Buying a hairdressing Business?

Question

I currently work in a salon, and the owner has asked me if I would like to buy the business as he no longer wants to do it.

Basically I am not sure, he has plucked a figure of £35,000 that he will sell it to me for. I am not sure it is even worth this although he feels it is worth more. At the moment I am the only stylist working there, it could easily accommodate 4, and there are 2 beauticians. At the moment I can not see how the business could be breaking even as the money coming in barely covers the wages, although I am working flat out. How can I find out if this is a worthy business venture? I can not afford for it to fail as I have 3 children etc, and I have not got an endless supply of money. I would need to borrow 100% to pay for it and then there are leese fees not to mention all the other overheads.

I really don't know what I should do, I know it could be a great salon with the right person in charge but don't know how I would cope financially whilst i am getting it up and running

Any advise would be much appreciated x

Answer 1

hi I'm going through the same dilemma ask for the account books so a professional can look over them and get a valuation independent to there,s.  take professional advice before you make up your mind is 35000 just for lease or does it include all fixtures and fittings

good luck

Answer 2

I'd see if any volonteers will work for you, then when you start getting money you can start paying them =D good luck

Answer 3

First of all, find out exactly why the current owner doesn't want to run the business any more.  If it's because it's not making enough money, then it's not even worth £35.

If he wants you to buy it, you have every right to ask to see the books for the last 2-3 years so that you can take them to an accountant and find out whether there's a viable business for you to take over.

As Lisa S says, be clear about what the £35k covers and then check exactly what all the outgoings are.

It sounds as if you could do with a couple more stylists, particularly if you were going to take over running the salon.  You can't run it properly and style hair at the same time.

Your local Business Link could also be of help to you.  They provide a free business review service.  Once you've got a copy of the books in front of you, you'd be able to talk it through with them and they'd give you an independent opinion on its viability and what you could do to make it a more successful business.

If you were to take it on, one of your first tasks would be to market it strongly to increase the number of customers to pay all your bills and to make some profit.  It can be done.  Our niece has been in the trade for over 10 years and we've watched her turn round a poorly performing salon to somewhere that was bright and cheerful and had all the stations occupied most of the time.

Business Link is also a good place to ask about funding the business.  It's doubtful if you could get 100% funding but they can advise you on that.

Good luck!

Answer 4

basically, a salon business have not much of an overhead except for rent and personnel and utilities. So u can start by making a rough estimate of sales per month - considering low and high of a salon business.. like when in a given day has there more customers, and when it is less and then get the average it can make for a month.  Start subtracting fixed and varaible costs and u get the net profit.

basically, u do not have to acquire this business of ur employer if it is not making money.  Probably there is a personnel problem? management problem constitutes a lot on a business' demise.  If u cannot manage and control the outfit better than ur boss can do, why carry on the burden?

But yes, a salon is a good mony making machine.. with the right management style.

1.  cut on personnel if it is too much - more personnel than customers, having personnel not doing anything at all.

2.  cut rent by cutting number of bay of store.  if u can use up only 2 bays, and bring in same amount of money as 4 bays, why rent 4 bays instead of just 2?

3.  develop incentive schemes with employees. incentives are paid out after costs are deducted from net profit on a percentage basis.  compare this out with net profit y-o-y.

4.  most important.. have a trusted emoloyee, a relative, or urself to over see the salon and make sure all sales go in the cashier.  There is no inventory to control, so many employees tend to pocket the money; so u have more customers but income never go up.

hope these helps