Issue link: https://www.massageandbodyworkdigital.com/i/68165
VALUATING YOUR PRACTICE Create a Client List If a massage therapist ever wants to retire or sell the business, he or she must develop a complete and detailed client list including as much information on the clients as possible. It's not only your location or equipment that's worth money—it's your computerized database, according to Michael Soon Lee, of Realty Unlimited. "A buyer of your business will want to quickly establish a relationship with the clients so this list is essential," he says. Whether you are planning to sell your business or not, you'll want to have (at minimum) the following information: • Client name • Address • Phone • Email address • Date of birth • Massage preferences • Names of children, if any • Names of pets, if any • Occupation With this information, a current owner will be able to send birthday cards, provide consistent service, and build a relationship with clients that will tie them to your business. It will also enable a buyer to send a change of ownership letter, special offers, and more. per period and a schedule of rates. "But they must add up to one important point—that there is enough money in the business to pay off the debt, pay the operating owner, and offer a significant cushion of discretionary cash flow in case things don't work out as well as expected," he says. Like most small business owners, massage therapists should keep solid financials on their income, expenses, and profit for the business, Handelsman says. "This will provide them with the information they need to secure a loan, sell the business, and hopefully manage the business successfully. There are many small business software programs, like QuickBooks, that can help owners track this information." Usually three to five years of financials are needed for a business valuation, but "There are no set rules to the amount of time a business has to be in operation to get a loan or sell," Larlee says. "If the business is relatively new, the buyer may use some assessments, like whether the owner has had previous businesses in the same industry and whether these businesses were successful." Larlee says sometimes valuation is driven by past performance and other times it can be driven by future opportunities. "In the massage therapy industry, it will probably be more driven by past performance, so the lender or buyer may want to see at least 12 months of historic performance, and more likely 36-plus months." When a business does not have a long history, the lender or buyer will look at the owners and managers, Larlee says. "From a lending perspective, [the bank] may require a new business owner to sign personal guarantees for any loans—meaning the owner's personal savings and assets are collateral for the loan. From a buyer's perspective, 70 massage & bodywork january/february 2010