Are you thinking about selling your salon? Here are some tips and tricks on valuing your salon and the risks and benefits that come with it. It can be difficult to find the true value of a salon and to try to decide how much you could sell your Salon for. There are many important factors that you need to consider in any business sale, which can lead to prices rocketing or crashing. The rule of thumb for valuing a salon is 10 times your weekly takings. However, this is often not enough for most Salon Owners, especially if they have owned the salon for a long time.
Risks
Salons are often valued at lower prices because of the risks that come with a new owner taking over. The success of a salon depends largely on its stylists, who can leave at any time.
For example, if a salon has two full-time stylists plus the owner and is up for sale, the new owner faces a big risk. If just one stylist leaves, the salon's earnings could drop by a third overnight. If both stylists leave, earnings could fall by two-thirds. This happens because stylists build their own loyal client base and many customers will follow them to a new salon if they leave.
Since a salon making £4,500 per week could suddenly drop to just £1,500 per week, buyers see this as a major risk. This uncertainty is why salons are generally valued lower than other businesses.
Using a broker
A business broker can help connect buyers and sellers and is an expert in valuing businesses. Some brokers even specialise in specific types of businesses.
They may charge a fixed fee or a percentage of the sale price but their expertise can provide peace of mind and a second opinion. If you're thinking of selling, consider reaching out to a broker. They’re easy to find online—just contact one for a consultation to start the valuation process.
Factors that could affect valuation
The value of your salon can be affected by competition in your area. The more salons nearby, the lower your salon's worth might be. Location also plays a role—if your salon is in an older community, it may not attract the younger, trendier crowd that other salons do.
Ultimately, your salon's value is based on cash flow and profits. If the valuation isn't as high as you'd like, you may need to make some changes to increase its worth.
Selling a salon is a big decision, and understanding its true value is key to getting the best price. By considering the risks, working with a broker, and assessing factors like competition and location, you can better position your salon for a successful sale. If your valuation isn’t where you want it to be, making strategic changes could help increase its worth. Take the time to evaluate your options and ensure you’re making the best decision for your future.
