Let’s bust some Myths about selling your salon
| What is hindsight worth to you? |
I share this to the Beaute Industrie Network straight out of my eBook - 'Are you ready to sell your salon?' (that I learnt when I sold two of my salons)
The 8 Myths That Could Sabotage Your Salon Sale.
Many salon owners I have spoken too since my recent podcast about this very topic, sadly have an unrealistic overview on 'how' a sale of a salon will go!
I put it down to simply 'you don't know, what you don't know'.
You may not be ready to sell this very minute but when you are the two biggest questions I ask is..."Will your salon be sale ready, when you are?" and "How will you know?"
Ok, so, let’s start with the bad news!
Times have changed in the salon industry. I mentioned this earlier, but it’s important enough to reiterate because it has a big bearing on the process of selling your salon and the price you can expect to receive.
If you are talking to someone who bought or sold a salon prior to 2010, then I strongly recommend that you do your own additional research (which is why you bought this book, anyway!). If they bought or sold their salon before 2005 then they were operating in a completely different marketplace and most of what they will tell you is irrelevant! The way salons are valued, the way buyers operate, and all the expectations you can reasonably have about the process have totally changed. I can only assume that the first broker I dealt with simply hadn’t kept up with these changes in the salon business sales market.
So, before we start on what you should do, expect, and work towards, let’s look at some common myths that could derail your process: -
Myth #1 - Any Business Broker Can Sell Your Salon.
Anyone in the salon business is used to questioning claims about new products and processes that make wild promises, but for some reason we suspend our critical faculty when it comes to business brokers and assume that they can all deliver what they promise.
I did this... twice! In my first costly venture, I fell for a great sales pitch from people who seemed genuine and experienced. Even though I questioned the second broker intensively before I engaged him, due to my previous terrible experience, I still didn’t know enough to make a great decision.
In the section on choosing a business broker and setting up the sale I tell you how to do effective due diligence. I also suggest that you contact me for an introduction to the broker I used who finally sold my salon, because he was incredibly effective, easy to work with, organised, and has a great reputation.
Myth #2 - All Buyers Want the Same Things
That may have been true 20 years ago when most salon buyers were hair or beauty professionals who understood the business, but it’s certainly not true today. Today’s buyers could just as easily be looking for a pure investment with no day-to-day responsibility at all (in which case the quality of your manager is crucial), or they may want to provide a relative (who may, or may not already be in the hair and beauty industry) with a valid immigration opportunity.
There are still industry professionals looking at purchasing your salon, but they certainly aren’t the only type of buyer.
Myth #3 - Selling a Salon is Like Selling a House
Nope!!! When you sell a house, your biggest challenge is choosing the agent most likely to deliver a great outcome. Once you’ve chosen your agent they’ll run a campaign on your behalf and in six weeks or so it will all be settled including the final settlement date.
Selling a business is more like competing on Survivor than running a six- week campaign to sell a house. There are always unexpected challenges and it’s difficult to anticipate exactly how long the process will take, what terms the buyer will choose to negotiate, and what the final result will be.
Myth #4 - If You’re Tired of Running Your Own Salon, Selling it is Your Best Solution Selling your salon won’t solve all your problems. In fact, if you’re trying to sell your salon because it’s driving you crazy and you aren’t making a profit then initiating the sales process will just be one more stress-filled nightmare you have to face.
The reality is that if your business is not making a profit, you probably have some work to do to make it sale-ready BEFORE you put it on the market. In fact, before you sell any business you should make sure it meets the criteria in Chapter 2. If it doesn’t (yet), that’s the best place to start because once you have a sale-worthy business you may actually decide that being a salon owner isn’t so bad after all. Even if you still want to sell your business, you’ll attract higher quality buyers, be able to ask a higher price, and have the opportunity to negotiate more favourable terms.
Myth #5 - Your Purchaser Actually Cares About How Much You Have Invested in Equipment, Training, and Decorating Your purchaser is interested in just ONE thing... your profit margin! They don’t care how much your equipment cost or how much you invest in staff training unless those investments increase your bottom-line. Yes, you do need equipment to serve your customers, and your staff certainly need on-going training, but that will only increase your sale price if it also improves your profitability. The same principal applies to your decor. The purchaser may think your salon looks wonderful, but your only justification for spending a great deal of money on decorating it, is if that enables you to attract more clients or charge higher prices.
That means you need to think carefully about the business case for any equipment purchases and ask yourself whether the expensive new machines you are considering will enable you to deliver superior results and set you apart from your competition so that you can increase your prices, or whether your existing clientele and target market will refuse to pay more than they already are. If your clients want to pay beer prices, then delivering champagne is not a great business decision. At the end of the day your sale price is based on profits, not the cost of your equipment, or your gorgeous premises.
Myth #6 - There Are No Buyers Out There. You Should Just Sell Your Equipment and Close the Business I got to the point where I believed that this myth might be true. Just three months later my salon was sold and the money was in my bank account!
There are buyers out there who are keen to purchase your salon... if you can demonstrate that it is worth the purchase price. Follow the steps in this book and you will be able to capitalise on all the hard work you have spent building your business.
Myth #7 - You Are The Best Person to Discuss Your Business with Prospective Buyers It is true that, as the salon owner, you know most about your salon and the business it supports, but that doesn’t mean that you are the right person to show prospects around and talk to them about the opportunity it presents.
Here are some situations in which you should get someone else to talk to prospects, or you should get some help so you don’t make these fatal mistakes: -
Are You Ready to Sell Your Salon?
· You can’t stop talking. Providing too much information can be a deal- breaker.
· You are totally ‘over’ your salon. This will show in your language and physiology and prospects will unconsciously pick up on your desperation and wonder what is wrong with the business.
· You are unclear about the opportunity and value of the business. They’ll wonder what you are trying to hide.
· You are not sure if you really want to sell. Buyers don’t want to risk you pulling out of the deal and they are quick to sense your unspoken hesitation.
· You are afraid that you won’t get the price you’re asking. Prospects will recognise this and play on your desperation to push the price down.
If any of the above are true, then you should deal with these mindset issues immediately, or ask someone else to discuss the business with prospective buyers on your behalf. I’ve worked with salon owners who had already unconsciously sabotaged a few promising sales at this late stage of the process. Once we dealt with their limiting decisions and emotions, and worked on some strategies for building rapport and answering objections the very next prospect went through with the sale because the owner’s projections were completely transformed and her confidence in the business was clear.
Ideally you want to invest in the self-development needed so you can manage this aspect of the sale yourself. Honesty with yourself at this point is essential. I work with many salon owners who have so many competing voices shouting inside their heads that it’s no wonder they are stuck, and if it isn’t sabotaging their salon sale, it’s undermining their salon’s profitability, their personal and professional relationships, or other aspects of their life. If this is you, then I just want you to know two things:-
1. You’re not alone - it’s a common experience; and
2. You can deal with the underlying reasons for this in a matter of hours
when you are ready. (More on that later).
But, if you don’t have time or energy to deal with your own ‘stuff’ at present, then ask someone who understands the salon business to take care of this interview. They will be able to discuss the business from a professional standpoint as well as considering it as a business investment. You generally don’t want your salon manager or business broker to show prospects around as this may turn some buyers away. This is a service that I provide for salon owners. As an industry insider, I am able to quickly master the specific facts and figures supporting your business and also to discuss your services from a professional standpoint. I will work with your broker to determine a desirable outcome for you and communicate that to your prospect without the emotion and pressure that you may feel.
Myth #8 - At the End of the Process You Will Have No Regrets
Selling your salon is a big decision! You’ve invested time, money, and energy (both emotional and physical) into building a saleable business and now you’re handing it over to someone else. It’s natural to wonder what will happen and to second guess yourself. That is why it is so important to know why you are selling your salon in the first place, and what you plan to do with yourself once it’s sold.
This plan for your next amazing step should be written down and it's best to include milestones and a timeline. That way you’ll be genuinely looking forward to your future and will have a tangible reminder of your goal.
| Always start with have the end in mind!
Click here if you would like to know more about getting ready to sell or finding out if thats the right way to go for you!
In the meantime