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Old 02-03-2014, 08:30 AM   #13 (permalink)
sunsally
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Re: Potential Salon Purchase - Need Input

Quote:
Originally Posted by DH View Post
Rent $16,000
Insurance $2,000
Utilities $6,000
Cost of Goods $3,000
Phone,Internet $1,800
New Lamps $5,000
Other Maintenance $10,000
Labor $20,000
Marketing $2,000-$5,000
Accounting fees $1,000
Legal fees $1,000
Unforcasted expenses $10,000

TOTAL: $81,000

Reinvestment %10 of revenue

The value of the equipment is ZERO. The value of the build out is ZERO. You're buying the business only. I'd pay one year PROVABLE profits only for this salon at best if you really want it but think you can start a salon for equal or less money. This salon is most likely out of date (at the end of it's usable life) and in need of major upgrades to remain viable.

This is pretty spot on. However, the Labor/payroll is ACTUALLY closer to $36k/year -- assuming paying about minimum wage, some commissions on sales, all the taxes, and open about 70-80 hrs/week.

My guess is the "owner's discretionary income" was actually what they took for "labor". So they sat there, open to close, 70-80 hrs/week - for $22K. Not sure your wife would want to sign up for THAT!

Agree with all. The beds ARE outdated, but they CAN tan you if properly lamped and maintained. You CAN make money from a salon like this - maybe. But not as it stands. It is NOT actually profitable currently.

I'd pass.
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