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Originally Posted by Edubw  Hi everyone!
Just joined today so "take it easy" on the newbie!
We are looking at a small salon (11 beds and 1 Red Light Therapy) in the Midwest. It has been in business since the late 90's and always profitable. Sales have been growing slightly the last 3 years and they had $82k in sales for 2013 with a Sellers Discretionary Earnings of $22k.
Lease is decent at 1300/mo for 1600 sq ft.
It is in a small suburb with the closest competitor 7 miles away and has a very good following. 800 repeat customers and 2,000 total.
My question is while it is very clean and I know many people that go there, the beds are older. They have the following;
(7) Puretan Impact 28 bulb 2001-2004 mfr date
(2) Puretan California 36 bulb with 3 facials 2000 mfr date
(2) Puretan Aruba 24 bulb (1 is a redlight therapy) 1999 mfr date
(1) Puretan Quantum Stand-up 52 bulb 160w/bulb 2006 mfr
It is the original owner and she is looking to semi-retire. I can buy the Salon for around $50k-$60k. Would be a great business for my wife and her specialty is marketing/advertising. The current owner does ZERO marketing. She says the younger people love the lower bulb beds due to the fact she offers fairly cheap packages for them.
Just not sure about the beds, although they always seem pretty busy.
Thoughts would be appreciated, Thanks!!! |
There are a number of things to look at beyond what you have posted. This salon may or may not be worth asking price. With the proper questions this can be determined.
An 11 system salon should be doing a great deal more business than $82K, how much more can be determined by looking at a demographic report that I am happy to provide for you.
Now here are some more pressing issues. This is a very old salon with completely out dated equipment. The equipment mix will never allow you to generate substantial income. Being an old salon it surely does not have enough power or AC to make the appropriate equipment changes. The rooms are also not going to be large enough for the equipment you need. This can all be determined with the proper questions.
As is can this salon take you into the future? The answer is No, not without substantial changes. So you must determine if it is possible to make the changes at this location that are needed and what are the cost associated with those changes. That becomes part of the investment.
In short there is a whole lot more that you should take a close look at before you make any decisions. Being the only salon in the community is great but being a beat down old business is not great.
Make a smart decision. that will come by collecting a lot more information. People are not lined up to buy this salon so you have time to go about it correctly. The equipment has very little value if you are looking at an asset purchase. You have $38K in rent and owner payroll and there are a lot more expenses, so the salon is not showing a profit.
Lets get a closer look and see what the income potential is with restructure. After looking at this you can better determine if this is for you.