We’ve previously mentioned the BizEquity service as a way to value a business, if you are thinking of buying a salon or selling a salon - Selling or Buying a Salon - What is your salon worth?
On the BizEquity blog recently they had an article - How to Value a Beauty Salon - which is worth a read if you are thinking of buying a beauty salon or buying a hair salon. From the article -
As for valuing a beauty salon, there are different approaches. For example, you can look at recent sales of similar businesses. This is known as the market approach. Although, it can be difficult to obtain this information, unless you visit a local business broker or have access to a database like BizComps (which can cost $400 per year).
Instead, you can rely on rules of thumb. Essentially, these are generally agreed-upon valuation metrics (usually based on the transactions from business brokers). So, for a beauty salon, the rules of thumb would include:
- 25%-35% of sales
- 1 to 1.5 times cash flows
Finally, if a beauty salon is break-even or losing money, the value could be virtually zero. In this scenario, a potential buyer would simply takeover the lease - and hopefully try to improve things. Yet, this can take some time because it requires building a strong team of stylists.
Related articles on Beauty Salon Marketing -
- Setting Up A Salon - Is now a good time to start a salon?
- Starting a salon - What to name your salon
- Salon Business Plan - Free business plan templates
- Salons for Sale - Business for sale websites
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