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Old 08-27-2012, 02:48 PM   #1 (permalink)
 
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New owner

Hello everyone! I'm new to all of this. In the next week I will be taking over a previously owned tanning salon. My husband and I are purchasing this salon for a very good price, I feel for $15,000. The salon was open and running well for 3 years. There are 3 commercial beds. One is Prosun X5, Prosun Onyx, and Solaris 442. The 2 Prosuns were bought brand new 3 years ago and all beds have been maintained well. The clientele is great and there aren't any other tanning salons in our town. We have a population of 6500. Am I correct to assume that this is a really good deal. Not to mention I am receiving free rent for the first year and after that the rent is minimal and the building is a really nice building.
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Old 08-27-2012, 02:53 PM   #2 (permalink)
 
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Re: New owner

If you're looking for a hobby you'll be okay...if you're looking to make money you'll be sorry.
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Old 08-27-2012, 03:05 PM   #3 (permalink)
 
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Re: New owner

I'm hoping to make some money. I will be the only person running it and she showed profit for past 3 years.
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Old 08-27-2012, 03:33 PM   #4 (permalink)
 
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Re: New owner

What did the P&L show? It can't make much money with the data you have posted. At best it will be a hobby.
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Old 08-27-2012, 04:46 PM   #5 (permalink)
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Re: New owner

RUN!!!
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Old 08-27-2012, 04:53 PM   #6 (permalink)
 
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Re: New owner

Quote:
Originally Posted by Oasis09 View Post
I'm hoping to make some money. I will be the only person running it and she showed profit for past 3 years.
Profit based on what? Be aware that the 3 beds you listed are not worth $15k. I can think of a lot of hobbies more exciting then sitting around bored out of my mine. And they don't cost $15k. Proceed with caution!
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Old 08-27-2012, 04:54 PM   #7 (permalink)
 
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Re: New owner

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Originally Posted by Brian Oshman View Post
RUN!!!
Actually, this is even better advise.
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Old 08-28-2012, 06:26 AM   #8 (permalink)
 
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Re: New owner

You say, the salon " was up and running well for 3 years". What do you consider, 'running well'? If it was successful, why is it being sold for such a low price (urgent to unload a sinking ship?). Any successful business is worth more than its year-end profit.

Did you look at the last 3yrs of tax returns/sales data/utilities for that period? How much inventory was re-stocked over that time? These are all sure tell signs of a business operating procedure. What is the REAL reason for the sale of the business? Over 95% of sellers sell for reasons other than what they say. I have seen many businesses over the years sell due to 'divorce'/ 'illness'/'retirement'/'other business interest'. Never the truth; losing money.

if industry stats could be believed, that less than 10% of the population tans, you can expect about 650 people to 'sign up'. Can you re-coup 15K with no more than 650 even considering to tan? Probably not. (that is about 2 people a day for a year).There will be other expenses on top of utilities, inventory, supplies, insurance etc., that you are not considering (R-U?). What about rent cost after free year? No rent is minimal. If it is a monthly expense, no matter the cost, it is just that, an expense. And that expense, like all others comes each month and MUST be met.What about salaries? Working the salon yourself still demands a salary. Are you planning to work for free? Then why go into business. Is this a hobby or future financial security? If the latter, you won't find it here.

Free rent for a year is nice, but at what price? Did you have to lock into a long lease that kicks in after 12 months? Is it an affordable lease?
Is there a clause to walk away if the biz folds, or are you still responsible no matter what?

Don't know how much business can be generated with only 3 beds, then I do not foresee people running to tan either.

At least when it comes time to 'walk' (don't 'run' as Brian suggest, walking is less painful), you are only out 15K and payoff of a lease, unless you can find someone else to take over.
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Old 08-28-2012, 07:26 AM   #9 (permalink)
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Re: New owner

Quote:
Originally Posted by Oasis09 View Post
Hello everyone! I'm new to all of this. In the next week I will be taking over a previously owned tanning salon. My husband and I are purchasing this salon for a very good price, I feel for $15,000. The salon was open and running well for 3 years. There are 3 commercial beds. One is Prosun X5, Prosun Onyx, and Solaris 442. The 2 Prosuns were bought brand new 3 years ago and all beds have been maintained well. The clientele is great and there aren't any other tanning salons in our town. We have a population of 6500. Am I correct to assume that this is a really good deal. Not to mention I am receiving free rent for the first year and after that the rent is minimal and the building is a really nice building.
This may or may not be a good opportunity for you - it depends what you do with it.

As others have mentioned, 3 beds can only generate so much revenue. But if you have the space, you may be able to expand. Maybe an inexpensive (used) upper level bed. Or spray tan (a booth or custom air brush). Maybe other services - massage, nails, hair, permanent makeup, body wraps, teeth whitening, supplements/body products, etc etc etc

If you aren't having to give up a job to work here - it may be a good opportunity for you to earn an income. As you look at their numbers, remember that there SHOULD be an amount in there for payroll. Even if it is owner-worked --- you should "factor in" an amount to pay yourself - at least minimum wage.

Welcome to the industry. There is a LOT of information on this board to give you some creative ideas of where to go next with this investment!
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Old 08-28-2012, 08:33 AM   #10 (permalink)
 
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Re: New owner

I appreciate all of the replies. As for a little more info on the lease as some have mentioned. There won't be a contract on the lease at all. I can leave at any time and there won't be any kind of penalty or loss of funds if I fold. As far as why the previous owner wants to sell is for the reason that she has another business that requires a lot more of her time with several new laws and regulations. I have visited this salon numerous times and I'm sure I won't get rich with running this salon without expansion of some sort. I am looking at other avenues to explore to bring in extra revenue other than just the 3 beds. As far as inventory in the building. There are some lotions, teeth whitening, and a small selection of flip-flops. Although, reading these responses are making me somewhat nervous. It's always been a desire of mine to have my own business such as this with the hopes of adding other items for sale to the community such as jewelry, some clothing, etc. In our town the women don't have a lot of options for shopping unless we drive an hour or further. I would like to try to find avenues for this but I also would like to be able to keep my prices reasonable. Any more info is greatly appreciated.
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