Business for Sale, Would I Buy It? | Massage Studio

Alright, so, in this version of “Would I Buy This Business”, we have a massage studio. And the highlights of the title are its “open, operating, and revenue-generating”. Okay, well, I hope if you’re selling an existing business that it’s open and it’s operating, otherwise what you have is an asset sale. You have a business that could be something but isn’t currently. So the fact that their highlighted facts for this, their title for this business is that it’s open, okay well that’s pretty underwhelming, right? Every business for sale that isn’t an asset sale is open and operating and generating revenue. So maybe that’s just a bad effort on writing titles. Maybe it’s this broker’s first listing. But that does not catch my attention in a positive way. 

But let’s look at the number. So asking price 625,000, revenue [1,112,584] million that’s pretty solid. I would say that you could definitely describe it as things other than open with over $1 million in revenue. And cash flow [170,178]. So right there 170,000 cash flow, asking price 625,000, that’s probably too high. $170,000 is not a ton of money for a business that’s doing over $1 million, that’s a service business, and shouldn’t have really any expenses besides paying rent and paying the masseuses. So where is all the money going? Are they blowing a ton of money on ads or is there something else going on? Are they bad at staffing? Or I don’t know, I don’t know why else. I don’t know why this would be such a low-margin business when there’s really no product other than the labor of the masseuses. So that’s a little bit of a mystery. But the asking price is definitely too high for the cash flow. 

Let’s take a quick look and see if anything else is jumping out at us. So established 2008. Good, they made it through Covid. Or seemingly they did. They’re open again now. It says wellness focus personal service. Save time – no – no – train staff and 3 experienced supervisors in place. Well, maybe that’s more supervisors than you need. Three supervisors and staff I don’t know – oh 31 employees. I mean I’m sure a lot of them are part-time and it only says – let’s see – Six rooms and two couples rooms. That doesn’t seem like enough rooms for an operation this size. And obviously, once you get to full capacity you can only do eight people at once, which is capping your ability to grow. So I don’t know, there’s something a little off with this business, I can’t put my finger on it without doing more research. The price is off. The margins off. I mean I think in general a massage business is a good business. The hard part is finding enough staff cause you need a lot of staff to have people always available to do it when somebody walks in and makes an appointment. But that’s really the only challenge in this business, there’s nothing else tricky about it. And it should provide a good profit margin. So I would look into this one and see what’s wrong. Is something that you could fix? And then if you can get it for the right price might be a good deal. At this price, it’s not a good deal. And if what’s wrong with it isn’t something you can fix then I would pass and look for a better massage business to buy than this one.

Here’s a little about this series. CapForge’s owner and founder gives us a little behind-the-scenes on what a good or bad business would be. CapForge helps tons of clients either buy or sell business and Matt was a business broker before starting CapForge. Let’s look at some of these businesses for sale and see if Matt would be interested in buying them.