At any point in your salon or spa’s journey, one of the most important questions you can ask is:  

“What is my business actually worth?”

Sadly, most owners wait until it’s too late—when they’re facing burnout, declining profits, or nearing retirement—to even consider this. But knowing your business’s value is essential for planning growth, making better decisions, and ensuring your hard work pays off when it’s time to sell.

Here’s how to start thinking about the value of your salon or spa and how you can grow that value over time:

Why Being "Busy" Isn’t Enough

Just because your salon/spa is busy doesn’t mean it’s valuable when it’s time to sell. Here’s why:

• Busy doesn’t equal profit: You can bring in $1 million in revenue but still not be profitable if expenses, like payroll, are too high.

• Revenue doesn’t equal value: Just because your salon earns a lot doesn’t mean that’s what it’s worth. The true value comes from the business’s health and financial stability.

7 Ways to Build Long-Term Value in Your Salon or Spa

1. Create value from day one: The day you open your salon/spa you are an entrepreneur, business owner first and a hair stylist, colorist, esthetician, etc. second. Your salon/spa company is an investment and an asset. Your goal is to make it worth significantly more when it’s time to sell. Working hard does not translate into value. Working hard on the right aspects of your company does create value.
2. Profit and Equity = Value: Healthy finances means a higher sale price. Your Profit and Loss statement should show consistent net profits (10-15% after paying yourself). Your Balance Sheet should show cash reserves and positive equity. Less debt = more value.
3. Get a Business "Physical": You get an annual physical to ensure that you're healthy, so why not get your business appraised every five years to make sure it’s healthy? Professional appraisers charge $3,500 to $5,000+. The fee will vary based on the size and complexity of your company. The American Society of Appraisers website, appraisers.org, has a “Find an Appraiser” page where you can search by expertise, state and Zip Code. There are also business brokers who will appraise your company with the goal of selling it; find one through the International Business Brokers Association (ibba.org).
4. Understand What’s Driving Your Value: If you're selling your home, you want to do everything you can to maximize its curb appeal by painting, landscaping, polishing things up and buying new appliances. It's very much the same in business. Once you begin monitoring and assessing the value of your salon/spa, you'll know where its weak points are. You may need to focus on making your Balance Sheet healthier by clearing up debt. The same goes for your Profit and Loss Statement. Other factors might be operational systems that need refining or reinventing, or physical space that needs a facelift. FACT: There is power in knowing.
5. How owners decrease value: If you are an owner that generates a significant percentage of your company’s revenue, it could have a negative impact on its value. For example, if your hands generate 15% to 30% of your company’s total revenue, a potential buyer could use the potential for lost revenue to justify a lower purchase price. If you have been taking cash and/or paying employees cash, the unreported income means that your financial reports are not accurate. More importantly, it signals to the potential buyer that the company is subject to the potential back taxes and severe penalties and interest by the IRS.
6. Beware playing bank: Selling your business for the best price in a cash deal is as sweet as it gets. When buyers can’t get financing, you may have to be the bank and hold the loan on the sale of your business. A good rule of thumb is that cash gets the best sale price. If you have be the bank, you’re assuming the risk that if the buyer defaults, you get to take over the mess. Like a bank, you should demand the loan be collateralized with real property, such as the buyer’s home. Lawsuits and foreclosing can be ugly, with no guarantee that you’ll ever see all of your money.

Ready to Get Your Salon/Spa in Selling Shape?

As the owner of a salon or spa, the more you understand about building value, the better off you’ll be when it’s time to sell. Take the time to assess where your business stands, so you’re not left disappointed when it matters most.

Start asking yourself the tough questions today, and make the changes needed to build a valuable, sellable business for tomorrow.

We can help you implement the financial and business systems to build a high-value business. Schedule a free consultation with us today: Schedule a Call