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02-02-2008, 02:40 PM | #1 (permalink) |
Join Date: Feb 2 2008 Location: MN
Posts: 1
Rep Power: 0 | IM CLOSE TO BUYING A SALON I am a total newbie. I have a seller with an unbelievable deal, great monthly repoarts-- aewsome location-- great client base. I've seen the financial reports, marketing... and everything is included in this sale-- beds, computers, software, furniture r=etc ect... all i have to do is make the lease payments for the space and the lease payments on the beds. I'm feeling like this is all too good to be true. What else should I be asking? Do I need an operators license? What about insurance? Do I apply for myself or take over the current owners? Bed maintenece... and finally, is there really a profit to be made from this? I want to quit working and work for myself. Any help/advice is appreciated. |
02-02-2008, 03:10 PM | #3 (permalink) |
I'm Banned Join Date: Jan 27 2007 Location: ca
Posts: 485
Rep Power: 0 | Re: IM CLOSE TO BUYING A SALON Are you paying a lump sum for the salon, then also taking over their bed lease payments? Who created the reports? Did you see tax returns? You will need insurance, workers comp (if you have employees), business license, fictitous business name, etc. Make sure you have at least 6 months bills in the bank. Do a search on buying a salon on here, lots of good info and wise words. :) Good luck |
02-02-2008, 04:21 PM | #6 (permalink) |
Team TanTalk Join Date: Nov 23 2004 Location: ITA Member & Berman Supporter!
Posts: 3,136
Rep Power: 25 | Re: IM CLOSE TO BUYING A SALON Have an attorney and/or accountant look through EVERYTHING before you go another step forward. Examine the costs - carefully. Ask to see copies of utility bills, payroll, etc Get the fine details on the building lease and equipment leases - are they assumable, what are the terms, etc. You will need a vendor's license, set up a corporate structure of some form, liability insurance. The lease company will want insurance naming them until the beds are paid off. Check with the local government - any assessments pending, special projects coming up (e.g. they are going to tear up the road in front of the place for the next 12 months,...)? Tax returns, as noted. See how well they compare to what you were told. If they tell you "oh - it is a cash business and we don't report a lot of it" - that is nice to know - but nothing you would PAY for. You should pay based on numbers you can verify. In doing this examination -- make sure to do the math this way: 1. Look at what you believe is the "net profit" yearly. 2. If you plan to quit your job to work this salon, subtract your salary - and the cost of your benefits if any - from this net profit. 3. Take the remaining yearly net profit after your salary -- and divide this into the amount you plan to PAY for the business - to determine the 'payback" time for your investment. For example - let's say the verifiable Net Profit is $60K/year. They are asking $150K for the salon (2.5xnet profit). You currently make $25K/year - and approximately another 5K in the value of your benefits, vacation time, holiday pay, etc Take the net profit of $60K, subtract the $30K in salary and benefits you'll be giving up for a NEW net of $30K/year to you. NOw - take the $150K they want you to pay. That means you will have to do this for 5 years, at the current profitability, to "break even". You won't start "making money" - until year 6. Plug in your own numbers and make sure it makes sense. Owning a business is MUCH more demanding than being an employee!! |
02-02-2008, 07:11 PM | #8 (permalink) |
I love Derf!! Join Date: Dec 6 2003
Posts: 405
Rep Power: 21 | Re: IM CLOSE TO BUYING A SALON ect... all i have to do is make the lease payments for the space and the lease payments on the beds. In my unedumekated opinion, "Leasing" the beds? After how long? How long has the business been there? If you answer with (any period of time of more than 3 yrs) they shouldn't be 'leasing' anything 'cept the space.
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