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Old 05-21-2005, 02:46 PM   #1 (permalink)
 
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Hello,

My salon has been open for 1.5 years and I'm either thinking of expanding my salon or opening a second location. I grossed $135K the 1st year and will most likely gross $185K the 2nd year.

During the busy times (Mon-Fri 5-7pm) some clients have to wait 5 minutes for a bed to open up, so I thought about expanding because the next busy season, people might have to wait longer. I currently don't take appointments, all walk-in. I currently have 10 tanning beds and I'm thinking of bringing in 5 more beds. Do you think that expanding the salon for the 3rd year would warrant an increase of $2500 per month in expenses? My current expenses are about $14,000 per month.

Some things to consider are-

The expansion would cost about $30-$35K.
Do you think I'm maximizing the market area right now?
What does a typical 3-level 10 bed tanning salon gross per year at max capacity?
Should I take appointments during this time?
Is this a parallel move- would it just take longer to pay off the salon?

The other idea is to hit a different market area all together by opening a 2nd location.

I'm sure that many of you had to make this decision already. Please let me know what your advice and ideas are, it is greatly appreciated.

Thank You!
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Old 05-21-2005, 05:03 PM   #2 (permalink)
 
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I am in the process of considering a second salon 3 miles from my current, I believe this may keep anyone else from coming in the area bc of the 2 salons so close and it would give you the oppertunity to change the type, ie more upscale for the clients who want the upgrade equipment only.
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Old 05-22-2005, 12:02 PM   #3 (permalink)
 
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I'm confused....You said that you gross $135K and your expenses are $14,000/month. Where is the profit?
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Old 05-22-2005, 12:29 PM   #4 (permalink)
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ditto...
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Old 05-22-2005, 01:03 PM   #5 (permalink)
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5 minute wait with walk-in only doesn't sound bad at all.
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Old 05-22-2005, 08:06 PM   #6 (permalink)
 
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I will gross $185K this year, the expenses are $168K per year. The first 9 months of operation, I didn't take as much from the salon and I had 9 months of free rent.
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Old 05-22-2005, 11:11 PM   #7 (permalink)
 
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Nice. I would look at opening at least two more locations asap. Cause your first years figures are your best to figure future sales. Next season you are sure to see an 18% increase in gross revs. And the third year will see 24.3% in increases over year two. By year #6 you will be doing well with personal finances and now have the option of keeping your 6 salons, or selling for major $$ or hanging in and increasing the sale value of your chain.

With the investments you have made in rehab real estate meantime, your are more than well off, but do not sell your chain of salons in haste. For further info:

www.yeah-you-will-be-okay.com
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Old 05-23-2005, 05:51 AM   #8 (permalink)
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Fitnessguy - You asked a legitimate question. Ignore Neon Beach - his sarcasm was directed at others, not you specifically. He's that way - sadly.

To your question....

Expansion? If you have room to add 5 more beds in your current location, I would do that before I opened a 2nd location. WAY more expensive to open a 2nd location from scratch obviously, and for now, you are just a bit more than breaking even on the 1st. When you add equipment, you add lease/loan payment and a teeny bit for electricity/maintenance, but your major expenses (rent, payroll, etc) remain the same.

However - I would WAIT to add beds until next busy season! No need to wrack up lease payments now. If the rooms need to be built out - go ahead. Make sure they are big enough and have enough electrical to be flexible for a few different bed types. Spend the off season really ANALYZING your traffic flow.

Do you really want to add more base beds??? A 5 minute wait isn't bad at all during busy season! Perhaps you should be adding bigger/better equipment instead - a 4th and/or 5th level to your 3 level salon? An additional level 2 or 3 bed? Sunless? These can all offer much greater revenues and profits - IF you know how to "sell" them in your salon and people in your market will pay to use them!

Do you have enough amperage left to add more units? Bigger ones? How about HVAC? If not, these are major expenses you might want to save for and wait to do the expansion the following year.

Lots of questions, big decision. I think the "advice" you are getting is --- don't move TOO fast and bite off more than you can chew! Sounds like you are off to a good start! Keep at it, look for ways to cut expenses, save/save/save all this busy season money to tide you over through this fall! See how the "off season" goes this year, see if your competitors make any moves, and come Feb/March of next year, decide if it's time to make a move. Can even just add 1-2 then, then maybe another in May if you think you really need it.

Thanks for posting - welcome!
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Old 05-23-2005, 11:19 AM   #9 (permalink)
 
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Thanks for the great advice Sun Sally, I think I will hold off on expanding for now. I already have (6) 20 min beds, (2) facial 160 watt beds, (1) stand up, and (1) high pressure bed. Clients have been waiting for the 20 min beds b/c I offer unlimited tanning on those beds with my EFT program. I have over 300 members now, but I'm just worried that people might be discouraged to sign up next year if I have 500 members and there is always a wait during the busy time.

How do you handle the traffic after work? Do you take appointments during that time? Should I install 15 min lamps?

Neon Beach is in la la land.
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Old 05-23-2005, 09:36 PM   #10 (permalink)
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I just saw this one....My dear, Just apartment complexes...houses are sooooo late night TV...

we do not take appointments..and I just had this concern in our 11 bed salon...we have people waiting 50 minutes for a base bed...if you are going to take it down to 15 minutes you will have a hard time selling that unless you change the beds...they can always upgrade..if you only have 5 minutes to wait, that not a big deal.
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