Nick Kozak for the Toronto Star
Case Studies

Toronto’s ‘first organic spa’ proves a tough sell

Vital Stats
Elixir Organic Spa
Lynn Shulman
766 King St. West (before Apr. 1); 850 King St West (after Apr. 1)
Organic spa services and retail
11 years
Organic beauty products and spa services

Lynn Shulman’s career path was forever changed by an allergic reaction.

While working as a brand manager for a corporate marketing company in 2001, Shulman travelled to several exotic destinations like Costa Rica, Mexico and Puerto Rico, often spending time at the spa between meetings and conferences.

“One day I had a product I bought from the health foods store, and I had this horrible allergic reaction that took months to go away,” she says. “After that I couldn’t go to spas because I was so sensitive to everything.

“I thought, ‘Okay, why don’t I try an organic spa?’” she says.

But none existed in Toronto at the time.

Though many of the products Shulman tried claimed to be natural and organic, a little bit of research proved otherwise. At the same time Shulman had just lost her job for the third time in five years after her position was eliminated, and felt that it was time to move beyond the corporate world.

“That’s why I decided I would create Toronto’s first, 100 per cent non-toxic, chemical free, kind of spa that I myself would want to go to,” she says.

In its 11 years, Elixir Organic Spa has experienced steady growth year-over-year, and while things have slowed down since the recession — from over 20 per cent growth annually to single-digit growth — the company continues to be profitable.

As her retail and online sales began to outsell her spa treatments, however, Shulman began considering the idea of selling Elixir, and using the money to start a natural beauty products ecommerce store.

In September she listed her business on MLS,, and

But after six months on the market with no offers Shulman has come to learn just how difficult it is to sell a small business in Toronto.

“I thought I’d be able to sell it in no time, and the fact that there’s been so little interest in it has been a rude awakening,” she says. “It’s tough to sell any business these days.”

Despite the trouble finding a buyer, Shulman says her company has just about everything a prospective buyer might look for. Elixir currently sits at a prime location on King Street West, a neighborhood that has experienced a population boom since she first moved in, and has a viable business model with a loyal customer base.

She has even tried to entice buyers by lowering prices, but to no avail. In fact, Shulman says she received even less interest from prospective buyers after lowering her price 15 per cent from $250,000 to $169,000.

“As business owners we think that our business is just the best and everyone’s going to want it,” she says. “The cold reality is that that’s not true.”

It’s a tough market for any small business owner looking to sell, according to Nicole Troster, a senior policy analyst with the Canadian Federation of Independent Businesses, an organization that represents small and medium-sized businesses across Canada.

“There’s going to be a huge influx of businesses available for sale, and we see a huge gap (in buyers) in the marketplace,” she says.

According to a report published by CFIB in November of 2012, nearly 50 per cent of small and medium-sized business owners plan to exit the company within the next five years.

Troster says the sudden increase in listings for these firms is largely a result of an aging population. Many in the boomer generation put off retiring until after the economy recovered from the 2008 recession, and are now looking to sell. In fact, the CFIB survey found that more than 85 per cent of those looking to sell cited retirement as their reason for exiting.

“There’s a small pool of buyers, and that’s something that business owners identify as the biggest obstacle,” Troster adds.

Unable to sell the business, Shulman has found an alternative. She now plans on downsizing to a smaller location one block west, reducing the number of spa rooms from four to one and her service offering to only facials and waxing.

At the same time the new location features more retail space, lower overhead costs, and an area that can be converted into a shipping department once she’s saved enough to open her new ecommerce store.

But instead of focusing solely on a new ecommerce store, as planned, Shulman will have to juggle old responsibilities with new, and make a slower transition out of the spa business.

She’ll have to wait until she’s accumulated enough in overhead savings to invest in the digital storefront, all while building design plans during her limited spare time.

“I’m still pursuing my goals, just slightly differently,” she says. “I’ll get there eventually, just not in a straight line.”


As Interviewed by: Rosemary Westwood

Lynn’s story is not uncommon among entrepreneurs trying to sell their business — something they’ve never done before. MLS is good for real estate, bricks and mortar, but when you’re trying to sell a business, it’s just not where interested individuals are going to look. On the other websites she tried, you get a lot of tire kickers and people looking for cheap deals or inexperienced sellers. Lynn has a very niche business, so the buyer would be a select individual. And it is hard to find the right person — only about 20 per of listed businesses sell. She may have put too high a value on her business, as most people do — unfortunately the long hours they’ve put in do not raise the value. Buyers want to know the financials, the profits, and little else. Also, most small businesses are sold to someone who knows the company — a supplier or a customer. Other buyers are out there, but they’re often using a shotgun approach with not a lot of focus on what kind of business they want. That’s why we suggest using a professional, whether a business broker, or someone else.

by Mike Haines

When business owners decide to try and sell their business immediately, they tend to run into trouble. We say at least three to five years of planning to go into a sale. The first stage is understanding how potential buyers will value the business. If that value isn’t in line with your expectations, you can then take steps to improve profitability, highlight strengths, and address different weaknesses over time. We don't have financials in Lynn’s situation so it’s hard to say whether her expectation is reasonable, but when your business is under $1 million it’s very tough to find buyers, because those businesses are often very dependent on the owners. Also, listing services could end up impacting your business if customers know you’re looking to sell. The alternative — doing a confidential search for buyers — is an expensive process. I like the fact that she’s being creative, extending the business and adapting it to the new venture. The other option is to wind it down, and depending on what lease she has, that could end up costing money.

by Trevor Hood

We see a lot of small business owners like Lynn looking to sell, and we always tell them: You need to plan for your sale and stage your business. Prepare materials for prospective purchasers. Recognize that the sale is not going to happen overnight. Put yourself in the shoes of the prospective buyer and ask yourself what makes your business attractive. Is it location? A unique value proposition? Most important is the sustainability of your earnings. What’s the cashflow of the business? You need to be in a position to articulate that up front. In the sale of a privately held business, there’s no regulated market, and there’s a lot of ambiguity. Every deal is different, and entrepreneurs need to recognize that’s the case. They often expect a quick resolution, and it may not come. It can help to engage an advisor that has an understanding of your industry or has experience with that type of business. Use your network, talk to people in your business community, anything you can do to put yourself in the stream of opportunity is good.

by Sal Rabbani