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Want to buy a beauty salon? Answer these 5 questions first.

Posted On: 12/01/2016 / By:
Buying A Business

questions to ask when buying a beauty salonThe beauty industry is notoriously known for remaining a healthy business market regardless of economic factors. The industry is driven largely by consumers’ desires to cater to themselves, a trend that is likely to never go out of style. Because of the ever-growing revenue and opportunity that the beauty industry offers, considering purchasing your own beauty salon may sound appealing. Before you take the plunge into buying a beauty salon, make sure you consider these five questions to help you understand if it is a wise investment.

1. Are you interested in buying a beauty salon that is franchised or independently owned?

There are benefits and drawbacks to purchasing either type of salon, but this point must be addressed first. If you are comfortable taking over a beauty salon entirely and handling 100% of the responsibility, then investing in an independent salon will fit those needs. However, if you are new to the industry and would like a little more guidance along the way, purchasing a franchised salon may sound more appealing. Once you decide how much independence you want in your investment, then you can move on to other considerations.

2. What is the true value of the salon?

This involves cracking open the books and looking into the financial history of the beauty salon. In other words, you want to make sure you are investing in a healthy business that has promising signs of future growth. Be sure to take note of the condition of the building and equipment during this process as well. If structural or cosmetic improvements need to be made, these costs need to be factored into your budget, too. To get the best valuation of a business, consider enlisting professional help.

3. How will external factors influence the success of the salon?

Consider whether or not the beauty salon is currently profitable and how you can continue or improve its success. A commonly influential factor to take note of beyond the business itself is the location. Is there new construction taking place within the vicinity of the salon? How successful are other businesses in the area? The location can tell you a lot about whether or not your business will attract or drive away new clients. The beauty industry is driven solely by customer service, so ensuring the elements are in your favor is crucial.

4. Will the current staff remain?

It’s no secret that a beauty salon is only successful with a great staff. Along with the business itself, consider if the current staff will remain at the salon, and thus under your supervision. Taking steps to ensure a smooth transition of management is vital to a profitable future. Be sure to also consider a non-compete agreement with the current salon owner as well. Clients often remain loyal to their usual stylists, so taking steps to maintain the current clientele could make or break your initial success.

5. What’s your plan for the future?

Though you’re in the initial stages of acquiring a new business, it never hurts to plan ahead. Unforeseeable circumstances may affect your ownership, and having some sort of plan will make the transition go smoothly. Consider how developing an exit strategy now can map out your options for a potential sale or transfer of ownership here.

If you are interested in buying a beauty salon and would like assistance in the process, enlist the help of a Sunbelt Business Broker! Our professional brokers have the experience and knowledge to help you successfully purchase your next business.


John Davies

After obtaining his MBA, John began his career at PriceWaterhouseCoopers, the international accounting and consulting firm, and subsequently joined Progressive Corporation, a large U.S. based insurance company. John was a Division President at Progressive and subsequently became the CEO of a New York based private equity investment company. In 2001, he founded MMI as a platform investment company and MMI has subsequently acquired 10 additional companies. John is also the founder and co-owner of MMI Capital Partners and SFI Investments, LLC, a registered broker dealer.

John’s professional credentials include being a Certified Public Accountant (CPA), Certified Business Intermediary (CBI), Series 7-General Securities Representative, Series 24-General Securities Principal, Series 63-Registered Representative and Series 79-Investment Banking Representative, Chartered Financial Consultant (ChFC), Chartered Life Underwriter (CLU) and Chartered Property and Casualty Underwriter (CPCU). He is a frequent speaker on various business topics and served as the subject matter expert for the writing of “Selling Your Business For Dummies,” a Wiley Press publication.

John and his family live in Cleveland, Ohio and are actively involved in the community. He currently serves on the Board of the Rock and Roll Hall of Fame, the Cleveland International Film Festival, The First Tee and Jump Start.

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