How to sell a Salon successfully
A little tale about a successful salon sale …
You’ve worked hard for years, your life is your salon, then before you know it, your husband gets a new job overseas, or you fall pregnant, or you reach a point where you’ve just had enough. Whatever the reason, you want to get out and you want to get out NOW!
Selling your salon can be an involved and often a time consuming process. Before you jump in, you’ll need to assemble…
The top things you need to get organised before selling a salon…
| Requirements | Check |
| Financial Information: | |
| Current Year Financials (to date) | |
| BAS Reports (Current Year) | |
| Tax Returns (past 2 years) | |
| Profit & Loss Statements (past 2 years) | |
| Balance Sheets (past 2 years) | |
| Computer Reports – Trading Figures (past 2 years) | |
| Current Individually itemised Team Weekly Wage Expenses | |
| Current outstanding staff holiday entitlements | |
| Current outstanding liabilities of gift certificates, per purchased services etc | |
| Fit out cost and any shop plans | |
| List of Assets: | |
| Owned Equipment | |
| Leased Equipment – with leasing details | |
| Rented Equipment – with rent details | |
| Plant and Equipment Schedule including values and current depreciation | |
| Intangible Assets (if any): trademarks, patents, items subject to copyright, unique software, technical training manuals etc |
|
| Lease of Premises | |
| Original Lease | |
| Amendments to Lease | |
| Assignments of the Lease | |
| Certificates and Permits | |
| Health Certificate | |
| Business Name Registration – ASIC Corporate Key | |
| Any other Certificates or Permits as may be required | |
| Other Items | |
| Management Organisation Chart | |
| Written Overview of the Business | |
| Representative Promotional Material | |
| Policy and Procedure Manuals or processes on how to operate the business | |
| Write a few paragraphs about the best things the business has to offer and how long it has been trading and where any opportunity for improvement exists | |
| Location details including a spiel on other shops around | |
| History of the salon and why you want to sell | |
| Spiel on the team and their skills | |
| Competition Submissions and awards granted to the business | |
| Any marketing plans you have for the future | |
| Past Marketing Promotions and Results | |
| Photos of the business and team |
Picking a broker
Now you’ve completed this checklist you’re ready to find a broker. Utilise someone with industry knowledge and never go with the cheapest commission – remember you get what you pay for! Ask how many salons they have sold. Ask for testimonials. Ask to see their detailed commission structure, as many brokers have hidden fees.
Compile documentation
Once you’re happy with all of this, pass on all of your details from the checklist above to your broker. They’ll develop an appraisal and compile a document which easily and concisely explains all the important attributes of your business. From there your salon is ready to show to prospective buyers.
Picking your price is the most important component in selling a business. And although we can give you a business appraisal with some price parameters you are the person who ultimately decides the listing price. If you are looking for a quick sale then price is the key driver, however if you don’t mind waiting till the right buyer comes along then you may get your listing price.
Unfortunately unlike real estate there can be no comparisons to develop an accurate valuation. However this is where an industry based broker can guide you. We say there are two mythical creatures: 1 is the buyer and the 2nd is the seller. When all is good and the moons align then we have a deal.
When the seller looks at the offer on the table, they will usually respond with a counter offer. If this is accepted by the buyer then the seller and the buyer go to contract and the business is taken off the market.
In my experience there can be no time limit for which a salon sells. It could be one week or one year, but settlement is usually around 1 – 2 months after the contract is signed. This is the period where all the legal stuff gets done. You don’t really need to know much here other than to make sure you get a decent lawyer to guide you through the transfer and any conditions attached to business sale. There are some standard terms of sale, but make sure there aren’t any special conditions to restrict your future plans or the sale going through smoothly.
Just prior to settlement you’ll need to do a stock count. You should also assist the new owner with an introduction on how the business works and introduce them to the team. This is usually takes about 1-2 days. Finally the money is transferred and settlement has occurred. Give the new owners the keys and pop a bottle of Champagne as your salon is now out of your hands and you have stacks of money because you built a great, well presented business which sold to the first interested party!
Now wasn’t that a dandy little tale about a successful salon sale? I only wish they always went that smoothly!
Happy sales…
For more information on appraisals and finding the right salon. Contact a salon specialist broker today on 1300 366 521.
Benchmark Salon Sales
