You have an Hair Salon that you’ve put a lot of time, effort, and sweat into. Growing your business has been your priority for your salon since the beginning, and you have reached a point where you are looking at answering the question, What is my salon worth? Your objective is to receive the maximum value for it, and there are many variables to consider when looking at the possibility of selling your business.
In the last decade, there have been many salons sold and purchased in the United States, and we have compiled and broken down the data for you to have the knowledge needed in order for you to make a solid decision to sell your salon.
What is your Hair Salon worth?
The value of your business is correlative to your individual business, the market and what potential buyers are willing to pay. However, 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 Hair Salon worth more?
Your Hair Salon 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 hair salon.
- 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 Hair Salon 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 salons sold in the last decade in the United States is around the 2.09 times earnings, with the average sale price coming in at $139,470.15. However, to have a clear understanding you also have to look at the median sale which was $95,000 as well as the most frequent sale which was $50,000. 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 of your salon.
What is the most frequent deal size?
The most frequently sized deal, when selling your salon, 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 42 sales of salons, and of those, 41 of the businesses were valued at under $250,000. While the market for hair salons, is that of the smaller valuations there are a few larger valued salons that are sold as well.
Is the Hair Salon market getting bigger?
In 2013 and 2014 there total yearly transaction was well over $9 million dollars and unfortunately in 2015 there was a fluctuation and that same total yearly transaction decreased to just over $4.5 million. There will always be fluctuations in the markets and trends, but being able to keep your salon a float in a time of the market fluctuations will give future buyers the knowledge that your business is safe to purchase and is less risk than other salons 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 1.67, however when your business’ valuation is in the $250-$500k range the multiple jumps to 2.46. Remember, the higher the multiple the more you are able to ask for your business.
What states have the most 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 in your area lately, 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 business no matter what state you are in, can help you successfully sell your salon.
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 business 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 Salon?
There is not one set timeline for the sale of a business. The variables of the individual business and terms of the sale will define how long it will take to sell your business. 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 salons, being patient is an essential part in selling.
What is the process of selling your Salon?
Our step by step process will help you become less confused when you have made the final decision to sell your salon. Many entrepreneurs forget 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 business please contact us and we will be happy to help you.
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 business, and you’ve decided that selling your business is the right decision for you, we encourage you to have your business valuated by a professional broker, this will ensure that you are receiving maximum value for your business. And remember that your business is unique, so comparing it to another business of the same kind will not get you the exact answers you seek, but we are more than happy to start you in the right steps to finding the true value of your salon. We can help accelerate the sale of your business, 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.