PetGroomer.com Pet and Dog Groomer Resource with Grooming Schools

Every buyer has problems determining the market value of a grooming business. Not enough seek professional help from a grooming consultant, or get a formal appraisal completed by an expert in business opportunities.

How many pet industry companies offer consultation services wherein they help you to determine if the asking price for a business is appropriate? You only need the fingers on one hand to count them, and you may have some left over. Have you even seen this service advertised? We haven't in 40 years. Does someone do it. Yes, we're back to our corporate office services, Find A Groomer, Inc. Talk about filling a void in the industry. Fortunately at our workshop we have the time to cover this topic in detail; it takes a few hours hours of training so that makes it hard to train here. However, we do offer hourly services to review documentation and determine if a business for sale you have located is reasonably priced.

Here are a few guidelines. You are primarily buying the clientele of the grooming business for sale. So many owners say they have this amount, or this amount of clients. Well, what's a client. I've seen an ad for a grooming business for sale stating the business had 5,000 clients and the business earn gross annual revenue of $75,000 a year. Oops! If each one of those 5,000 clients came in only once a year (eek! the pets will be in terrible condition too) and the average service fee is a low $25, that alone is 5,000 times $25, or $125,000 a year. So, why only $75,000?

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Obviously this business does not have 5,000 clients. Yes, they may have 5,000 pet owners come in over the years, but are you going to purchase even one client that really isn't? On the average nationwide, a client is a regular visitor and that ranges from 4 to 8 times a year! I assure you we would NEVER pay a dime for even one "client" pet owner that did not come in at least 2 times a year. Even then I wouldn't consider that client worth a lot. Therefore, the seller should make known how much of the client base they are selling are currently coming in for services 4 to 8 times a year. Now you have a real picture of what you are purchasing, and you can better project sound income projections to see if you will have ample income from the business under your ownership.

Are there more variables? Of course. You are purchasing their equipment and leasehold improvements. Perhaps you are buying a mobile business. If vehicles are included in the sale these are important assets. In a commercial location you may be purchasing a nice long lease. But what if the lease is about to face renewal. Will the rent jump? It could. Check it out. Sometimes there are alarming leaps in high growth areas.

Businesses that have been successfully in business for many years have "goodwill" to be appraised and purchased. We took part in a business sale where the logo and goodwill was appraised by three certified commercial appraisers at over $80,000. You know that business was owned by one smart groomer.

Did you notice the term "certified commercial appraiser?" We always require a business we purchase to be appraised by a certified appraiser, and we like 2 or more appraisals. Are you really going to accept the market value placed on a business solely by the owner, or even a Realtor who probably has had no involvement in owning or managing a grooming business? Don't! We strongly recommend that you ask the seller to provide at least one appraisal by a certified commercial appraiser. This professional takes their appraisal very seriously and it is unlikely they play favorites. They know their appraisal must be able to stand up even in Court. If the seller supplies one certified appraiser, supply the second one yourself. Now that's a smart move; you're taking care of yourself!

You must realize that some of the clientele may be lost when the previous owner departs. However, some sellers will stay on as a consultant for awhile, even in the background and support the transition. This can be especially important if you are purchasing your first business. Oh yes, there have been stories where an owner sold a business, and a year later decided to re-enter the industry and opened up a new grooming business near the one they sold! Yikes! Will they take back some of the clientele? Disasters happen.

Talk to your attorney about non-competition clauses in the contract of sale. Wait, did you notice I said contract of sale. Yes, the purchase should be managed by YOUR attorney possibly working with seller's attorney. Oh how many times have we seen problems where everyone was so friendly no one thought an attorney was necessary? Too many. It doesn't cost much to have your attorney to write or review a contract of sale, GET ONE! It's part of being a business person today and you deserve the peace of mind.