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Old 12-11-2005, 07:17 PM   #1 (permalink)
 
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What's hiding? Worth buying?

Hi, I'm looking into buying an existing tanning salon in my area. The asking price is $58K for a small salon with only 4 beds (all sundash-2 competition 226 and 2 endurance 424), no room for expansion unless you could lease the space next door and add on, which may be possible soon. Anyway, when I s**** with the owner on the phone she told me that her gross sales the past three years (that's how long it's been open) has been roughly $75K/year and her take home net is $45K with her running it most of the time and only 2-3 part-timers for nights and weekends. When she gave me a print out on her financials, she lists only about $38K gross each year and roughly $16-$18K per year in actual net profit. I'm going to call her tomorrow to see if she can explain but thought I'd ask you guys what you think? She told me that if I and my teen daughter run it most the time I should be able to net about $60K back in pocket. She admits she does no advertizing other than a one time school newspaper ad around prom time so I know I could increase sales if I got some advertizing going. There are no other salons within 6 miles. Is it worth me spending the money? Thanks for the advice!
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Old 12-11-2005, 08:52 PM   #2 (permalink)
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Re: What's hiding? Worth buying?

Quote:
Originally Posted by wanttobetan
Hi, I'm looking into buying an existing tanning salon in my area. The asking price is $58K for a small salon with only 4 beds (all sundash-2 competition 226 and 2 endurance 424),
Year..how many hours..condition?

Quote:
no room for expansion unless you could lease the space next door and add on, which may be possible soon.
UMM MY take is That extra space is another fixed income to adjust your books to be able to pay. IE additional rent) JMHO Now build out cost and such is expensive ( electrica, hvac-- etc) and may not necessarily add to your gross profit.



Quote:
Anyway, when I s**** with the owner on the phone she told me that her gross sales the past three years (that's how long it's been open) has been roughly $75K/year and her take home net is $45K
Not buying that at all. 4 beds...umm no :sarcasm:
Quote:

When she gave me a print out on her financials, she lists only about $38K gross each year and roughly $16-$18K per year in actual net profit.
well some owner are more creative ( accounting wise than others) asking her to explain is unnecessary... she is asking way tooo much for something so small. Even with allowing room for creative accounting on her part.. that is half of what she claims. wow.


Quote:
She told me that if I and my teen daughter run it most the time I should be able to net about $60K back in pocket.
No one can predict what YOU would do. Her lack of effort to advertise is her loss. NOT that you could not do better but for the math is bad here.

CC is a large part of gross sales in most salons. ask her to see 12 month of CC statement. and bank statements. NO way did she make 30- 40 k in cash disappear. ( to the eyes of the IRS) Secondly--
she claims you will clear 60 IF you and your daughter basically give up you life ---and live there. UMMM dude you will be paying 58 to buy it.

enuff said.
Offer her 20 and let her counter for no more than 25 and then maybe IF the lease is a sweet deal and other things are in order I might do it if I were you.. ONLY becasue it is the only salon in that market .

JMHO

then come back for more questions to ask from us. After she reduces the price.
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Old 12-12-2005, 04:21 PM   #3 (permalink)
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Re: What's hiding? Worth buying?

I just don't see clearing that kind of $$$ with 4 beds !! I would want to see their 1040's and gather more info.
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Old 12-12-2005, 10:15 PM   #4 (permalink)
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Re: What's hiding? Worth buying?

Are you trying to open a salon for a career or for a side job? Do you have the money availab;e that if you could throw it away you would not miss it? If you can answer yes to these questions then go for it....what do you have to lose. If you are trying to actually generate a healthy income on the tanning salon, I would go for either a bigger store or get all of the facts of what she is telling you. Alot of people want to puff up there numbers when they are trying to sell something.....why is she selling if she has that much profit? if you say no to the 2nd question, you have a lot of thinking to do. As I know people will agree with me when I say that a tanning salon is not an overnight money maker, so if you dont have the money to support yourself for atleast the first month, I would be warry....especially of this place inparticular......something just does not seem right
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Old 12-13-2005, 07:15 PM   #5 (permalink)
 
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Re: What's hiding? Worth buying?

Quote:
Originally Posted by MJ
Year..how many hours..condition?


UMM MY take is That extra space is another fixed income to adjust your books to be able to pay. IE additional rent) JMHO Now build out cost and such is expensive ( electrica, hvac-- etc) and may not necessarily add to your gross profit.




Not buying that at all. 4 beds...umm no :sarcasm:


well some owner are more creative ( accounting wise than others) asking her to explain is unnecessary... she is asking way tooo much for something so small. Even with allowing room for creative accounting on her part.. that is half of what she claims. wow.



No one can predict what YOU would do. Her lack of effort to advertise is her loss. NOT that you could not do better but for the math is bad here.

CC is a large part of gross sales in most salons. ask her to see 12 month of CC statement. and bank statements. NO way did she make 30- 40 k in cash disappear. ( to the eyes of the IRS) Secondly--
she claims you will clear 60 IF you and your daughter basically give up you life ---and live there. UMMM dude you will be paying 58 to buy it.

enuff said.
Offer her 20 and let her counter for no more than 25 and then maybe IF the lease is a sweet deal and other things are in order I might do it if I were you.. ONLY becasue it is the only salon in that market .

JMHO

then come back for more questions to ask from us. After she reduces the price.
I agree with MJ. Most High Pressure Phase 2 beds cost $7,000 a piece. At 4 thast $28,000. Electrical setup is usuallu about $600 a room. $2400. Electrical in salon is around $1,000. Extra equipment is around $4500.. tops...
Inventory can't be more than $2000. So do the math for brand-new. Build up consists of 2"X6" walls , no ceilings and some doors. I think you can do an 8 room salon with all the perks for $60,000. This includes the rent for 6 months.
Advertising is an expense you will need to bear. Get on it and quit wastring time with an untruthful owner, THAT'S MY TAKE... Customers love new beds....
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