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Financial Issues to Consider When Buying a Beauty Salon
Based on the experience of Moscow and regional salons, we can talk about the profitability of a business with the following ratio of expenses and revenue:
No more than 30% of revenue goes to staff salaries.
No more than 10% is what is a loan spent on purchasing materials and servicing equipment.
A maximum of 25% of revenue goes towards renting the premises.
In this case:
Each barber shop must generate an annual profit of at least $30,000.
The larger the area required for the procedure, the higher the beauty salon's revenue from this procedure should be.
There are a few more pitfalls to keep in mind when buying a beauty salon:
Competing firms nearby. What services do these studios, offices, etc. provide? It is advisable to buy a beauty salon that provides unique services that competitors do not offer.
Employee qualifications. Find out where the craftsmen were trained, what diplomas and certificates they have, whether they participate in exhibitions, professional competitions, etc.
What does the beauty salon look like from the outside? Is the sign visible, do people come inside?
Interview the beauty salon clients: why they choose it, whether they are satisfied with the quality of services.
No matter how brilliant a manager you are, promoting a purchased enterprise that has many problems will require a lot of effort and serious financial investments, so it is better to take a closer look at it at the purchase stage.
Conclusion of a purchase and sale agreement
Once all documents have been carefully studied and the lists of tangible and intangible assets have been verified, you can begin signing the contract.
Do not enter into a contract to purchase a beauty salon if:
Its price is obviously too high.
The current owner has not provided you with comprehensive and transparent documentation.
The financial indicators are not supported by anything.
The owner refers to “gray” profits and alternative accounting.
The remaining goods are in poor condition.
The purchase and sale agreement must include a complete list of all assets of the business - both tangible and intangible - since you become the new owner of all rights and permits to the business.
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