excitednewguy

OK Folks,

I have had the pleasure of speaking with someone from the board here, to get ideas and advice on what I'm trying to do. Here's the scenario:

I have been "looking" for about 1 1/2 years now to either open or buy a salon. I may have the oppurtunity to purchase 2 in my area. One I think could be bought for about 60-70,000. 14 beds, 2200 sq. ft., airbrush in place (manual), huge room for massage therapy, very clean and well ran, same owners for 6 years (older couple). Problem is, the beds are quite old, they are Sunal, which I have found out is no longer produced. They are asking 90,000 but I am in no way going to pay this much. Their PandL's show that they have been consistently "losing money", 2003-183,000 gross, 2004-126,000 gross, 2005 to present-69,000 gross (which would equal 118,000 gross at the end of the year). Owner takes 30,000 per year and the lease is 3100 per month, which is good for the size. The salon is in a Kmart parking lot, right next to a gym. But, this is one of those "was a good shopping center back in the day but is not the most modern in the area now". This somewhat worries me. I did some research and found that I can get a 10 bed complete set up package with timers, software, etc. etc. for 50,000. So, this would leave me to believe that I could start a brand new place for about 100,000, allowing monies for build out.

The other salon is 8 beds and the guy was asking 75,000 a few months ago when I talked to him. All sundash beds with one stand up, about 5 years old. In another shopping center that is a little older, not as old as the other one, with a more modern center across the street. I'm thinking I could get this one turn key for about 50,000.

There are 5 salons within a 25 mile radius or so. The city I live in is growing by leaps and bounds! What I was thinking was to buy both "on the cheap", for about 125,000 estimate, and then go from 5 total salons in the area, to 4. I could take out two compeititors, so my 2 salons would be competing with three others. Also was thiking of upgrading the beds to newer versions once I bouth the salons, this would cost about 100,000. Of course this could wait or I could do a few beds at a time.

So, what do we all think? 2 salons for about 125,000, turn key, working. Would I be wasting my money to upgrade beds after buying them, or should I just let it go. I think what the beds look like to consumers means a lot?

Thoughts, Suggestions?

caribbean tan man

if it was me and i had the $$$$ i would buy the 2 change both the names to your 1 new name that would make a impact alone! you could upgrade maybe 2 machines per salon and even move equipment between the 2 salons to make things look different and possibly get a better mix!if you were to open a new salon youd spend atleaset the same $ and that leaves the opportunity for someone else to buy the 2 salons and make them better! there is alot to more to look at electrical,computerized,# of clients distance between 2, etc good luck

excitednewguy

I kind of think the same Tan Man. I did the math, and equipment wise, I could buy a 12 bed package to include low pressure-high pressure-stand up-timer system, and many other things for 63,000.

I really don't think the one is worth 90,000. Based off of equipment, I am thinking more like 30,000, add trhe customers and smaller items, maybe we are at 50,000 on a good day.

I do think someone will buy it though, even if it's too much, so I am wondering what to offer.

caribbean tan man

just offer what you feel comfortable with just make sure u can handle it! do you have any training its not a easy business and it will be real tuff at first? keep searching this site and you will find stuff to look for that u probally never thought of! good luck

BigLeo

Dear Mr. Excitement:

There are so many hints of potential problems, most of them you. What makes you so sure you can blow out two other salons? Don't be so over-confident. You've got old, outdated equipment from an non-existant manufacturer. Declining sales and loses for probably three straight years. Now you figure you can buy "two birds with one stone" and build a successful salon around that. I don't see your plan to turn this around if you bought out these salons. What is your plan? Take your time. This is a tough industry and there is a lot of over-capacity. Too many salons chasing fewer tanners. High energy costs are making it tough for pro's to operate in this economy. I could think of a lot better busiesses to be in right now than tanning. The bankrupcy and collections business is just booming right now. Gas & oil is doing fantastic. So far from what I've read 2005 is just as bad as 2004. Only well established, well managed salons are going to make it through two bad years. So just take your time. Excitement clogs the brain. Leo.

sunsally

Leo makes some good points, but there may be "more to the story" as well so hard to judge with what you've given so far.

Note however -- I'd be suspect that you are getting a "competitive" equipment lineup if you are looking at purchasing 12 units, including High Pressure and timers and all kinds of accessories, for $63K!! Or even buying 10 units for 50K and investing another 50K in buildout. If you have to upgrade A/C and/or Amps, that alone could eat up that much!

Got your message - get back in touch and we'll discuss further....

excitednewguy

Bigleo,

First of all, this would not and is not the first business I have owned or bought, so don't worry about what you think are the "hints of potential problems". Do you honestly think someone would not complete some sort of due dilligence before going forward with the purchase of a business, wether it be tanning or any other sort. Give me a break. As far as your comment on one of the problems being me, again give me a break. You have no clue who I am or what I do, so don't assume anything. Whoever said anything about "blowing out" a competitor? What I said was if I buy both there will be two less comp.

Something about folks who think they know it all just ticks me off. I am a business man, not some idiot trying to buy a business based off of emotions. I will offer what I think is right, if they accept great, if not I will move on.

Gas and Oil----What-buy a refinery....LOL

West Side Tanner

There are Idiots on here everyday, who would buy a business, and not do any research at all!

caribbean tan man

excited new guy this is a forum your going to get negatives and positives and "what the fu

missyhot

Hey Excited- Stay Excitied because I am a newbie into this business for almost 6 months now and I am desperately in need of more tanning beds because I can't keep up with the demand. I am the only tanner in my small town but Business is great! Granted, I am hitting a slow time at this time but I am still going strong! Keep your excitement, give great customer service and fix the salon up and make it as nice and clean as you possible can.