Thinking about buying an already established hair salon?
Salons Direct, stockists of professional salon supplies, share with us the important attributes that need to be considered when buying an already established hairdressing business.
Guide To Buying An Already Established Hair Salon
So you’re thinking of buying an already established hairdressing business? There are many factors to consider when taking on such a purchase that will ultimately dictate how successful your business is, as well and your image as a professional within the hairdressing industry.
Of course, every business proposition is entirely unique and we highly recommend enlisting the help of an experienced accountant and/or solicitor to help with the legal and financial sides of the prospect. However, if you are wondering where to begin and what to consider when buying an existing hairdressing business, here are a few helpful points to consider…
1: Knowing exactly what you are investing in…
First and foremost, if you see that a hairdressing salon is for sale and you are interested in its prospects, you need to evaluate if it will really be right for you and what you want to achieve. We recommend doing some digging to try and find out why exactly the salon is for sale – perhaps the owner is retiring, moving on or it is not making profit? Any indication as to why the salon is for sale is of benefit to you as taking a punt is a huge risk and could be detrimental to your future successes.
2: What should I be looking for when buying an already established hair salon?
There may be obvious signs as to why the business is being sold. This could be due to lack of profitability – for example, the décor is outdated or there are no signs of a clear brand and voice, which may turn clients off. These are attributes that can be easily rectified, and are not as significant as if the salon is positioned in a location with barely any footfall and attracting clientele is challenging.
From the initial visual cues, weigh up how practical and suitable the salon is before you decide to proceed. Also, examine other competitors in the area; you will be able to gauge what clients are expecting, and what you can do to attract business from these existing salons.
3: Lease Agreements…
You absolutely need to know if the lease is transferable upon purchase, and if it is, you need to be fully clued up on all the terms of lease – are they going to stay the same upon renewal?
Ask as many questions as possible about the lease before you negotiate your terms, as you do not want to be stuck with payments you can’t afford before the business has even got off the ground. If the lease has under three years left, you will need to consider your terms to propose and have clear, professionally examined terms and conditions laid out. If in doubt, we have more details on leasing a salon, with five important areas to keep in mind.
4: Looking over hair salon accounts…
When buying an already established hair salon, it is very important to look over the existing salon’s accounts and appointment books. This will give you a good measure of the clientele and if the business is currently staying afloat.
We highly recommend investing in a finance professional to help you see if the business is truly worth the money (due to external variables, such as any generated ‘goodwill’ or a fantastic pool of stylists and clients), and if there is any room to haggle on the price. It is also a good idea to verify that a fair price is being paid for the business by getting it valued independently.
5: Terms and conditions…
You will need to know exactly what you’re getting for your money when buying and already established hair salon. Will its sale include stylists, equipment, furniture, etc? In particular, staff have a huge effect on whether or not a salon will succeed… Are the current team effective or are they playing a major part in what has caused the business to fail?
On the flip side, perhaps an amazing styling team are already in place and you would want to keep them on as part of the sale agreement. If this is the case, their clientele list is extremely valuable to you, and you will want to communicate that they are a prized asset to your new salon business, encouraging them to stay after the business has exchanged hands. Luckily, there are plenty of salon teamwork goals and ways to lookout for your team to get them behind you.
Picking the right employees for your salon is also super important. This may involve a recruitment drive, but you’re in safe hands with our best interview tips to find the perfect candidate. Look out for a great personality, accredited qualifications, an image that fits your brand, and an ambition to succeed!
6: Cost considerations for buying an already established hair salon…
Think about whether or not the asking price of the salon is worth what it could cost you to renovate and remarket it with new branding. There may be some room to negotiate if there are significant structural changes that need making, or the equipment included in the sale is outdated. Remember that, no matter what you do, make sure the salon is evaluated and is covered by the correct salon insurance types if you move forward.
Buying an established hair salon or existing hairdressing business is an increasingly popular choice for those who don’t want to build a business from scratch. It is likely that an established salon will have a market presence and a revenue stream which can give new salon owners a head start. Remember, the most important thing is to do your homework and seek the very best advice.
Salons Direct cover a number of comprehensives topics on their website. Why not read their guides for more?