The most important thing when selling your salon (other than selecting the price) is deciding if a public or confidential campaign is right for you.
In most cases we recommend a confidential campaign because in our experience knowing a salon is for sale can be disruptive to your staff, clients and suppliers and your competition may try to take advantage of this.
In our experience, serious buyers actually prefer salons which are advertised confidentially as they can be more confident competitors aren’t trying to poach your best staff and clients after hearing the salon is for sale.
We get it – salon owners like you wear many hats and wish you had more hours each day to implement your good ideas in your business. The truth is most salon owners get tired of being ‘the leader, the one behind all the good ideas and the problem solver’, and you know you can’t do it all, forever.
If you’re feeling stuck and want more clarity and control over what happens next we can help – Even if the past couple of years have been pretty tough.
When it’s time to hand the baton over to the next owner, there are some important things to consider to make sure you are ready.
To maximise the chances of a successful sale you need to think clearly about what is for sale, why someone would buy your salon, and you need to be prepared.
The truth is, that all salons are saleable “at a price” so even if your salon isn’t ideal for you, has some problems or isn’t very profitable, there is still someone who will want to buy your salon so they can try to turn it around.
In fact, there is an old saying that “a good business should always be for sale at the right price”. However, as you would expect, salons that are more profitable, have a high-quality fit-out with a great reputation will usually sell faster, and at a higher price.
So, How Do You Sell Your Own Salon
Get Prepared
Preparation is one of the major areas we see private sellers get wrong. Remember the 5P’s: Prior Preparation Prevents Poor Performance.
If your goal is getting your salon sold – not just “listed” then good preparation is a must.
This is why having a checklist of what buyers will ask for is so helpful.
Our team has created the definitive checklist for selling your salon privately in 2023 with all you need to know in an easy to tick off format.
Regardless of the reason you are selling, the fastest way to cause a buyer to lose interest in your salon and walk away is not having the information they need available when they request it.
Once you’ve read the checklist and listed your business on the BusinessSales.com.au website, the rest of the process will be a much more straightforward experience.
Write an ad which focuses on the benefits, not the features
Having a really well-written ad is imperative, as your ad is what a buyer will read and respond to so understanding what might interest a buyer is critical, remembering this can be done without disclosing the name or location of your salon.
For Example:
- List the top 6 features and benefits of your business, that will capture the interest and attention of buyers.
- Instead of writing “8 car parks” write “easy and convenient parking for clients”
- Instead of writing “12 years in business” write “longstanding salon well known in the community”
- Instead of “located on the main road” write “great location with huge foot traffic”
These sentences not only highlight the benefits of your salon, but make the identity almost impossible to guess, whereas with a quick google search you would be able to find the salon on the main street with 8 car parks that has been trading for 12 years.
You can also write about; your staff, business achievements, the type of customers you service, customer loyalty (focus on their loyalty to the salon rather than their loyalty to you as an individual), what sets you apart from your competition and what you have loved about the salon.
Some other benefits you could mention are a growing population nearby, having cheap rent or a great landlord!
It’s also a great idea to talk about the opportunities for growth. Even the best salons have room for improvements, tell the buyer about ways they could grow the salon. This could be as simple as a new website, adding a product range, extending the trading hours or being more proactive with social media.
As the business owner you know the salon back to front much better than the buyer and definitely better than any broker would. So don’t assume they can see the value and opportunity you see – telling them upfront about the opportunities for improvement in your salon helps the buyer see the value and gives them a head start on taking your salon to the next level.
Set a price for your salon
By collating the information above and writing your advert you are ready to showcase it to a buyer and are well on the way to a successful sale.
The next step is to work out how much should I sell my Salon for?
The short answer is – it depends.
Typically, salons are sold based on either a multiple of the profit they generate for an owner or the value of the assets included in the sale. The quality and value of a fit-out can also play a role in achieving a higher price.
A good rule of thumb is to multiply your net profit (including your wage) by 1 – 2 times, plus the value of the Stock at cost. Usually, the better the systems used in the salon, the better the fit-out and the less you need to work in the salon to have it perform well, the higher the multiple.
For example
If you work in your salon 7 days a week, with an average fitout, month-to-month lease and generate a profit of $60,000 p.a. (PEBITDA) a typical price would be around $60,000 – $90,000 + stock at cost (1 – 1.5 times PEBITDA).
If your salon operates 5 days per week, with a good fit-out, attractive lease and generates a profit of $120,000 p.a. (PEBITDA) a typical price range would be around $180,000 – $240,000 + stock at cost (1.5 – 2 times PEBITDA.)
Whilst industry rules of thumb and benchmarks are a very handy guide, they don’t take into account all of the unique circumstances and attributes of your business.
If you’d like our team to help you decide a price for your business taking into account the specifics of your salon or make an introduction to professionals that can give you advice with the sale and how to get the best price you can contact us on 1300 77 NEXT (1300 776 397) or help@BusinessSales.com.au.
Please remember that people can often have differing opinions about the value of the business, which is normal. Buyers in Australia often see risk differently to a seller and factor this perceived risk by wanting to pay a lower price. That is why it is crucial to give buyers more comfort and confidence about moving forward, because the more comfortable and confident a buyer is about the business and it performing well under their ownership, the more likely they will pay you more, for the business.
The only price that really matters is the price you and the buyer agree to, however by being well prepared you will likely achieve a better sale, sooner.
Next Steps
Selling your business can be tough, but so are you.
We’re here for you, whether you want some professional guidance to keep you on the right track, or one of our trusted professionals to take the reins – you can count on us to keep you and your business moving.
