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What Are Some Tips For Buying A Beauty Salon?

Comments & Replies: 1 Views: 7899 Posted By: Joe Ranieri

What should you look out for when buying a beauty salon business? Buyers kept asking us so I decided to go over the basics plus a bit more and discuss items like: independent contractors vs employees, inventory considerations, licensing issues, escrow considerations, and of course valuation ranges.

Topics: Buying A Business Tags: buying a business, due diligence

Contributor: Joe Ranieri, Business Broker: LA, Orange Counties

Whether we are in an upswing or downturn economy, people will always cut and or color their hair, in fact it's often thought of as a recession proof business. Per the Professional Beauty Association, "The salon and spa industry is a vibrant and growing component of the U.S. economy, with more than 1.1 million total establishments and annual sales of more than $44 billion."

Most salons are classified as non-employer establishments, which means either the owner works there alone or also has independent contractors who work there. A buyer should investigate if the people there either work on commission or if they rent their space.

When looking to buy, don't forget to consider the amount of inventory needed to be purchased on top of the asking price, and investigate how much the salon does in sales. Selling conditioner and shampoo is a great way for a business owner to increase their bottom line.

A buyer should verify that the people who work there have their cosmetology license, and try to retain them after taking possession of the business. A buyer can include in the sales price the business' client list, but should be aware that many clients will follow a hair dresser where ever they go. I have sold some salons where the seller was tired of running the business and just wanted to be an independent contractor at the same location. A buyer may want to include in the contract a non-complete clause, so the owner can t take their business and reputation across the street, although the vast majority of buyers also have their cosmetology license and cut hair at their own establishment bringing with them their own client list.

Before the close of escrow, the buyer should inspect that everything in the store is in working condition, and that all of the chairs are in working condition. The buyer should also verify that all permits and business licenses are up to date.

Sales prices of many salons range from 2-3 times the annual net income. A buyer should take into consideration that renting chairs is a great way to offset business costs/rent.

Helpful Resources To Assist In Selling And Buying California Businesses

Jack Oh, Business Broker: Southern California

Business broker and real estate services in the Los Angeles and Orange County areas. 10 years experience with great negotiating skills. To sell a business or buy a business in the LA or Orange County Areas phone Jack and his team at 562-787-4989 Cell / Text.

Peter Siegel MBA, BizBen Founder, ProBuy, ProSell, ProIntermediary Programs

Founder Of BizBen.com (since 1994). I am the Lead Advisor for the ProSell, ProBuy, & ProIntermediary Programs. I consult daily with buyers, sellers, and brokers daily about buying and selling California small to mid-sized businesses. Call 925-785-3118.

Michael Davidson, Business Broker - Southern California

Los Angeles Business Broker providing M&A quality services for Small Business Owners. We leverage our technology and expertise to Simplify & Expedite the Business Sales Process. Matching the right buyer with the right business is how we define success.

Peter Siegel, MBA: Business Purchase Financing Solutions

Niche business purchase financing advisory and loan placement services with SBA and Non-SBA Financing, Retirement Fund Rollover Solutions, Combo Financing Packages. To get professionally pre-qualified or more information on the ProBuy/ProSell Programs: 925-785-3118.

Joe Ranieri, Business Broker: Orange, LA County Areas

Having owned retail/restaurant businesses for over 20 years, my interest turned to selling businesses rather than owning them. I specialize in LA & Orange County restaurants, fast food independents and chains, bars, & liquor stores. Call 714-292-5448 Cell/Text.

Lee Petsas, Business Broker: Southern California Area

Lee Petsas has been selling businesses with UBI Business Brokers in Southern CA since 1981. In 1999 he became the Owner and Broker for UBI. He has been approved multiple times by Courts as an Expert Witness in the area of Business Valuations.

Rick Carlson, Business Broker - Southern California

You Will Never Feel Lost In The Shuffle. Many Brokers Simply Send Out An NDA And That's The End Of Communication. All Buyers Receive A Personal Meeting With An Ace Acquisition Specialist So They Can Recommend The Perfect Business For You. Phone Rick direct at 800-985-4939.

Ryan Clark, Business Broker: Southern California

The Veld Group provides a refreshing approach to Business Brokerage, Mergers & Acquisitions and Business Consulting and Valuations. From Your Street to Wall Street, we cater to Main Street Businesses as well as more complex Strategic Firms and Start-Ups. Phone Ryan, Business Broker at 310-652-8353.

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