South Africa’s hair industry is booming- especially independent businesses! If you have a hair salon that you have nurtured over the years, it might be time for you to cash in and sell your salon.
After the time and effort that you have put in, though, you will be wanting to find the right buyer for the right price. Here are some tips to make sure that the sale goes according to plan!
Sector overview
South Africa has a huge hair care industry with a myriad of different types of salons all over the country. When it comes to selling your business, you will need to identify who your particular target market is.
No matter what kind of hair salon you are running, however, if you give enough preparation to the sale, you will be able to find a buyer.
Preparing to sell
From the moment you open your salon door, you should be thinking about the sale of your business. This is, of course, is usually not the case in practice. It is important, however, that you give at least two or three years of preparation before the final sale of your business.
This time frame will give you the opportunity to make sure that you are running your business with the sale in mind. Meaning that all your books will be in order and you are driving the profits of your salon so that it can fetch a higher value.
Potential buyers will want to know how many days it takes to collect receivables and whether there are any outstanding loans. They will also be looking at what your profit and turnover have been over the past five or so years.
You should also look at the premises and the assets that will be sold with your business. First impressions count. If there are things in your salon that could do with an upgrade, spending a little time and money on it can help to increase the value of your business.
Valuing your salon
There are a few things that will determine the value of your salon. Two of the main factors are the location of your salon and the demographic in the area.
If you are in a more affluent area, your business will usually attract customers who are willing to pay more for their cut. You will also need to show, however, that you have a list of regular clients that can be depended on to visit your salon every few weeks. This way, a business doesn’t need to rely on always having to drum up new business.
If you have invested time and money into training your employees or hiring the best stylists, this will pay off when it comes time to sell. Any new owner will reap benefit from buying a salon that has a capable staff working there.
Clients will also often visit a salon because of a particular stylist rather than because of who the owner is. This is a great advantage for new owners who will have less risk of losing regular clientele due to the change of hands of the business.
The number of stations that you have in your salon will also affect the value of your business. The bigger the salon, the more bookings it can take, the more money it can make.
Of course, there will always be benefits to smaller businesses like lower overheads and maintenance costs. Buyers can often be attracted by businesses that have room to grow so keep that in mind when it comes to marketing your business for sale.
