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Taking over established hair & beauty salon

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Enhancebeauty

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Hi guys :)

I am thinking about taking over the hair salon that i currently rent a space in for beauty treatments.

I am looking for advice in if there are any start up grants or help with funding that I could apply for? (I am in scotland).

Also the owner wants to stay on as a hairdresser and rent a space from me. I feel this will be good for clients as she has a large client base that would follow her anywhere. She would like to pay £40 a day and on top of that, pay £5 for evey colour she does. Is this a normal rate?

The rest of the girls are employed and hopefully I would be able to keep them on. I will probably be looking for more advice once ive got this bit out of the way but for now can anyone help me. Im open for any advice at all.

Thanks so much,

Emma xxxx
 

snaz

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R u supplying the colours??
 

Divine h & b

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One thing that always makes me wonder why would someone sell their business and still work there!

Definitely look into how much she takes each week as this would still be hers and will come off the value of the business.
 

Enhancebeauty

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R u supplying the colours??

Yes i would be suppyling all colours etc. Just needing a little advice really.
 

Enhancebeauty

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One thing that always makes me wonder why would someone sell their business and still work there!

Definitely look into how much she takes each week as this would still be hers and will come off the value of the business.

Yes i thought this too although Ive worked there for 3 years now so i know she cant be bothered with it. Ive looked at her income and yes it is alot of the income but the other hairdressers bring in more than enough to cover their wage. Plus i have lots of ideas to hopefully make the business more successful. x x
 

Enhancebeauty

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The other thing is she is looking for £15,000 for good will. I think this is alot, what do you think? xx
 

Beansy

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It usually depends how long the business has been established for as to whether you would qualify for 'start up' grants, simply because an established business isn't starting up.
I would suggest looking for local organisations that support self employment, new business, women in business. Being honest though, if it's anything like England, funding will be difficult to find (unless you're under 25).

In terms of goodwill, it's difficult to comment without knowing more info around what %age of the asking price does she consider the goodwill? When you say, she wants £15k for goodwill, I assume you mean that this is in terms of apportionment?

From a tax perspective, you will want the fixtures & fittings to be the predominant amount but this is the opposite for her. You should discuss this with an accountant if poss. However, you need to consider how established the business is and the size of the client list to determine the 'value' of the goodwill.

If staff are employed within the business they would be subject to TUPE arrangements.

I can't comment on the figures you've quoted for daily rates but chances are this will be a figure that works better for her than you. Once you've checked out local rates, negotiate!! She probably won't want the hassle of moving and so you could be in a strong position.
Good luck with your plans!
 
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Divine h & b

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My dad is an accountant when buying my salon he advised me to pay no more than 50-60% of a years profit!
When buying goodwill you cannot put this through for deprecation on next years accounts you need yo be buying fixtures and fittings and if she is keeping her clients then theres not so much goodwill to buy if you get me.

Can you work out the takings of the others that are staying an average for the year and come up with an offer.
 

Divine h & b

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Just about the daily rate that is for you to decide but as above said if this is what she wants it's in her favour!

£5 per colour we use loreal in salon and pay £x.xx plus vat per tube this also works in her favour say she mixes too much and wastes it of has someone in the has extra long thick hair you would be out of pocket.

From what I have seen people who pay a daily rate tend to provide there own stock.

I think she has really worked this all out in her favour!
 

Pdubbs89

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To be honest, these days there isn't much good will. I went through the process of buying a salon which was infact losing money and the owner was trying to make me pay for 'goodwill' with only some fixtures and fittings when actually the accountant said id be silly to want to buy it.

Id tread very carefully and make sure you take the accounts to an accountant then work out what you think it's worth.

There is obviously a reason the owner isn't Interested and it must be more than she just can't be bothered, if it was making her enough money she would most certainly be bothered!

Good luck though and I really hope it works out for you!!
 

persianista

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My dad is an accountant when buying my salon he advised me to pay no more than 50-60% of a years profit!
When buying goodwill you cannot put this through for deprecation on next years accounts you need yo be buying fixtures and fittings and if she is keeping her clients then theres not so much goodwill to buy if you get me.

Can you work out the takings of the others that are staying an average for the year and come up with an offer.
Nobody is gonna sell a business for 6 months profit! Normal is 3 years profit.

If the biggest earner wants to stay on as a chair renter though, you should disregard her takings to work out the value. Ie if she is taking 30k a year and the profit is 35k a year, take the profit as 5k.
 

Divine h & b

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Nobody is gonna sell a business for 6 months profit! Normal is 3 years profit.
Funny I have used this advise and have bought 2 successful salons this way.
 

Victoria1984

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However much you pay you need an accountant to go over the books with a fine tooth comb (due diligence) until then you might as well pick numbers out of a hat.
 

Hiltonbeauty

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Funny I have used this advise and have bought 2 successful salons this way.
Wow are you serious? So if my profit was £100k you would buy my business for 50k?

So why don't I just run it for another 6 months and make the 50k myself and still have the business? Persianista seems to be bang on this one as any business to business agent always values a business 3 times it's profit.

Anyway fair play if you found 2 business owners who sold you their business for half their years profit though you go sista!!
 

Enhancebeauty

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Thank you :) That has helped me out alot. x x x
 

TMH

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I think she should pay more than £5 per colour as a tube costs more than that and also take peroxide, foils etc into consideration. :)
 
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