What's Your Salon/Spa Exit Strategy?
Lately, it seems that the two questions we are being asked most are: How do I figure out what my business is worth, and can you help me create an exit strategy?
Clearly the frequency to which we're receiving such questions has a lot to do with veteran business owners confronting the reality of what to do at this stage of their careers. Yes, that day will come when you too must decide on an exit strategy from your business.
Here's something to ponder: All entrepreneurs eventually must separate from their businesses and move on to a new phase of life.
This doesn't mean you have to stop working and retire. You may have other interests to pursue that will tap your years of experience. Heck, there's nothing wrong with just kicking back enjoying life after years of hard work.
But here's the rub: "Cashing out" and walking away from your business with a big smile on your face isn't going to just automatically happen.
We've been in this industry many years, and we've only seen a handful of fortunate and prepared owners cash out and have that big smile. They had an exit strategy or ran their businesses aggressively and diligently to build value.
Here are four thoughts every salon or spa owner should ponder about exit strategies:
- It's never too early or too late to plan: Where do you want your business to be in five or ten years? What do you want it to look like? How much in revenues and profit? Planning means setting a future goal and creating the necessary steps to achieve it. If you don't like to plan - don't expect a windfall when it's time to sell.
- Financial reports tell a story: Today, right now, what kind of story do your financial reports tell? "Action adventure" where the hero gets the girl and the gold? "Drama" where it's life and death all the way. "Horror" where there's lots of scary stuff, guys with hockey masks and chainsaws? Make sure your financial reports tell the story you want today and they'll reward you tomorrow.
- Is it a business or you? This one is simple. If your business can function profitably without you generating revenue with your own two hands, you're on the right path. If not, it's time to rethink the design of your business and your role in it.
- Is there a natural successor? If you have a son or daughter in the business, are you grooming them to take over or will it require the jaws-of-life to pull control away from you? Is there a key employee worthy, capable and with the resources to acquire the business?
Your business most likely represents your life's work. Given this, it deserves to know what will happen to it when you decide to move on to the next phase of your life. Drafting a simple initial exit plan based on the previous points is a good starting point. From there, it can be refined into something more detailed and concrete. Consider working with a coach to construct your exit plan.
Remember, constructing an exist plan today can give you many fine days after you sell your business.
DEEPER DIVE: Want more insight on planning for your exit strategy? Join us on Monday, June 19, 2023 for a FREE half-day Onlive training with Neil Ducoff called Salon/Spa Exit Strategy: Playing for Your Best End Game. Register for free here.