Field Notes: A Cut Above the Rest?

South Florida Upscale Salon & Spa For Sale

I found the perfect business for a bald guy!. I kid, I kid. Seriously though, this upscale salon and spa seems to hit a sweet spot in revenue and EBITDA for many ETA’s.

Let’s take a look:

This upscale salon and spa appears to have a proven track record, strong cash flow, and potential for future growth. The asking price looks justified by the business’s profitability, strategic position in a high-traffic area, and upscale offerings. However, you’ll want to understand the lease terms, the competitive landscape of salons and spas in South Florida, and make sure the business aligns with your managerial capabilities.

Here’s a detailed breakdown of the listing. (I do love how the ‘precise numbers’ give the listing an air of credibility. Why say $1.8M when you can go with $1,108,024, lol)

Financial Overview

• Asking Price: $3,200,000
• Cash Flow: $1,108,024
• Gross Revenue: $5,400,046
• EBITDA: $664,984
• FF&E (Furniture, Fixtures, & Equipment): $133,460 (included in price)
• Inventory: $42,537 (included in price)

Business Operations

• Location: South Florida, high-traffic shopping district
• Established: Claims several decades, though the exact year not provided
• Industry: Upscale Salon and Spa services
• Employees: 39
• Facilities: 2,900 sq ft, leased property with luxury interior and plenty of parking
• Real Estate: Leased, not included in the asking price

Analysis

Valuation and Price:

• The asking price is about 2.9 times the annual cash flow, which seems reasonable given the high cash flow and EBITDA margins relative to the revenue. This multiplier is in line with or maybe slightly above typical small business valuations in personal services but could end up being justified by the business’s profitability and established market position.

Strengths:

• The salon has demonstrated strong sales and profit growth, likely driven by its effective marketing strategies, high-quality service, and customer retention efforts.
• The business operates in a growing geographic area, potentially offering sustained customer base along with expansion opportunities.
• High customer experience focus and an upscale setting differentiate it from local competition.

Risks and Considerations:

• The business is in a competitive industry with several other salons in the area. This will probably require continuous innovation and marketing to maintain market share.
• Dependence on the leased location could pose a risk if the lease terms change unfavorably or if relocation becomes necessary.
• The business’s success heavily depends on its current operational systems and staff, which the new owner must maintain and/or improve. Do you have the chops to step in? I know this is more than just “hair cuts” yet cutting hair has been relatively recession proof.

Opportunities for Growth:

• Expanding service and product lines, such as introducing hair replacement services and new retail products. Going back to my bald joke; yes, I’m thinning and the demographic wave as we age could be a burgeoning opportunity for hair replacement. Think about it.
• Hiring an international award-winning stylist as planned could significantly enhance the salon’s prestige and attract a wealthier clientele.
• There may be potential to expand to additional locations or franchise the business model, given its proven success and operational systems. A proven operating system is always fodder to consider franchising your system.

Market Outlook:

• The U.S. hair care services industry is expected to grow significantly, outpacing general economic growth, which suggests a favorable market environment for the continued success of this salon.

About: Silverwave Field Notes combs through and analyzes thousands of businesses available for sale that may be of interest to entrepreneurs looking to acquire an existing business. We are not affiliated with the business listed for sale unless otherwise disclosed. The business highlighted above is represented by Michael Moore.