What really matters to a prospective buyer – and the nonsense business brokers, accountants and your closest friends will tell you.
“I’m going to put my salon on the market,” said a confident young lady on the phone to me the other day. “I’ve worked hard for five years, it’s time to start a family.”
So, I asked, is the business ready for sale?
“I think so. I take a good salary, we have great products, lots of regular clients, and the salon looks wonderful and it’s in a great location…”
But when I started asking questions, I could tell from the tone of her replies that this was going to be a disappointing conversation for her. And that’s because there’s a gaping chasm between what the owner of a business thinks has value, and what an astute prospective buyer thinks is valuable.
(And I use the word ‘astute’ advisedly. With stars in their eyes, many a beauty therapist or stylist on the hunt for their own business will fall in love with the ‘pretty’ surface and fail to look at what really matters.)
An accountant will look at a business the way accountants do, with a calculator, analysing past performance, profit and loss, assets and liabilities, and come up with a ‘valuation’ for you based on those bare essentials. Valid, certainly, but extremely limited, and limiting. Past performance is only half of the story.
Stock, fixtures and fittings and shop lease (again, obviously)
Yes, they may have some value. But have you ever tried to sell second-hand furniture? It’s worth next to nothing. Retail products? You’ll need to be a very good salesperson to get anything like what you paid for it. And an astute buyer will screw you down on the remaining term of the shop lease, knowing you’re legally obliged unless they’re prepared to have the lease assigned to them.
Then there’s that hoary old chestnut,
Goodwill.
It’s just air. Business vendors will, usually on the advice of their accountant/broker/business coach, attempt to ascribe a dollar value to that most intangible of intangibles, the ‘goodwill’ or loyalty of the customers to the business. These days, there is little or no loyalty. And buyers know it. Don’t even think about trying to pull that one over them.
Now to the stuff you haven’t thought about, and certainly your accountant hasn’t.
Your database.
By far the most valuable, most measurable part of your business is your list. Your list of clients, customers and prospective customers held in an orderly, well-maintained electronic database containing not only their full contact details (name, email address, phone number, and most importantly, physical mailing address) but their spending habits and booking frequency.
This is the gold. This is the thing that a buyer can look at and determine with reasonable accuracy the current health of the business, and its potential, given a more robust and refined marketing program. If you software program is set up correctly, a prospective buyer will also be able to determine what marketing information you’ve been sending out to that database, and its responsiveness.
Your list has a strategic value in and of itself. If I were buying a salon, it’s the first thing I’d look at, not the financials of the business. I’d then put that list alongside the financials, and try to find cause and effect.
Then I’d take a very close look at the thing that really matters…
Your marketing infrastructure, both online and offline.
The second most important, most valuable, and easily the most measurable asset of any local business like a hair or beauty salon is…drum roll please…your online presence.
Thanks to technology, an astute buyer will demand your Google logins. Why? Give me your Google account logins and within one minute I’ll be able to tell exactly how many phone calls and website visits you’ve had in the last 30 days or 90 days from people searching for a hair salon or a beauty salon in your area. Here’s an example; the Google Insights figures for one of our Member salons, in the little South Australian town of Port Pirie.
It shows that this salon received 74 phone calls in the last 30 days from people who had Googled a beauty salon in Port Pirie and called the business using the ‘click to call’ function provided by Google.
In addition, the salon received 67 clicks through to its website from the Google Plus listing in search results, which would have produced another raft of phone calls.
Here’s what Amber Clayton, the owner of that salon, says about the value of her local search ranking:
This is important, value-adding stuff. For a prospective buyer, it is incontrovertible proof that the investment put into online marketing by this salon owner is paying off in easily-measured numbers.
It means I, the buyer, can count on getting a steady stream of appointment-producing phone calls. And that means sales, and profits. And that means you can put a defined value on that online presence, quite apart and separate from any valuation your accountant might put on past revenue and profit. (You should also know – and Google provides the tools to find this out – how many people are searching online for a hair stylist or beauty therapist in your area in any one month period.)
Your presence in social media also matters, though not to the extent that Google ranking does. How many Facebook fans you have, how many Instagram followers you have, matters in that it gives a buyer a sense of how active and productive you are on social media.
But don’t be fooled, or try to fool – Facebook and Instagram followers are not customers. They’re just fans. People who actually call your business are customers (or potential customers).
Offline marketing
You should also be keeping accurate records of responses, sales and re-bookings from your offline marketing – mailbox flyers, direct mail to clients, newsletters, ads in newspapers. As a buyer, I want to know, because those figures give me a precise record of what works for the business and what doesn’t.
These things have real value. They are the value of your business.
So yes, financials and balance sheets matter. But smart buyers know they’re only part of the story. And they are past history. The only figures that can give me a picture of the future are those produced by the marketing metrics above.
If you don’t know what your marketing metrics are, then you – and the buyer – are floundering in the dark.
NOTE: members of our My Social Salon flagship marketing program – such as Amber Clayton – get all the above and more as part of our service. Click here to find out more.
Play video below. When Carolyn Evans bought an ordinary suburban salon in Brisbane a few years ago, she had no idea it would turn into an international consulting business with clients from all over the world.
But that’s the power of the internet – if you seek out the right help, and put it into action. Watch as Carolyn describes how – with help from Worldwide Salon Marketing director of online, George Slater – she not only turned her struggling salon around, but re-invented it completely in the process.
(Hint: before you watch, Google ‘hair health brisbane’ – Carolyn’s various websites and videos totally dominate her market, squeezing out all her competition.)
Attention Worldwide Salon Marketing members:watch the full interview herein the Members Only Million Dollar Resources Library.
FOOTNOTE: In case you missed it, here’s a screenshot of a Google search for ‘hair health brisbane’ – every single listing bar one on Page 1 points to Carolyn’s business.
I’ve lost count of the number of times over the past 10 years I’ve been accused of advocating ‘tacky’, so-called ‘unprofessional’ or ‘cheap’ marketing for salons and spas. In one memorable instance, a member of the ‘upper echelon’ of the beauty industry, a veteran of some 30 years, approached me during a marketing seminar I was giving and snootily told me “no self-respecting proper company would lower themselves to using your sales & marketing tactics.”
Well, I told her then, and I’m here to tell ya now, she was wrong in every possible way.
Have you heard of Time Magazine? Yep, the very same, establishment publishing giant that’s documented the movers and shakers of the world since 1923.
Like all publishers, Time makes its money from advertising, and to a less extent, subscriptions.
Now, nobody would ever consider Time Magazine any kind of hip, brash, swashbuckling outfit. Certainly not the kind of ‘old-money’ business that’d consider doing something even remotely ‘trashy’ or lowbrow just to boost its market share.
Um, well, yes they would.
Here’s a Time offer that arrived in WSM Director of Online George Slater’s mailbox this week. Yes, a full-color, four page direct mail piece offering
FREE WATCHES!
…in exchange for a drastically-discounted, 54-month subscription. (Watches. Time. Get it?) Now, for the serious student of marketing, this is worth studying. There’s nothing new here. Time is using one of the oldest, tried-and-tested, bait ‘n switch marketing strategies in the book. Because they know that people will often buy the product just to get the free bonus.
You see this exact strategy every time you browse your local newsstand; a free DVD or CD, glued to or packaged inside the magazine. Only a handful of people actually want the magazine. But many more just want the bonus CD. In Thailand, the Talisman Billiards Company gives away a free golf shirt with every order over $100. “I do see people increasing their order just so they can get the free shirt,” says Talisman owner Tony Jones.
This strategy works in almost any business. Salons and spas are no different. Got a cupboard full of products you haven’t been able to give rid of? Give them away, with an offer tied to an appointment for a service. “Yours Free” has for more than a century – and remains – one of the most powerful phrases in any marketing arsenal.
For decades, word of mouth has been the most powerful and effective form of marketing just about any business can use. Restaurants, movies, holiday resorts and dozens of others live or die on the basis of their referrals…hardly anyone would even think of booking an overseas holiday these days without checking on Tripadvisor first. The internet has put the power of word of mouth on steroids.
For effective salon marketing these days, online reviews are absolutely imperative.
You can ignore it at your peril, or you can embrace it, like my guests on this webinar. Jenine Wood is one of our Worldwide Salon Marketing members, from Sandton Hair Gallery in Mitcham, Victoria. We’re also joined by the founder of one of the biggest Australian review sites, Fiona Adler of WOMO (Word of Mouth Online), and our own Director of Online, George Slater.
NEED HELP: go to www.mysocialsalon.com, comlete the form and we’ll contact you within two business days.
If your salon has a website, you could be in for a big shock. Google is changing the rules (again) on how it ranks websites in its search results. If your site doesn’t fit the new regime, you could find your site dropping out of view, unless you take urgent action.
Because as of this week, Google will begin demoting websites that aren’t “mobile responsive.”
The company announced its impending changes back in February, giving webmasters nearly two months and plenty of information to make the changes necessary to keep their sites from disappearing from mobile search results. But the update is still expected to cause a major ranking shake-up. It has even been nicknamed “Mobile-geddon” because of how “apocalyptic” it could be for millions of websites, according to Director of Online at Worldwide Salon Marketing, George Slater.
“Come April 21, a lot of small businesses are going to be really surprised that the number of visitors to their websites has dropped significantly. This is going to affect millions of sites on the web,” he says.
Businesses that depend on people finding them through localised search — like, if someone typed “hair salon Hawthorn,” into Google on their phone — could see a decrease in foot traffic as a result of this update, says Mr Slater.
“Google has always been about relevancy, and content is king,” he says. “But that’s changing. Yes, they’re saying content is still important, but user experience is just as important. It’s not enough to have good content — if people come to your site and the content is there but it’s not readable, that’s not good.”
“I’m worried about it, a lot,” says one salon owner whose website is featured prominently at the top of Google searches. Thanks to her website’s position on the first page Google – which has 80% of the world’s search business – customers were finding her more and more easily. And she should be worried. A quick check of her website on a mobile phone and the problem was obvious. Because Google is about to change the way it ‘rates’ websites in search results, her high-ranking site risked being downgraded – ‘sandboxed’, in geek terms – relegated to back pages where nobody will find it.
The problem: Her site was built back when smart-phones had nowhere near the market penetration they now enjoy. Recent studies indicate that people are now using their smart phones – iPhones and Android devices – for fully 60% of all online searches.
And on a smart phone, her website was just about unreadable; the full-sized, detailed, multi-page site, crammed into a tiny phone screen made it almost impossible for searchers to find relevant information…like her phone number. Why is that important? Because other studies show that of all people searching for a local business like a hair or beauty salon on a smart phone, more than 60% are doing so because they want to buy something or book an appointment…now.
According to George Slater, “The people at Google aren’t stupid. They know that smart phones are taking over the world. They also know that if a Google search on a smart phone doesn’t take the searcher to a website that’s easy to read, Google’s own relevance in a mobile world will diminish.
George Slater, Director of Online at Worldwide Salon Marketing
“So the folks at Google are checking websites that appear in the top three pages of its search rankings. If those sites aren’t ‘mobile responsive’, the sites will be downgraded. And the salon will lose valuable business before the problem can be fixed, and more valuable time before the site can climb back up the search listings.”
In other words, your website could disappear from search rankings completely. And for many salon owners, like Lesley, that could be disastrous for business.
How to check your site
It’s easy to check if your site is mobile responsive. Just grab your smart phone and in its web browser, type in the address of your site. If all you get is the whole website, with all its lovely graphics and photos, and you have to scroll around that little screen just to find your phone number…you’re in trouble. Imagine it from your prospective customer’s point of view; all she wants to do is find a salon in her area that she can call and book an appointment for a cut and colour, or a facial, or some waxing, and you’re making it difficult for her. So she hits the back button, and finds another salon that makes it easy for her to do business there and then.
What to do
Call your web designer NOW. If he or she can’t (or won’t) help you – or can’t be located/doesn’t respond, which is often the case for salons who had their websites built in some cases years ago – call us at Worldwide Salon Marketing on 08 9443 9327.
WSM builds, hosts and maintains websites for hundreds of salons, spas, medispas and wellness clinics all over the world – and every single one of them is ‘mobile ready’.
What really matters to a prospective buyer – and the nonsense business brokers, accountants and your closest friends will tell you.
Have you heard of Time Magazine? Yep, the very same, establishment publishing giant that’s documented the movers and shakers of the world since 1923.
…in exchange for a drastically-discounted, 54-month subscription. (Watches. Time. Get it?) Now, for the serious student of marketing, this is worth studying. There’s nothing new here. Time is using one of the oldest, tried-and-tested, bait ‘n switch marketing strategies in the book. Because they know that people will often buy the product just to get the free bonus.
Billiards Company gives away a free golf shirt with every order over $100. “I do see people increasing their order just so they can get the free shirt,” says Talisman owner Tony Jones.
For decades, word of mouth has been the most powerful and effective form of marketing just about any business can use. Restaurants, movies, holiday resorts and dozens of others live or die on the basis of their referrals…hardly anyone would even think of booking an overseas holiday these days without checking on Tripadvisor first. The internet has put the power of word of mouth on steroids.
