Salon Employees Leaving in the Sale of a Beauty Business
If you’re buying a salon business or working in a salon that’s been sold, the following information is for you. As a buyer, you may have fears of employees leaving. Or maybe you are an employee, and you feel uncertain about the new ownership and what the future of the salon you work in will be.
The main thing both buyers and employees/ booth renters should know is- everyone involved wants a good outcome and a great outcome is easily achievable. Let’s address salon employees leaving in the sale of a beauty business so you understand how this may or may not apply to you!
Hi there, my name is Susan Wos, I am the founder of Salonspa Connection and I lead a team of beauty industry brokers who are all beauty industry veterans. We have sold hundreds of beauty businesses for sale since 2019.
One of the most common concerns we have with buyers is assuming staff in the sale of a salon business. Anxiety over employees or booth renters leaving under new ownership is not only a hot topic in forums, but it is a commonly misunderstood aspect of beauty business acquisitions.
I will first address the salon, spa or barber employee and independent contractor. Next, I will provide some real world data for buyers of salon businesses as well as go through how buying a salon with employees is most effectively handled.
Feel free to jump to the information most relevant to you:
Table of Contents
Working in a Salon that has been Sold
If the beauty business you work in has recently been sold, usually there are a lot of questions and uncertainty associated with the new ownership. As an employee or booth renter, you chose to work in your salon for a number of reasons- most likely none of those reasons will be negatively affected by a change in ownership.
Employee buyouts and people who buy salons, spas, barbershops and beauty businesses have been attracted to what the former owner was able to accomplish. Buyers generally feel they can take what your former owner did for the business, and make it much better.
Almost never does a buyer want to come into a new business and make waves or do anything that will put you off. Buyers have put in a significant amount of time, effort and money to acquire your salon and are excited to work with you and grow your career.
Nothing Changes Fast
Any life or career change can be difficult, even when it’s positive. If you are working in a beauty business that has been sold and are fearful of the changes a new owner will make, know that changes will take place, but this can take several months or years to implement.
Most of the time, the changes new ownership makes are very positive for both the staff and the overall business.
Will you love absolutely everything the new owner does? Probably not, BUT changes that are made are all geared towards career happiness, more income for salon staff and more perks to working in the salon that was sold.
Leaving a salon that has been sold, just because there is a new owner, is not a good reason to quit a salon. As a matter of fact, 95% of salon professionals who have undergone a buyout report a significant increase in both new business, happiness and overall workplace satisfaction!
Employment Terms that Transfer in the Sale of a Beauty Business
When someone buys a salon, they also buy the benefits provided to salon staff lined out in a booth rental or employment agreement. Let’s say you get 2 weeks free rent or vacation- this transfers with new ownership along with all of the other benefits you have enjoyed.
If you are concerned about retaining the perks enjoyed by working in your salon, schedule a one-on-one meeting with your new owner. Most of the time, a new owner will happily address any concerns you may have, and appreciate you more for taking the initiative to discuss your concerns.
Talking through any concerns you have with a new owner is the best approach to a change in salon ownership.
What the New Salon Owner Wants from Employees and Booth Renters
The new owner of your beauty business wants to be accepted and to enhance all of the good things about your salon. The new owner chose to acquire an existing business- not build from scratch for good reasons.
Those reasons vary widely but one thing is for sure- they have conducted plenty of research on the business, the staff, and feel they can make things better for both you and the business.
Effectively, they chose YOU amongst a large variety of beauty industry businesses for sale. Great communication and an open minded attitude towards new salon owners will help you understand their vision, and how you can grow under great salon leadership.
What Salon Staff Wants from the New Owner
If a salon buyout is news to you, this can be a bit shocking. It is unusual for salon owners to tell employees or renters the business is for sale or that a current employee is buying the business.
While I won’t go into why the sale of a business is often kept private, the nature of a secret sale can put employees off, leaving you to feel cheated or duped.
The thing is, all businesses change hands at some point in time– some close, and others that are worthwhile, get sold.
Owners retire, move, get sick or change career paths, all of the time, and that is OK! Nothing lasts forever and often changes in ownership mean very positive reasons to stay working in the salon. Open communication lends itself to happiness, especially when changes in ownership or management occur.
Give yourself a bit of time to think through how you feel about the sale of your business and what you would like the new owner to know. New management won’t know every little thing about you or the business… if you stand out as a positive contributor to the growth of the business, your ideas and thoughts will be very well received.
Employee POV: How to Get What You Want When Your Salon Has Been Sold
You are concerned about how the sale affects you and possibly your teammates, which is very valid. The truth is- only time will tell, and your openness and honesty with the new owner is key to ongoing happiness in your salon.
Make sure you are heard and seen by creating a relationship with the new management. If you don’t express how you feel, or what you are thinking, you will have no room to complain. Taking a proactive approach and understanding what the new owner wants for both you and the business, will lend itself to ongoing workplace happiness.
Don’t make assumptions or gossip with your friends- this gets rumors started and can often negatively affect you if the new management finds out you are deliberately causing problems. Instead, take a deep breath, give yourself some time to think and let time pass to see what changes (if anything).
More often than not, just letting new ownership play out will provide plenty of answers to your questions and concerns!
Buying a Salon with Employees or Booth Renters
Buying any existing business where you deal with staff, or customers comes with several considerations. How will customers feel about new ownership? Will the staff welcome me and want to stay?
What if I buy this business and everyone quits??
Buyers want guarantees and there are no guarantees in business nor are there many guarantees in life.
Even starting a salon from ground zero offers absolutely no guarantees other than there will be hidden costs and many roadblocks along the way. So why would someone buy a beauty business with employees or booth renters?
Traction, physical & digital assets and the ability to build upon an established business with momentum.
The first few years are the absolute hardest for brand new, startup businesses. Savvy business buyers understand this- they choose the faster path to profitability and less hassle over starting from scratch.
There are several ways to flesh through potential issues when buying a salon with staff. Let’s review a few details to look into when considering a purchase of a beauty industry business.
What to do Before Buying a Salon with Staff
Once you have gone through the seller’s details with your salon business broker, and you want to learn more about the staff, take to social media and the seller’s website. This is a good way to get a feel for who you will be working with.
At this stage, you should have a list of information about the staff from the seller. Asking for individual sales or rental income will allow you to crunch some numbers. Consider how many staff members you need to retain to break even, and how many you will need to stay profitable.
Analyze current and projected income and expenses and assess your own risk tolerance. Is it worth it to take a risk on an existing salon team, or is building from scratch and hoping you have what it takes to make it to profitability, worth the effort & expense?
Existing Salon Staff Helps to Envision a Future
Buying a business with staff allows buyers to envision a more clear future than starting from the beginning, even if everyone left. Location, digital assets and momentum exist in an established business- all things the current owner has worked for many years to establish.
Remember, there are no guarantees with a business you buy, nor are there guarantees with a business you start from scratch.
Owners who don’t do “all of the things”, meaning they have management and systems in place tend to be easier businesses to slip into as a buyer. This also tends to be less disruptive to employees, as not much changes when the owner leaves.
Ask an expert business broker with salon industry knowledge, if you don’t have a representative on your side, contact Salonspa Connection for buyer guidance and support.
Get Insight on the Salon Staff Before Making the Offer
Secret shopping is a great way to get insight on a business you are interested in buying. I wouldn’t recommend personally visiting the salon you are considering buying as you have likely already met the seller and it may be awkward.
Instead, send a friend or family member in for a service. An in salon experience, on a normal day, should yield a ton of insight for a business buyer. Visiting during the holidays or a typical slower time- such as a Monday morning, will yield a different and more abnormal experience than on a Thursday evening.
Ask around about the business without compromising your NDA with the seller. Consumer insights may yield an additional helpful point of view.
Questions to Ask the Current Salon Owner About Employees
Asking the seller about the staff is another great way to alleviate fears over salon employees leaving in the sale of a beauty business. The unknown is what is scary here, getting into the know is the best way to handle emotions and manage expectations in a business acquisition.
How Long Have Salon Employees Worked There?
If the beauty business you are about to buy has people on staff that have been with the salon for years- this is a good sign. Longevity is attractive and loyalty is an incredible aspect of business ownership to inherit.
This is not to say if the staff is more green that you are more likely to lose employees… happy salon professionals stay, unhappy pros leave. Longer term employees are clearly happy where they work and newer salon professionals are still learning their craft.
Why do Stylists Quit?
Asking the salon owner why stylists have quit their business is a great way to get insight into what has gone wrong with management. Maybe the current owner isn’t exactly warm and fuzzy or maybe the pay is too low.
There are several reasons stylists quit- most of the time the stylist outgrew the ability to earn and live as they see fit OR they don’t see eye to eye with the salon management. If the seller gives general reasons they have lost staff, ask about the last 3-5 employees or booth renters they have lost to get a more detailed response.
How Does the Beauty Business Recruit New Employees and Booth Renters?
One of the biggest lost opportunities with beauty businesses is the knowledge of how to recruit and grow. This is especially true with sellers over 50.
Ask the seller- What are the salon recruitment strategies that have yielded the best results for the business? You will likely hear a bit of complaining and excuses with this question- this is good as it means a huge opportunity for your future business.
Beauty industry recruitment is successful with consistent and forward thinking efforts- something owners often do not practice. Consult with a salon recruitment expert, learn where your ideal hires hang out and make an effort to alleviate this common issue with owners who have lost touch with today’s recruitment strategies.
Personalities of Salon Staff
Asking the seller about the different personalities in the salon is helpful to gauge who may entertain quitting, should you buy this salon. Who gets along and is friends? Who causes the most trouble? Who is most helpful and who is the most motivated?
Understanding the personalities you will inherit will help to set you up for long term success!
Announcing New Ownership of a Salon
The big day has come- you bought the salon and now it’s time to make the announcement to staff. Below are a few tips on how this is best handled:
- An announcement works well when a current owner announces the change in ownership. This should be a very positive chat with the staff, the former owner should pump you up and make the conversation ALL positive to build trust and comfort for you as the buyer.
- Buyers should make a strong, positive and genuine first impression. Bring treats for the staff, smile during the meeting and immediately start engaging with the staff by asking questions and making eye contact.
- Ensure the staff that no negative changes will be made, you are growth focused. This is the staff’s biggest concern- how will this negatively affect me? Work to calm fears and make it known that you are invested in the beauty pros and their happiness.
- Tell them why you love the salon and include them in the reasons. Compliments get you everywhere and personally building up the team pays off in spades!
- Encourage employees to talk with you- communication is key to squashing fears. Being approachable, fair and open minded drastically helps employees learn to trust and like you.
- Ask for grace. We are all human and if the staff knows you are not perfect and you have a lot to learn, they are more likely to support you in business ownership.
- Hammer away at positive change and growth- ask for feedback on the way the business has been run to dig into potential areas of additional growth and positive change.
What the Salon Staff is Thinking
Change is hard- even good change. As a buyer, you are probably wondering what the salon employees and or booth renters are thinking.
You may have been met with a bit of uncertainty or hesitation from at least a few of the employees. This is NORMAL! Familiarity, time and consistency will help to ease apprehension and grow into a true team.
Find out reasons the salon employees like working in the business you purchased. These reasons will allow you to focus on what is working and plan to remedy what is not working.
Most of the time, the staff thinks of 3 things- me, me, me! It’s all about them and validating their concerns, hopes and dreams leads to high retention and overall increased workplace happiness.
How Many Salon Professionals Leave Under New Ownership
You know how you get excited over an event or trip and it’s not at all what you imagined? Or what about a problem you dwelled upon, caused yourself stress and it turned out to be no big deal?
That is what worrying about salon employees leaving in the sale of a beauty business boils down to. Rational fears are normal, but talking yourself out of buying a robust salon business due to fears of a walkout are almost always unfounded- especially when you intend on keeping things similar in the business or improving upon what is already there.
Less than 5% of salon employees or booth renters leave, just because the business sells. Of that 5%, 100% of the staff that left was already one foot out the door and would have quit, regardless of an ownership change.
In the first year of business, salon buyers experience a 15-20% turnover when aggressive changes are implemented. When a buyer eases into the business, creates relationships with the staff and follows the salon broker’s advice, there is less than 2% staff turnover.
Conclusion
Whether you are buying a salon business or working in a business that has recently been sold, high turnover rarely happens. Building yourself up with fear over negative changes or consequences in ownership transfers is a waste of time and energy.
With effective communication, patience and an open mind, the sale of a beauty industry business is often a very positive change for staff. The unknown can be scary in any life change- most of the time the fears and assumptions we build up in our minds are far less impactful than reality.
If you are in need of help in a salon industry acquisition as a buyer or a seller, reach out to us for expert advice!
Yours in service,
Susan Wos, Founder Salonspa Connection
