
There are??

Peoples is stupid.
~engfant

mr belvedere

Hey, it's usually cheaper than building a new one, and with half the overhead. It's the overhead that kills you the other 9 months of the year. Just be careful, and do everything Steve said. I recommend anyone ierested in buying a used salon, starting a new one, or anything in between, call Steve and use his consulting services. You won't be sorry. Good luck.

Steve Underhill

Thank you for that mr belvedere, the point is get some help you will never be sorry. Knowledge is power.

bruceD

The time you save buying an existing salon is more time to practice!