How do I check a beauty supply store’s salon and stylist trade accounts?

Trade accounts can be the steadiest part of a beauty supply store, and also the riskiest if the paperwork is thin. Start with the accounts receivable report. Look at which salons carry balances, how old those balances are, and whether the owner has written any off. A long list of unpaid invoices from a few stylists tells a different story from a tidy list paid on the last day of the month.

Ask how trade status is granted. Does the shop check a stylist’s credentials, or just take their word? Is there a separate price list, a discount tier or a loyalty arrangement? Find out whether those terms are written down and whether they would carry over to you.

Then ask about the relationship itself. Do stylists come for the products, the advice or the owner’s personal service? A salon that follows one staff member could leave if that person does. Ask about suppliers too, since trade pricing often depends on what the shop can buy. Last, talk to your accountant about how unpaid balances should be handled in the purchase. Ask to meet one or two long-standing salon owners if the seller agrees.

Key takeaways

• Get an aging report of trade balances and ask which have been written off.
• Find out how a customer qualifies for trade pricing and whether those terms are written.
• Ask who personally holds each salon relationship and what would keep it after a sale.