Non-Confidential Business Review

Well-Established Upscale Salon & Spa in Southwest Missouri VR Business Number 42014274

Notice: This file does not contain any confidential information about this very nice business for sale. Please feel free to share it with anyone who may have an interest. The reason the business name is not being disclosed is because most business owners are very concerned that their employees, customers, suppliers, competitors, landlords, or lenders not find out they are considering the sale of their business, believing that such a disclosure could cause severe harm to the business. Disclaimer: The information herein was furnished by seller or seller’s representative. VR Business Sales has made no attempt to independently verify the information, and makes no representation as to its completeness, accuracy, or reliability, and disclaims any responsibility for any action taken in reliance on the information. During the due diligence process, it is the responsibility of the buyer, with the aid of an accountant and/or attorney, if necessary, to independently verify all representations which have been made about this business for sale.

Persons interested in obtaining the name and location of the business should contact:

Jerry Myers MBA, CBI, Co-Owner/Principal Broker VR Business Sales, Springfield/Branson Office

5505 N 17th Street Ozark, Missouri 65721 417 581-8887 Jmyers@VRSpringfield-Branson.com

Members

The above information is provided by the SELLER, or other sources identified by SELLER, and is not verified in any way by VR Business Sales (VR). VR has no knowledge of the accuracy of ANY information provided to BUYER and makes no representation, promise, or warranty, express or implied, as to the accuracy or completeness of such information. BUYER shall be responsible to make an independent verification of said information during due diligence. BUYER agrees to indemnify and hold VR and its agents harmless for any claims or damages which may occur by reason of the inaccuracy or incompleteness of any information provided to them with respect to any business they might purchase. It is understood and agreed that any and all information provided to BUYER regarding any business is to be considered confidential and proprietary, and that disclosure of any such information could result in damage to the business and/or its principals and employees.

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General Business Information

Business Name Confidential Year Business Established 2006 Business Description Full Service Salon and Spa Seller Has Owned Since 2006

Annual Revenue (2012) $174,482 Website None Discretionary Earnings (2012) $45,480 Hours Tue-Fri 9-7

Sales Price $79,900 Hours Sat 9-4 Real Estate Leased Special Licenses Required City business license

Number of Employees 9 FT including 1 owner Parking Very adequate Other locations None Broker Associate Jerry Myers, CBI

Highlights of Business

Established business - opened in 2006 Sales price is much less than the original cost of the build-out, equipment, and furnishings, which was $210,000 Upscale, modern décor Great location Multiple opportunities to expand the business Very little inventory required

Services The nine technicians and stylists including the owner’s wife and an aesthetician offer a wide range of hair and spa services. The salon has 6 stylist stations, 2 manicure stations, 2 pedicure stations, 3 shampoo stations, a facial work chair, and two massage tables in separate private rooms. History of Business The business was established in 2006 at its current location by the current owner. Financial History/Discretionary Earnings Calculations The decline in sales in the last two years has been caused by the owner’s absence, while having to be away to manage his other business in New Mexico. Previously, he had done all the advertising and promotion for the business, and helped manage it with his wife.

2011 2012 2013

Total Sales $208,047 $174,482 $146,491

Discretionary Earnings $65,267 $45,480 TBD

What is Discretionary Earnings, and Why is a Business’ Value Based on This Concept? Business owners and their accountants employ various tax strategies intended to keep reported net profit as low as possible, in order to save taxes. Identifying and accounting for those tax strategies to accurately reflect the real earnings history of the business is therefore critical in determining the value of a business. In fact, the amount of the real, total benefit produced by a business for its owner in the past, which is termed the Discretionary Earnings of a business, is the most important piece of information for any buyer to know. The term discretionary is used to indicate that this is the amount of cash flow produced by the business after all expenses which could be used in any way the business owner might choose. The three primary uses of Discretionary Earnings are to 1) service the debt incurred to purchase the business; 2) provide the business owner a salary for managing the business; and 3) provide the owner a return on the investment (down payment) made to purchase the business. Discretionary Earnings, also known as Discretionary Cash Flow or Normalized Earnings are not the same as net profit, but the net profit of a business is the starting point for determining Discretionary Earnings. According to the International Business Brokers Association, which provides guidance in the proper procedures for determining Discretionary Earnings to lenders, accountants, business intermediaries, and business owners, five types of adjustments must be made to net profit to arrive at Discretionary Earnings:

The above information is provided by the SELLER, or other sources identified by SELLER, and is not verified in any way by VR Business Sales (VR). VR has no knowledge of the accuracy of ANY information provided to BUYER and makes no representation, promise, or warranty, express or implied, as to the accuracy or completeness of such information. BUYER shall be responsible to make an independent verification of said information during due diligence. BUYER agrees to indemnify and hold VR and its agents harmless for any claims or damages which may occur by reason of the inaccuracy or incompleteness of any information provided to them with respect to any business they might purchase. It is understood and agreed that any and all information provided to BUYER regarding any business is to be considered confidential and proprietary, and that disclosure of any such information could result in damage to the business and/or its principals and employees.

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1) Any non-recurring income that is included in net profit, such as gain from the sale of a piece of equipment or interest earned on investments, must be subtracted from the net profit.

2) Any expenses that are direct owner benefits, such as owner salary or fringe benefits, must be added back to the net profit, since they are non-recurring (a buyer will not pay them in the future). 3) All other non-recurring expenses that are deducted must be added back to net profit. These might include a one-time purchase of an alarm system, or point of sale system, or lawsuit expense.

4) Any non-cash expenses such as depreciation or amortization must be added back, since no cash was expended for these expenses.

5) Any discretionary expenses that the owner might have deducted are added back to the net profit. These are expenses deducted by the business that were not strictly necessary for its successful operation, and which a new owner might choose not to incur. Business trips for which the primary purpose is a vacation with the family, or country club membership or luxury car leases are examples. Deducting these items may be appropriate perks of owning a business, but not required for the business to succeed. To qualify as discretionary, the expense must meet all of the following criteria:

a) The expense primarily benefits the owner b) The expense does not materially benefit the business or its employees c) The expense is included as a deduction on the business’ tax return/income statement d) The expense can be verified by a prospective buyer and their advisors The intent of the process of determining Discretionary Earnings, called Recasting or Normalizing the financials, is to determine the amount of cash flow a business has provided its owner in previous normal time periods, with no non-recurring income received, nor unusual or unnecessary expenses incurred. Buyers use the calculated Discretionary Earnings as an indication of how much cash flow the business might provide them in the future, if they operated it no better and no worse than the current owner. The calculations determining Discretionary Earnings of a business are based on its historical results, which are often the best available indicator of future profitability. However, the actual results achieved by a new owner could be substantially different because of a change in economic conditions, the new owner’s management style and competence, or a myriad of other factors. Website The professional company website allows online scheduling of appointments. Financing Because the seller believes in the future success of this business, he is offering to finance the purchase, with $39,950 down and 5 years on the balance at 7%, with a balloon payment at the end of 3 years. Or, the business could be purchased using an SBA guaranteed loan. Working Capital and Take-Over Expenses Buyers should consult with their accountants regarding how much capital they will need in addition to the down payment to provide working capital and to pay for expenses incurred in the transition of the ownership. Inventory Included in Sales Price Six hundred dollars of inventory at seller’s cost is included in the sales price of the business. Accounts Payable and Accounts Receivable Accounts Receivable if any are not included in purchase price, and sellers agree to pay all Accounts Payable and any other debts of the business at or before closing.

The above information is provided by the SELLER, or other sources identified by SELLER, and is not verified in any way by VR Business Sales (VR). VR has no knowledge of the accuracy of ANY information provided to BUYER and makes no representation, promise, or warranty, express or implied, as to the accuracy or completeness of such information. BUYER shall be responsible to make an independent verification of said information during due diligence. BUYER agrees to indemnify and hold VR and its agents harmless for any claims or damages which may occur by reason of the inaccuracy or incompleteness of any information provided to them with respect to any business they might purchase. It is understood and agreed that any and all information provided to BUYER regarding any business is to be considered confidential and proprietary, and that disclosure of any such information could result in damage to the business and/or its principals and employees.

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Assets Included in Sales Price The purchase price includes all the assets used in the business to produce the Discretionary Earnings on which the value of the business is based, including the furniture, trade fixtures and equipment, the name of the business, and other intangible assets such as the goodwill which has built up over the years. The seller estimates that the value of the equipment and other tangible assets used in the business and listed below is approximately $60,000, in addition to the upscale leasehold improvements (build out) for which he paid $150,000 when the space was leased in 2006.

Qty Description Qty Description

1 Whirlpool stackable washer & dryer 6 Stainless steel full length station mirrors - custom made

1 Bunn commercial coffee maker 6 Stylist cabinets

1 Medical grade sterilizer 6 Station floor mats

2 Stainless steel work tables/shelving 6 Stylist hydraulic chairs

1 Paragon 7000-A facial machine with steamer 2 Manicure stations

1 Dynatronics Synergie aesthetic microdermabrasion and massage system ($24,000 new)

1 Facial work chair

1 Norvell 3000 spray tanning system 3 Work stools

2 Paragon UV towel warmers 4 Work chairs

1 TouchAmerica massage table 2 Children's booster seats

1 Golden Ratio Woodworks electric massage table 1 Futon couch

1 Custom-built cabinet for wax room 1 OPI curing lamp

1 Rolling wax cart 2 Retail shelving units

2 Floor lamps 5 Reception area sofas

15 Wall Posters - Custom framed 1 Half-round reception desk - custom built

1 Retail shelf display - massage room 1 Whirlpool water dispenser

8 Stainless steel trash cans 1 Insignia sound system with Bose speakers

2 Belvedere pedicure chairs 1 Microwave

3 Belvedere shampoo stations 1 Large UV towel unit

1 Stainless steel water fountain 1 AT & T phone system with 3 phones

1 Computer system with cash register and POS printer and cash drawer

1 Salon Iris Software system with website/online booking

1 Refrigerator Custom oak cabinets and trim work throughout facility

4 Work trays 4 OPI stainless wall mount nail polish displays

Misc towels and sheets 1 Neon open sign

2 Outdoor signs front and back - custom made - ($15,000 New)

4 Wooden magazine holders

3 Small wall clocks 2 Hot stone warmers

Assets Used in the Business but Not Included in Sales Price None Facilities No expense was spared in the equipment, furnishings, or decorations to make this business one of the most stylish, inviting, and functional salon/spas in southwest Missouri. The business is operated from approximately 1600 sf of leased space in a newer shopping center. An offer to purchase a business operating from leased space should always contain a contingency clause stating that the purchase will be contingent upon the buyer being able to obtain a lease satisfactory to the buyer in all respects. The sellers say their landlord has always been reasonable to work with. The current lease is month-to-month. The business could be located anywhere in the area, but could not be relocated outside of the area without risking the loss of clientele.

The above information is provided by the SELLER, or other sources identified by SELLER, and is not verified in any way by VR Business Sales (VR). VR has no knowledge of the accuracy of ANY information provided to BUYER and makes no representation, promise, or warranty, express or implied, as to the accuracy or completeness of such information. BUYER shall be responsible to make an independent verification of said information during due diligence. BUYER agrees to indemnify and hold VR and its agents harmless for any claims or damages which may occur by reason of the inaccuracy or incompleteness of any information provided to them with respect to any business they might purchase. It is understood and agreed that any and all information provided to BUYER regarding any business is to be considered confidential and proprietary, and that disclosure of any such information could result in damage to the business and/or its principals and employees.

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The above information is provided by the SELLER, or other sources identified by SELLER, and is not verified in any way by VR Business Sales (VR). VR has no knowledge of the accuracy of ANY information provided to BUYER and makes no representation, promise, or warranty, express or implied, as to the accuracy or completeness of such information. BUYER shall be responsible to make an independent verification of said information during due diligence. BUYER agrees to indemnify and hold VR and its agents harmless for any claims or damages which may occur by reason of the inaccuracy or incompleteness of any information provided to them with respect to any business they might purchase. It is understood and agreed that any and all information provided to BUYER regarding any business is to be considered confidential and proprietary, and that disclosure of any such information could result in damage to the business and/or its principals and employees.

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Competition There are usually several competitive salons in any area, and that is true in the area in which this salon and spa operates, but this one is one of the most modern and completes salon/spas in southwest Missouri. Seasonality Please see sales by month information below.

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total

2014 $12,525

2013 $12,049 $9,764 $12,925 $13,367 $14,101 $12,816 $12,248 $11,978 $10,940 $11,887 $12,676 $11,740 $146,491

2012 $10,628 $11,665 $15,409 $12,229 $16,001 $16,091 $11,985 $12,473 $10,823 $11,730 $13,209 $13,354 $155,597

2011 $13,028 $15,517 $16,941 $16,898 $16,638 $15,093 $15,489 $15,979 $14,174 $13,298 $12,169 $15,983 $181,207

Sale Structure The purchase of this business will be on the basis of an asset purchase, rather than a stock purchase, which means the purchaser will form their own corporation or LLC with which to purchase the assets used in the business, and the goodwill generated by the business over the years. The reason business buyers prefer to purchase a business as an asset purchase is to avoid assuming any contingent (unknown) liabilities, which will remain with the seller’s entity, which owned the assets before the sale. For example, if a customer fell on an icy sidewalk outside the business last winter, has not yet filed suit, but intends to, the purchaser will not inherit this legal problem, since they will have purchased only the assets of the business, not the business itself. The future lawsuit of that customer will remain the seller’s problem, regardless of when the suit is filed. Seller’s Disclosure Statement The Seller’s Disclosure Statement appears on the next 3 pages. Any identifying information has been blanked out.

The above information is provided by the SELLER, or other sources identified by SELLER, and is not verified in any way by VR Business Sales (VR). VR has no knowledge of the accuracy of ANY information provided to BUYER and makes no representation, promise, or warranty, express or implied, as to the accuracy or completeness of such information. BUYER shall be responsible to make an independent verification of said information during due diligence. BUYER agrees to indemnify and hold VR and its agents harmless for any claims or damages which may occur by reason of the inaccuracy or incompleteness of any information provided to them with respect to any business they might purchase. It is understood and agreed that any and all information provided to BUYER regarding any business is to be considered confidential and proprietary, and that disclosure of any such information could result in damage to the business and/or its principals and employees.

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The above information is provided by the SELLER, or other sources identified by SELLER, and is not verified in any way by VR Business Sales (VR). VR has no knowledge of the accuracy of ANY information provided to BUYER and makes no representation, promise, or warranty, express or implied, as to the accuracy or completeness of such information. BUYER shall be responsible to make an independent verification of said information during due diligence. BUYER agrees to indemnify and hold VR and its agents harmless for any claims or damages which may occur by reason of the inaccuracy or incompleteness of any information provided to them with respect to any business they might purchase. It is understood and agreed that any and all information provided to BUYER regarding any business is to be considered confidential and proprietary, and that disclosure of any such information could result in damage to the business and/or its principals and employees.

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The above information is provided by the SELLER, or other sources identified by SELLER, and is not verified in any way by VR Business Sales (VR). VR has no knowledge of the accuracy of ANY information provided to BUYER and makes no representation, promise, or warranty, express or implied, as to the accuracy or completeness of such information. BUYER shall be responsible to make an independent verification of said information during due diligence. BUYER agrees to indemnify and hold VR and its agents harmless for any claims or damages which may occur by reason of the inaccuracy or incompleteness of any information provided to them with respect to any business they might purchase. It is understood and agreed that any and all information provided to BUYER regarding any business is to be considered confidential and proprietary, and that disclosure of any such information could result in damage to the business and/or its principals and employees.

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The above information is provided by the SELLER, or other sources identified by SELLER, and is not verified in any way by VR Business Sales (VR). VR has no knowledge of the accuracy of ANY information provided to BUYER and makes no representation, promise, or warranty, express or implied, as to the accuracy or completeness of such information. BUYER shall be responsible to make an independent verification of said information during due diligence. BUYER agrees to indemnify and hold VR and its agents harmless for any claims or damages which may occur by reason of the inaccuracy or incompleteness of any information provided to them with respect to any business they might purchase. It is understood and agreed that any and all information provided to BUYER regarding any business is to be considered confidential and proprietary, and that disclosure of any such information could result in damage to the business and/or its principals and employees.

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About the Broker The seller has engaged the services of Jerry Myers, MBA, CBI, to represent them in the sale of their business. A brief bio and some buyer recommendations are below. As co-owner and principal broker of the Springfield-Branson office of VR Business Sales, Jerry specializes in the ownership transfer of privately-held businesses and franchise re-sales, and has facilitated the acquisition or sale of numerous businesses in southwest Missouri. His VR office was honored for ranking 8th in the world in sales volume in 2012. Jerry was awarded the designation of Certified Business Intermediary by the International Business Brokers Association in 2007, and was re-certified in 2010. Held by fewer than 500 individuals worldwide, the CBI designation is granted to IBBA members who have met rigorous requirements in education, industry knowledge and experience, ethical standards, and continuing education. A Springfield, Missouri native, Jerry graduated from Drury University in that city with a degree in marketing. He then earned an MBA from Rockhurst University in Kansas City. Jerry is a graduate of the U.S. Business Brokers Advanced Course in Professional Business Brokerage, and is a licensed real estate broker in Missouri. He is an active member of the International Business Brokers Association, and serves on the Small Business Council of the Springfield Area Chamber of Commerce. Jerry was one of the 5 judges for the prestigious W. Curtis Strube Small Business of the Year Award for 2012, sponsored by the Springfield Chamber of Commerce. In addition, Jerry is a SCORE volunteer, Business Workshop Coordinator for the local SCORE chapter, and teaches the SCORE workshops Obtaining Financing for Small Business Acquisitions and Startups, How to Determine the Value of a Business, and Buying a New or Established Franchise – The Do’s and Don’ts. His columns on buying and selling businesses have appeared in the Springfield Business Journal, and he taught tax law courses for H & R Block in Kansas City for several years.

Buyer Recommendations I worked with Jerry over about an 8 month period to find a business to acquire, and we found one that is a good fit for me and which has great potential. Jerry is thoughtful and resourceful and I would recommend him to anyone thinking of acquiring a business. Stan Bell, New Owner Integrity Floor Covering, Springfield, MO I would absolutely recommend Jerry Myers to anyone looking to buy or sell a business. It has been five years since I purchased our service business with outstanding assistance from Jerry. His guidance and recommendations have continued to bear fruit. I have worked with numerous business advisers over the years and Jerry is by far the best I have ever seen. He is very knowledgeable, his professionalism is top notch, you can trust him completely.

Rich Hare, New Owner Air Services, Springfield, MO

If you are buying or selling a business I would highly recommend Jerry for the job. This was our first business venture and Jerry went above and beyond to make sure all our questions and concerns were addressed. Jerry is a very knowledgeable and trustworthy individual with hard to find qualities. Jerry helped us every step of the way even through post procurement. His level of service is undeniably remarkable and I guarantee you will be happy with your acquisition. Krisheena and Kevin King, New Owners Kings of Kustom Embroidery, Joplin, MO I wish to recommend Jerry Myers if you are looking at purchasing a business. He is extremely knowledgeable on all the aspects of purchasing a business and does a great job explaining all the different steps involved. I purchased two different companies with his help and could not have done it without him. He helped me every step of the way and had other resources that could help in the legal and accounting areas. I would highly recommend doing business with Jerry and feel like he has set my entrepreneurial spirit free. McKay Perry, New Owner Classic Services Transportation, Fair Grove, MO Diamond K Express, Pleasant Hope, MO

For more buyer recommendations, please go to www.VRSpringfield-Branson.com

The above information is provided by the SELLER, or other sources identified by SELLER, and is not verified in any way by VR Business Sales (VR). VR has no knowledge of the accuracy of ANY information provided to BUYER and makes no representation, promise, or warranty, express or implied, as to the accuracy or completeness of such information. BUYER shall be responsible to make an independent verification of said information during due diligence. BUYER agrees to indemnify and hold VR and its agents harmless for any claims or damages which may occur by reason of the inaccuracy or incompleteness of any information provided to them with respect to any business they might purchase. It is understood and agreed that any and all information provided to BUYER regarding any business is to be considered confidential and proprietary, and that disclosure of any such information could result in damage to the business and/or its principals and employees.

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Neither VR Business Sales nor the owner of the subject business of this Non-Confidential Business Review will pay any finder’s fees, commissions, expenses or other compensation to consultants, advisers or other intermediaries of any prospective purchaser without prior written agreement.

The seller is responsible for verifying the accuracy of any information provided, to the buyer’s satisfaction, during the due diligence phase of the purchase of the business. Information provided in this Non-Confidential Business Review was provided solely by the seller or representatives of seller. No representations or warranties are provided by VR Business Sales, its agents, representatives, or subsidiaries as to the accuracy, completeness or validity of such information. Purchasers are encouraged to seek the counsel of their accountant, attorney, and/or other business advisors before concluding the purchase of any business.