You have an Day Spa that you’ve built from the ground up, it has been your baby since the very beginning. You’ve take the correct steps to make your Day Spa fabulous, by continuing to educate your staff, carrying the best products and keeping your clients happy. And at the end of the day, you sit down after all the work is done and ask yourself, What is my spa worth? Your objective would be to receive the maximum value for it, and to make sure that your day spa is well taken care of after it’s sold. There are many variables to consider when looking at the possibility of selling your day spa and taking it one step at a time puts you on the road to success.
In the last decade, there have been many quite a few day spas sold and purchased in the United States, 350 that met our criteria to be exact. Spas or also known as bath houses have been around since medieval times, but have since evolved into the luxurious retreat from life that we call day spas. And much like other businesses, day spas some have stuck around and some are gone forever, but of the day spas, that have stuck around in the last ten years, we compiled and have broken down the data for you to have the knowledge needed or you to make a solid decision to sell.
What is your Day Spa worth?
The value of your day spa is correlative to your individual business, the market and what potential buyers are willing to pay. Larger day spas that incorporate perhaps a salon side or more extensive full-body services will sell for a higher amount than a day spa that performs only mineral baths. Both of these day spas are great in their own way, but when trying to figure out what your business is worth, there are some questions to consider, including:
- What are the sales?
- What is the profit?
- What are the growth trends?
- What is driving new sales and is that sustainable?
- What channels do new customers come from and what is the breakdown of each channel?
- What is your market position?
- Is your Location favorable?
- How reliant is the business on the owner?
- What systems and processes are in place to run the business?
What makes a Day Spa worth more?
Your Day spa is worth every penny you have put into it plus some to you. However, not all buyers will agree unless you are able to show your buyer, that their return on investment (ROI) will be high, their relative risk will be low and have the following characteristics associated with your day spa.
- Predictable key drivers of new sales
- Stable or growing traffic from diversified sources
- Established suppliers of inventory with backup suppliers in place
- Traffic stats
- High percentage of repeat visitors and repeat sales
- Clean legal history
- Brand with trademark, copyright or legal concerns
- Documented systems and processes
- Growth potential
What does the average Day Spa sell for?
The graphic above, has broken down the data that we analyzed from the last 10 years, which consisted of businesses that range in the $50 thousand to the $10 million valuation range. And these businesses can sell for as much as billions of dollars or as little as a few thousand. You can clearly see the average of day spas sold in the last decade in the United States is around the 2.59 times earnings, with the average sale price coming in at $202,019.33. However, to have a clear understanding you also have to look at the median sale at $135,000 as well as the most frequent sale at $75,000. All this information is a bit overwhelming without being broken down, so in the later part of this article, we will break down these numbers and give you the information needed to be able to start the selling process.
What is the most frequent deal size?
The most frequently sized deal, when selling your day spa, is the valuation range of 0-$250k. Throughout the last 10 years, the 0-$250k range has dominated the number of sales. For example in 2015 there were 47 sales of day spas, and of those, 37 of the businesses were valued at under $250,000. While the market for day spas, is that of the smaller valuations there are a few larger valued day spas that are sold as well.
Is the Day Spa market getting bigger?
In 2013 the total yearly transaction was about $6 million and in 2014 jumped to almost $9 million dollars and unfortunately in 2015 there was a fluctuation and that same total yearly transaction decreased to just over $7 million. And there will always be fluctuations in the markets and trends, but being able to keep your day spa afloat in a time of market fluctuations will give future buyers the knowledge that your business is safe to purchase and is less risk than other day spas for sale.
Are bigger businesses worth more?
As a general rule of thumb, yes, the bigger your business is, the more that is is worth. As you look at the images below, you can see that as your revenue becomes larger, so does your multiple, which in turn helps you as the business owner generate a better return on your investment. To help you understand the graph a little better, look at the multiple from 2015 for the valuation price range of 0-$250k, here the average multiple lands right at 2.21, with a total of 37 day spas sold, however when your business’ valuation is in the $250-$500k range the multiple jumps to 2.40, with 9 day spas sold. So, remember the higher the multiple the more you are able to ask for your business.
What states have the most day spa business deals?
Are you wondering where the most deals were made throughout the country, or if your state has a hot market to sell fast? As you can see if you are located in California or Florida, you may get a lot more offers than if you are in Mississippi or Minnesota. Even if there has been a low number of sales of day spas in your area lately, that does not mean that someone is not looking to start a business venture in your area. Having a broker to help you find a buyer for your day spa no matter what state you are in, can help you successfully sell your business.
Why would you sell in the first place?
When deciding to sell your business, it can become an overwhelming and difficult decision. Your reasons will always be different from the day spa owner next door. Maybe you need a change, or you are ready to retire. Whatever your reason is, be sure that you have the necessary knowledge and tools to get the value out of your business that you are looking for.
How long will it take to sell your day spa?
There is not one set timeline for the sale of any business. The variables of the individual business and terms of the sale will define how long it will take to sell. Do keep in mind that generally speaking, the larger the deal (over $1 million) take longer to sell, over the smaller deal (under $200k) because of the complexity of the business, in addition to the risk of purchasing a company that large for the buyer. And try to remember, that your individual business will always sell at a different pace than other day spa, being patient is an essential part in selling.
What is the process of selling your Day Spa?
Our step by step process will help you become more confident, when you have made the final decision to sell your day spa. Many spa owners forget or overlook essential steps in the selling process and sometimes become confused and lost throughout the process. Doing each and everyone one of these steps will help guide you to the maximum profit of the sale of your business. If you have questions or concerns about your spas value or the process in itself please contact us and we will be happy to help.
Who will buy your business?
Buyers are essential for your business, but have no fear because there are many options and possibilities. These buyers can be first time buyers, experienced entrepreneurs, or private equity companies. No matter what the size or maturity of your business there is a buyer for your business, and we can help you find them.
After reading this article and understanding the necessary steps and processes that come along with the sale of your spa, and you’ve decided that selling your business is the right decision for you, we encourage you to have your spa valuated by a professional broker, this will ensure that you are receiving maximum value for your business. And remember that your spa is unique, so comparing it to the shop in the next town over, will not get you the exact answers you seek, but we are more than happy to start you with the right steps to finding the true value of your day spa. We can help accelerate the sale, by helping you find the right buyer and making the correct steps in selling. Feel free to fill out our valuation form and get started right away.