The financials tell you what a business did last year. They don't tell you whether anyone in town actually knows it exists.
That second thing is what almost nobody measures, because everyone assumes you can't.
I disagree. Just because something is hard to measure doesn't mean you get to skip it. It means you approximate it, get less uncertain than you were yesterday, and make a better decision than the person who threw up their hands and called it a gut feeling.
A book I read in grad school changed how I think about measurement
There's a book called "How to Measure Anything" by Douglas W Hubbard. The whole premise is that measurement isn't about getting a perfect number. It's about reducing uncertainty. Even the "hard" numbers we trust, like revenue, get fuzzy once you dig into the details. So the goal isn't precision. The goal is knowing more than you did before.
When I was evaluating salons, the hard stuff was easy: profit and loss, prices, number of competitors. The valuable stuff was the soft stuff. How aware is the community of this business? How is it actually perceived? Is it loved, or has it quietly gone invisible after years on the same corner?
You can't pull those off a tax return. But you can triangulate them.
The spreadsheet Chelsea and I built for intangibles
We couldn't directly measure how well-known our target salon was. So we did the next best thing: we mapped the competition and figured out where our salon stood in the pack.
We pulled 10 hair salons and 10 nail salons in the area and tracked the same data points across all 20. Here's the actual column list:
Address and distance from our target salon
Google rating, review count, and review trend (improving or declining over the last year or two)
Yelp rating, review count, and trend
Website link, and whether they offered online booking
Instagram link and follower count
Facebook link and follower count
Approximate number of service chairs (counted from their Google photos)
Number of waiting room chairs
Days closed per week
Google rank (when you search "hair salon in Falls Church," where do they land?)
A normalized price grid: women's, men's, and children's cuts, plus perm, blowout, root touch-up, highlight, full toner, ombre, balayage, keratin, Olaplex, and full color
None of it was perfectly scientific. But stacked side by side, it gave us something a P&L never could: a sense of where our salon really sat. How busy it likely was compared to others. Whether our prices had room to move. How visible we were online versus the competition.
That little detail about counting chairs in photos is one of my favorites. A salon with few service chairs and almost no waiting room is telling you something: they aren't busy enough to need the space. You can read a business's reality in what it didn't bother to build.
Reading the trajectory
The single most useful intangible was trajectory. Not where the business is, but where it's heading.
I watched the trend and frequency of reviews over time, and I paired that with the financials month over month. When the online story and the money tell the same story, you can trust it.
Here's what the data told me about the salon I bought. It had been highly successful early on, built around a master stylist who worked there in its prime. After she left, the previous owner bought it, and that's exactly when the online perception started to slip. But here's the tell: all four of the stylists still working there had been there since the original era. The roots were intact. The decline wasn't about the talent or the foundation. It was about how the place was being managed.
That's not a failing business. That's a good business with a management gap. And a management gap is the best thing a new owner can inherit, because it's the thing you can actually fix.
The Competitor Scorecard
The method works for any local business, not just salons. Before you make an offer, build your own version:
Pick your comparison set. Find 10 to 20 direct competitors in the same market. If there aren't many in one category, widen it (we used both hair and nail salons).
Track the same fields for every one of them. Reviews and their trend, online presence, pricing, physical capacity, hours, search rank. Same columns, no exceptions, so you can actually compare.
Stack rank where your target lands. You're not chasing a perfect score. You're answering one question: is this business ahead of the pack, in the middle, or quietly falling behind?
Pair the soft signals with the hard numbers. When the reviews, the trajectory, and the financials all point the same direction, believe them.
I want to make this easy for you, so I'm giving away the actual spreadsheet we used. Reply to this email with "scorecard" and I'll send you the template, the salon version and a blank one you can adapt to any local business.
The numbers on a P&L are the price of admission. The intangibles are where the real decision gets made. Measure them anyway.
Next issue: once you own the place, how do you actually measure what's working? I'll walk through the funnel I use to run the salon, and why I market haircuts and manicures in completely different ways.
Michael
Join the conversation.
I don't run comments on the blog. A comment buried on a website just disappears. Instead, I open one discussion thread per issue on LinkedIn. That's where you can ask questions about this article, push back on anything I said, and see how other owners are working through the same decisions. I answer as many as I can, right out in the open, so we all get to learn from each other.
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