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Episode 15: The Two Roads to Salon, Spa, or Barbershop Ownership
56 Plays6 months ago
Running your own salon, spa, or barbershop can take you down two different paths. Are you planning to stay in it for the long run, or do you see yourself building it up to eventually sell? In today’s episode of "The Business of Style," we’re diving into these two options to help you decide which route is best for you.
Option 1: Build, Work, and Stay
This approach is all about commitment. You start your business, nurture it, and one day, when you’re ready, you close the doors and move on. Here’s what you need to focus on:
- Setting Goals: Since you’re not planning to sell, it’s important to think about your financial goals early on. How much do you want in the bank when you close up shop? By setting clear targets now, you can work towards a comfortable retirement or next chapter.
- Resilient Business Model: Your business needs to be able to adapt to changes over time. Keep an eye on your neighborhood and your market, and be ready to make adjustments as needed. The goal is to build something that lasts, no matter what comes your way.
- Building a Strong Team: Even if you’re the only one running the show right now, think about how a team could support your business in the future. Having reliable people around can help keep things running smoothly, especially as your business grows.
- Investing in Technology: Don’t be afraid to embrace technology—it can make your day-to-day operations a lot easier. Whether it’s an online booking system or tools to manage your social media, a little investment in tech can free up your time for other important tasks.
- Creating a Positive Culture: A positive atmosphere is key, whether it’s just you or you have a team. It helps keep customers coming back and makes your business a place people love to visit.
Option 2: Build and Sell
If selling is your end game, your strategy will be a bit different. Here’s what you should focus on:
- Loyal Customer Base: When it comes to selling, a strong and loyal customer base is gold. Consider starting a loyalty program to keep customers coming back—that repeat business is a major selling point.
- Building a Strong Brand: Your brand is more than just your logo—it’s what people think of when they hear your name. A strong brand adds a lot of value to your business, so it’s worth spending time on building and maintaining your reputation.
- Up-to-Date Technology: Buyers want a business that’s modern and efficient. Make sure your technology is up-to-date, whether it’s your booking system or the way you manage customer information. This can make your business more attractive to potential buyers.
- Experienced Team: If you have a team, their experience and loyalty can really boost the value of your business. Buyers want to know that the staff is likely to stick around after the sale, which can make your business more appealing.
- Having a Growth Plan: A clear plan for growth can make your business more valuable. Show potential buyers that you’ve had consistent success and that you’ve got a solid plan for the future. It’ll give them confidence that they’re making a good investment.
Final Thoughts
Whether you’re planning to keep your business for the long haul or build it up to sell, a little planning goes a long way. Think through your options and prepare yourself for whichever path you choose. And remember, we’re here to help—visit BeautyCouncil.ca for more resources and personalized advice.
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Transcript
Introduction: Salon Business Paths
00:00:01
Speaker
If you own a salon, spa, or barbershop, you have two roads to choose from. The first one is you open and run your operation from beginning to end. In other words, you open it, you run it, and then you close it and move on happily ever after. The second option is you open it, you build it, you create value, and then you sell it and you go on to do something else. Which kind of owner are you?
00:00:37
Speaker
Hey this is Greg Robbins and welcome to the business of style brought to you by the beauty council. Episode 15. Today we're going to be talking about two different routes you can take in your ownership journey. One of them is to open.
00:00:53
Speaker
build and work there for the entire lifetime of the business. In other words, you open it, you work there for maybe 10, 15, 20 years, maybe even longer, and then you close it and you move on. The second thing you can do or the second option you have is to open it.
00:01:09
Speaker
build it, create value, generate a brand, put it out on the market and sell it for money, walk away and then you can go do something else. Maybe you want to retire, maybe you want to open up in a different city, who knows? But those are the two options. So let's talk about what goes into each one and then you can decide which one is best for you.
Long-term Operation Strategies
00:01:29
Speaker
Okay, the first model I'd like to talk about is the build, work, and stay there until the end of the business at which point you can retire or move on or just close the door and walk away. So this is the kind of business that you can set up whereby you really literally launch it, open it,
00:01:49
Speaker
You know build your clients and run the operation maybe hire one two three people you could potentially even rent space out to them and you Literally stay and run the operation until it wraps up and closes. So there is no sale You just run it and that is your own little mini car self-employment job that you have, a little operation that you run, and it might not even be small. It could be big. It could be 10 people. It could be 15 people. But regardless, your your intention is not to sell, but rather to actually continue the business and operate it. So what does that look like as opposed to building to sell? When you are building a organization or a company, and this this comes out of business school, that you are going to run and operate for a long time, there's an entirely different set of disciplines that you have to think about and practices that you need to undertake when you want success in that particular model. So let's just talk about what those are. So no matter whether you have not opened yet and you're thinking of setting everything up or you're already underway and you would just like to kind of fine tune your operation a little bit to make it more successful for you in in the long term. The first thing you really wanna do is just write down and set out your goals. The reason is, because you're not selling this company. You're not actually going to wake up one day and put it out on the market and get a big check and walk away and and and sort of profit in that sense. What you need to do is you need to build up an equivalent amount of money that you think you could sell it for and build that out as a long-term goal.
00:03:21
Speaker
And usually that involves some sort of financial goal. What do you want in the bank when when you're all said and done, you close the door and walk away. um How much money do you want in the bank? So you have to work backwards and say, all right, each year I should be making this much profit, putting that aside, either putting it into a personal savings account or keeping it in turn in the company, whatever your accountant best recommends. But this is all part of the goal setting that is really necessary when you're when you're hanging onto a business for for the long haul. You don't want to just close the door, walk away and realize that your income has completely dried up and you've got absolutely no cash in the bank
Financial Goals for Longevity
00:03:59
Speaker
to survive. Things are getting more expensive. Life isn't getting any cheaper and you certainly don't want that to hold you back. If you're done for whatever reason, when it's time to close it up and you've run it for a long time, you want that money in the bank to sustain your lifestyle so that you can go on and do something else, whether it's retirement, a new career,
00:04:16
Speaker
Having children ah just moving on maybe maybe even moving locations. You do want that money So goal setting is really important if you're going to be operating your own salon spar barbershop Make sure that you sit down possibly with an accountant or at least a skilled bookkeeper who understands the the basic goals and then you can lay out a plan to save that money and and to have it available in place of a sale, which you are not going to be putting
Resources from Beauty Council
00:04:44
Speaker
together. So that's ah sort of number one, you can get going on that anytime. Now, by the way, I just wanted to throw this in sideways here. Over at the beauty council, we have some wonderful resources for you. We have repackaged our
00:04:56
Speaker
business in a box, we are slowly converting everything out of a lesson format into more of a easy access searchable format. So you will find actually some basic fundamental outlines of what you can do in both of these scenarios over at beautycouncil.ca. If you're a member, you have full access to all of the resources and of course you can call us anytime to get any updates or request any other information. Just wanted to throw that in there as a little pitch and a little resource for you.
Building a Resilient Business Model
00:05:23
Speaker
So the second piece is when it comes to running your own business is you've got to put together a strong and resilient business model. So what do I mean by that? If you are going to be in this for 10, 15, 20 years, this little baby has to be strong. It has to go all the way for you. It's got to perform. So what does that even mean? It just means that understand, you know, What neighborhood are you operating in? Do you have any threats? Is there going to be some construction that's going to close down your neighborhood for a year? We saw this in Vancouver with the Canby Street ah problems and people really do. ah You know, we we saw people actually having to close their business because they didn't have that money in the bank that we talked about in the first step to ah sustain them. So what is your yeah what is your target market? Who are they? Is your neighborhood going in one direction or another? Where is it going over the next 10 to 15 years? Not just tomorrow, not just whatever is cool on Instagram, but really where are the fundamental shifts? Where is that sustainable position you can take in your marketplace?
00:06:26
Speaker
What is your unique value proposition and what does that mean? Well, it's a fancy word used in business which is how are you? How do you stand us apart from your competition? What makes you different? Why would people come to you instead of ah the place down the road or around the corner? and What is it about your business that is that is appealing to the people that are around you?
00:06:48
Speaker
um Also just developing a sound pricing and revenue model. So what can what can your customers afford to pay in the long term? Do you see more money moving into your neighborhood or money moving out of it? what are your competition What's your competition doing? Who's opening? Who's closing? How can
Role of a Competent Team
00:07:05
Speaker
you?
00:07:05
Speaker
ah fit into that model and that and that puzzle so that you have a good place in that um neighborhood and and around your customer base so that you realize a steady stream of business, not today, not tomorrow, but for the next 10, 15, 20 years.
00:07:21
Speaker
ah Finally, just in terms of like a resilient, we we use that term a lot and we hear it like, oh, get resilient. What does that mean? It just means being able to adapt and change and not being stuck in in a rut. If you did something last year, it doesn't mean you necessarily have to do it again this year.
00:07:37
Speaker
revisit your services, look around, see who your competitors are, who's opening. And sometimes your competitors can be not necessarily a direct competitor. They could be an indirect competitor like let's say a Sephora or even a Shoppers Drug Mart who now is you know an organization.
00:07:53
Speaker
ah very much focused on cosmetics and and the sale of cosmetics. hill So how can you adapt to a changing market and how can you sort of adopt a mind mindset that says, you know, I'm in this for the long haul. I better be ready to to change and evolve as I need to. The next piece is just to build a strong team. Now it might just be you. So if it's you, you can fast forward 30 seconds or so and just skip over this. But even if you're just working with one other person, that other person is going to potentially be with you for many, many years. And the longer they're with you and provided they're a good service provider and and good with customers, These are the kind of people you want around you that will create real strength in your organization. you know When I ran Salon Magazine for years, I was very careful to work closely with my business partner to put in very good, strong, smart people who could manage the operation
00:08:45
Speaker
while we went on to grow it and to create new new products, for example, the Contessa Awards. We could have never done the Contessa Awards if we didn't have the right people because I would be busy scrambling around trying to keep everything afloat as opposed to having ah the the opportunity to be able to expand the company while good smart people around me were able to sustain the basic operations. So if you've got even just one other person worth you with you, look at them as sort of your key to a long and steady successful business.
Leveraging Technology in Business
00:09:19
Speaker
Next piece is just to invest in technology and infrastructure. A lot of times
00:09:23
Speaker
We're sort of afraid of technology and and how it can make our our workplace better. It is really important to to look at it and say, look, you know how can I use things like booking systems ah to to relieve some of the work? If I'm if i'm in this for the long haul,
00:09:39
Speaker
How is it going to look in 5 or 10 years when I don't have these technologies in place? Consider the the ways in which technology can help you, out whether it's an automation for booking, ah client reminders, some way of automating your social media posts and your marketing. All of these tools will will relieve you of the burden of the day-to-day operations that can remove your administrative workload. And even if it's just 10 minutes a day, that's almost an hour a week. That's a long time, a lot of time that you could put into just getting back to the basics of your business and making sure that you're you're
Cultivating a Positive Work Culture
00:10:14
Speaker
set up properly. Finally, just to really set up a positive ah culture, even again, if it's just you, if you are just like a solo person, to have that positive culture inside your organization that people gravitate to and you build those long-term relationships with your clients and your customers so that they want to come back and they tell their friends about it, this will assure you success over the long run.
00:10:37
Speaker
There's absolutely no advantage in creating any sort of toxicity when you're when you're in it for the long haul. This is a big investment. This is kind of like owning a house or or undertaking, you know, like having kids. You don't want to introduce any toxicity or or not invest in your own asset, which is in the form of the business. You want it to be a good, positive, forward moving, ever changing, evolving place that people not only want to to come to, they also want to be a customer. customer of. So those are the pieces. I hope that made sense. We do offer all of this in our online resource library. We call it business in a box and you're more than welcome to pop in and use any of those tools and of course reach out to us if you want
Building a Business to Sell
00:11:23
Speaker
some help.
00:11:23
Speaker
So what's the second pathway? The second pathway is to build and sell. Now this is, you know, you hear about this a lot in Silicon Valley where essentially people open up companies for the sole purpose of selling it. There is nothing to be ashamed of in this model whatsoever. It is used in many, many Different industries whereby people say look I have a great idea I'm gonna build it and then I'm going to sell it to somebody who doesn't want to deal with all of the startup headaches and hassles. There are many people who just want to buy a business that is already rolling along and it could be for any reason. Maybe they're coming into the business what they think is a little bit late or they were busy raising a family um and and suddenly they want to just open a business but they don't want to worry about finding a location, getting all the licenses and
00:12:10
Speaker
and permits into place, building the brand. They just wanna walk in, write a check and get going. And typically in those scenarios, and this is just a total back of the envelope thing, but they will pay between three and five years worth of profit um for your business. So really that's that's what you can look at on your way out. You can sort of think to yourself, all right, I'm going to take about five years worth of profitability, walk away with that and be done with it. And that means that I can go on and do do the rest of my stuff.
00:12:38
Speaker
So what do you need to do? So there are some slight differences, obviously, if you're looking to sell something, it's quite different than just operating it. Apart from all the the recommendations that I gave in first part, because those are all important regardless, no matter what, you have to take a look at some other additional pieces that actually make it worthwhile for someone to buy. So the first one is you have to have a a strong and loyal customer base. That's what you're going to be selling. If you can imagine sort of what your ad will look like, it'll it should read and say strong, loyal customer base who come for the high quality products, services and experiences delivered at this location. You know, if you have an extraordinary customer experience and and clients just love coming to your place,
00:13:24
Speaker
It actually doesn't matter who owns it. and yeah it's It's more about the actual experience. So if you think of great restaurants or fantastic hotels, you don't really even know who owns them usually. You just know that you love the space, you love the environment, the experience. And so if you can demonstrate and show that you have that strong and loyal customer base, you have something to sell. And actually it's very valuable. The more loyal that customer base, the more value it has.
00:13:51
Speaker
So what do I mean by loyalty? Loyalty is defined sort of by repeat business or or the retention of clients. And if you have a loyalty program, even better because it just really shows that many of your clients are willing and ready to come back. You see a lot of loyalty programs, gas, groceries, coffee, there's a reason for that. It adds value to the organization.
00:14:12
Speaker
So consider um your loyalty and the value of your customers to not just be one, two, three time visitors, but rather long-term clients that you can go and say, I've got this to sell, this is a long-term revenue proposition, and ah this is what I'm asking.
00:14:28
Speaker
The second piece is you yeah having a strong brand is absolutely critical. i can't I cannot emphasize this enough. Brands are really what are sold and bought. It's not so much just I've got a space, um I've got some chairs, there's a bit of plumbing, there's some beds. It really is about the brand. So building a brand is, it takes time, it's about One of the most, I would say challenging things to get right because brand, you know, consumers are fickle and there's a lot of competition for brand. But if you can have a good little brand that people talk about and recognize and know, uh, you have something to sell.
00:15:10
Speaker
That's what people are willing to buy. They're willing to buy the reputation. It's very often called goodwill. If you think of any brand that's out there that is well known, for example, I'll just use, I don't know, Apple or Starbucks or any brand that you know comes that comes to mind and you can envision and you understand what they offer has enormous value, so much more than a brand that you don't recognize. Porsche is another good one. You know, if you talk about fancy cars, even if you've never driven a Porsche, you just kind of know it's a great car and super fancy and that's why they cost so much. Brand is where it's at. So again, putting an emphasis on what it is you have as a brand, how you're represented, how you're known in the industry is something you can actually list and sell. I did speak about investing in technology and infrastructure earlier as part of your sort of a long-term play. Again, if people come in to buy their your business, they don't want to worry about lack of technology as something they have to fix or something they have to deal with.
00:16:10
Speaker
So if you're still working on paper and you're still working on text messages to ah make your appointments or or phone calls, you are going to have a little bit of a challenge when you go to sell because people realize that you know when they buy this business, they're inheriting ah sort of a patch together system. So if you've got A good strong client management system or a CRM or a point of sale system that is tracking your customer base that you can generate reports from that you can demonstrate is that you've got some degree of organization and people can walk in and literally be trained on a system and suddenly be in total control of your client base.
00:16:49
Speaker
That is a huge advantage. So where possible, take a look at some of those POS systems that are out there. Over at the beauty council, we do make some recommendations on ones that we we really know and love. um Certainly check those out. And of course, if you're a member, you do get things like discount, white glove onboarding, as well as custom recommendations.
00:17:08
Speaker
The other piece is to build a strong and experienced team. Even if it's just yourself, if you have that experience and you're strong in in the way that you run your business, when people buy the business, they typically will ask the owner to stay on for a certain amount of time for a transition period. That owner demonstrates themselves as being pretty organized and they've got everything laid out and they are very much in touch with their clients and can hand those clients off to a new owner, there's real value in that. And if you are selling a business and it comes with a manager or a team who is in love with the operation and they have no intention of leaving and they they'll so they'll miss you, of course they will, and they'll they'll you know send you birthday cards, but they're not going to leave. If you leave, they're not going to leave because they're actually there for the operation and the business and their clients. And you are ah certainly a big part of it if you're a good leader.
00:18:02
Speaker
And if you can sell to someone who is also a good leader, chances are they are going to stay and chances are that the new person is going to continue with their payments or pay you sort of top dollar for your business. I guess that also speaks to who you're selling to as well and that puts you in a power position as an individual who is selling a business.
00:18:19
Speaker
if you are If you can demonstrate that strong relationship with you and your team, you can certainly be a little bit more picky as to who you're going to sell to. and Usually buyers may sense that and and potentially even offer you a little bit more just to kind of get and in front.
00:18:33
Speaker
And lastly, just to have a clear and realistic growth plan, people do want to buy businesses and if you'd like to get a little bit more money for your business on the way out, to have a graph that goes from the lower left to the upper right. So what do I mean by that? There is a plan of growth and you can demonstrate that in ah past growth and future growth to be able to say this is how our sales have increased over the last eight, 10, 12 years, whatever the timeframe is. And this is our plan to continue that success using these particular strategies. That way you've done all the hard work. You've done all the planning and a buyer will come in and just kind of sit in your chair and execute that plan. You've already demonstrated that it worked.
00:19:19
Speaker
It's not just luck. It didn't just happen because it happened. It happened because it was a deliberate plan. You're in the right neighborhood. You've got your brand set up. You've got your team in place. You've got your profitability strategy set up. It gives you an enormous amount of power when it comes to selling your business. This is a ah real A difficult thing for many people to do only because it's a bit of math and sometimes you're spending time looking way into the future with roadmaps and stuff like that. However, if you're looking to sell, can't recommend it enough just to have these in place so that you can
00:19:53
Speaker
sell them. ah so You can so have these in place so that you can have them and sell them to somebody. Trust me, somebody will buy. So those are the two pathways.
Conclusion: Pathways to Success
00:20:04
Speaker
Either you're in it for the long haul, you're going to stay there to the end and close the door and walk away ah with enough money in your bank account to make your choices and do what you want. Or you're in a in a mindset where you would like to sell it either as a plan where you build and sell, or you would just simply like to sell in one or two years and and you want to have a a strong package to present to a potential buyer or very often a real estate agent or a broker who would go to sell your business. they They would be looking for these details before they even took it on. I hope that this has helped you. Again, please check out the resources over at Beauty Council. We offer as much help as we can. ah there's There is so much to go into this and of course if you're a member, give us a call.
00:20:48
Speaker
We're happy to point you in any direction that you like and make this a big success for you. Thanks everyone. Talk to you next time.