Buying an established salon

[Lemmonie]

Hi guys,

I am tentivly dipping my perfectly pedicured toes in the water here and looking at possible buying an established beauty salon.
What questions do i need to be asking? so far i am looking at:
1) turnover
2) net profit
3) established customer base (is this goodwill)
4) reason business is for sale
5) fixtures/fittings
6) lease agreement/terms

Also apart from the business cost and then the rent what other outgoings do i need to take into account.

thanks

 

[loubylou]

Business rates
water rates
gas
electric
accountancy fees
solicitor fees (for the sale transfer)
stock & supplies
advertising
staff wages (if you will have staff)
telephone
stationary costs (business cards, price lists etc...
tea, coffee etc for clients

that's all i can think of off the top of my head but there could be more.

 

[YSL]

There are two parts to the transaction- the first is getting enough information upfront to enable you to pitch an appropriate offer and the second is all the remaining gumph that your solicitor should collect as their appropriate due diligence on the salon and business. I recently prepared a short list for a client considering an offer which included,

1. copies of contracts with suppliers/ manufacturers (including salon IT system)

2. a salon rate card or confirmation of charge structures

3. employee list

4. details/ numbers of any contractua, negligence or employment disputes

5. financials- namely,

i. P&L

ii. cashflow analysis

iii. current year projections

iv. future projections

There are clearly some gaps here given the two previous posts but they all help I hope. One critical question is the employee situation as there is legislation under the name TUPE which essentially requires you to assume the transfer of the employees or render them redundant which is a major financial burden

 

[tog]

Hi guys,

I am tentivly dipping my perfectly pedicured toes in the water here and looking at possible buying an established beauty salon.
What questions do i need to be asking? so far i am looking at:
1) turnover
2) net profit
3) established customer base (is this goodwill)
4) reason business is for sale
5) fixtures/fittings
6) lease agreement/terms

Also apart from the business cost and then the rent what other outgoings do i need to take into account.

thanks

If you are a serious buyer could you not get an accountant of your choice to take a look at their last 3 years accounts?

At least you would get a professional opinion instead of having to wade through everything yourself and wondering if you've forgotten anything. Also he/she could explain any items you are not sure about. I'm sure it's worth paying a fee to an accountant if it helps you make a decision. And if the business owner doesn't want you to look at her accounts then you know there's something wrong and you can drop the idea like a hot brick.

If I was selling my business I would expect a potential buyer to request this.

Good luck!

 

[Lemmonie]

I would DEFINITELY get an accountant in if i was seriously interested. No point in mucking that bit up!

Just needed some initial pointers. I have an appointment this week to view and meet the current owners of a business so have some great question lined up thank you.