Barbers have become one of the fastest-growing businesses on today’s British high street. As more entrepreneurs grab their beard trimmers and open up shop, it’s an ideal time to sell a barbershop and make a profit on your years of hard work. This article outlines the importance of being prepared and making a great first impression, as well as detailing what factors will influence the valuation and how best to advertise your business to buyers.
Preparation
Prospective buyers will want to see your barbershop is profitable with loyal regulars, high referral rate and potential for growth. Resolve any issues – be it cosmetic or operational – before you put the shop on the market; try to view the barbershop through the buyer’s eyes.
Find out whether the new owner is keen to keep the current team; or if you’re planning to open another barbershop, you may want to take your staff with you. Give your employees adequate notice, this will vary depending on how long they have been working at your salon.
Make sure all your accounts are readily available and organised; list your profits for the last three to five years and note any significant changes, such as moving from a net loss to a positive cash flow. You also need to keep track of accounts receivable from your customers.
Create an inventory of all the tangible assets you plan to include within the sale, such as retail goods, chairs and equipment. Check the condition and market value of the equipment. You should also list your intangible assets, such as your client list, logos and goodwill.
Valuation
There are various drivers that will help determine the value of your barbershop, for example, if your target clientele matches the demographics of the area, then you will score high points for location. Footfall figures and high street presence will also make a difference in the value.
Local competition may affect the price; the more crowded the market the less a business could be worth. Are there any other barbers in the area? Who is your main competitor and how does your shop differ? Assume that every buyer will research the area, so be honest.
The quality of your team is likely to affect the valuation. Barbershops generally have a high turnover of staff and a lot of stylists work contractually, paying a fixed chair-rental per day. Recruiting new employees takes time and money; low staff turnover could attract buyers.
Brokers will generally use a multiplier of your profits to calculate the value. If you can show healthy profits and evidence for future business growth, then your proposition will attract more buyers. Find a broker who has experience selling in the same sector and location.
Marketing
Gone are the days of simply putting a ‘For sale’ sign in your shop window; now there are so many different channels you can use to advertise your business proposition. First, you must have a clear understanding of what type of buyer is likely to be interested in your barbers.
Once you’ve established a buyer profile, you can determine which medium will be more suitable for advertising. For example, a young entrepreneur is more likely to look online; whereas a more mature buyer is likely to read trade magazines and local newspapers.
You should also consider the contacts you’ve made while operating within the industry, you could have a past employee or competitor who is interested in buying your business. It’s also worth asking your friends and family to spread the word and consider your broker’s contacts.
Barbershops have had a renaissance in the last decade, décor goes beyond a red and white striped pole spinning at the front of the store. Today’s barbers have adopted their own individuality, whether it be steampunk or retro décor, market your USP to attract buyers.
@Be_TheBoss
