trying to buy business - tanTALK

catalina beach · 02-15-2005, 08:52 PM

I am so nervous, please tell me what you think. I am looking at a business that the asking price is 65K, included is FF & E totaling 65K....but I called the dealer, who told me if the (4 year old) machines were new they were worth 52K...I was told that tanning clientele are very transient and are not to be considered in the price. The shop is clean, but nothing special. It only clears 20K. I do love it, what should I offer?? What should I ask?? I know it is getting to the "dead" season. It was originally listed before the busy season, should I ask them to replace bulbs? I am stessing! I dont want to make a mistake! Please any help would be so appreciated!!

DWhite6872 · 02-15-2005, 09:25 PM

FF & E? What is that....What is their gross and what was their net...how many do they have on membership programs? How big is their database...but more importantly how many are active?

catalina beach · 02-15-2005, 10:23 PM

FF&E is furniture, Fixtures & Equipment. Last yr gross was 84K....exp. was 62K...not alot of profit......22K, not alot, but, that is a not properly advertized salon. she says about 1900 clients....gave me 1 days sales....the day prior to my visit....it was a $500 day.....I also saw financials of the bad months to come. I am an aggressive person with 30 yrs customer service exp. ( + some marketing) I am sure I can make this profit, maybe not in 90 days....and it will take me ( at these figueres) 5 years to pay it off.....just need a little hand holding.......

DWhite6872 · 02-15-2005, 11:22 PM

Are they giving you special financing? Do you need their help with financing..or could you go out an get your own loans and start your own location? You cannot pay for the upside. What are the three year trends..have they been going down each year? They have old equipment....how many rooms? If they do not have a membership clients..its not worth a heck of a lot.

catalina beach · 02-15-2005, 11:28 PM

That's what I thought...I know that clients are not relliable...and that equipment is 3.5 yrs old...I am thinking on offering 55K ( the asking is 65K) ..and asking for hours on bulbs...the 84K is with no ads....I am a ad wiz!! I can at their figures pay the business off in 5 years...my husband does not need my contribution, and , I do have the luxury to go to a loss...but, my ego WILL NOT ALLOW THAT!! Do you think that an offer of 55K when asking is 65K ...( now that it is coming to slow season) is insulting?? Who really cares?? Do you think I can pull this off???I do have my husband as a backer...can I MAKE this HAPPEN????

sunsally · 02-15-2005, 11:43 PM

If the equip was worth 52K new, probably more like 30K now. Furnitures/fixtures etc is generally pennies on the dollar (figure it at garage sale pricing). Only clears 20K. You say place is "nothing special". I don't see 65K here

How many beds? Room for expansion? What are the lease terms - assumable by you or you have to renegotiate? Will landlord give you the same (or better?) deal?

I'd want to see full reports - not just 1 day's report. Also, 3 years of tax returns (not computer numbers or P&L - actual filed tax returns).

Clearing 20K/year - is this with them working all/most of the hours or complete payroll? Do you plan on working it yourself? Would you be happy with a fulltime (plus!) job that made you 20K per year - and you had to pay 55-65K to get it first?

Is the location great? Better than other locations where you could start from scratch?

Just a few things I would want answered, before I jumped into a purchase like this.

HotSpots · 02-16-2005, 05:39 AM

I would suggest you get a more accurate estimate on the equipment being sure to include age and usage (ie hours). I would offer the value of the equipment and the average of the earnings over the last three years. Doesn't sound like the salon is any where near 65k.

I agree with SunSally 100%. Definitley take your time on this one.

tropicaltanusvi · 02-16-2005, 08:29 AM

If $20 k was take out and can be proven over the last 3 years as an average, expenses included payroll it is not uncommon for a 1 year takeout offer. This equates to $30 k for FF&E and 20 for the year of abuot 50K, so your offer idea of $50-55 is not that far off.

catalina beach · 02-16-2005, 10:44 AM

Thank you all for any and all info!! I am going to the bank today....wish me luck!! This is going to be my full time job, hopefully it will be sucessful. If it is...I will be doing 1 or 2 more within 3 years...My husband works inAlaska, this will be our retirement.

engfant · 02-16-2005, 11:28 AM

"Last yr gross was 84K....exp. was 62K...not alot of profit......22K, not alot, but, that is a not properly advertized salon."

This is actually really good unless it's a 10+ bed salon. I'm thinking this is more like 5-8beds?

The advertising isn't gunna help as much as you think UNLESS you know what works in your area. I do all my own ads and ALL the publications have screwed them up. Save your money on big phonebook ads, and overpriced newspaper ads. Stick to the 5 year plan and do as much as you can yourself. If you can do this SERIOUSLY then I say go for it.

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02-15-2005, 08:52 PM	#1 (permalink)
catalina beach Join Date: Feb 15 2005 Posts: 20 Rep Power: 0	I am so nervous, please tell me what you think. I am looking at a business that the asking price is 65K, included is FF & E totaling 65K....but I called the dealer, who told me if the (4 year old) machines were new they were worth 52K...I was told that tanning clientele are very transient and are not to be considered in the price. The shop is clean, but nothing special. It only clears 20K. I do love it, what should I offer?? What should I ask?? I know it is getting to the "dead" season. It was originally listed before the busy season, should I ask them to replace bulbs? I am stessing! I dont want to make a mistake! Please any help would be so appreciated!!

02-15-2005, 09:25 PM	#2 (permalink)
DWhite6872 Waiting Confirmation Join Date: Apr 22 2004 Posts: 3,646 Rep Power: 0	FF & E? What is that....What is their gross and what was their net...how many do they have on membership programs? How big is their database...but more importantly how many are active?

02-15-2005, 10:23 PM	#3 (permalink)
catalina beach Join Date: Feb 15 2005 Posts: 20 Rep Power: 0	FF&E is furniture, Fixtures & Equipment. Last yr gross was 84K....exp. was 62K...not alot of profit......22K, not alot, but, that is a not properly advertized salon. she says about 1900 clients....gave me 1 days sales....the day prior to my visit....it was a $500 day.....I also saw financials of the bad months to come. I am an aggressive person with 30 yrs customer service exp. ( + some marketing) I am sure I can make this profit, maybe not in 90 days....and it will take me ( at these figueres) 5 years to pay it off.....just need a little hand holding.......

02-15-2005, 11:22 PM	#4 (permalink)
DWhite6872 Waiting Confirmation Join Date: Apr 22 2004 Posts: 3,646 Rep Power: 0	Are they giving you special financing? Do you need their help with financing..or could you go out an get your own loans and start your own location? You cannot pay for the upside. What are the three year trends..have they been going down each year? They have old equipment....how many rooms? If they do not have a membership clients..its not worth a heck of a lot.

02-15-2005, 11:28 PM	#5 (permalink)
catalina beach Join Date: Feb 15 2005 Posts: 20 Rep Power: 0	That's what I thought...I know that clients are not relliable...and that equipment is 3.5 yrs old...I am thinking on offering 55K ( the asking is 65K) ..and asking for hours on bulbs...the 84K is with no ads....I am a ad wiz!! I can at their figures pay the business off in 5 years...my husband does not need my contribution, and , I do have the luxury to go to a loss...but, my ego WILL NOT ALLOW THAT!! Do you think that an offer of 55K when asking is 65K ...( now that it is coming to slow season) is insulting?? Who really cares?? Do you think I can pull this off???I do have my husband as a backer...can I MAKE this HAPPEN????

02-15-2005, 11:43 PM	#6 (permalink)
sunsally Team TanTalk Join Date: Nov 23 2004 Location: ITA Member & Berman Supporter! Posts: 3,136 Rep Power: 25	If the equip was worth 52K new, probably more like 30K now. Furnitures/fixtures etc is generally pennies on the dollar (figure it at garage sale pricing). Only clears 20K. You say place is "nothing special". I don't see 65K here How many beds? Room for expansion? What are the lease terms - assumable by you or you have to renegotiate? Will landlord give you the same (or better?) deal? I'd want to see full reports - not just 1 day's report. Also, 3 years of tax returns (not computer numbers or P&L - actual filed tax returns). Clearing 20K/year - is this with them working all/most of the hours or complete payroll? Do you plan on working it yourself? Would you be happy with a fulltime (plus!) job that made you 20K per year - and you had to pay 55-65K to get it first? Is the location great? Better than other locations where you could start from scratch? Just a few things I would want answered, before I jumped into a purchase like this.

02-16-2005, 05:39 AM	#7 (permalink)
HotSpots Join Date: Oct 8 2004 Location: ri Posts: 69 Rep Power: 0	I would suggest you get a more accurate estimate on the equipment being sure to include age and usage (ie hours). I would offer the value of the equipment and the average of the earnings over the last three years. Doesn't sound like the salon is any where near 65k. I agree with SunSally 100%. Definitley take your time on this one.

02-16-2005, 08:29 AM	#8 (permalink)
tropicaltanusvi Join Date: Jan 27 2005 Posts: 35 Rep Power: 0	If $20 k was take out and can be proven over the last 3 years as an average, expenses included payroll it is not uncommon for a 1 year takeout offer. This equates to $30 k for FF&E and 20 for the year of abuot 50K, so your offer idea of $50-55 is not that far off.

02-16-2005, 10:44 AM	#9 (permalink)
catalina beach Join Date: Feb 15 2005 Posts: 20 Rep Power: 0	Thank you all for any and all info!! I am going to the bank today....wish me luck!! This is going to be my full time job, hopefully it will be sucessful. If it is...I will be doing 1 or 2 more within 3 years...My husband works inAlaska, this will be our retirement.

02-16-2005, 11:28 AM	#10 (permalink)
engfant Join Date: May 20 2003 Posts: 9,301 Rep Power: 30	"Last yr gross was 84K....exp. was 62K...not alot of profit......22K, not alot, but, that is a not properly advertized salon." This is actually really good unless it's a 10+ bed salon. I'm thinking this is more like 5-8beds? The advertising isn't gunna help as much as you think UNLESS you know what works in your area. I do all my own ads and ALL the publications have screwed them up. Save your money on big phonebook ads, and overpriced newspaper ads. Stick to the 5 year plan and do as much as you can yourself. If you can do this SERIOUSLY then I say go for it.

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