Business for sale... whats my next step??

ancasta_2

Background – Ive always wanted to own my own hairdressing / beauty salon. I do part time hair extensions in my free time but as they are not regulated I do not have an nvq or similar for them so could not be my shops own stylist.

I have seen a hairdressers business for sale for £25,000 and I cant get it out of my head. I feel ready to leave my full time job and finally attain my goal of owning my own business.

I plan on doing the skivvying myself (washing hair, tidying, answering phones etc) as well as extensions while employing stylists to work along side of me.

Problem is, I don’t know how to procede. I don’t know what the next step is. Unable to get to a business link office for a few weeks but wondered if there was anything I could do in the background. I know I might miss out on this opportunity but I will be prepared if another venture comes along.

MORPH3US

Points to think about:

1. do you have the £25k or where will you get it from?

2. Don't rush in without putting a business plan together and thinking about finances and looking over the books.

3. Could you not set your own place up rather than buy a ready made one?

4. I would be concerned that you don't have the necessary skills needed. Ok so you say you will get other people in to do the styling but as owner, I would expect you to have a basic grasp of that sort of thing even if you can't actually do it and would expect you to be training hard to be fully skilled in the areas you mention.

M

ancasta_2

Thanks for your input. I do have the skills and knowledge, i just dont have the piece of paper to professionally say i can do normal, mainstream hairdressing. Been doing it for years so hope im some use!!! hee hee

Will have a proper sit down tonight and get my head round things, its all still in the fuzzy grey matter at the minute.

Pennywise

I had a client who did exactly what you are proposing and they failed miserably after 2/3 years of making nothing. Her problem was that they, neither, could actually "do" the job. She had to employ proper stylists, of whom there seems to be quite a shortage and she had to make do with who she could get. If her stylist was off sick, she had to cancel the appointments and took no money that day. Her problem was that all the decent stylists were already highly paid in other salons or were already self employed with their own and she couldn't offer a high enough salary to get anyone half decent. Look at it another way - the work you propose to do could be done by someone far cheaper than yourself.

With a small business, the owner really has to be able to do everything themselves so that they can cover for sickness and holidays, but at the same time, should be able to leave the business to look after itself. In your proposal, you could do neither.

Sorry to say, but I don't think you have a realistic proposition.

MORPH3US

Pennywise makes some very good points.

You could get someone to sweep the floors and answer the phone for £5 an hour (the job that you propose to do) while the stuff that will cost a lot (the styling) is what you will need someone else to do. You need it to be the other way around.

My suggestion is first and foremost, DON'T LET THIS PUT YOU OFF!!! I would say the best idea is go to college and learn to do the difficult stuff / get the certificate to prove it and while you do that, work part time in a sallon (sp?) to a) get experience and b) to save some cash towards your dream.....

It might take a bit longer to get going this way, but long term sustainability goes through the roof!

Another option (full time or more likely part time while you are at college) is start working as a mobile hairdresser (getting customers from word of mouth). Might take a while to build business up, but it will be £25,000 cheaper as you have virtually no setup costs....

M

ancasta_2

Thank you both for your points

MORPH3US wrote:

Another option (full time or more likely part time while you are at college) is start working as a mobile hairdresser (getting customers from word of mouth). Might take a while to build business up, but it will be £25,000 cheaper as you have virtually no setup costs....

I already do this, successfully for hair extensions with a profit of around £800 a month give or take.

MORPH3US

ancasta wrote:

I already do this, successfully for hair extensions with a profit of around £800 a month give or take.

Thats great, £800 isn't bad. How many hours per week is that working?

My suggestion, as I already said, would be to carry that on, expanding it if you have the time and in any other spare time you have, get to college and learn to do other stuff that you can use.

Make suure your current customers know that you are looking for more business and i'm sure they will recommend you.

As I said, much better doing that with virtually no setup costs than spending £25,000 and risking it all....

M

Idiophreak

This may sound like a dumb question - but what do you get for the £25k?

Fairly sure it would be nicer and cheaper to just rent and decorate your own salon?

Astaroth

The majority of a business' value is "goodwill"... you are effectively buying the brand (which you can choose to keep or dump) and the client book as much as buying the equipment, lease etc. Depending on what the current owner is going off to do then certainly a significant proportion of the existing clientel if not the majority will continue coming.

Set up a new salon on a new street and you have to get people to realise you are there and attract them away from where they usually go.

If you are seriously considering buying the business you should get a copy of their accounts/ records etc. If everything looks reasonable enough then you need a business plan... the price suggests the business isnt doing that great so the question is what are you going to differently to "turn it round".

If you think you can make a run of it then an accountant is really in order to double check everything... if you are coy you should get them at a decent rate on the suggestion (but not promise) of future work.

Finally a solicitor is obviously a damned good idea to check over the contract and help advise on things like getting the current owner to remove staff etc prior to your purchase if that is what you want to be doing.

I would be less worried about not being able to be the lead stylist as others on here are but then I am a "businessman" and so all the side projects I have been involved in I have never had the skills to do the "doing" but have focused on marketing/ strategy/ accounting etc. I wouldnt however do the skivying as this can be so easily done by a lass on little more than minimum wage allowing you to actually run the business.

competitionscafe

I second the good advice above from Astaroth...

If (after doing due diligence) the business is profitable and you are confident you can get/retain the staff you need then you could always take a hands off approach - employ someone else to manage the business on a day to day basis and use the salon as a way of growing your existing work whilst also overseeing the salon.

This would seem to be a more logical way to manage your time than "doing the skivvying myself" - as the owner you need to be in overall control of the business, looking at how you can increase trade, managing staff, etc - not doing the odd jobs that could easily be done by a junior/trainee/apprentice. For your business plan, think of ways you can increase trade which the current owners may not have explored. You could also look at NVQ's part-time/evenings so that you have the paper necessary to work in the shop too. If the salon is sufficiently profitable to pay someone to run it on a day to day basis as well as the other staff and still have some profits left over then you could use these to pay off the 25k (assuming you are borrowing it) whilst giving you time to grow the business and get your qualifications.

UK Business forums are also useful for free advice: http://www.ukbusinessforums.co.uk/forums/index.php

Debt_Free_Chick

ancasta wrote:

I already do this, successfully for hair extensions with a profit of around £800 a month give or take.

But with a salon, you would have to pay the overheads (rent, electricity, insurance etc) and staff costs (wages, NI & tax) - which would substantially eat in to your £800 profit.