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Purchasing a massage business
I am currently in talks to buy one half of a massage business with another massage therapist who has built a very sucessful business over the past 13 years. She does approximately 43 hours of massage a week. Her annual income is approximately 100k. The potential for making great money is very real; however, I am skeptical of buying into a massage business due to the fact the only thing I am actually buying is a client list which is not tangible and she is asking 25k. I would like some thoughts.
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Replies to This Discussion
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Permalink Reply by Daniel Cohen on
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What is the space or is this an outcall business? Please give more detail. Are you simply buying half of the client list? From what you describe it sounds like you can make it back in 6 months and continue to grow. If that is the case it depends on your ability to hold the clients. How similar are your massage techniques, modality, knowledge, personalities, etc?
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Permalink Reply by Robin Byler Thomas on
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You have seen her P & Ls for the last 3 years to verify, right? I've heard most buy-outs are able to retain about half the clients if they're lucky; in this case that's still pretty good. If she's staying and actually referring half her regulars on a consistant basis that's even better. Keep this in mind however, my client list is extensive but only 10% are active (people have moved on for whatever reason).
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Permalink Reply by Tammy Wilson on
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There are lot more things that are necessary for all of you to understand while, getting in a business as, she had a business for quite long time and that is why she is having an years of experience and you have to maintain it which is quite necessary for you.
massage tables
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Hey thanks Daniel for replying. This is an actual space outcall is done only in special circumstances. The business location is the most excellent for this town, right on the corner where the two main streets intersect. What it seems to me is that I am only buying the client list and that makes me shaky. Our massage techniques are completely different, basically due to the fact I was trained in Las Vegas within the last couple of years and she was trained in Missouri 13 years ago. Our personalities are pretty close and we are close in age also. Our common denominator is that we both have a very strong work ethic and that is the reason she sought me out. My whole concern is that client lists are not tangible. I was wondering if anyone else may have done this very thing and what was their experience.
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Thanks Robin for the reply. I'm scheduled to see the P & Ls next week. She is staying and she will be referring clients. She has an extensive client list that are no longer active, which I am thinking about purchasing instead. This would be a way of increasing my client list. I do realize I will probably only get approximately 10% in my business but they maybe this would be better than actually
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buying half the business. (sorry for hitting the posting button too soon)
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Buying the inactive list will probably result in less than 10% because of people moving out of town, deaths, infirmity and etc. Only those getting massages locally would be possibles from the inactive list. You might as well do a local mailer for less money. This gets .5 - 1% response. See if you can advertise at the local gym. It should be a better source than an inactive list.
Figure what the space lease benefit is as opposed to setting up new and equipment then add 25% for the customer list. You can offer a commission & on repeat customers from the list for six months.
Other than use of space and an intro to her clients I still am not sure what you are getting. Is there a massage or spa license involved? This ups the price. What amenities does the location have?
If you retain 50% clients at the current cost of a massage it will take 12 months to make back the money from the list. That assumes the clients come back at their past rate of return. What % of your current business does this represent. Can you take on that many new clients to make a profit from expansion?.
I hope this is helpful in your decision making process.
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Permalink Reply by Julie Onofrio on
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There are also many other things to consider...
-will she write a letter to clients referring them to you?
-will she teach you about her clients?
-will she show you what kind of massage she does? Are you a match?
-how does she get clients? will you have access to that stream? as in referrals from doctors or businesses- will she write letters to them saying you will be taking over etc and tell them to refer to you?
and then are you actually going to be moving into her space where clients are used to coming or will you be setting up a new space? I would guess that less people would follow.
How much does she charge? will you be keeping or raising the rates - someone that busy should really have higher than ave. rates.
Will she sign a non-compete that she won't open an office within 10 miles or whatever?
It isn't just the list but what will happen with the list and how active it really is and who the regular clients are- will they come to you?
Julie
www.massagepracticebuilder.com
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Thanks so much Julie. Yes, she is ready to teach me about her clients and yes, she is going to give me all the new clients that come through the door. She actually gets clients from word of mouth, business location and the fact she has been in the business for 13 years in the same location. Due to the geographic location of this town she charges the best rate for this area. I would be moving into her space which I feel is optimal to be able to tap into her client base and pick up on new clients. Our rates are the same so that is not an issue. I was figuring if I should buy the client list rather than half the business I would only get and possibly retain 10%. I really appreciate all of your questions and your advice it has been really helpful.
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I'm not clear what 'half the business' includes -- could you be very specific. What exactly are you buying?
You've spoken of client lists, P&Ls, and future clients -- is that the extent of the purchase?
I haven't heard about physical plant issues -- does the business own the building? Is the space leased? How long remains on the lease? Are there any potential lease issues? Any CAM of note coming up? New roof, parking lot repair, etc?
WiIl you be assuming half of all expenses? Have you run a credit check?
Will she warranty any equipment? I once moved into a retail space and really didn't understand that when the HVAC needed to be replaced the business was responsible for the entire cost.
Why is the woman selling half her business -- are you truly buying 50% making you both equal partners?
Have you ever been involved in a partnership where one of the folks was previously the owner? Seems a lot like buying the home of ones parents, moving in and then expecting to be treated as an equal...THAT didn't even always work well on television.
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