7 Steps to Sell a Spa Business

How to Sell a Spa Business

1. Organize finances

If you want to sell your spa business, then you first need to get your paperwork in order. Getting organized first will make everyone’s lives easier. It will keep you grounded during the sales process. It will also show busy lawyers and accountants that you are a serious seller. As a result, they will more likely take you on as a client.

Get together your tax returns and business bank account statements. Potential buyers want to understand a business’s financial health before writing a check.

For example, they might analyze the income statement to see if the spa’s revenue has been increasing over time. They might also look at the balance sheet to see if the business has any debt.

Organize these files on your computer by using folders. Be specific when naming your files. You should also keep physical copies of everything just in case something happens. For example, you might not have access to a computer one day when you need to quickly look up information.

2. Come up with a price

How much is the spa business worth? This is now the time to find out. I know, you want to sell the business for as much money as possible.

But before we get to that point, we need to first come up with a fair value for the spa. Then, we’ll see if we get away with applying any multiples.

You might want to evaluate your spa business yourself if you are sophisticated with numbers. However, for most people, it’s best to bring in an expert. You don’t want to undervalue the business and cut yourself short.

Professional appraisers do this for a living. They assess businesses to come up with a dollar value. To do this, they may look at similar businesses in the industry.

Therefore, professional appraisers understand current market conditions. You need to pay for their expertise. However, it’s worth it in the end. It’s one less thing to worry about.

3. Find buyers

You obviously need to find a buyer if you want to sell your spa business. There are two ways to find buyers: you either approach them or they approach you.

Who would be a good fit for the business?

You might consider other spas, particularly the ones that are looking to expand. They already know what the spa industry is like. For them, taking over your spa would be a relatively easy task compared to people with no experience.

You want someone who can keep the business running and not mess everything up.

You can start finding buyers by contacting your direct network.

Reach out to peers in the spa industry.

Are they interested? If not, do they know someone who might be?

In addition to peers, you can try your luck with suppliers, senior employees, or even knowledgeable customers.

Also, you can make announcements about your intention to sell in industry-related publications. Create listings on business marketplaces and post on social media.

4. Sift through your pool of candidates

Your competitors would love to see your business’s finances.

I mean, who wouldn’t?

The selling process provides a perfect window of opportunity for sneaky competitors to do just that. They might say that they are interested in buying. However, they just want to understand your finances and business model before walking away. They will use the “market research” to improve their own businesses.

Therefore, as a seller, you need to distinguish serious buyers from the ones there for their own benefit. Doing so will help you save time.

There are a few strategies that you can use. First, do not disclose sensitive business information too early. Instead, interview your potential buyers to understand their intentions.

Before sharing financial information, draft non-disclosure agreements with the help of a knowledgeable lawyer. NDAs protect trade secrets. They will prevent potential buyers from openly talking about your business with other people.

5. Close the deal

You’re almost near the finish line. At this point, you should have considered all offers and picked the best one.

Make sure you put everything in writing and read all terms. Documenting everything in writing is important in case something goes wrong, and you find yourself in court.

Run everything through your lawyer. If you have any questions, then this is now the time to ask. Discuss payment logistics and sign on the dotted line.

6. Tell your employees

This step isn’t easy. Now that you’ve sold your business, you need to tell your workers that the spa is under new management.

Your workers’ future with the spa is uncertain at this point. The new owner might keep everyone on the payroll. They might also cut costs by letting some people go.

Regardless, this is now the time to say goodbye and celebrate the moments you’ve spent together.

7. Ensure a smooth transition

There is a learning curve whenever a business undergoes structural change. New managers might be unaware of existing business policies. They might not know how to do something.

As a courtesy, you can give the new owner your phone number. Tell them that they are free to ask about anything for a month. That way, confusion is minimized, and customers remain happy.