theGuideline: No. 71 [Buying a Barbershop]

theGuideline

No.71

Hey Reader,

I got some big news! I'm in the process of buying a barbershop. I've never bought a business before, so this is new territory for me and I've already learned a lot.

It's funny timing because almost a year ago, I wrote this blog "Your Exit Plan: Selling Your Barbershop". Since posting, this blog has become one of my most popular blogs, probably because there aren't many people talking about this topic.

I can't share all the details of the shop I'm buying, but I do want to share about the process in case you're curious to learn more. Without sharing the exact number, let's just say this shop is being sold for very little. It felt like a possible scam, but when you think about it, it could be sold for less. Let me explain.

Little Profit

Let's be honest, cash dominant industries have a history of under reporting taxes. So, the older shops that are cash only aren't making much money on paper.

When you go to buy a business, the buyer will review the profit and loss statements to evaluate how much money the shop is making. This helps justify the selling price.

In my scenario, the profit and loss statements showed the shop was barely breaking even because of how much the business owner was reporting. The owner was thinking short-term, not long-term.

Short-term thinking sounds like this: "If I report less income, then I'll pay less taxes."

Long-term thinking sounds like this: "If I report all my income, then I'll be able to show how much the business is worth. So, if and when I ever choose to sell the business, I'll make more."

No Reports

Welp, this is the problem with many walk-in, cash only shops. There is no master list of clients. No evidence to see how many clients the shop serves daily. No contact list, no client emails, no phone numbers.

This is the exact scenario of the shop I'm buying. 35 years in business, walk-in, cash only shop with nothing to show for it.

This is a major benefit to barber booking apps. They do the work for you. They collect names, emails and phone numbers. They have reports of clients, services, income etc. You can export those reports to show proof of where the numbers come from.

Mixed Feelings

On the one hand, I am grateful for this amazing opportunity to buy a business. There are small changes I'll make that will make a huge difference and will increase the valuation of the shop.

On the other hand, I feel sad. This barber was in business for 35 years. The children thought they would be able to sell the business for a significant amount of money, inheriting some generational wealth.

Unfortunately, the business model of their father's shop had too many holes and the price was a reflection.

Look for Opportunities

I'll end with a quote from my blog:

As OG barbers near retirement, I’m really curious to see what buying shops will look like. Every city likely has the OG shop with a barber in their 70s that is coming to the end of their career. Buying an existing shop from one of these retiring owners can be a great opportunity for the next generation to step into ownership. It can also be a great opportunity for an established shop to expand their brand and add more locations.
Unfortunately for the OGs, but fortunate for the younger generation, I think barbershops will sell for a steal because the shop owner will have no idea the true value of their shop. In other words, it will sell for a fraction of what it is truly worth. If you’re looking to own or expand, keep your eye out.

Special Feature

I got my ticket! Will I see you there? If you are a shop owner, I actually have a discount for you. Reply to this email and I'll share more details.

Do you want to be featured?

Last but not least, I'm always on the look out for headlines taking place across the industry and would love to feature you.

So, if you are hosting an event or releasing a new product and you want it to be featured in theGuideline, then this form is for you!

Alright, finished with No.71. See you next week!


Whenever you're ready, there are 3 ways I can help you:

  1. Creating Your Barber Budget: a 21 day challenge to help you figure out how much money you actually make.
  2. Passing Your Barber Exam: online course that helps you pass your barber exam
  3. Creating a business strategy: The Barbers' Playbook features 10 essential strategies to help evaluate & grow your business

Written by: Matthew Mendoza​​

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I write a newsletter, host a podcast and teach workshops to help barbers level up their business.