Buy a beauty salon advice

[LondonEntrep]

Hi everyone,

This is my first post. Hopefully not my last though..

Been browsing around here recently and there seems to be a really good crowd with great industry knowledge.

Reason I'm posting now is for some pro/cons of buying a beauty salon. My wife and I are looking at buying one our area not too far away. The owner is selling due to health reason and we have both been there ourselves as clients and really like the place, the service and the brand itself.

I expect some clients to leave as they loyal to their therapist the owner, but there is currently already a full time therapist there. Plan to put in a manager with beauty salon experience and put back in profit and grow the business some more as we a believe it's been plodding along and the owner agrees there is more that could be done.

The owner is happy to assist hiring the manager, training the manager and being contact for a few months to answer any questions. Really see's at her baby being handed over and wants to see it carry on not just drop kick it.

The managers salary can be covered and over time if we successful at building it up and growing it some more my wife can leave her office job and move full time into the salon. Which will give her time to study and slowly take on the business.

I know there is the risk not having a background in this field being a big negative so if we can find a decent beauty salon manager with industry experience we hoping we can get it running smoothly after transition and look at making some positive changes.

Looking for all warning signs, pros and cons here and any positive and negative advice offered. Things to watch out for or avoid. Do we go in cautious after weighing it up or run for the hills?

Appreciate you reading this far. :biggrin:

Regards, Charles

 

[carlytaylor1986]

Hi everyone,

This is my first post. Hopefully not my last though..

Been browsing around here recently and there seems to be a really good crowd with great industry knowledge.

Reason I'm posting now is for some pro/cons of buying a beauty salon. My wife and I are looking at buying one our area not too far away. The owner is selling due to health reason and we have both been there ourselves as clients and really like the place, the service and the brand itself.

I expect some clients to leave as they loyal to their therapist the owner, but there is currently already a full time therapist there. Plan to put in a manager with beauty salon experience and put back in profit and grow the business some more as we a believe it's been plodding along and the owner agrees there is more that could be done.

The owner is happy to assist hiring the manager, training the manager and being contact for a few months to answer any questions. Really see's at her baby being handed over and wants to see it carry on not just drop kick it.

The managers salary can be covered and over time if we successful at building it up and growing it some more my wife can leave her office job and move full time into the salon. Which will give her time to study and slowly take on the business.

I know there is the risk not having a background in this field being a big negative so if we can find a decent beauty salon manager with industry experience we hoping we can get it running smoothly after transition and look at making some positive changes.

Looking for all warning signs, pros and cons here and any positive and negative advice offered. Things to watch out for or avoid. Do we go in cautious after weighing it up or run for the hills?

Appreciate you reading this far. :biggrin:

Regards, Charles

i've never owned a salon but didn't want to read and run. i used to work in a salon though. it's really a tough one, because you have no experience in the industry. you will just need to be wary about things i think, sounds like a great opportunity though. make sure you ask the current owner about gift vouchers, as she could have taken hundreds of pounds off people who then want to redeem these gift vouchers when you are the new owners. be wary about products as well, she may have some old products that they no longer use and try to flog them to you for hundreds, make sure you take her price list and see what she currently offers to avoid this! any beauty accounts she has with the suppliers i.e. dermalogica, ask her if she is going to continue that account for herself or whether she is going to transfer it to your name - the opening cost of an account with some suppliers are thousands. also, does she have a legit reason of her selling? x

 

[Cheshire_Gal]

Dont underestimate how loyal clients are. Therapists make the salon. I personally wouldnt buy into a service industry that i couldnt do myself. Good luck xx

 

[Cheshire_Gal]

Just ask yourself one question. If managers salary can be covered, why isnt owner doing this. The ownerbwill tell you anything to get a sale. Check accounts and see if theres a trend if reducing turnover. Also check how much it takes in quieter months from September to March as beauty is definately seasonal xx

 

[libbylou]

Hi i think buying any business that you have no knowledge of is risky.With beauty you are going to need deep pockets. Obviously you know the kind of profit the salon is currently making. To employ a salon manager will cost you approx 20 grand per year,is there enough profit already in the business to cover this ? You say your wife would like to leave her job and train to be a therapist, that alone will take abt 2 years. She is going to need to be trained to NVQ level, to work in a salon. Even then she is not going to be no expert,that is just the start of her training. There is a lot more to beauty then painting a few nails etc,a lot of people think it is a very glamorous job, that could not be further from the truth.What if your wife changes her mind ? I am not saying it can not be done, of course it can, but it will take a lot of commitment,and probably a lot of time before you see any real profit. good luck.

 

[LondonEntrep]

i've never owned a salon but didn't want to read and run. i used to work in a salon though. it's really a tough one, because you have no experience in the industry. you will just need to be wary about things i think, sounds like a great opportunity though. make sure you ask the current owner about gift vouchers, as she could have taken hundreds of pounds off people who then want to redeem these gift vouchers when you are the new owners. be wary about products as well, she may have some old products that they no longer use and try to flog them to you for hundreds, make sure you take her price list and see what she currently offers to avoid this! any beauty accounts she has with the suppliers i.e. dermalogica, ask her if she is going to continue that account for herself or whether she is going to transfer it to your name - the opening cost of an account with some suppliers are thousands. also, does she have a legit reason of her selling? x

Some good points there thanks Carly.

Just ask yourself one question. If managers salary can be covered, why isnt owner doing this. The ownerbwill tell you anything to get a sale. Check accounts and see if theres a trend if reducing turnover. Also check how much it takes in quieter months from September to March as beauty is definately seasonal xx

Hi Chesire_Gal,

She has been upfront and warned about customers leaving that are loyal to her and said to expect some to leave. The reason for selling is health problems and wont be pursuing opening a competing salon again. So they will have to go elsewhere or hopefully stay and use a new therapist.

There is another full time therapist who handles a fair bit of the work so clients seeing her should stay. But we fully expect a drop in sales shortly and then to grow it there with a manager overseeing and assisting and two therapists. This would be payable at current income for business.

My accountant will be going over the books to verify everything and I'll inspect the bookings for as far back as I can.

 

[LondonEntrep]

Hi i think buying any business that you have no knowledge of is risky.With beauty you are going to need deep pockets. Obviously you know the kind of profit the salon is currently making. To employ a salon manager will cost you approx 20 grand per year,is there enough profit already in the business to cover this ? You say your wife would like to leave her job and train to be a therapist, that alone will take abt 2 years. She is going to need to be trained to NVQ level, to work in a salon. Even then she is not going to be no expert,that is just the start of her training. There is a lot more to beauty then painting a few nails etc,a lot of people think it is a very glamorous job, that could not be further from the truth.What if your wife changes her mind ? I am not saying it can not be done, of course it can, but it will take a lot of commitment,and probably a lot of time before you see any real profit. good luck.

Yeah there is loads to weigh up. The budget is there for a manager and two therapists and spare will be put back in to grow bookings and look at other avenues. Current owner is willing to spend a month or more handing over, working with manager and advising areas that have been neglected and could possibly grow sales.

We understand to be a therapist is no walk in the park and a 2 years path to get there. But want to manage more, cater to the clients and provide great front door services and have quality therapist attending to the clients.

And also look at way to keep clients loyal to salon and not the therapist although being such a personal service can be difficult from what I've been reading over recent research.

It doesn't feel like a take money and run sale there is a genuine concern to handover and see it carry on. But I trust a mate 100% on a business sale so I'm going in very cautious taking in what I'm told by the owner.


Appreciating all the advice and cautionary words here. Thank you.

 

[libbylou]

I think you have already made your mind up , and with hard work and dedication, i am sure you will make it work. There are lots of geeks here with heaps of knowledge who run very successful businesses, so dont be afraid to keep asking questions. But i would definitely get the books looked over by a charted accountant before you part with your cash.

 

[squidgernetball]

As the owner of a salon that is growing I'm almost going to do the opposite of what you propose. I'm planning to keep growing my business and as it grows to employ more staff and take on a managerial role. Although I'm a very qualified therapist I'm finding that running a salon, ordering stock, paying staff, dealing with clients etc is taking up a lot of time. I would almost like to be meeter/greeter/receptionist/troubleshooter and leave the staff to do treatments. If you are knowledgeable about the business and you don't assume that all nail treatments/waxes etc are the same I don't see why you can't manage without performing treatments - unless you want to!

Very best of luck

Vicki X


Sent from my GT-I9505 using SalonGeek mobile app

 

[nicolaluise]

I agree with Vicki here, I too own and run a large salon. I'm a hairdresser and find it so difficult over seeing important things like ordering stock, meeting with reps, all management rolls whilst maintaining a full column. At the moment I'm the biggest earner in the salon so I cannot step away from my column just yet but hope to drop some salon floor hours eventually to be able to "manage" the salon. Luckily I have an accountant business partner who looks after a lot of behind the scenes stuff so I don't have to worry there!

I would probably suggest a few courses about managing a salon and business before training in the beauty side of things, get some substantial salon business knowledge first if possible xx

 

[Charlee-c]

I bought a business over 4years ago I'm fully trained beauty therapist and honestly I would never ever do it again.i wish I had started from scratch buying the things I wanted and gaining my own reputation rather than taking over someone else's.i have none of the previous owners clients as they all moved on. Look carefully maybe ask if you could go in and shadow her for a day and meet people

Charlotte

 

[stephanie_87]

I own and run my own business, I worked 70 hours a week for a year to get it up and running. Believe you me you won't ever get others to work as hard you need. If you can't actually do clients and you can't plough everything you have in to that business you are going to need deep pockets to keep it going. I also used to work somewhere where the owner was not qualified, it was a bloody nightmare. She had all the business head and determination but without the fundamental industry knowledge she was relying on staff and massively floundering. She lasted two years and lost a god awful lot of money. I've been in the industry for 14 years and I still find running my business a challenge. Even now if I was completely relying on staff to do clients I wouldn't be making much money. Sorry to put a downer on your idea but I'm just being honest from experience.

 

[TheDuchess]

Greetings Charles and welcome. I did exactly what you are proposing to do...almost identical circs!

I know a lot of people who have bought small businesses and all got done to a greater or lesser extent. I also work as a Business Risk Analyst, Non Executive Director and Business Mentor - so I know a number of the pitfalls. The main No no is going into a business with your heart because you love it but without the relevant background and knowledge.

I came into the salon for two weeks part-time and made myself useful as receptionist. I concluded that there was no point in purchasing goodwill (ie client base.) I was worried about the salon owner's lack of business savvy - she was a really really fabulous therapist, but quite innocent about other matters. I didn't think that she really understood the principle of utmost good faith and due diligence. It isn't sensible to buy from someone who doesn't understand exactly what they are committing to - it's usual to have a clause which requires that the business seller abstains from the trade for two years - but all you can do if the agreement is broken is go to Court and if the person has few assets, this will cost more than it is worth - and suing your clients ex-therapist isn't good for business!

I was worried that once the strain of running the salon was off her shoulders and she had had a good rest she would get got mojo back. I also felt that there was no way that I could stop her from operating in the locality in competition - an agreement is only as good as the enforcement or sanctions available!

But basically, I really wanted to take over the salon. I was sure that I could make it work.

So I bought the stock, equipment and took over the lease. This saved me time and hassle in setting up from scratch. I offered ex salon owner a consultancy fee for six months and offered her a couch two days a week, with products and towels etc in lieu of the consultancy fee - which kept her in house so to speak.

I came in on those days and acted as receptionist/salon junior and scurried around turning around the rooms and making drinks. I learned loads and this gave me the chance to hire an ace senior therapist to manage the salon (but not the books or buying decisions).

I'm a very experienced man/woman manager, but I found that therapists just don't understand the economics of business and resent an owner "making a profit out of them" They have no grasp of the realities that the staff budget must be no more than 25/33% of the turnover to break even on a salon and to give a reasonable return on investment might need to be as little as 10%.

So I lost money whilst S.therapist did seemingly very little. It was exhausting trying to mentor her and teach her what she didn't know. Basically (and I don't mean this unkindly) therapists that have entered the industry from school are not good management material. They learn intuitively and by repetition. They need lots of constructive feedback, reassurance and face to face time.

I wanted to develop treatment protocols and investigate new products and I found that I was dealing with resistance to change - concealed as "I'm making great progress" The penny finally dropped when I learned to thread clients whilst my Senior therapist fussed that "she didn't feel ready yet" I realised that the rather brutal management techniques that I had seen some successful Salon Owners adopt, have some advantages.

If your wife wants to train I suggest that you investigate the CIDESCO qualification offered in private colleges. The training will be worth every penny and can be done part-time. I was working on my own clients (for limited treatments) within three months of starting a part-time course and I was outperforming level 2 qualified, new to industry students.

My therapist had an injury and was off work when I was in my fifth month of my training. I scrabbled around trying to staff the salon and ended up covering some days by myself. To my astonishment, I took more in one day a week on my own than my senior therapist took in a typical week. This was not a one off.

I came to the conclusion that an owner proprietor is always the best therapist in a salon and she can build a business out of nothing. There is absolutely no point in buying a business. Clients are not property and you can't buy their goodwill - it's like trying to buy someone's friends! Clients may visit once or twice out of loyalty to ex salon owner, but they'll also investigate alternatives. Whether you keep them will be up to you. If you are not able to greet them as new salon therapist and they get "staff" instead they may not like it. You certainly can't rely on more than 10% of previous annual turnover - ie 6 weeks. and if someone else sets up down the road, your client base will be just as interested in this new option.

Caveat emptor! (Buyer beware):lol:

 

[LondonEntrep]

I think you have already made your mind up , and with hard work and dedication, i am sure you will make it work. There are lots of geeks here with heaps of knowledge who run very successful businesses, so dont be afraid to keep asking questions. But i would definitely get the books looked over by a charted accountant before you part with your cash.

Not really, actually in a little more doubt after this thread.

She is more than willing to sit with manager and do a full handover and get her up to speed running everything. So that will be a few weeks which is more than a hand over key sale. I'll be documenting the business over the first 3 months. Ideally a run book on what to do where, when and how.

Safe bet, it ticks on current model and carries. Ideally with new services, some tweaks to online presence and business and it grows a fair bit and makes when original owner was there.

Loads to think about.

 

[LondonEntrep]

As the owner of a salon that is growing I'm almost going to do the opposite of what you propose. I'm planning to keep growing my business and as it grows to employ more staff and take on a managerial role. Although I'm a very qualified therapist I'm finding that running a salon, ordering stock, paying staff, dealing with clients etc is taking up a lot of time. I would almost like to be meeter/greeter/receptionist/troubleshooter and leave the staff to do treatments. If you are knowledgeable about the business and you don't assume that all nail treatments/waxes etc are the same I don't see why you can't manage without performing treatments - unless you want to!

Very best of luck

Vicki X


Sent from my GT-I9505 using SalonGeek mobile app

That's the role we want to do. Focus on the client before and after and not just when on the table. Build the extra relationship so it's not solely with the therapist.

I also find loads of smaller ones the front office is empty when rooms full up and phone not being managed. A front office manager handling this would help loads.

 

[LondonEntrep]

Greetings Charles and welcome. I did exactly what you are proposing to do...almost identical circs!

I know a lot of people who have bought small businesses and all got done to a greater or lesser extent. I also work as a Business Risk Analyst, Non Executive Director and Business Mentor - so I know a number of the pitfalls. The main No no is going into a business with your heart because you love it but without the relevant background and knowledge.

I came into the salon for two weeks part-time and made myself useful as receptionist. I concluded that there was no point in purchasing goodwill (ie client base.) I was worried about the salon owner's lack of business savvy - she was a really really fabulous therapist, but quite innocent about other matters. I didn't think that she really understood the principle of utmost good faith and due diligence. It isn't sensible to buy from someone who doesn't understand exactly what they are committing to - it's usual to have a clause which requires that the business seller abstains from the trade for two years - but all you can do if the agreement is broken is go to Court and if the person has few assets, this will cost more than it is worth - and suing your clients ex-therapist isn't good for business!

I was worried that once the strain of running the salon was off her shoulders and she had had a good rest she would get got mojo back. I also felt that there was no way that I could stop her from operating in the locality in competition - an agreement is only as good as the enforcement or sanctions available!

But basically, I really wanted to take over the salon. I was sure that I could make it work.

So I bought the stock, equipment and took over the lease. This saved me time and hassle in setting up from scratch. I offered ex salon owner a consultancy fee for six months and offered her a couch two days a week, with products and towels etc in lieu of the consultancy fee - which kept her in house so to speak.

I came in on those days and acted as receptionist/salon junior and scurried around turning around the rooms and making drinks. I learned loads and this gave me the chance to hire an ace senior therapist to manage the salon (but not the books or buying decisions).

I'm a very experienced man/woman manager, but I found that therapists just don't understand the economics of business and resent an owner "making a profit out of them" They have no grasp of the realities that the staff budget must be no more than 25/33% of the turnover to break even on a salon and to give a reasonable return on investment might need to be as little as 10%.

So I lost money whilst S.therapist did seemingly very little. It was exhausting trying to mentor her and teach her what she didn't know. Basically (and I don't mean this unkindly) therapists that have entered the industry from school are not good management material. They learn intuitively and by repetition. They need lots of constructive feedback, reassurance and face to face time.

I wanted to develop treatment protocols and investigate new products and I found that I was dealing with resistance to change - concealed as "I'm making great progress" The penny finally dropped when I learned to thread clients whilst my Senior therapist fussed that "she didn't feel ready yet" I realised that the rather brutal management techniques that I had seen some successful Salon Owners adopt, have some advantages.

If your wife wants to train I suggest that you investigate the CIDESCO qualification offered in private colleges. The training will be worth every penny and can be done part-time. I was working on my own clients (for limited treatments) within three months of starting a part-time course and I was outperforming level 2 qualified, new to industry students.

My therapist had an injury and was off work when I was in my fifth month of my training. I scrabbled around trying to staff the salon and ended up covering some days by myself. To my astonishment, I took more in one day a week on my own than my senior therapist took in a typical week. This was not a one off.

I came to the conclusion that an owner proprietor is always the best therapist in a salon and she can build a business out of nothing. There is absolutely no point in buying a business. Clients are not property and you can't buy their goodwill - it's like trying to buy someone's friends! Clients may visit once or twice out of loyalty to ex salon owner, but they'll also investigate alternatives. Whether you keep them will be up to you. If you are not able to greet them as new salon therapist and they get "staff" instead they may not like it. You certainly can't rely on more than 10% of previous annual turnover - ie 6 weeks. and if someone else sets up down the road, your client base will be just as interested in this new option.

Caveat emptor! (Buyer beware):lol:

Thanks for taking the time to write that detailed experience you have had so far.

You right, clients are not property and in this field the business is the owner. The only assets is some equipment old/new and stock. Clients can walk and people don't like change and can easily move.

 

[carlytaylor1986]

Can I just say also, it's not necessarily a 2 year path to be trained as a beauty therapist. I did my level 2 and 3 in a year or less I think (from what I can remember) on weekends only - this was with the beauty academy, look them up. The NVQ courses are pricey - about £4k in total but totally worth it and I am guess your wife would have to pay anyway. But as I have said on many threads here, they are great for getting you a quick NVQ, but you do need to practise. Any other courses, spray tanning, eyelashes and nail extensions/shellac - you are better off training with the company you want to use i.e. st tropez, lash perfect, CND...Hope this helps and wishing you every luck xx

 

[swilks12]

Hi,

I had a salon up until recently and decided to step back for a year to pursue a teaching qualification. I brought in a manager to run things in my absence and it was the worse thing i ever did for a number of reasons:

My clients still wanted to see me-they has been coming to me loyally for 6 years and didnt just come to me because i was good (not being bigheaded!) but also because i had a history with them and they enjoyed a good natter-the owner of your potential business is this person also and could loose you alot of clients

Secondly she turned out to be a snake basically, talked the talk at interview and when she worked along side me, but when running the show she slagged me off to my clients telling them i was in financial difficulty and that she was thinking of buying the salon!

Finding decent, loyal and damn good therapists is very difficult in tjis industry and managing a salon with no knowledge would be damned hard too, its hard when you do have experience, its relentless and you are never off duty and if you are both working elsewhere and theres a prob at the salon, ultimately the buck stops with you and you are expected to sort it. On top if your 'day' job you can be looking at a lot of working hours.

 

[LondonEntrep]

Hi,

I had a salon up until recently and decided to step back for a year to pursue a teaching qualification. I brought in a manager to run things in my absence and it was the worse thing i ever did for a number of reasons:

My clients still wanted to see me-they has been coming to me loyally for 6 years and didnt just come to me because i was good (not being bigheaded!) but also because i had a history with them and they enjoyed a good natter-the owner of your potential business is this person also and could loose you alot of clients

Secondly she turned out to be a snake basically, talked the talk at interview and when she worked along side me, but when running the show she slagged me off to my clients telling them i was in financial difficulty and that she was thinking of buying the salon!

Finding decent, loyal and damn good therapists is very difficult in tjis industry and managing a salon with no knowledge would be damned hard too, its hard when you do have experience, its relentless and you are never off duty and if you are both working elsewhere and theres a prob at the salon, ultimately the buck stops with you and you are expected to sort it. On top if your 'day' job you can be looking at a lot of working hours.

This is the cross road I am. Is it possible to find someone that will fulfill the management role properly or are we always going to be taken advantage of.

 

[BannerPenguin]

This is the cross road I am. Is it possible to find someone that will fulfill the management role properly or are we always going to be taken advantage of.

I would say probably the latter most of the time. I dare say there is someone out there but you have slim to none chance of finding them.

In the industry everyone capable of running a business has started up on there own mobile or salon.