Selling Your Spa: How to Prepare for a Profitable Sale

As a former spa owner and a current spa business coach, I know a thing or two about selling your spa… and I especially know the ins and outs of both selling your spa and how to prepare for a profitable sale.

While most of the spa business-related questions I field are regarding growth (most commonly how to attract aligned team members, how to become more profitable via your services, how to sell more retail, and how to lead your spa biz more confidently), there is one question that always pops up periodically: “How do I sell my spa?”

Whether it be because it’s time to retire, the passion for the spa industry just isn’t there for you anymore, or a sudden change in lifestyle (children and moving being the main two), selling your spa is likely going to become a reality at least once in your lifetime.

That leads us to today’s guide, “Selling Your Spa: How to Prepare for a Profitable Sale”. Read on for my tips and tricks for how to claim top dollar for your client list, space, equipment, and team.

(Plus, are you thinking of purchasing a spa? Bookmark this blog to use as a checklist for what value to look for in a spa you find for sale to ensure you’re making a good investment.)

First Things First: Preparing For a Profitable Spa Sale

Did you know that preparing for a profitable spa sale is almost identical to the process as growing your spa business?

Yes, really!

Like we chat about in my spa owners-only Facebook group, Spa Business Mastery, succeeding in the spa industry boils down to understanding and subsequently capitalizing on your business’s value. The energy and effort you put into selling your spa needs to be equal to the energy you spend fixing its problems before the final sale; this often means that, if you’re selling your biz because you’re simply at your wits’ end with how burnt out you are, you may find that, in fixing these problems, you’re able to move on with leading your business in a new and improved way!

Selling Your Spa: A Value-Based Checklist

Not sure where your biz stands in terms of value? Here’s a handy checklist of non-negotiables that you need to figure out before you put your space up for sale:

• Profitability: Let's have a virtual show of hands… Do you know your profit margins? If not, correct that ASAP! So many spa owners don’t know their profit margins (especially including overhead and labour expenses!) This puts them at a major disadvantage when they go to sell their business, as, when asked, they don’t know what their spa’s profitability is and can’t put an accurate price tag on it
• Pro Tip: Only give your numbers to serious offers! I highly recommend asking your accountant to create profit/loss & balance sheets together so that serious buyers can see the tangible profitability of your business and know that they are investing in a successful brand
• Structure and Scalability: Whether you’re a solo or a team, structure and scalability is key. Asking yourself how you or your team is performing in terms of sales is key to determining the scalability of your business. For example, have sales been stagnating for years but your commission is still at 50%? If so, you’re not just losing money; you’re also not in the financial position to scale your spa business. Letting go of negative or underperforming employees, restructuring compensation, cutting out low-performing services, upping your ecommerce offers, or overhauling your marketing systems is crucial for remedying a lack of scalability 
• Pro Tip: Buyers will want employees who are interested in selling both services and retail! If you’re finding that the bulk of your team is not willing to do both, it’s time to reshape your sales system & retrain your team and hires new help before passing your spa biz off to a new owner
• Systemization of All Business Outcomes: If all of your systems and operating procedures are only stored in your head, whoever takes your spa business over will have a headache figuring out your undocumented policies and protocols. Systematizing your team growth, marketing, and sales via handbooks or digital records adds enormous value to any buyer and will reassure them of your spa’s potential
• Pro Tip: Treatment protocols, including room & bed set-up expectations, client-facing protocols, sales systems, marketing systems, commission policies, business value policies… As a spa owner, you can never have too many systems documented and standardized. If you don’t know where to start, download the Kirsten Foss Coaching Spa Team Handbook Template and Walkthrough to make the documentation process a cinch
• Client List: A client list is going to be your main sale if you don’t have a solid structure or documented systems in your spa business. However, a client list is a bit of a “house of cards” to sell the list because there’s no guarantee that the clients will stay with the new owner. It’s goodwill! Your clients came for you, so it’s a certainty that not all of them will stay with your business once the face of it (you!) leaves
• Pro Tip: Standardizing your protocols and systems, ensuring your profitability, and ensuring that your spa’s structure is rock-solid before you hand your keys over gives your business the best shot at retaining its clients. If clients can be assured that little will change, they are more likely to put their faith in your biz’s new owner
• Equipment: Finally, a piece of the selling puzzle that’s easy to sort out! I highly recommend getting an accountant or bookkeeper onboard who can tally the depreciation of equipment value, how equipment leases factor in, and any other professional tips they may have regarding getting the most bang for your buck regarding spa equipment
• Pro Tip: Get that bookkeeper or accountant onboard sooner rather than later! Success is a numbers game, and you don’t want to leave money on the table by hiring help at the last minute
• Inventory: While inventory is typically included as a separate transaction vs. being included in the sale of a spa, buyers do usually purchase all remaining inventory. To prepare for your sale, it’s recommended to do a full inventory audit in order to get rid of any dead stock and make a sales strategy for moving more retail on a regular basis
• Pro Tip: Don’t forget to audit team retail! Identify the retail items that are lagging behind and plan for more in-depth sales training to rectify this before the sale of your spa business. What isn’t selling? What’s sold really well? Which team members are faltering with sales? Knowledge is power, especially when it comes to inventory!  As a rule of thumb, if retail sales are under 30% then you should be seriously rethinking how you’re tackling retail sales issues
• Gift Card Sales: Often forgotten, providing the income for any and all unused gift cards is a must when selling your spa. This is because you will need to give the new owner of your spa business the outstanding money from those unused gift cards
• Pro Tip: I always, always recommend to keep gift card money in a wholly separate bank account and then, at the end of each week, move it over into your main business account as needed. This is to prevent getting yourself into a sticky situation by using it as cash flow.

These Are the Tips I Learned From Selling My Own Spa Business 16 Years Ago. Are You Ready to Implement Them?

So you see, prepping to sell your spa is quite the same as preparing to grow! You need the same structure and systems that are profitable and scalable in order to get top dollar for your spa biz.

If you’re ready to make plans for your spa business exit strategy but aren’t sure where to start, reach out today to chat; I’ll help you prioritize!