Is $30,000 worth a 9 year book of a hair salon? I have yet to see the profit and loss (which I will be seeing when I sit down again with the owner)

Back story she has cancer and will be getting surgery and will not know if she will need chemo or not. I’ve been looking for a bigger space to rent and found this one and in the listing it also stated she is willing to sell her books.

Today she told me she is asking $30,000

My question is, when I look at her books, how much should she be making a year in order to justify $30,000.

  • kthapps@alien.topBEnglish
    1·
    1 year ago

    You’ll need a little more info, but here’s how I would do it

    1. Calculate annual average client revenue (annual service revenue/active clients)
      1. I would probably just include services here and not product sales
    2. Calculate annual average client cost of services
      1. Include cost of service goods (dye etc) (annual cost of goods/active clients)
      2. Average hours per service * your rate
      3. add these two numbers together to get average client cost
    3. Subtract the two numbers to find out average profit per active client
    4. Figure out how many active clients are in the book
    5. Multiply profit per active client by active clients
    6. Don’t pay more than 50% of that number
      1. 50% because you need to have cashflow in your first year. This is a one time cost so after the first year it won’t impact you anymore