How to value a small beauty salon?

[jeniwalsh]

I have a small salon which is doing well, I have one ft therapist alongside me and one pt, I’m considering relocating and am looking to sell the established business, I’m wondering how to do that? Thanks in advance x

 

[BannerPenguin]

Normally it's so many times your net profit.

 

[jeniwalsh]

Normally it's so many times your net profit.

Thanks, how do I find out how many times? X

 

[RED STAR]

Are you going far with your 'relocation'?
If local, will you be taking your staff with you....if so, I would I expect your client base to follow ......
Hence the problem.....how can you put a value to what is not there?

 

[jeniwalsh]

Are you going far with your 'relocation'?
If local, will you be taking your staff with you....if so, I would I expect your client base to follow ......
Hence the problem.....how can you put a value to what is not there?

I’m leaving the area altogether 3 hours away and the staff I have are the ones I want to buy the salon, so nothing should change apart from my long term clients will be unhappy

 

[salonfrog]

There are a number of ways to value your business (multiplier method - as BannerPenguin says) , Net present value (accountants like this), good old market rate, or just blag it and see what happens.

If there’s good money involved, you could get a professional in to do this valuation.

What you do need to do though is show potential buyers just what a good investment your salon is. Putting together a 3 or 5 year detailed plan (presented beautifully) of all the income and expenses, pointing out areas of potential expansion or new business opportunities (eg new services which could be offered or space to take on additional staff) etc. so a buyer can see just what the potential of your salon is!

The Plan should also include key metrics, such as annual return on investment, how much an owner is likely to earn after tax etc etc.

In other words, spoon feed potential buyers with what a great place you have to maximise your sales price. Think what estate agents do to sell property. They sell a lifestyle.

 

[Beckybee]

Do you own the building?

I'd be hesitant on buying a business that to some extent is area related or building position. Only to find the landlord doesn't want to renew the lease etc

 

[littlebear]

It's generally your net profit X 5 or X 10 but you also need about 3 years of accounts to display this value