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What Are Some Tips For Buying A Beauty Salon?

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Comments & Replies: 1     Views: 3952     Posted By: Joe Ranieri  Joe Ranieri, Business Broker: LA, Orange County Areas

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



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 canít 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.


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George Lanza, Business Broker, At Plethora Business Sales

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Michael Davidson, Business Broker - Southern California

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Bob Baumgarten, Business Broker: Orange, LA Counties

National Business Brokerage is a full service brokerage company that has been serving buyers and sellers of Southern California businesses since 1994. We are dedicated to providing the highest standards of professional service for our clients. Phone Bob direct at 949-588-8727.

Lee Petsas, Business Broker - Orange, San Diego Counties, Inland Empire

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Christina Lazuric, CBI, Business Broker - Orange County

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Jack Oh, Business Broker - LA, Orange Counties

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