But for the time being, she took a job with PayPal. Closer to the dream: When Sarah and her family moved to Austin in 2012, she realized that her money could go further there than in DC, and that she might be able to buy a business. Hopping on the SMB bandwagon: Sarah explains how her first job in DC selling advertising for a local lifestyle magazine to small business owners, followed by a similar role with Groupon, got her excited about the ins and outs of small businesses. Stylists turn over, and when they leave they take their customers with them.įinally, customers trust their stylists, who are therefore in the perfect position to recommend beauty products sold by the salon. The margins are much higher on physical products than on services, and more predictable. Sell products, not just haircuts & styling. If you’re thinking of buying a salon, Sarah recommends building out the retail side. “I did not assess that, and that became the biggest challenge for me.” ?️ Build your business on shampoo, not stylists. “The biggest thing I would suggest to someone who's looking to acquire a business would be to include as part of their due diligence an assessment of the team, the people, and the culture,” she says. Sarah says that if she were doing it all again, she would do more due diligence on staff. Some appreciated the consistency and structure Sarah brought in, but several quit - right as higher rents kicked in - and took their customers with them. Stylists who were W2 employees acted like contractors, with the freedom to set their own hours, prices, and approaches to the work. Sarah realized that the previous owner’s management approach had been laissez-faire. It quickly became apparent that she had underestimated the importance - and challenge - of getting existing staff on board with new ideas. She believed that her value as the salon’s owner came from her skills in marketing and vision to modernize the business. When Sarah acquired Bella Salon, she had no experience in hairstyling or beauty. Given that founding from scratch was out, she decided to go the acquisition route. But when her attorney explained that franchisees don’t have much control over the services they sell or how they market the brand - “the only thing you're really going to be able to make decisions about is staffing” - she realized that she wanted to have more say over her business. So she decided against founding a business, and very nearly became a franchisee. Sarah knew that her strengths lay in operations, not creating something from scratch. Which of these paths you go down ultimately depends on what you want your day-to-day life at work to look like, and what you’re good at. There are three main ways to become the owner of a local small business: start one yourself, become a franchisee of a chain, or acquire an existing business outright. Top takeaways from this conversation ? Franchising vs. She planned to bring in new customers by promoting Bella as a luxury salon. Sarah was more comfortable submitting her offer this time, and the salon became hers for $80,000.Īlthough Sarah had no experience in the hair and beauty industry, she knew she could cut costs and modernize the business. Six months later, Josh had unfortunately succumbed to his cancer, and a family friend was running Bella, desperately trying to sell it. Based on traditional methods of salon valuation, she calculated that a reasonable purchase price would actually be below $100,000.īut not wanting to insult him, she didn’t make such a low counter offer and instead walked away. Looking at Bella’s numbers, Sarah didn’t believe it was worth anywhere near the $450,000 Josh was asking. But as former employees started their own competitors, its glory - and revenue - had faded. Established in 1995, the salon had been a hugely successful trailblazer in the ‘90s.
I did not assess that, and that became the biggest challenge for me.”īella was Josh’s life’s work.
“The biggest thing I would suggest to someone who's looking to acquire a business would be to include as part of their due diligence an assessment of the team, the people, and the culture. A hair stylist himself, Josh wanted to continue working “behind the chair” with customers but transfer ownership of the larger salon to someone else. The owner, Josh Martin, had been struck with cancer. Scrolling through BizBuySell in 2014, Sarah discovered downtown Austin hair salon Bella Salon. This exposure planted the seed that one day she would like to be the owner of a local small business herself. Arah Romer’s first two jobs involved selling advertising to small business owners, a class of entrepreneurs she came to admire.