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Thinking about buying a beauty salon? 5 things to consider

BusinessesForSale.com reveals why buying a beauty salon is a pretty sure thing

The beauty and personal care sector is said to be a recession proof industry, and its rapid growth, despite the economic slump goes hand in hand with a study commissioned by the International Spa Association (ISA).

The study pinpoints the number one reason for its success as being an outlet for stress relief and relaxation, as people seek a sanctuary to unwind from the pressures of everyday life.

The 'lipstick effect' (whereby in times of austerity people will spend their limited funds on relatively cheap 'pick-me-ups', rather than a larger investment), and the ever increasing fixation on appearance, personal care, whether it be a monthly manicure or a regular roots rejuvenation has become something integral to many people’s spending routines.

Something that makes buying an already established beauty salon a popular Investment, alongside benefits such as immediate sales revenue and a pre-existing customer base.

The salon is also likely to be equipped (or the equipment will be heavily discounted) giving you a base to work with from the get-go.

If buying an established salon seems like the ideal option for you, here are a few things to consider:

1. Legal and Industry requirements

Buying a beauty services business involves several key steps and, legally, you will have to ensure that you apply for the correct licences depending on the kind of treatments you want to offer.

The higher risk treatments, such as piercing, tattooing and laser treatments require a Higher Risk Personal Services Licence and an infection control qualification (information about this can be obtained from your local council).

If you buy a business that is already licensed through the local council, you will need to get a Transfer-Higher Risk Personal Appearance Services Licence.

There is a wealth of information and advice on your virtual doorstep. Just one being ALBIS, the Australian Business Licence and Information Service, that will help you to find the correct licence/permit for your business.

2. Research

Before you buy a business you need to gather an understanding of the industry and marketplace in which you are operating.

Market research is at the forefront, you will need to consider the demographics, the location, and the existing and potential new customers, assess the competition and identify gaps in the market.

If you need advice, think about joining an industry association. Hair and Beauty Australia (HBA) offers invaluable industry advice to beauty salons, spas, beauty manufacturers and suppliers.

3. Costs and finances

The majority of beauty salons operate on a 30-50% profit margin, after deducting the additional costs of payroll and staffing.

HBA executive director Mary Davitt, calculates that ‘buying an existing business premise, fitted out with basic equipment, will cost anywhere between $70,000 and $500,000, depending on the location and quality of the existing salon’.

She states that “Overheads can be quite expensive to initially” likening it to “setting up your home kitchen” as it “costs a lost to buy spices and nice oils … but, after the initial expense, you can restock as required.”

If you buy an existing business you may also choose to buy or lease the building. There are no licensing requirements for buying or leasing the premises, however something you may want to bear in mind is solicitor fees, rental costs and agency fees.

4. Employees

Another benefit of buying an established business is the employees; they will be already trained and experienced  and are often a reason for existing customers to return under new ownership.

Business owners in this sector tend to be qualified beauticians with the necessary qualifications, but don’t worry, this doesn’t rule you out.

If you don’t have a background in beauty therapy, you could consider employing a qualified beauty therapist to run the salon day to day.

5. Other things to consider

Use of business vehicles:  This requires a Commercial Vehicle Registration or permit - an annual registration managed by the Department of Transport and Main Roads.

Any vehicle must be recorded as commercial for registration and compulsory third party. The permit is accessed through the local council, and allows registered commercial vehicles to park in loading zones.

Use of radio and TV:   A music licence is needed if you wish to play music or show television in your salon to abide by copyright laws of public Performance, Broadcast or Diffusion:

Australasian Performing Right Association (APRA)

Phonographic Performance Company of Australia (PPCA).

There are over 260 beauty salon opportunities available on BusinessesForSale.com.

Despite the uncertain economic outlook, it's likely that people will continue to put their hands in their pockets, forever striving to look younger and more attractive, and that owning a personal care business could well be a recession proof business option.

 

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