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Old 02-13-2006, 08:32 PM   #1 (permalink)
 
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GOOD BUY?? HELP!

Hey thanks for checking out this post. I am in desperate need of some help!!

I am looking to buy an existing tanning salon it has been in operation for about 5 years now. It is in a prime location, 99.9% white, good income, high traffic etc.

The lease is $1580/mth, about 2100 sq ft. Only one other salon in the area, very little competition as they are a fairly crappy salon.

All the beds are relatively new all 2003, most all of them are made by TanSES. They all look MINT, not marks etc. Very well maintained salon.

Beds:

4 - 28 Lamp Beds - TanSES
3 - 32 Lamp Beds - TanSES
1 - 52 Lamp Beds - TanSES
1 - VHR Stand UP Level 1
1 - VHR Stand Up Level 3
1 - Ultrabronz Bed
1 - Mystic Tan Booth

Client Base:

4,400


(not exactly sure how many are active, however was told when current owner took over there was only 1000, and he has increase that number over the last 3 years)


The current asking price for this business is $200,000.

I have been told and shown with financial statements last years yearly GROSS OF $190,000

With profits around $85-95,000


ANYONE!! HELP! DOES THIS SOUND GOOD??? BAD?? ANY HELP WOULD BE SO SO SO GREATLY APPRECIATED!!!

THANKS!!
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Old 02-14-2006, 01:01 PM   #2 (permalink)
 
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Re: GOOD BUY?? HELP!

Tax returns will reflect the Net Profits. A salon is typically worth 2 to 2.5 times verified net profit for the most current year. Have the sales been going up or down over the past few years?
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Old 02-24-2006, 05:22 PM   #3 (permalink)
 
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Re: GOOD BUY?? HELP!

Here is what you have to think about---OK you go get a loan for whatever you need. Now calculate ALL the monthly expenses plus paying that loan off. Here is my problem, dont forget you have to be able to pay you PERSONAL bills also. Dont forget that busy season is on its way and you still have to keep money aside for the slow months. GOOD LUCK
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Old 02-24-2006, 05:29 PM   #4 (permalink)
 
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Re: GOOD BUY?? HELP!

Quote:
Originally Posted by Steve Underhill
Tax returns will reflect the Net Profits. A salon is typically worth 2 to 2.5 times verified net profit for the most current year. Have the sales been going up or down over the past few years?
What's this? 2 to 2.5 times the net profit for the most current year?

So, I have a salon with $150,000 worth of tangibles, but my net profit in the time period you mention was only $20,000. It's only worth $40,000 to $50,000? That sucks. No?
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Old 03-25-2006, 02:07 PM   #5 (permalink)
 
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Re: GOOD BUY?? HELP!

It's actually 2 to 2.5 times profit, + assets. And, customer goodwill counts as an asset.

so 20,000 profit (is 40 to 50K), plus 150,000 value of assets, plus good will could be for sale in the $200,000+ range.
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Old 03-26-2006, 10:28 AM   #6 (permalink)
 
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Re: GOOD BUY?? HELP!

I'd check that lease to be sure the price you're quoting includes CAM, R.E. tax, etc. Sounds low for the size. A lot of sellers quote the "minimum rent price" but when everything is added on you find it's double.
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Old 03-26-2006, 12:05 PM   #7 (permalink)
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Re: GOOD BUY?? HELP!

Why are they selling?

What software do they use? There are tonnes of reports you can see with software. And I'm sure that all the different software users here can tell you what to check.
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Old 03-26-2006, 12:09 PM   #8 (permalink)
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Re: GOOD BUY?? HELP!

The question you should be asking is can you enter an industry you have no experience or inside knowledge of and survive the first three years? If the answer to that is "yes", then I think the situation sounds like a good deal. If the answer is "no", or "maybe", then I sincerely recommend that you look into other investment vehicles. Good luck. -Belvy
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Old 03-26-2006, 12:29 PM   #9 (permalink)
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Re: GOOD BUY?? HELP!

^^^ Well said. My 'education' in the tanning industry cost me about $50k

welcome back Mr. B
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Old 03-26-2006, 12:31 PM   #10 (permalink)
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Re: GOOD BUY?? HELP!

It's good to be back my friend. Thanks for holding down the fort. :sarcasm: You guys had quite a week from the looks of things around here.
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