Ask These Questions Before Buying A Pet Grooming SalonAug 23, 2022
Ask These Questions Before Buying A Pet Grooming Salon
You’re thinking of buying a grooming salon but aren’t sure where to start. How do you know how much a business is worth?
I’m going to answer all your questions about buying a grooming salon and why buying a business isn’t always the right choice.
How much is a business worth?
One of the biggest questions is how do you know what a business is worth? Often, people say that a business is worth 2-3x its profit. It is important to look at net profit (the profit after subtracting all business and payroll expenses) not gross profit.
I say don’t pay more than 1 year’s net profit after the salon has paid a full-staff manager and a groomer.
It is also important to look at the equipment that is included in the sale. Be sure to consider what condition the equipment is in and value it at its fire-sale price (what you could realistically get for it on craigslist). Very few items in the grooming industry hold their value.
Are you buying a business or just someone’s job?
Many grooming salons are one groomer-owner salons, meaning that the owner does all the work and does not have other groomers as employees.
This means that buying a one-groomer-owner salon usually means that you’re just buying the owner’s job instead of buying an established running business that is going to be a money-making asset for you.
I don’t see the point in buying a business if you aren’t going to hire employees. The way that I see it, instead of buying a grooming business for $50,000, you could just get a grooming job that pays $50,000 and it would be much easier and cheaper.
If you’re going to buy a business, you should look at it as an asset or an investment, not a job. You should hire employees to run the business and your role should just be to oversee and grow the business how you see fit. Otherwise, you could just put your money in stocks or invest in something safer!
Besides, many experienced groomers are ready to step down from grooming and jump into a manager role, so hire them!
Learn about the clientele
When you buy a business, you are also buying their clients. To determine how much the business is worth, it is also important to figure out how much their clientele list is worth.
A business with many religious 2-week mat / 4-week cut clients is going to be much more valuable than a business with mostly 8–12-week clients that don’t want to pay for add-on services.
It is important to note that when you take over a business, you’re going to lose about 30% of your clients so you need to factor that in.
Do you have the same grooming style?
You may have to mimic somebody’s style.
If your style is different the likelihood that those clients are going to stay is slim to none.
Now they can have pictures of every dog, but you would have to change your style to match theirs, which is not always the easiest.
Can you do the same number of pets a day as the owner?
Let’s say they do 14 dogs a day.
Can you do 14 dogs a day?
What is the likelihood that the owner’s clients are going to stay?
Consider style differences and personality differences.
Are they pricing properly?
Are they a $35 Yorkie place or a $75 Yorkie place? What do you want to be?
Is their branding the same way you want your branding?
Are the colors the same?
Are the clients not going to like it once you paint the room?
They may not like the branding, if they don't like the branding, there's not much you can do about that.
Can you get a long lease for the grooming salon?
Let’s say you bought that grooming salon for $50,000. I would want a 5 or 10 year lease, because let’s say in 2 years they go to sell the building. Now what?
You spend $50,000, now you have to take your clientele, move them to a new place, do an entire new buildout, but you still owe that money. Now you paid $50,000 for a job for 2 years and you got relocated.
What is the ideal scenario for buying a business?
Ideally, you should only buy a business that you’ve worked at for at least 3-6 months. That way, you know that you like the business, its clients, its branding, its prices, etc., and the clients like you. You know that you love the business so much you’d be willing to buy it.
And consider that buying a business might not be the right choice for you. Starting your own business or simply getting a better grooming job might be the answer.
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