Is it Profitable To Buy An Existing Salon Business?
Once you are done with the cosmetic chemist degree, you can think of starting off your own salon. The thought of investing in employees, interior designers and salon furniture is likely to cross your mind, but have you thought about how you can buy an existing salon? Well, yes, you can actually think of buying an existing salon business.
However, you may encounter many questions like, would it be a great thought to actually buy an existing salon or should you build one from scratch? Would it be a fair deal to invest in the right salon with the right location? Would the business become profitable knowing the fact that the previous salon owner didn’t earn his penny?
Well, the slightest of the entrepreneur skills is likely to help you in deciding your answer for the above questions. With this mind churning process, you will get an idea of whether you should be investing in buying an existing salon or not?
However, if you are getting a fair deal with the right place, right location, right salon interiors, then, go ahead and seal the deal. If not, then, go for the below considerations and get an idea.
What is the reason behind the salon sale? Is it a profitable venture, or is the business running in loss?
Well, since you would be getting into the ex-salon owner’s shoes, it would be vital for you to check out if the business is profitable or not. The reason being, you get to know about how much effort you have to put in to make it profitable. However, your marketing strategies may differ from the existing one, which can bring a drastic change in the revenue. But, if the business is already profitable, you can gauge how much business will stay once the salon owner leaves the chair.
Is your target audience located in the same area?
Well, apart from any other considerations, “location” should be on the top. Your target audience is your golden egg, and while selecting a salon location, do not compromise over this thing. Ensure that the location has walk-in traffic so that you do not have to invest much in marketing initiatives and you get an extra budget to invest in salon chairs or can buy exclusive salon furniture for sale.
Can the salon owner transfer the lease?
You would have to check with the salon owner if they can transfer the lease to your name. Usually, the lease doesn’t get a transfer; instead, they chose to terminate.
What is the purchasing process?
This one is crucial but foremost important to know. You can ask the ex-salon owner to present you with the audited financial statements of the past two years. Why should you do this? This allows you to set your post-purchase profit/loss statements.
Ask for the monthly income as well as the expenses:
Once the ball is in your court, it will be on you to decide when to spend and where to spend. But since you are buying it from somebody else, check what amount you would have to spend behind setting up the interiors and the beauty salon equipment? Does the salon have high-technology and the latest instruments? Do you need to renovate or change the look of the salon?
It may happen that you might have to invest some more amount into the salon initially, but ensure that it doesn’t break your bank. Make efforts to maintain positive cash flow into the business so that you do not have to stain the resources during the initial days. Also, if the salon is not popular, then you would have to invest in marketing the salon. In such scenarios also, you need money. Hence, keep such things in mind before signing off the final deal.
Your decision of buying an existing salon relies on a detailed answer to the above questions. In the next section, we have listed down a few of the pros and cons of buying a salon. Check them out... Let’s start first with the pros.
Pros of buying an existing salon:
- You grab yourself a very good deal because buying an existing salon business means it comes along with the staff. How many of them stay is not sure, but you do not have to invest your time in hiring employees. Additionally, soon after signing the deal, you can get customers flowing into the business.
- If you buy an existing salon business, it means you are also buying their structure and systems in place. No doubt, you can change it as soon as you purchase, but if the structure and the system are well defined, then, you do not have to work on them.
- Also, the existing business will already have its set of the target audience and the local community. Hence, you can make the most out of this opportunity and impress the existing set of audience.
- Well, you would not have to look out for suppliers in the market. The existing business will have its trades and suppliers defined, which you may continue if you wish to.
- If you are buying an exclusive salon, the furniture, the salon chairs of high-quality would already be in the place. So without giving in much thought, you can start the salon business at the earliest.
- Businesses are usually built and run around the person who owns it. So there is always this challenge that lies in front of you that, the value of the business may get less as soon as the existing salon owner leaves.
- This can also be the con that you would have to inherit yourself with the already existing staff. It may happen that it is not the same as you would have expected.
- The existing team may not embrace the changes that you plan to bring in your business module. It may happen that some may disagree and would not be happy with the new policies.
- Some of the existing relationships with the client, service provider or trader may change as soon as the salon owner changes.
- The existing salon owner may not have the latest salon equipment, and you may have to invest a huge amount in buying and replacing the old ones.
A thorough analysis will help you in deciding better, whether the salon business deal is good or should you reconsider it. You will have a rough frame to decide on how you can make the current business profitable.