Value Drivers for a Hair Salon
The hair salon industry is thriving with pent-up demand from the COVID-19 pandemic closures. However, competition in the hair salon industry is high. In addition, there are low barriers to entry. Whether you are looking to buy, sell, or grow a hair salon, it is important to know the value of a hair salon. Understanding value drivers for a hair salon can help your salon be competitive and successful. A business appraiser considers them when valuing a hair salon.
In the following paragraphs, we discuss the key value drivers for a hair salon. Obtaining a business valuation gives you the best knowledge of the value of a hair salon. If you are entering or exiting the hair salon industry it is important to know the fair market value of a hair salon. It is also useful to know what increases the value of a hair salon. Peak Business Valuation performs business valuations for hair salons regularly. Schedule a free consultation with Peak, business appraiser to learn more.
Key Value Drivers for a Hair Salon
The following sections contain key value drivers for a hair salon. Understanding these value drivers will help you begin taking steps to increase the fair market value of a hair salon. For questions, reach out to Peak Business Valuation, business appraiser. See also, How to Value a Hair and Nail Salon, Valuing a Hair Salon and Valuation Multiples for a Hair Salon.
Economy
The first value driver for a hair salon is the economy. Many businesses struggled during and after the pandemic. Most hair salons are bouncing back with long waitlists after the “non-essential” business closures. In addition, as the unemployment rate is decreasing and consumer spending is increasing, people are more likely to spend money on hair care and services.
When valuing a hair salon, Peak Business Valuation, business appraiser, considers the economy and how your business is impacted and reacting to it. The appraiser analyzes the strengths and weaknesses of your hair salon compared to the competition and the industry. For additional information, read How Does the Economy Impact the Value of a Business.
Expansion of Products and Services
The next key value driver for a hair salon is expansion. This includes expanding products and services, as well as the number of stylists and salon space. As your hair salon grows, you can expand into more corners of the market by hiring new stylists who have different talents. Additionally, it is important for hair salons to stay on top of current trends. Offering diverse and trending products and services increases competitive advantage.
It is vital for a hair salon to offer a variety of services. Consider expanding your shop to include more than one service. This expands your customer base and decreases customer concentration. For example, hair extensions are becoming more and more popular. Having a few stylists specialize in hair extensions is a great way to differentiate yourself from the competition. But, it is important to offer a variety of services that appeal to more than one type of customer.
When valuing a hair salon, Peak Business Valuation, business appraiser, considers the competition and how your hair salon compares to them. Expanding your revenue streams increases competitive advantage and improves profit margins. Reach out with questions by scheduling a free consultation with Peak Business Valuation.
Customer Relationships
One of the most important key value drivers for a hair salon is customer relationships. Excellent customer relationships increase the number of repeat customers. In addition, loyal customers will refer others to your hair salon. There are many ways to improve customer relationships. This includes amazing customer service and quality products.
For a hair salon, employees have a high impact on the customer experience. It is important to hire employees who are enthusiastic as well as detailed-oriented. Hair salon employees must perform quality work as well as make each client feel welcome. Quality results and excellent customer service improve customer loyalty.
Many hair salons pair services together for a discount. For example, if customers buy hair coloring services they receive a discount on a haircut. Encouraging customers to refer friends for a discount increases your customer base. In addition, you can offer gift cards and specials as well as incentivize referrals. Advertise gift cards, especially during holidays such as Christmas and Valentine’s Day. Each of these can increase customer loyalty.
Customer relationships are important for a hair salon to increase its value. Customer base impacts financials. When valuing a hair salon, a business appraiser at Peak Business Valuation analyzes financial statements and customer concentration. For additional ideas, see Growing your Customer Base.
Online Presence
Next, having a strong online presence is important for a hair salon. Social media is a great way to advertise as well as connect with your clients. Clients may post their new hairstyle on social media and tag your hair salon. In addition, posting giveaways, new products, and happenings will help drive traffic to a hair salon.
Be sure to have a Google My Business page so clients can find you. Have loyal clients review your hair salon. A highly-ranked and findable hair salon has a greater competitive advantage. It is also important to have good SEO to increase traffic to your online platforms. Additionally, it is also helpful for clients to book appointments on your website and see all the services you offer.
Peak Business Valuation, a business appraiser, analyzes online presence as well as SEO when valuing a hair salon. For more ideas see, The Value of SEO.
Location
The last value driver for a hair salon is its appearance and location. Location, accessibility to consumers, and appearance impact the value. When choosing a site for a hair salon, analyze the surrounding businesses and population. Knowing the competition in the area enables you to differentiate your hair salon. In addition, the surrounding businesses and population influence the customer base. It is important to consider curb appeal and accessibility. Is there ample parking for customers? Is the storefront noticeable and attractive?
A business appraiser such as Peak Business Valuation considers the site when valuing a hair salon. Appealing presentation both within and outside of a hair salon increases its value. In addition, a high-traffic, visible location increases the value of a hair salon.
Summary
Knowing what drives the value of a hair salon enables you to begin taking steps to maximize the value. Whether you are looking to buy, grow, or sell a hair salon, it is important to know its value. A business analyst at Peak Business Valuation, business appraiser, is happy to help. A business valuation determines the fair market value of a hair salon.
Peak Business Valuation, business appraiser, values hair salons across the United States. We are happy to answer any questions you may have about valuing a hair salon. Knowing the above value drivers for a hair salon can also help. Reach out by scheduling a free consultation.
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