How to Buy a Spa Business

Buying a spa business can launch you into a new career in health and beauty, or add a new market to your established enterprises. The spa industry is unique in its operations and financial procedures, so it's best to do plenty of research into the industry before buying a day spa, spa retreat or spa/salon.


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    Look for a good location. Spas should be busy, attractive places with plenty of foot traffic and easy access to major roads.
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    Research the local economy to be sure the area is growing, as some markets are greatly affected by the downsizing of local industries. Spa owners need clients who can afford their services, so stability or growth in medium- to high-income sectors is what you are looking for.
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    Find a spa for sale. Search trade magazine, local brokerage listings, and business classifieds. If there is a spa you like that's not listed, ask the owner privately if they are interested in selling.
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    Check out the spa. Call the broker or number listed on the ad to determine the location of the spa. Visit the spa and have a treatment to get a feel for the place. Do not tell the staff you are considering buying it, or that it is for sale. Many owners keep business sales in strict confidence until all deals are finalized.
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    Acquire financial statements. You must first sign a confidentiality agreement to review the statements. Once signed, the spa owner should give you 3 to 5 years prior financial statements. You need to see tax returns, profit and loss statements and a statement of liabilities. Spas have high liabilities due to gift certificate sales, so be sure you are aware of this up front. Review the numbers with an accountant.
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    Check the lease and be sure it is transferable before you agree to buy the spa. Property owners will usually want to check your credit, see your business plan, and have some assurances that you can maintain the profitability of the spa business.
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    Research license transfers. Be sure you are able to transfer or get a new license for all of the services of the spa business. Some states require a separate license for massage, cosmetology, nails, and laser treatments.
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    Valuate the business. Determine the amount of debt, total liabilities and growth potential for the business. Be sure that owner has fully disclosed any liens or potential risks. Also, consider the owner's charge-backs or non-essential spending when determining profit potential.
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    Make an offer. You need enough capital to purchase the business and survive for at least the first few months, or until you make a profit. Remember, once you buy a spa, you need some cash in the bank to pay for basic overhead, payroll and inventory to keep the place running. Some owners will "owner finance" their business, so investigate this option.
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    Get a preliminary spa business sale agreement. Agree upon a purchase price and terms. The contract should state exactly what you are buying--equipment, inventory, branding, web sites, client lists, licenses, and rights of use for the business. The contract should also establish your new company entity or transfer shares of the spa business corporation, and the closing date.
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    Apply for licenses and sign lease.
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    Sign the final business sale contract. Both the spa buyer and the spa seller should have an original signed copy.

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Categories: Buying & Forming a Business