How to sell your salon business when you're the owner

If you are a salon owner, at some point you might want to sell your salon business. Liz McKeon explains why you should consider your plan sooner rather than later. Every salon owner needs an exit strategy, because circumstances can change, and the future is never set in stone. When planning your exit strategy, there are two fundamental questions you need to ask: How will you get the money out of your business and how much money will you get? You should plan your preferred exit strategy well in advance, as it can be a lengthy process. Here are some options to consider:

Liquidation

This is the ‘close up shop and sell all the assets’ exit strategy. For a very small salon, especially those that are dependent on the performance of a single individual, liquidation is sometimes the only option, as there’s really nothing else to sell. It might be advisable to restructure the salon so it can be operated by somebody else – turning it into a salon for sale.

Keeping the business in the family

This is the dream for many salon owners, as keeping your business in the family ensures that your legacy lives on and provides a living for your heirs. The advantages to this are you may be able to keep a hand in the business in an advisory capacity. However, you need to know your family members have the skill, interest and commitment to take the business over.

Selling the business to a manager or employee

This is ideal as the employee gets an established business they are familiar with and enthusiastic about. It’s possible to arrange a long-term buyout, which can increase loyalty and motivate staff to work hard and make the business succeed. Again, this arrangement may allow for you to stay on in an advisory capacity. Handled carefully, this option should have very little impact on clients.

Sell the salon on the open market

This is the most popular exit strategy option for salon businesses. The business owner puts the salon up for sale for a certain price and hopefully walks away with the amount of money they want to get for it. A profitable, well run salon should be attractive to buyers and sell quickly. Assets, database, salon name, and good will can be incorporated when valuing the business for sale, maximising the return to the owner. However, salon businesses can be difficult to value, and the selling price may be much lower than expected. If this is your preferred exit strategy, spend time grooming your salon for sale, making it as attractive as possible to potential buyers. Whichever exit strategy you choose, planning in advance gives you time to do it right – and maximise your return on investment.

Getting the Best Price for your Salon

• Sell at the right time and for the right reasons otherwise a buyer will use your circumstances against you. • Determine what your salon is actually worth. Invest in a professional valuation, while accepting that your salon is worth as much as it will fetch in the market place. • Make sure your house is in order. People want to buy a thriving salon business – not a neglected one. • Keep all your business records up to date. • Make sure the premises is well maintained and attractive to potential buyers. Speaking of salons, have you seen these five crucial tips on running a successful salon in a small town? Liz McKeon is a business coach who specialises in the hair industry. For details about business seminars and industry workshops go to lizmckeon.com. This article originally appeared in the February 2018 issue of Hairdressers Journal.