sarah romer thank you for joining me today on acquiring minds nice to be here well thanks for having me i'm really looking forward to this conversation sarah we talked last week and i heard the entire story that you are going to share now with the audience you acquired a salon in 2015 and turned it around grew it and sold it in 2018 uh and while that sounds like a perfect kind of business story in fact it was a rocky three years uh so lots of lots of interesting details to that story the salon was in austin is in austin texas uh on sixth street on on the west end of sixth street which is kind of for people who know austin um you know the east side is kind of the nightlife side of um end of sixth street and the west side is kind of the retail uh higher end end of 6th street and so that's where the salon was very central great location so to kick us off sarah why don't you just give me two minutes on your professional background prior to getting an interest in buying a business and what led to that interest to go out and buy the salon yeah um sure well i started my career actually in washington dc i'm not originally from austin but i spent their first five or six years post college selling advertising for different publications um including the washingtonian magazine which featured lots of retail restaurant you know salon spas in the dc area um and then i spent several years working for groupon also in a sales and market development capacity working with local retail businesses like salons spas restaurants theater companies to offer deals on groupon and during that time i just became very interested and excited about just the inner workings of learning how different types of businesses ran and you know how they were staffed and how they marketed themselves and um and i i had just a ton of admiration for the owners that i worked with i thought oh my gosh you know this person is a big figure in the community and they're running this business and you know even though i was in some corporate roles you know from local to larger companies i really just admired and kind of set my sights on being a retail business owner without really understanding what that entailed it just became kind of a career goal for me after working with many of them on the vendor side okay so you are in dc developing admiration for small business owners you and your family move to austin texas so bridge that gap then what happens that makes you actually want to go out and do the thing yeah so the move to austin was for several reasons i grew up on the east coast but i was ready for a change of scenery my husband was as well and we had some family that was already in austin and coming from the dc metro area which was very expensive um as at that time you know it still is we were ready to buy a house and have a family and we just wanted to be in a smaller market where we could afford a certain quality of life um and also in the back of my mind you know i thought well maybe that i could own a business if we lived in texas i certainly couldn't imagine it you know financially living in dc because of the cost of living in the requirement that i had a you know we both had two big salaries to pay the bills um so we moved to austin in 2012 and i was not quite ready to take the leap at that time so i ended up with a job at paypal for three years in austin i'm working with a team that was based on the west coast and some in the austin office but again i found i sought a position where we were working with local business communities so i helped drive a adoption of paypal's mobile payments at that time it was a way to pay through the paypal app but we had to go and just knock on doors of local retailers restaurants coffee shops food trucks and see if they were willing to take paypal's payments this is before apple pay was a thing um is this kind of like paypal's answer to square yes very similar to square you could take a credit card through a phone or you could also check into the business via wi-fi and connect your paypal account to their point of sale so um you know very quickly when upon moving to austin i started to get to know the owners in austin as well and you know even when i took that job my boss at paypal when he was interviewing me he said what do you where do you see yourself in five years and i said i want to have my own business but i'm not ready to do that yet and i want to learn more about payments and point of sale and uh he said that sounds that sounds good to me so so they hired me at that time um but you know in the background of working my paypal job i just started to look for opportunities to really take the next step into business ownership um and the first place i thought of was looking at i looked at franchise opportunities quite a few um before i came around to the idea of actually buying an existing business two questions on this sarah so you were basically working in tech you weren't a technical person but you were working at these tech companies big names groupon you were actually there in the very early days and kind of wrote that up during that those rocket ship years for that company and then of course paypal is a is a is a blue chip tech company as well so much of entrepreneurship these days is associated with tech uh and but you are you're drawn to the kind of the small business retail um entrepreneurship was there any part of you that like why not the the kind of the tech entrepreneurship path since you were in your corporate days that's where you were working and what you were seeing that's a good question and you know i it never even crossed my mind that i had the skills or the ability to start my own tech company and really i couldn't imagine owning a business that i couldn't physically see all you can see is the retail landscape you know and i know now that there are so many businesses that just operate you know professional services and things that you don't see but i was really really focused on the retail segment because that was about as far as i could imagine you know based on my view of the world at that time yeah and then in terms of becoming a small business owner it sounds like you were basically already decided that you would acquire a business you're gonna about to tell us the difference between acquiring an independent business versus a franchise but what about founding or starting a retail business from scratch did that cross your mind um it did and i really kind of rolled it out because i know my strengths are more um on the operations side and i i felt very confident in my ability to operate a business i did not feel confident in my ability to start up a business from scratch and grow it to something that i could then operate i didn't think that i had any great ideas that someone else hadn't thought of before um so the franchise model made a lot of sense i thought well if someone else has the idea in the playbook you know i could execute it and operate it um and i went down the path you know discovery process with several different franchises in the health and wellness space a massage chain a nail salon a men's grooming operation and i got very close to proceeding with one of those and i had hired an attorney to help me review all the franchise docs you know 175 pages of it and he made it really clear to me he said that you know sarah i hope you understand like once you sign these papers and you you know you do this deal you're not really going to have any ability to make decisions on marketing or strategy you know you're gonna have to follow this playbook and the only thing you're really gonna be able to make decisions about is staffing hiring and firing and managing people that's what franchises want you to do and i took a step back i thought that's not why i'm doing this i really i i believe in myself i believe i'm capable of more than that not just the staff management so that was when it first occurred to me to look at actually buying a business that already existed well it's funny because what you just said about yourself and your strengths that your strengths are in operations and and i feel like franchise yeah that what they a franchise or wants you to do is hire and fire but also just be a really good operations person that's they just want somebody in there to operate an operator um and so once you this was put to you as something that um really that's all it was you realize in fact that you thought you had potential beyond that you did want to exercise some creativity did want to exercise some strategy so you you get close to signing on the dotted line your lawyer talks you out of it uh lawyers do that and then what um so then i don't remember which came first the franchising or the biz by sell but i had a good time just browsing listings of businesses for sale on bizbuysell.com and i would hone in on austin and every you know month or so to see if there was anything new and there's a lot of small businesses you know pool cleaning routes or bread delivery routes that's right and i came across a listing that looked really interesting it was um top austin salon and spa downtown on sixth street i don't know if it's at six street but it's in downtown austin 20-year legacy in the community uh inquired for more details so it didn't say what it was but i had enough information and i had a sense of the location that i was really interested in it so i applied and got through the vetting process that the business broker put me through and and began that process so tell us what you found um so that would have been fall of 2014 and what i found was a business that had been open since 1995 in the same space on sixth street uh bella salon still there in austin today and it had been founded by josh martin who was a really well-known talented hairstylist and he was still owning and operating the business and working behind the chair doing hair and it was really his life's work he was in his early 60s but he was trying to sell the business because he had some health issues he actually had cancer that had he had battled it he got better then he had gotten sick again and he really just wanted to transition the ownership of the business to someone else who had the you know the opportunity to run it while he continued to do hair as long as he was able to so i met him in person i was really impressed with him and his story um and wanted to proceed in the process and went and got into this due diligence you know looking at the numbers and the books with josh and his business broker and real quickly realized that there was just a huge gap between what he was asking for the business and he felt it was worth um which was 450 000 which is not you know for his life's work that was it felt reasonable to him but the numbers did not support that valuation i couldn't even come up with something close to what he was asking for um and what really had happened with the business after looking through the numbers was it was a huge operation in the 90s it was the only salon spa like it at that time um and i think at one point the rumor was i didn't see any um paperwork but it had been a four million dollar operation but over time a lot of the stylists who worked at bella left bella and went to open their own salons or their own spas and there are at least 10 other businesses now in austin that are run operated by people who at some point got their start at fellas so it was a huge operation for a long time uh and then it just kind of uh slowed down and and got a little bit smaller and um you know continued to hum along but not at the same level of prestige and and success financially uh so josh the owner you know he was still remembering the good times and that was what he thought the business was worth and when we looked at the books it was just not even close so i i walked away from it i said i don't think we're gonna be able to agree on this and i'm gonna keep looking sarah let me jump in with a couple questions so um first of all how did you know how to value a business like what calculations were you doing to decide that it wasn't worth the 450. did you just google this or did you have some some help or what like yeah like people doing this for the first time they often know nothing about um how to value a business so yeah so there's a pretty simple formula for salon spas and my uncle is actually a business broker he operates in south florida and yeah it's somewhere between two to three times the profit or owner's discretionary income is the value of the business so i'm looking at the numbers and i looked at a few years and there really wasn't much profit there was a little bit of profit but the real kicker was that josh as a hair stylist was still in a produce he was a producer for the business so his clientele generated 300 000 a year of revenue out of the million dollars in in revenue for the business and with the uncertainty of josh's health and his ability to continue to serve those customers it was just really hard to assign any value to the business that was associated with the profit because that was in jeopardy really yeah yeah because of his health yeah and aside from that question would you have been nervous to have the seller in the business you know oftentimes the conventional wisdom is kind of that you want a clean break with the seller um not always but often so did that was that a red flag to you or were you fine with that maybe maybe it added some cachet to the place to have the original sounds like he's kind of famous in in that community maybe it would have been good i would have actually enjoyed having him in the business and look forward to that you know he was a creative and he was um he would have it would have provided some continuity and some security i think in buying it to have him there even uncertainty around how much work he could do yeah so you you choose to walk away you don't you don't even present a counteroffer nope i didn't make an offer i just thought a lot about it and then just walked away because i thought it was just i didn't want to offend him and uh by lowballing him so i just walked even though you thought you really you didn't it wasn't necessarily a lowball it was really a justified offer but it was just so far from his 450 that you thought it would be perceived as a low ball and insulting okay so then what happens um so then i go back to work at paypal i find that i'm pregnant with my second child and i thought this is fine i have a good job i'm just going to keep my head down and um you know have them grow my family and i'll just figure this out someday are you still checking biz by cell on a monthly basis i was a little bit yeah um and then six months go by i'm seven months pregnant and i found out that josh martin the owner of bella had passed away unfortunately um and i inquired with the business broker hey whatever happened did you did you is there a new owner and he said no and in fact what are you doing because we we still you know we're we're at the end of this process we haven't found someone to buy the business and the lease on the space is up this year the landlord is ready to put a for release sign in the window um you know it just it was an opportunity to take advantage of the fact that no one had bought it while he was around and he had a family friend that was still trying to operate it and find someone to take over uh okay can continue and and so then what so so then i didn't feel so bad about making my low ball offer and i'm just gonna look at the books and then it was clear to me you know i could clearly make the case that well all this revenue that's on the books that was being produced by josh we don't know if this revenue is going to continue if these customers will see a different stylus if they'll go somewhere else so i made a very low offer to buy the business and did a little bit of negotiating and ended up with a deal to acquire the business for 80 000 which you know significantly less than the 450 that josh had been asking and i you know as far as my due diligence i did not spend a lot of time um really checking and double checking the numbers i just took the p l for face value and i looked around the building and i just saw opportunity um it was 5 500 square feet of space that had been built out into a salon spa there were salon chairs and mirrors and computers and a front desk and retail inventory and the place was filled and it was operating and it was what staffed and there were customers so to me um you know i couldn't imagine a better opportunity to get into something you know and and just do you know maybe try to make something out of it 5500 feet sounds like pretty big is am i right is that a pretty big salon it's very big um and that ultimately became one of the biggest challenges was covering you know growing the business to a level that could support the overhead and the rent for a space that big but we had 18 styling stations for hairstylists we had a little room for nail technicians we had six spa rooms we had massage therapy skin care estheticians um shampoo room i mean and we also had a cafe that was it was sublet to another operator who ran a little restaurant out of the side of the salon because when it was originally built in 95 that was part of josh's vision was to have a baseball with the cafe and then he um outsourced the operations so it was huge really and it was one of the biggest challenges of the whole thing yeah but i can imagine from the outside looking in you know walking around this impressive space in an incredible location in austin that for 80 000 you just kind of feel like you know there's a lot of room for error here because it's a really low purchase price who are you negotiating with exactly how does that work when the owner has passed and and somebody else is selling the business i guess on the behalf of the estate yeah it was a close friend of josh's he did not have any family that was willing to take take over the the business um and the business broker who was working with josh while he was still around really wanted to see that the process through i think he had um you know it was they there was a lot of um people really really adored this man and just wanted to see this business continue you know sort of as a tribute to his legacy and the work that he did when he was when he was there that's great and just before we now get into you putting on the ownership hat um a quick step back when you were looking at businesses or looking at biz buy sell did you have a sense of what your budget would be like had bella really looked like a strong profitable business that first time around when it was for sale for 450 was that was that a price you were prepared to pay for some solid business what was your criteria that you were looking for yeah it was high um in my mind i had a budget i had about a budget of cash that i was willing to part with and risk in a venture like this and it was the two to three hundred thousand dollar range and that was sort of enough for me to pursue some of the franchise opportunities that require you know sixty thousand dollars down and um a build out of a of a retail space so to me you know to pay 80 for the business that left me with another two hundred thousand dollars that i was going to put into the business as needed for operating cash and renovations and things like that and so you didn't even finance it you paid in cash that's right um and to be honest i didn't even know i could finance it i just thought you had to have that cash and you know my budget was my budget and whatever i could get what i got yeah well learning about the fact that you can finance a business acquisition is something that we all come to late and it's a big theme of this podcast okay so you acquired it in cash you you um you kind of didn't do the most rigorous diligence in the world because you know you you looked around and you just saw opportunity everywhere what did you uh imagine like what value did you imagine adding like why why is sarah romer who you know comes from you know working corporate jobs at tech companies what could she bring to the salon business to any salon business the biggest thing i saw with this business in particular was just it there was a lot of opportunity to modernize the business this was 2015 and the space had been built out in the 90s the technology had not caught up you know i saw some of my strengths in both sales and marketing and technology being a real asset to restoring this business to its its former glory uh the first things we did were that you know i took some of the the budget i set aside we did um we did some renovations we painted we put new artwork we got a new front desk we put new signage on the outside we rebranded the whole thing i hired a designer to help me with a new website and imagery for the website um really just try to bring the business into the the 20 2015 um you know visually and with technology uh and that part was a lot of fun i you know very it was very obvious to me what needed to be done um another thing that i i could tell by looking at the p l that i was gonna have some success with was just cost control and expense management you know this um gentleman josh had been so busy doing hair and taking care of himself that he really wasn't paying a lot of attention to the expenses um and i remember looking at the p l and seeing things like six hundred dollars a month for internet like that's six hundred dollars worth for internet i wish i could save you know 400 a month right there so yeah um we did i did a lot of shopping for new vendors and was able to both save money and improve the technology you know we quickly got a voip phone system and we used to have a landline you know old-school phone system that cost a lot of money to have different lines that ring in different parts of the salon and uh the new system was you know third of the price and we could text message the clients from the front desk so um the combination of marketing you know new technology and cost reduction was i knew that i could could do that right away great and then uh conspicuously absent from that is all the all the people issues which of course which is always always that where people get tripped up in a transition so talk to me about uh talk to me about that piece which of course is that really the big story here yeah so you know something that i didn't really understand when i bought the business and was fantasizing about being a salon owner in austin was that the product we were selling is produced by people it is a service business and um you know a haircut it's not just a haircut it's being performed by a person so i when i bought the business i inherited 31 employees and the the majority of the employees were service providers but then i had some administrative staff as well front desk bookkeeper manager um and you know in my mind i had been studying the business for several months before this deal actually closed so i already had a list of 100 things i wanted to do like right away to turn the business around and get it making money again and it was just not that easy because i i didn't think about you know how was i going to get these people to do the things that that were on my to-do list and that became really the biggest challenge and where i made the most mistakes um you know that first year for sure what was your experience in managing people prior to inheriting 31 employees at the salon i had management experience so i actually thought you know oh i know how to manage people but it was always as a middle manager where i had you know worked my way up as an individual contributor into some leadership position where i had a small team or i was a player coach one of my roles at groupon i was a regional sales manager so i had maybe between eight and ten people at any time who were doing who were selling um but the difference was that they you know the people who worked for me in those roles were doing work that i had done i was able to lead by example and yeah i had some expertise where i come into the salon and i didn't go to hair school i don't know how to do hair you know not only do i not know the craft i also didn't come from the same place that a lot of the staff came from you know um hair and beauty services it's a trade and a lot of um you know a number of the stylists learned in high school they got they trained they trained in high school and they got a license coming out of high school or they went right from high school and they got their beauty license after high school um several people did actually get a bachelor's degree and then decide to go in that direction but it was just a um you know we had different backgrounds and it was not as easy as i expected to relate and communicate with folks who just came from somewhere very different than than the path that i had come up from are there any examples that come to mind of things that you wanted to change that were going to require the getting everybody on board and that you encountered resistance to oh yeah the first thing um one of the first things i knew that had to change was our pricing structure so every service provider at bella is a w-2 employee but they're commissioned employees so they receive a percentage of the revenue that they generate through their services and in most salons like that there is a pricing menu that is set by the owner and the stylists do the provide the services and they charge the prices that the owner sets and what i inherited was a business where the w-2 employees set their own prices so you call it up and you call the salon and say well how much does it cost for a haircut and the front desk would say well who are you trying to see well i don't know i'm new in town oh well uh keith's haircut is sixty dollars and steven's haircut is eighty-five and someone says haircut is you know a forty um and it's okay to have levels but there was no rhyme or reason to it it was just that each service provider set their own prices they were allowed to do that and that was a problem to me because we were going to be doing a lot of marketing for new customers and it just needed to be more clear to a new customer what they would expect so we created a matrix based on the level of experience that the stylist had they were either a stylist a senior stylist or a master stylist and then each service had three different prices depending on the service provider's level of experience um but what i found was that there was a lot of resistance even from some stylists who were really talented and had a ton of experience to charge appropriately they just weren't comfortable asking um their long time clients to pay 15 more for their haircut they had been charged in the same price for 10 years and it was a you know just a personal thing where they they weren't valuing themselves with the way that i saw their values so you know that it took months of um you know we had to give notice to all the clients that the prices were going up here's our new menu we were handing menus on the way out the door hey in a couple months we're gonna have these new prices put it on the website but when that time came to actually charge those prices some of the stylists were so anxious that they were gonna lose their customers because they were charging more and they didn't realize what they were you know they just didn't associate their worth with the a market rate for their service um yeah so that was a really uh something that seemed obvious and like was going to be good for everyone to me was a very hard thing to manage it with the team and you weren't you didn't share their anxiety that in fact that might drive some customers away um i did i did a little bit but you know we felt like anyone who's not going to pay at least 50 for a woman's haircut is not that's not our customer you know we're we're serving a this is a luxury experience they're getting a scout massage and all these other things coming here um it's okay we're getting we're gonna get new customers so so did uh it took longer there was more resistance but did this plan ultimately work was there attrition like what did your what did those 31 employees that you inherited were they all still there a year later 18 months later how did that play out yeah that's a good question will um the pricing example was not really the reason why we had any turnover um but the a component of that was that we had a number of stylists who you know partly because the previous owner was not paying attention and he was focused on himself really um were coming and going and and operating as if they were independent contractors while they were receiving the you know stability of full-time employment um and the pricing example was just one example of some folks just didn't want to have someone over them telling them what they were going to do so you know someone who says well my price is going to be 75 and i'm not gonna you know go with your new pricing menu and we did have some turnover we had a lot of turnover the first year um and it wasn't any one thing that i said or did it was really just the fact of there being some um you know ownership who wanted a consistent experience for the customers and was putting standards and and process in place that folks who just wanted to operate independently didn't want to participate in um so i really didn't lose service providers to other salons that were like mine with an owner where they you know had to follow someone else's roles most of them that left went to um what we call booth rental you know an independent contractor arrangement where they rented their chair and then they could do whatever they wanted with their prices or their operating hours or you know service protocols so that is a model in the salon space in some people who do here choose that model prefer that and some do w-2 and you basically wanted to make yourself it was already a w-2 shop but it wasn't really behaving that way and you wanted it to yeah wanted everybody to be on board with that model yeah and it needed to be because we were spending the money and the time on marketing and branding and attracting new customers and i could not attract a new customer into an environment and experience that i had no control over um and that's what was happening at the beginning was you know um it depending on who the person saw they had a totally different experience and you know in some ways that's okay but there we just needed we needed more consistency than we had the previous owner's name the seller the gentleman was josh it sounds like i'm envisioning like josh was kind of it was his place but he didn't he wasn't an authority figure he wasn't people's boss he was just kind of among everybody else but it was it happened to be his place and so is that is is that an accurate characterization so when you come in and it's kind of like no there you know there's a new sheriff in town it was it was a bit of a it's just a total change in vibe and atmosphere yeah it's true and you know out of that 31 there were people in the business who are still there now who were amazing to work with who were desperate for some leadership and those ended up being the folks who i had the best relationships with you know they didn't like seeing people coming and going and not having any structure to their day and giving this point guy a free haircut and pocketing the tip you know and charging this with 60 bucks like there there were there there were as many people who were happy to have the the new structure as not but it did you know you asked if i was nervous if customers wouldn't pay the new prices i was far more nervous and on edge about making a big decision and then seeing who which stylists were going to leave um because that was a much bigger deal than losing a customer because with this stylist and they have um loyal clients who want to go see them even if they leave so yeah well when stylist leaving could mean 100 customers are going to go somewhere else sure sure so sarah now that you're in there and you're looking at you know you're implementing these changes what did the what did the money look like once you got in there i mean how profitable or not did the operation reveal itself to be um it was not profitable for the first year for sure um i got into the business and we were doing about a million dollars a year in revenue and the overhead was about a million dollars a year but i had a few months left on the old lease there was a 10-year lease that was negotiated in 2005 that ran through 2015. so the first few months were okay like there was enough money coming in i could pay the rent but then my lease kicked in with new 2015 rent um three or four months into the whole thing right around the time that a handful of the veteran stylist decided they were going to leave and all of a sudden i thought oh my god i'm five months into it and i had um you know several months in a row where the business was operating at about a ten thousand dollar a month loss i thought this is this is not gonna i can't sustain this for very long i'm gonna um slow this so then but then you know the part we kicked in the price increases and that helped bridge the gap um hired some new stylists you know people talk about startups being like building a plane while you're flying it you know it's still sort of the the same thing that we were doing so um but but the first full year was 2016 and i think we had it up to about 1.4 million in revenue but not a whole lot of profit i did take a small salary for myself um but then by 2017 we actually started things turned around we started to do much better well going from about a million dollars to a million 1.4 in a year 18 months of ownership i mean that's 40 increase in in sales that's really dramatic so that that must have been encouraging despite all behind the scenes you're frantically assembling this airplane yeah yeah it was um it was but the expenses were going up too you know i'm spending the money on marketing and i had to pay more to get good people and we were putting people through training and um trying to just you know as fast as the money was coming in i was able to spend it so there just wasn't you know revenue growth was great but it there was a lot of a lot of overhead and a lot of people to pay for sure not the same as profit so sarah tell me like where's your head at like how how is it going i mean okay so it's really challenging um and and that's a theme and all the in so many of my interviews those first six twelve months or daily punches in the face is the is the uh phrase of choice for so many people um but they can see a light at the end of the tunnel is that how you are feeling like talk to me about you know and also now you're that you're you are the business owner that you had my admired from afar you've become that person is it is it uh the glory that you would envision so yeah talk talk to me about how you're feeling during all this yeah so 2016 the first full year i had the business was for sure the hardest year of my life you know personally and professionally i mean i had young children at home i had a business that was originally open seven days a week and we changed the operating hours went down to six days a week somewhere in that year but um it was it was so hard and so stressful and i thought why am i doing that why am i doing this why did i think this was a good idea and it took me until the end you know and the other thing that i i didn't understand was i knew i could get new customers i knew i could um grow the business but i didn't understand how the margins worked in the in the business so cost of goods you know sure i can grow the business but i have to pay a lot of that money right back out to the service providers who are providing the services and um oh we get busier well we gotta hire more front desk staff so my payroll just went up um so even a really really well run salon is lucky to do to have a 10 profit margin you know maybe 15 somewhere in that range and to be doing that kind of business you have to have a very robust retail sales program selling skin care and hair care products and accessories and jewelry so once i really understood what the opportunity was going to be for me as an owner to and i was looking at this business as my primary my only source of income um yeah it started to feel like this it didn't make sense for me uh you know i saw even at a 1.7 million in revenue we were still you know i still had to pay myself and justify the amount of time and energy that i was putting into the business and um i couldn't see myself being able you know another big challenge was i didn't have a full-time general manager to really take the burden of the day-to-day operations and the management of the staff um off my plate right away so it just sucked the life out of me the um you know emotional investment of energy that i put into the team into the business just left me with nothing at the end of the day you know i would leave at five o'clock to go home to my family and was just completely out of gas so by the end of 2016 i thought this is not sustainable even if i grow this business i don't i don't want to do this it's not the upside is not worth the amount of risk and responsibility that i have to these people in this business and you know financial obligations i also signed a the five-year lease came with a 225 000 personal guarantee so if the business closed i was on the hook to pay rent and for the first year until the owner uh the building owner could fill the space so i decided uh after 2016 that i wanted to sell the business and this came from um you know still start some soul searching with my husband but i also had a business coach at the time who was a salon owner and she really pushed me to consider are you sure you want to do this you know you could sell this business to someone else if you don't want to do this like this is you can't change your mind you're not stuck in this forever and that that's what i decided to do at the beginning of 2017. well so the fact that that's an interesting point so are there people who maybe are just so passionate about the beauty business or about hair that they would have been fine putting in the hours that you were putting in i mean was it is it a good business for the right person even if it's a really hard business or is it just like would you advise anybody to just like stay away um it's a great question and it's one of the reasons it did not work out for me because i didn't have a passion for that industry that was not my craft i didn't have a strong enough why and people talk about you have a why if you're gonna go through this journey um however if you are a hairdresser you know for some for some stylist or you know even um skin care providers that is the pinnacle of their career is to have their own business and they can continue to practice and they mentor junior staff um and it can be a good business because they can make a lot of money behind the chair and the business can throw off a little cash and they have a place to work you know so i i think i don't know the numbers off hand but i think there are very few owners like like i was just a business person coming in from the outside where you know most of these successful businesses are operated by someone who came up through the industry and you didn't see a path to get revenue or get profit to a point where you could afford a general manager so you step out and it pays you some sort of dividend or something and you have somebody else in there doing all of the you know 60 hour weeks yeah i figured i needed the business to make about two to be added about two and a half million dollars a year to pay a general manager to do that work and take things sort of income i needed for myself um and i did eventually hire a general manager once i knew i was going to sell it because i started worrying less about my income at that moment and more about passing the business on and you know create an asset for someone else but it would have taken me too long to get there and i just didn't have it in me i didn't have another three or four years to get to that revenue level um where then i could step out and when you hire the general manager to prepare the business for sale essentially that left you with no profit like that you were doing to hire the general manager experiment and finding that there was nothing left over pretty much i mean i was still able to take a paycheck and pay this person but it was not the income that i needed to support my family you did good things at bella though and you were acknowledged for this were you not yeah so by the industry i did i would say a bright spot in all this well first of all i i did i was able to sell the business um for a price that i was really proud of because it was significantly more than what i paid for it and i felt like it represented all the sweat equity i put into it for three years um but as part of the transition from 2016 to 2017 we had another big growth year and i helped the new owner we applied for um recognition in the salon today magazine which is the big trade publication and every year they recognize it top 200 salons in the u.s and we applied for best practices in two categories of digital marketing and growth and we were recognized for both so we got featured in the magazine and got to put you know framed article an award on the wall uh and i didn't find out that we had won that until after i sold the business but it was for the time that i had owned it and it was really um very rewarding because it's not often as an owner that people tell you you're doing a good job people are happy to tell you when you're not doing a good job or what's wrong or they're upset about something your customer had a bad experience but it was really awesome to be recognized you know by the by the industry yeah speaking of the experience of being an owner and and the validation you do or don't get so this experience was a grueling one for you um but a lot of that it sounds like has to do with the industry and the particulars of this story and this salon do you see yourself doing something entrepreneurial again maybe buying another business or have you had it with the whole the whole concept that the the admiring the small business owner from afar was just naive sarah and now you you see what the real deal is and you don't want anything to do with it well so what you just said is exactly true when i think about retail businesses you know the shop on the corner the main street businesses the restaurants there are you know boutiques those folks are the heroes of our communities really because they're working their asses off and they're not getting compensated for anywhere near the amount of work and risk and responsibility that they've taken on to make our communities really unique places so i still have a ton of admiration for those folks but i do not wish to be in a retail business owner seat anytime soon probably ever again but i really did enjoy you know certain aspects of of having my own business certainly making decisions i i mean um i'm very decisive and i'm action oriented so i really liked being in a position to see what needed to be done and just go do it and we work through a you know list of stuff to do very quickly and um you know working for someone else now i still have a lot of autonomy in the job that i have now but um i could see having my own business again but it would be something that is not retail focused you know something in professional services or attacker or e-commerce or something that would allow me to work um you know a little bit more flexibly and not be beholden to retail hours and do you think the format of of acquiring an existing business is something that you'd repeat or would you d does your experience inform that uh or do you feel like you do that all over again versus starting from scratch um i would definitely buy a business over again i mean there still was no way there was no way i was going to get into half the opportunity that i had if i had started something from scratch the amount of time it would have taken me to build a business to the point that bella was out when i acquired it it could have taken five or ten years it took josh 20 years to build it um and i got the goodwill the customer base there were 22 000 customers in our database that i was able to acquire we had a yelp profile that had hundreds of reviews from customers for years and i had that on the day day one my first day of owning a business so there were a ton of things about it that um you know gave me a head start and i would i would consider an opportunity like that again the biggest thing i would um suggest or caution someone who's looking to acquire a business um you know include as part of their due diligence would be an assessment of the team the people and the culture because i did not assess that and that became the biggest challenge for me you know in implementing the changes that i wanted to make but um it might not have been so bad if i hadn't thought through that part and understood and understood what i was getting into um you know and i i think it's an important component but absolutely i mean it's a it's a head it's a head start i think and it it also you know depending on how long the business has been around it really mitigates the risk of starting your own business you know it might not be perfect and there might be a lot of work to do but there's also a lot less risk that's going to fail um and that was true in my case sarah can you share what you sold the business for um i sold it for 475 thousand dollars um and that which is which is coincidentally very close to what the original price had been when you first learned about bella the 450. that's true that's true um and that was a lot you know for a salon that a lot of salads changed hands for more like what i paid than than what i ended up selling it for but the owner who bought it he had a very different vision he's still operating it today um he did not need any income from the business he had uh you know sort of retired from his first career and he was in a second phase of his career in building assets and um and he went and put more money into the business and built out the retail boutique component even more and um you know he's got a 10-year he has a new 10-year release on the space and he's gonna make his money back and then some you know with the plan that he has it's just a very different strategy and vision and needs that he had so i think he's happy to have it i was happy to sell it to someone who i knew was going to carry on the reputation and the work that i had done and um we can still go there today sarah you um talked about who the appropriate buyer for this business might have been and typically like basically a stylist who kind of it's it's a good business to run if you're a stylist with maybe more ambitions than being just a stylist is there anything else about the salon business that um is is relevant to share and i ask just because you do see a lot of salon businesses on biz by cell and so i know that that's um a type of business that just transacts a lot um anything else that uh any pros or cons that that somebody out there might contemplating buying a salon business should know um yeah i think that the two things you'd have to understand are who are the stylists are they you know the the reason salons close is because stylists come and go and they take the customers with them and um that's a real that's really risky and the way to mitigate that risk and to actually make money in a salon is to focus on the retail component um you know we sold about 250 000 worth of hair care skincare makeup um styling you know hair dryers things like that uh and that you know as a retailer you you make 50 of that revenue so we had still say 125 000 of profit from the retail business and that you know the more you can grow the retail side of the business the the more secure and more profit there is in the business and the cool thing about the salon industry when it comes to retail is there's a very um unique combination of service you know when service meets retail retail can be successful so the way we would approach selling skin care is the esthetician who did this facial would have spent enough time with the customer's skin to know that they needed something for you know redness and brown spots and they would recommend on the way out oh you really should take home these products this will help you with the you know issues you're having with your skin um so you know there's there's other um industries that i think have you know the same synergies but um if you can get those two things right and working in sync and you can have your service providers understanding how important it is for the business to also have strong retail component then you really can make some money and be successful um so that you know there's there's opportunity but it it's it's you have to be strategic about it so if i wherever i get my hair cut if they're not selling product of some kind in there or have some carve out for like a little retail section it's probably just scraping by the business and another way to look at is maybe somebody out there looking to acquire a salon uh if there isn't that retail component yet that could be some low-hanging fruit to really juice profits it to introduce that into into islam that doesn't yet have it absolutely yeah cool sarah this has been great how can people reach you if they if they want to uh have your council on acquiring a salon or any council at all yeah you know what's so funny um they can reach me on linkedin you can find me sarah romer austin texas um i'm on linkedin and also email my email is sarah.romer gmail.com um and regarding the salon stuff you know when i sold the business to david who bought it from me part of the agreement was a non-compete he said you can't in this amount of time in this radius i was like no problem don't worry i'll find that i'll turn my life away um but really i'm actually out of the non-compete now so if anyone has any questions about the salon you know salon business or buying a salon i'd be happy to you know weigh in and give my team awesome very cool sarah thanks for joining me thanks for sharing your story this has been great yep you're welcome thanks for having me