yveskleinsky

How would you value the business then?

vinmorello

i have been looking into buying a salon..it has 9 units total .price is just for the business and not the building.it has 3 level 1 beds, 3 level 1 standups, 1 supercyclone, 1 vhr bed, and 1 vhr standup.sale includes all supplies,inventory,helios,desks,chairs,t ables,etc.basically everything is included..its located in a busy strip mall.over 5000 people in database..business does 70k a yr with no advertising...asking price is under 30k...lease is 1400 a month for 1000 sq ft..any comments

sun blast

Vin, sounds similar to a salon I've been looking at. Shows around 65k on the books, has 7 beds, and adding a spray booth right now, has 4,500 customer database, Helios, recent total remodel, good shopping center, and currently asking 55k, but I can work on the price when I'm good and ready.

sunsally

"Shows 70K" and "65K on the books" -- is that total revenue, or net profit??

HUGE difference!

If total revenue, neither of them is even breaking even --- which is why they are for sale.

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houseoftan

to see how much a salon is worth , i would think you would multiple the
average profit a year,with the years left on the lease? my opinion
its all about how many years u are guarented
business/location?

Ezliving_Jim

So. in your opinion, working for free, making zero money on your investment for an indeterminate period of time sounds like a shrewd business decision.

May I respectfully disagree.

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houseoftan

ezliv.jm
no.. i guess i didnt explain myself right... bottom line, a business is worth more, the more years u have left on a lease,?!and THAT i would think.. has to be a big part of the price value as well as taxes etc?? maybe am wrong,and i am not saying..nothing else matters. just trying to figure out how u would really price a salon.
i am getting close to a new negotiation of lease, and i am gonna fight for a 10 y lease so i would get a better price when i sell..(compare to a 5 y lease)

jones10021

Part of the problem that I've run into with exsisting locations is that their are some very suscessful salons making tons of cash but your not going to see it reflected on there tax return!

excitednewguy

Real Simple:

Easy valuation method --- last 24 months cash flow (adjusting for
non-required expenses, like a wife on payroll) x (a multiple) - the outstanding debt.

Let's say:
Spits off $25,000 per year in cash after paying everything (before
taxes & debt payments _or_ EBITDA) x Multiple of 2 - debt obligations (or other liabilities)

Depending on equipment-Add Depreciated Value of this and any FFandE that you would pay to start new, usually this is a multiple

Public companies sell for multiples of 5-10 x EBITDA normally (forget
google and facebook type sales) for a mature business model.

Example:

Asking $150,000, assuming beds and FFandE are worth about $50,000, you would want to see an annual cash flow of $50,000 (This is not including any multiple-which salons do not support)-- per year.

Just an example and depending on location, age, demographics, surrounding comp, have there been new salons open recently, etc. etc. variable can change.

Steve Underhill

It is very important to see tax returns, a tanning salon is typically worth 2 to 2.5 times net profit reflected on tax returns. If it is a salon that is less than 5 years old some consideration is given to equipment value based on current market resale value. If equipment is older than 5 years it is completely depreciated and is of minimal value and must be viewed as such. There is no value in build-out after 5 years. If a salon is for sale it is failing and tax returns will reflect this. I have a questionaire that will assist you in determining the value.