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02-04-2005, 01:13 PM | #3 (permalink) |
Join Date: Oct 26 2004 Location: Florida
Posts: 2,262
Rep Power: 21 | I got this from someone that did alot of research: So, what is your tanning salon really worth??? Most likely less than you think, unfortunately...The key here is to understand what you have to sell, and what the buyer wants to buy... Essentially, the buyer is buying: First: The customer base, repeat tanners and the income they can reasonably be expected to produce NEXT year...Customer acquisition and confidence costs money, you have invested that money in the past, the new buyer will automatically have a customer base in place that he can count on to market products to...You could value your customer base at $10 per tanner who has tanned with you in the past 6 months...Some will be steadies, there every month, others seasonal in nature...Those customers who have tanned in the past 24 months, but not in the past 6 months are worth $3 per name. Secondly: The lease... A favorable lease is worth money, and unfavorable one can spoil the deal, and make the salon worthless...Favorable conditions are a below market rate, unusual landlord concessions, and a long remaining term, or unclaimed lease extension options... Unfavorable terms are above market rental rates, high CAM charges, deferred maintenance on the building, poor parking, a poor mix of tenants in the location you share, etc... Third: The depreciated value of the beds and equipment...Tanning beds are machines, they wear out, they become obsolete, they even ugly out with age... You could value your beds at about ½ of what you paid [not the list price] if they are under three years old, 1/3 of what you paid if over that... Unfortunately they don't appreciate, but most buyers won't value the beds highly, since many will want to upgrade the beds shortly after purchasing your salon to attract and excite new customers...Your computers and furniture are worth about ¼ of the cost new...Your buildout cost for construction, A/C are worth around about ½ the cost you paid for the work and equipment regardless of the age of the salon... Fourth: The potential cash flow of the salon...If you can document the income and expenses of the salon, it is better...If you tell the buyer that the salon made more money than you have documentation for he will discount your statements... you could estimate that the "cash flow" of a standard salon is around 20-30% of the gross annual income...A buyer will usually pay around one year's cash flow to obtain the income stream... So for example: Facts: Beds: 7 standard 20 minute beds 5 years old cost new $4,000 ea... Beds: 1 VHR w/facials 12 minute bed 2 years old cost new $14,000... Customer base: 3,000 of which 900 have tanned in last 6 mo and another 900 have tanned within a year... Size of salon: 1,000 square feet, cost of build out $25,000, age of salon 5 years... Computers and furniture cost new: $7,000... Last years documented gross sales: $150,000... Using this basic formula this salon would have a "value" of approximately $95,000 to a normal buyer...This may seem low to you, but consider that a buyer could sign a lease in another location and buy used equipment and be in business for less than you ask for...If you want CASH now, decrease the above by 20%....Cash buyers for tanning salons are rare, this is not a highly liquid market, and most with cash don't want to be in the health business with our seasonal fluctuations...If you "finance" the buyer by agreeing to carry back "paper" you will get more, suggest 30% down, and the balance over three years at 12% interest to maximize your potential yield...Suggest you DEMAND collateral such as his home or other assets to secure your interest and secure prompt payment as the note securing the salon demands. Make sure you engage a competent attorney to represent you in drafting the paperwork for the sale...Don't believe your salon is worth much more than this, or you will be disappointed and discouraged...Reality is the key to selling, and securing top dollar... Remember: The more flexible YOU are the more you get for the sale, and the greater the risk you take in selling for the increased price of the salon...You see the sale in terms of what you have invested, but remember the buyer is terrified you are lying to him about everything...Both sides should have a good attorney, and you need a good accountant... _________________ celebritytan.com[ This Message was edited by: ramcat on 2005-02-04 13:14 ] |
02-04-2005, 02:33 PM | #6 (permalink) |
Join Date: Oct 26 2004 Location: Florida
Posts: 2,262
Rep Power: 21 | If you think that you will get out of it exactly what you put into it, think again. Everybody will try to buy it from you at 1/3 of the value. Just be honest with yourself and remember that your labor does not count. |
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