“Sweaty Betty” or “Super Salon”?
It has come to my attention over the last 17 years of being in this industry that most salon owners don’t know whether they own a “Sweaty Betty” salon that is worth nothing or a Super Salon that is worth stacks. Everyday salon owners come to me and ask me to give them an appraisal on how much their salon is worth and whether they can get a good price for it. I always run them through the same questions to arrive at a figure. Here’s how it goes … Where is your salon located? – Shopping Centre, Strip Shop or Stand Alone? Location is key to success in business and all these sites will work, as long as the lease is long, and the rent is affordable. How much rent do you pay? – your rent is the other driving factor in success, your aim is to have the cheapest rent for the best location. Shopping centre rents normally come in at $800 – $1600 per square metre – so if you have 100 square metre shop then you would pay $80,000 – $160,000 per year in rent … obviously if you are paying the higher amount you would want the “Walk By” traffic to be extremely high. We find high rent in a poor location is one of the determining factors that contributes to the creation of a “Sweaty Betty” salon. What lease terms do you have? – If you don’t have a good lease then you have nothing to sell. If you have a 5x5x5 year term (15years) then that is definitely better than having only 2 years left on your lease with no option to renew. Profit vs Turnover? – Selling salons is all about profit and has nothing to do with turnover (sales), profit is how much is left over after you pay all of your bills, and pay yourself a regular wage for your work … how much you have left always impacts on the price you will be able to sell for … the higher the profit, the more money you get when you come to sell! The lower the profit – the less your business is worth. Staff? – If I were to buy your business and the top 2 key staff members walked out on me would your business continue to operate at the same profit levels, or would your staff drag out half your clientele, set up down the road and ruin me as the new owner? If you know that the business would continue on, without a “bump” in the road, then you have a Super Salon. Staff are another important factor in selling a salon, and you need as many as possible to make for a stable business for a new owner. Computer or not? – Being computerised is always part of a Super Salon, as it holds all the data that can be accessed by the new owner, to help to market the business and hold onto the clients. The brand of system does not matter, as these days they pretty much do all the same stuff … get a system that is easy to understand and does not cost you the earth. If you go through each question above and see how your salon “stacks-up” then you can easily find out what you need to do to turn your salon from a “Sweaty Betty” into a Super Salon. Iain Horne Salon Specialist Business Broker