Home – New Forums Starting your journey Small Beauty Salon Business-Sale Price?

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  • #978640
    Skyblues
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    Hi,
    Wondering what reasonable price should an owner ask for a small beauty salon with the following context/assumptions:

    -40mins to Adelaide city centre in an upper middle class suburb
    -Located in an ‘open shopping centre’ complex.
    -Offers massage, nail and hair removal services
    -Relatively small floor space, perhaps 15-20sqm, running 3 massage booths at a time, employing girls or at times ‘renting the booths out’ to experienced beauticians who just want a space to bring their own clients
    -Has been there for several years with good clientele, with an assumed steady revenue of $50-75k

    This particular small beauty salon ticks most of the critical boxes, we will of course request her key figures when things get serious but with such assumptions, what do you think would be a fair price, let says:
    -if the revenue for FY11-12 was $75k?
    -if the net profits for FY11-12 was $50k?
    -if the net profits for FY11-12 was $75k?

    Wondering whether there are rules of thumb or cardinal business management rules in terms of pricing a business from a buyer’s perspective. For example:

    ‘shouldnt buy a business for more than half of its revenue, or net profits’ etc…What do business schools or MBA courses teach about this, and what actually happens in practice?

    Any insights/advice from business owners/people who purchased or sold a business before, or from someone in the beauty industry, who ran/owns such a salon etc would be great. We might have to do all preps and take action within 3 months…

    Thanks.

    #1108485
    Evo the marketing guy
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    Given the questions you are asking, I would strongly suggest you work with a business broker or business consultant. A good consultant will save you a lot of money during the purchase negotiation.

    There are so many negotiation tactics that can be employed – not just around price – that can work in your favour.

    Variables you can play with are price, bonus payments for future performance, vendor finance, rent terms, training terms, settlement terms, handover conditions, stock level valuations to only scratch the surface….

    More importantly, a consultant will be able to tell you whether it is a good business – or to run like the wind the other way!!!!

    Trevor Monaghan (FS member) has a valuation calculator I’d suggest you try. http://www.climaxbusiness.com.au

    Best of luck!

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