One of my coaching clients is looking to expand and he asked me if he should buy an existing salon, or open a new one from scratch
I’ve done both and there is definitely ‘for’s and against’s’ with both options and obviously they will vary dramatically depending on the business you are buying.
- The biggest challenge with buying an existing salon is that most salon businesses are built around the person who owns it and when they leave the value of the business often leaves with them.
- When you buy an existing business you are inheriting an existing culture, and the culture of the business may not be the culture you want.
- With the business comes the ‘people’ some of them will be great… but remember ‘you’re the newbie’ and the existing team will not willingly embrace all the changes that you inevitably want to make. You’re coming into their patch and some of them will not be happy about that.
- It’s often seen as a good idea for the owner to stay on for a handover period, sometimes as much as 12 months or more! It can be a good idea but the downside is that they will find it very hard to take a backseat in what is no longer their business and you may find that they are undermining and meddling in what you are trying to do.
- When the ownership changes it’s often an unsettling time for the staff and clients who also decide it’s time for a change and you can end up with a business and no staff/clients.
- Buying an existing business usually means it comes with staff! Whether they stay or not isn’t guaranteed, but if it comes with staff then it comes with clients and the immediate cash flow that goes with it
- An existing business will have ‘some’ structure and ‘systems’ in place, depending on the business you may want to change them. sometimes a little and sometimes a lot, but if it is well structured and has good operating systems it can save you a lot of time and work.
- An existing business will already have established itself as part of a local community and hopefully have the good relationships and local support that comes with it.
- An existing business will already have business relationships with suppliers, banks and trades people etc. Again you may have your own network but if it’s your first foray into business ownership those established and trusted relationships can be a great benefit.
- Assuming it’s a profitable concern, buying an existing business is proof that there is an established market for your products and services so the risk element is less and therefore probably easier to get finance based on real facts and figures as opposed to ‘projections’ based on guesstimates!
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