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Old 01-08-2007, 10:44 AM   #1 (permalink)
 
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Red face Need advise on possible purchase of existing salon

Hi I am new to TanTalk. I find all the info on here very helpful. I am currently looking to purchase an existing salon. Need all the advice I can get. Here is the story. The salon owner owns 2 salons in different towns. I am interested in the newer one. It has been owned and remodeled by her for almost 2 years. Prior to her there were a few different owners (poorly ran) used coin operation. Anyway it has been a tanning salon for at least 10 years or so. When she took it over she basically started from scratch. This is now what it has. 3 Ergoline Ambition 200 w/ about 150 hours each. 2 Ergoline 250 w/ 800 hours and new bulbs. 1 Ergoline 300 w/ 800 hours and new bulbs. There is Ergoline stand up. There is also a MagicTan 3500 with diagnostic check and attached handspray. The salon is run on SalonTouch software and has 1100 in the client base. I don't know how many are active yet. I am going in to work there starting tommorrow to start gathering the info that I need to make an informed decision. She says she is selling because she can't put the time in to it to make it a go. She has a manager and an employee running it and she probably comes in every few weeks. There is no advertising done. She said that she worked the other salon she has and it holds its own and she thought that she would be able to open this one and have somebody run it for her. The salon decor is beautiful, extremely clean and all the beds are 20 months old. I see potential here with alot of work. First operating it myself, some strategic marketing and possibly a high pressure unit if it will allow.
I would also like to start an EFT.She says she will have the computer print off for me and p&l from her accountant. She said that she has kept horrible books and didn't know much of the numbers herself.
My question is that she is asking $110,000 which I know is way to high if she is only showing a loss. What would you value this salon at based on the equipment I listed. There is some lobby furniture, desk, computer, some lotion and supplies. What info shoud I request from her. Do you think this is worth buying. The lease is assumable with 14 months left at $2500.00 per month. Please let me know any of your thoughts. I would appriceiate it.

Thanks
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Old 01-08-2007, 10:46 AM   #2 (permalink)
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Re: Need advise on possible purchase of existing salon

If she kept poor numbers, how would she know what to charge for the salons? I would look into that statement.
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Old 01-08-2007, 10:52 AM   #3 (permalink)
 
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Re: Need advise on possible purchase of existing salon

I agree. Thats why I am going to work there to get the info I need. The area has demographics of about 40,000 households in a 3 mile radius. She said that the P&L show a loss. Sowhat do you think the equipment, clients, and furniture are worth.
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Old 01-08-2007, 10:54 AM   #4 (permalink)
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Re: Need advise on possible purchase of existing salon

You need to do more than work there. Send Steve Underhill a PM. He is the best person to talk to about this. Search Steve Underhill on here and he can help you.
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Old 01-08-2007, 10:56 AM   #5 (permalink)
 
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Re: Need advise on possible purchase of existing salon

Thanks. I have seen him on here quite a bit. how do I send him a PM? Sorry I am new to this.
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Old 01-08-2007, 10:56 AM   #6 (permalink)
 
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Re: Need advise on possible purchase of existing salon

most new businesses show loses for the first 5 years even if they are banking big money it works best for tax purpose....Mine makes good money but I file every lose possible.....Tax wise but if I went to sell it would make it alittle hardier.....I would just have my accountant show them month by month..... Ask for a monthly statements as well as a year statement...

Do not be trusting research! Sit in her parking lot undercover and see the clientele....If she is asking 110,000 your loan should be for a least 10-15,000 more to cover licenses, untold problems etc....
simply broke down a 7 bed salon with airbrush ....at 2500 a month rent.....with a 110,000 invested......
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Old 01-08-2007, 11:01 AM   #7 (permalink)
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Re: Need advise on possible purchase of existing salon

thats alot of money.

id be more concerned with the reason(truth) why she dont run that salon herself and put the employees and manager at the first location.

the reason she is selling isnt the truth find out the truth......salons for sale never list the true selling reason.

PS you could probably buy a quiznos for $110,000
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Old 01-08-2007, 11:02 AM   #8 (permalink)
 
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Re: Need advise on possible purchase of existing salon

Should I trust her computer print outs or do I need the tax returns as well even though they are going to show a loss. When I get the stuff I will have an accountant look at it. She is also willing to finance part of it.
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Old 01-08-2007, 11:03 AM   #9 (permalink)
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Re: Need advise on possible purchase of existing salon

get the returns! even if there is a loss there is still a GROSS.
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Old 01-08-2007, 11:04 AM   #10 (permalink)
 
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Re: Need advise on possible purchase of existing salon

She is acually selling both of the salons and she said that it is family reasons. That she is stretched too thin. She used to be a distributor for MagicTan and is currently working now. She said her family needs her.
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