Esthetician Podcast; Business tips for Beauty professionals

066: The Unspoken Truth About Selling Your Esthetician Empire for Maximum Profit

• Kari Jo

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Ever lay awake at night fantasizing about selling your esthetician business and walking away for good? That freedom might be further away than you think. 

In this eye-opening episode, Kari Jo Patterson delivers the unvarnished truth about selling an esthetician business - something she learned firsthand when selling her own company. Through two compelling real-world examples, she illustrates why most beauty businesses have almost no market value despite generating substantial income. The harsh reality? When you ARE the business, there's nothing concrete for buyers to purchase or banks to finance.

The episode delves into the critical distinction between emotional value and market value. That solo esthetician netting $150,000 annually might believe her business is worth a premium, but without systems, employees, and transferable brand recognition, potential buyers see only risk. Banks—the ultimate arbiters of business value—refuse to finance acquisitions without tangible collateral and evidence that revenue won't evaporate when the seller exits.

Kari Jo doesn't just highlight problems; she provides a practical blueprint for building true business value. She outlines the five essential elements every esthetician must develop: documented systems that function without the owner's presence, capable employees who maintain client relationships, a brand identity separate from the founder's personality, tangible assets (particularly real estate), and consistent profitability. The message resonates with both industry veterans seeking eventual exit strategies and newcomers hoping to build sustainable businesses from day one.

Whether you're feeling burnout creeping in or just starting your entrepreneurial journey, this episode offers valuable perspective on creating freedom through strategic business design rather than endless personal hustle. Ready to transform your practice from a self-created job into a genuine asset others would eagerly purchase? Subscribe, leave a review, and share this episode with fellow estheticians who need this reality check!

To learn more about coaching please visit: https://www.karijopatterson.com

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Links You May Want to Check out:

Join the Client Building for Estheticians group to go deep in learning all the latest tips and strategies https://www.facebook.com/groups/clientbuildingforestheticians
Check out Kari Jo’s courses here https://esthelaunchacademy.com

Announcer:

Welcome to the Esthetician Podcast, where passion meets prosperity. Your host, Kari Jo Patterson, transformed from a solo esthetician into a successful business owner, achieving ultimate time and financial freedom by the age of 38. Kari is the author of Fearless Prosperity, empowering estheticians to build their empire and achieve financial freedom, and the creator of the Empire Growth System for Aestheticians. Get ready for some empire-building wisdom Now. Welcome your host, Kari Jo Patterson.

Kari Jo Patterson:

Hey friend, have you ever just laid in bed at night and thought I don't want to do this anymore? What would it be to just wake up and never have to think about your business again, wake up or go to work for someone else and just wake up and show up at work at 8 o'clock and be off at 5 o'clock and never have to think anything about your business. Go on a vacation and be with your family, be where you are and not have to think in the background your work. Have you ever dreamed about that? Have you ever thought about selling your business? Well, if so, this episode is for you. I'm going to walk you through the hard truth that nobody talks about when it comes to selling your aesthetics business. And, trust me, you want to stay until the end, because I'm going to tell you exactly what you need to do to build today If you ever want to sell in the future for money. This episode it actually came out of a bunch of conversations that I actually noticed a trend in having talked to different estheticians in the industry, in having talked to different estheticians in the industry, and there is a trend, and there is this trend that so many of these estheticians hey, if you're new esthetician just tuning in and you're building, I want you to know that there is a way to capitalize on this. Like you, pay attention, find those old estheticians. They want out. I'm telling you right now, they want out of their business. They do not want to stay behind the chair anymore. Just FYI, that's your tidbit.

Kari Jo Patterson:

Now, if you are an esthetician and you have been in this industry, I know what that feels like. You are feeling burnt out, you are tired. You are waking up already stressed and having to do the work. Your brain is running numbers. It's planning content, it's tracking, inventory, replies to clients, what you need to do to grow your employees, all of it. And it's because when you own the business, you are the business.

Kari Jo Patterson:

I remember when I hit that point I was building my business and scaling and growing and I just got to this point in my business and I can remember it so clearly. Like feeling is just there, like I was done. I was ready to be done. I wanted my life back. Like I did not want this weight on me any more. I didn't want to come up with game plans anymore. I just wanted to be where I was, without thinking and problem solving 24 seven. I didn't want to check one more email. I didn't want to do it. That's the only way to really explain. I wanted out and so I sold my company.

Kari Jo Patterson:

But I want to tell you something that nobody tells you is that selling your business it's not like selling a house, right? It's not about what you think it's worth, it's about what someone else is willing to pay, and that is not going to be your price, and that is a hard pill to swallow. I want to break this down into two real stories. I'm not going to say names or anything like that, because I love these people and I want you to think of their situations. People and I want you to think of their situations and I want you to think about what you see and use it to kind of maybe edit what you're doing.

Kari Jo Patterson:

The first one I had this coaching client and she is a solo esthetician. She has no employees, dude, she is netting over a hundred thousand dollars after she pays all of her expenses. I mean like over $150,000. I mean, this girl is netting, taking home that much money. Okay, this girl is killer. She played her cards right, I didn't. If I could go back to being and if I went back to working behind the chair, this is the girl that I would actually become, because she's been solo, she has no employees, she, she doesn't have to deal with any drama, she's super profitable and basically the reason why is her prices are a premium, a premium. She charges a premium, but she can charge that premium because she has a shit ton of knowledge Like this. Girl knows what she's doing, she is on fire, she has the knowledge and she can charge that and people will happily pay her rates because she is just that good. But now she's been in this for I've been in it for 28 years and I was ready to get out 20 years she's been in over that, over than me, and she's ready to sell her business.

Kari Jo Patterson:

Here's the problem is her business. She is the business. She doesn't own the space that she's in, she's leasing it. She has no teams in place, she has no systems that run without her. So she's not, she is the company. She does not make money unless she walks through the door. So here's the thing there's nothing for someone to buy, except for her book of clients, you know, and obviously some of her machines or equipment. But if she buys that book of clients. Those clients trust her. Those clients pay that premium because of her knowledge, because she's so dang freaking smart. They trust her, not the business name, it's her. So the moment she walks away so the moment she walks away, that value completely drops. This is what I mean by when I say your business isn't sellable, and I don't mean that rude and it is so hard to hear, because that is really hard. What do you mean? It's not sellable? She's making over, she's netting, taking home hundreds of thousands or a hundred thousand dollars. More than that. It should be sellable. She has value. She is the value, though. Right, that's the thing. Even if she hired somebody to come in a new esthetician five years whatever, they don't know that knowledge that she knows, that took her 30 years of getting.

Kari Jo Patterson:

Now I want to tell you a second story. Okay, I had an online business opportunity come my way an esthetician and she has a killer brand. Guys, I mean killer brand. This is gold mine. I'm starting my business and I I have the experience, I have the knowledge, I know my crap, I did it, I walked it. I'm there. I'm just starting a personal brand. So I have to develop trust, and trust takes time and I have to build it.

Kari Jo Patterson:

This girl, she has like an online brand and she has a crap ton of followers and she everybody trusts her. She posts. Hundreds of people comment on her post. Anyways, she has this brand with tons of followers. She has some courses, things that she sells. She came to me and she said hey, I want you to buy my business for X amount of money. You know you can take over all my followers and everything. That'd be great, right? Doesn't that sound great for me? I got 800 followers. I could walk into this brand with thousands of followers instantly. Like that, right, my, I would get whatever. But here's the deal. The entire brand is built around her. They trust her. They trust her voice, her reputation. So, again, when she walks away, what am I buying? If I go to the bank, I can't get a loan for that because there's no collateral Banks hate risk.

Kari Jo Patterson:

When you go to buy a company, the truth is, the person that has the power is not the seller where, like you're selling your house, you have the power you're selling you do not have. The person that has the power in a business exchange is the person that is purchasing, because they are the ones that are carrying all the risk when they buy it. So they are the ones that ultimately have the power is your buyers have the power, not you. So when you are looking to buy a business, because you're going to carry all this financial risk, you want to make sure you're making a good investment. You are buying something that you're going to get a return on your investment.

Kari Jo Patterson:

The best way and I did this episode a while back and you guys can listen to it I interviewed one of my biggest mentors. He helped me sell my company. He buys and sells companies, and I asked him because you know a lot of estheticians like they want to buy lasers, they want to buy just different machines. So I asked him what does that look like, like? How do you? You know you're going to make a good investment, and the one thing that he gave me advice on is when you are buying a business or not, when you are doing any investment whatsoever, go back and listen to the episode. But if any kind of investment, he says, though you know how you know if it's a good deal, you take it to the bank because the bank will look at it.

Kari Jo Patterson:

Banks are risk aversion right, they hate risk. Banks hate risk. They want their money back. So they're really good at analyzing deals. When you take it to a bank and if bank is saying no, you know what I mean that is kind of a red flag. Listen, you can sell your company and list your company for whatever you want, but ultimately that buyer, whoever is going to come in, is going to have to go to the bank and they're going to have to ask the bank to buy your company. When they go to ask the bank to buy your company, that bank is going to need collateral, for if you fail, they get something back. What is the collateral? And that is ultimately what they're going to look for. So it's not just you choosing a price, it's what is the bank going to be willing to give that sender or that purchaser, that buyer. Just like the first story and the second story, they're emotionally tied to this number of what they think that their business is worth. And it doesn't matter how hard you feel your business is worth something. Ultimately the market is going to choose what it's worth.

Kari Jo Patterson:

You can list your business at a million dollars and say I'm not selling until I get this million dollars, and sure, maybe you might find somebody for that, but more than likely, you're going to sit on it for years. Honestly, you might not sell it. You have to listen to the market and you have to know what the banks are going to pay for your business in order for you to sell it. If you are listening to this and thinking, I want out one day, right, we all want out one day. Nobody's going to sit behind the chair forever. Here's what you need to build. You have to build systems.

Kari Jo Patterson:

Your business has to be able to run without you. From every single process, from the client onboarding to the payroll, to the documentation Everything needs to be delegated. When I sold my company, I was living in Texas. By the time it sold, I wasn't there. I had the front desk. I had someone else doing my payroll, running the payroll, managing my team, everything like that. It ran without me. Same for, like the online business, you got to get it running for a few. You can't be the one posting on social media. You got to get someone else doing that. You got to get it running without you, because that's when it becomes desirable and business and that's when banks are like oh, okay, yes, the next is a buyer get employees. You need employees. A buyer wants to know that the income is going to continue as soon as they buy it, and that only happens if there is a team that is already delivering those services without you. The third thing is you have to have a transferable brand. Your face cannot be the brand. You need a business identity that stands out on its own. It's not you. Clients trust the company, not you. They trust other people in the company, and that's what's going on.

Kari Jo Patterson:

Four is you got to have assets, so you got to own your equipment. You got to buy a building, if you can. You got to have real, tangible value. I will tell you, when I sold my company, what made my company valuable was the building that I owned. So many people wanted the building in particular, not even necessarily the company. Like, I had an insurance company, an insurance agent that was interested in buying not my business, but wanted to buy my building alone. You got to have tangible assets.

Kari Jo Patterson:

And last but not least is profit, not just revenue. So your people that are coming to look at it they're not going to be looking at yeah, how much did you make? They want to know what you're netting. What are you bringing home after all of your bills and everything is paid. How much are you actually netting?

Kari Jo Patterson:

Listen, I know this episode might feel like a reality check, but if you're dreaming of peace and selling one day, or walking away with freedom, you've got to start building that version of your building or that version of your business right now. You can't build a prison and expect somebody to come in and move in. You've got to build an empire that is running totally without you. That is when your company is completely sellable, all of it. So here's what I want you to do I want you to think of another esthetician who's burnt out and thinking about selling. Send this to them. Maybe they'll start thinking about selling to you.

Kari Jo Patterson:

If you are new and you're wanting to buy a company, there are people. Walk into success is a lot easier than building it, but make sure you're buying the right investment and you're walking into the right investment. Anyways, guys, I don't know, maybe next week I should dive into a checklist that you need to prepare for your business. Let me know what do you think? Is this episode helpful? Do you want to know more about this episode? And, of course, please help me. Leave me a review. Star this, save this. Subscribe to my podcast. I read all of your reviews. They mean so much to me. Please, please, please, leave me a review.

Kari Jo Patterson:

Thank you guys for tuning in and I will see you on Wednesday with another guest. Bye, guys.

Announcer:

Thank you for listening to the Esthetician Podcast with Kari Jo Patterson. Each week, Kari brings you real world lessons on how to grow your empire. To learn more about Kari fearless prosperity, prosperity Mastermind Group, one-on-one VIP coaching opportunities and more visit Kari. That's Kari. See you next week for more insights and strategies on the Esthetician Podcast.

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