“I had people approach me who wanted to purchase my business and I didn’t have any idea what it was worth. A couple of people made low offers and played games. Lori warns, “Players are out there so be careful who you divulge information to. Both times I used a realtor and should have stayed in my own industry and used just my accountant and my lawyer.”
When she finally decided to sell in 2009, she produced financial statements for five consecutive years showing profit and growth. She had consistent sales over the years and was advised to go to the best realtor in town that sold corporate and personal real estate. Lori always felt unsure about this decision from the moment she made it, as she says, “I’m a go-by-your-gut girl.”
Lori listed in the spring and right out of the gate she had an offer The buyers wanted her to carry the loan for four years – she answered no. Next she discovered the agent didn’t return the call from another interested party. At the same time a high number of clients were coming in to redeem gift certificates. Word had gotten out. Also purchases of gift certificate sales were down 60% at Christmas and then at Valentines – all while she was trying to sell. She had to reassure her loyal staff everything would be ok. Lori was starting to worry. The books that were great now weren’t. She had another interested buyer, but because the last year looked so bad they were afraid the goodwill wouldn’t be there. Lori came to realize she was the goodwill component. She also learned not to sell your business publicly wasn’t the answer either. What she thought was going to be the passing on of her business to another confident spa owner – carrying on the very same quality and care – wasn’t going to happen. She quietly worked out a deal with the landlord and he kept the spa and some staff, calling it under a different name. It was never the same and it didn’t last long. All Lori was concerned about was that the outstanding gift certificates were honoured; it was in the new owners best interest. Lori knew her staff would find work if they didn’t stay there – they were the best in the city!
Lori's advice she learned first hand on selling your spa ….
1. Have someone in the spa industry help value your business. Hire a consultant that has enough years and experience to provide that information. Sometimes it is not as easy as numbers on a balance sheet – its more than that.
2. Make sure you incorporate a transferal program in your exit plan for the new purchaser. You will never have a seamless sale with out it. This strategy is key in handing off your business successfully.
3. Try to own the building so you have an asset, because of all the costly leasehold improvements and the wasted rental cost.
4. Reach out firstly to spa industry sources to sell your business privately and quietly. They can be a resource and request anonymity.
5. Once you breach the staff barrier and tell them you’re selling, it causes an unrest that is hard to control.
6. If you wish to list with a commercial realtor don't put up a sign outside and keep it as an anonymous listing where the information is not given until the client is qualified.
Fast forward to today, Lori Burke is the Partner/Director of Sales & Eduction for Skin Spin Cosmetics Inc. and Educator of Medical Aesthetics.
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