Is the juice worth the squeeze??? - tanTALK

lucky7_93021 · 05-24-2006, 04:21 PM

Hi all!
I am new to this whole industry and I'd like to start by thanking everyone for there great posts and awesome information. Until recently I have invested in real estate but as the market cools off I've decided to move on. I have been interested in opening a tanning salon for a number of years.. and this seems like a good time to start.
I live in Southern California and have been looking for an established salon to take over. I know it takes time and effort to run but I just don't have the avalible time to start from scratch. For as much sun as we have here tanning salons seem to go like hot cakes and every time one is on the market it's gone within days. Does anyone know what the busy times are for So. Cal salons? The temperature is so moderate all year, most salons I have looked at are not showing a heavy decline in business through the year.

Recently I was offered a chance at a salon in an up and coming part of SoCal but it's to far and I'd have to be absentee. I would like to tell you what I know so far and find out if it's really worth looking into?

First off they are asking $270,000 for the salon. It's yearly reported grose is $285,000 but they claim at least $25,000 in cash from an on site massuse as well as an estitician who split there earnings 50/50. The estimated net is $105,000 with a working owner.... plus the $25k.
Now the salon has only been open for little over a year but it's huge, 2200 square feet with over 10 machines. Everything will be paid off in the sale, including the equiptment for the estitician. The rent it high, $5500 plus CAM making it $6400 a month. The build out was amazing and everything is very high end looking. No expense was spared.
At the moment there is only one other small compeditor in the area, which has grown 40-50% a year for the past 3 years. They are currently building 3500 new homes almost across the street and the salon is located off a major highway... close to a college, golf course and country club.

On paper to me this seems like a good deal but at $270,000 it's a lot more money that the other salons I was looking at in LA from $65k-$150k. My main question would be, does this seem worth the asking price and is it possible to make money in a situation like this as an absentee owner?

Thanks for all the great posts!
Cheers!
~S~

SunDizzy · 05-24-2006, 04:32 PM

those "profit" numbers seem a little too good to be true for someone wanting to sell their business. i know if i was making $125k/year net running only one salon, i wouldn't be in any hurry to sell it. have you verified those numbers with the last two years worth of their tax reports?

lucky7_93021 · 05-24-2006, 05:27 PM

I am trying to set a time to see the place this weekend. The problem is they have only been around for a year and dont have tax statements from that far back???

cametotalktan · 05-24-2006, 05:33 PM

What somebody put my salon up for sale?

lucky7_93021 · 05-24-2006, 05:41 PM

:-) I guess so... can you give me some numbers???

SunDizzy · 05-24-2006, 05:42 PM

still seems a bit fishy to me, and here's why. businesses tend to grow after the first year, which means that their profits would go up. so this owner has the potential to "bank" over $125k this year, possibly more next year - why would they want to sell? who goes through all the trouble to set up a business in CALIFORNIA (for that matter) AND make that much money the first year, just to sell it? i dunno, if something sounds too good to be true... ya know. in either case, **** i'd buy the salon if everything they're saying is true. for the chance to jump into a well-established business in CA where you can make your initial investment back in only a couple years - that's a no-brainer.

lucky7_93021 · 05-24-2006, 05:48 PM

Yeah those are definatly my concerns. I have read on here that there is never a good reason to sell a profitable business that can run itself.... so, when I go to see the salon... what are some questions I can ask to get a real idea of what is going on? What are some things a newbie can look for if someone is trying to pull the wool over there eyes?

SunDizzy · 05-24-2006, 06:11 PM

i would ask to see their financial statements, incl. tax returns, equipment & lotion purchase histories, and even their computer records since they've opened. you may not understand the records... but try to get them anyways. mention that you're going to have someone in the industry review them for you. they shouldn't mind to any of those requests. did they mention why they want to sell?

lucky7_93021 · 05-24-2006, 06:22 PM

i will definatly get all those things before moving forward and make sure to have the right people review the paper work.
i did ask at one point why she was selling... but i can't remember for the life of me what it was. I will find out and repost.
the salon along with tanning also offers Body Treatments, Brazilian Waxing, Facials, Massage, Microdermabrasion, Relaxing Massages and Skin Care. Most of that money is not accounted for in the profit I believe since it's a split with the massuse and estitician. the owner just takes her half in cash. is there any way to prove that?

lucky7_93021 · 05-24-2006, 06:29 PM

Oh.. here is a list of what tanning equiptment she has...

(2) 250 ambitions
(1) Sundash Standup
(1) Ergoline 650
(1) Mystic Tan
(3) Sunvision ZX30's
(1) Starpower
(1) Velocity UWE 918

She also has all the equiptment for the spa including a microdermabrasion machine... this will all be paid off in the sale and she is putting the estimated worth at $150k.

05-24-2006, 04:21 PM	#1 (permalink)
lucky7_93021 Join Date: May 17 2006 Posts: 13 Rep Power: 0	Is the juice worth the squeeze??? Hi all! I am new to this whole industry and I'd like to start by thanking everyone for there great posts and awesome information. Until recently I have invested in real estate but as the market cools off I've decided to move on. I have been interested in opening a tanning salon for a number of years.. and this seems like a good time to start. I live in Southern California and have been looking for an established salon to take over. I know it takes time and effort to run but I just don't have the avalible time to start from scratch. For as much sun as we have here tanning salons seem to go like hot cakes and every time one is on the market it's gone within days. Does anyone know what the busy times are for So. Cal salons? The temperature is so moderate all year, most salons I have looked at are not showing a heavy decline in business through the year. Recently I was offered a chance at a salon in an up and coming part of SoCal but it's to far and I'd have to be absentee. I would like to tell you what I know so far and find out if it's really worth looking into? First off they are asking $270,000 for the salon. It's yearly reported grose is $285,000 but they claim at least $25,000 in cash from an on site massuse as well as an estitician who split there earnings 50/50. The estimated net is $105,000 with a working owner.... plus the $25k. Now the salon has only been open for little over a year but it's huge, 2200 square feet with over 10 machines. Everything will be paid off in the sale, including the equiptment for the estitician. The rent it high, $5500 plus CAM making it $6400 a month. The build out was amazing and everything is very high end looking. No expense was spared. At the moment there is only one other small compeditor in the area, which has grown 40-50% a year for the past 3 years. They are currently building 3500 new homes almost across the street and the salon is located off a major highway... close to a college, golf course and country club. On paper to me this seems like a good deal but at $270,000 it's a lot more money that the other salons I was looking at in LA from $65k-$150k. My main question would be, does this seem worth the asking price and is it possible to make money in a situation like this as an absentee owner? Thanks for all the great posts! Cheers! ~S~

05-24-2006, 04:32 PM	#2 (permalink)
SunDizzy I love Derf!! Join Date: Mar 21 2003 Location: California Posts: 234 Rep Power: 22	Re: Is the juice worth the squeeze??? those "profit" numbers seem a little too good to be true for someone wanting to sell their business. i know if i was making $125k/year net running only one salon, i wouldn't be in any hurry to sell it. have you verified those numbers with the last two years worth of their tax reports?

05-24-2006, 05:27 PM	#3 (permalink)
lucky7_93021 Join Date: May 17 2006 Posts: 13 Rep Power: 0	Re: Is the juice worth the squeeze??? I am trying to set a time to see the place this weekend. The problem is they have only been around for a year and dont have tax statements from that far back???

05-24-2006, 05:33 PM	#4 (permalink)
cametotalktan I love Derf!! Join Date: Jul 10 2004 Location: california Posts: 3,385 Rep Power: 51	Re: Is the juice worth the squeeze??? What somebody put my salon up for sale? __________________ When I grown up I want to be Angerfant.....

05-24-2006, 05:41 PM	#5 (permalink)
lucky7_93021 Join Date: May 17 2006 Posts: 13 Rep Power: 0	Re: Is the juice worth the squeeze??? :-) I guess so... can you give me some numbers???

05-24-2006, 05:42 PM	#6 (permalink)
SunDizzy I love Derf!! Join Date: Mar 21 2003 Location: California Posts: 234 Rep Power: 22	Re: Is the juice worth the squeeze??? still seems a bit fishy to me, and here's why. businesses tend to grow after the first year, which means that their profits would go up. so this owner has the potential to "bank" over $125k this year, possibly more next year - why would they want to sell? who goes through all the trouble to set up a business in CALIFORNIA (for that matter) AND make that much money the first year, just to sell it? i dunno, if something sounds too good to be true... ya know. in either case, **** i'd buy the salon if everything they're saying is true. for the chance to jump into a well-established business in CA where you can make your initial investment back in only a couple years - that's a no-brainer.

05-24-2006, 05:48 PM	#7 (permalink)
lucky7_93021 Join Date: May 17 2006 Posts: 13 Rep Power: 0	Re: Is the juice worth the squeeze??? Yeah those are definatly my concerns. I have read on here that there is never a good reason to sell a profitable business that can run itself.... so, when I go to see the salon... what are some questions I can ask to get a real idea of what is going on? What are some things a newbie can look for if someone is trying to pull the wool over there eyes?

05-24-2006, 06:11 PM	#8 (permalink)
SunDizzy I love Derf!! Join Date: Mar 21 2003 Location: California Posts: 234 Rep Power: 22	Re: Is the juice worth the squeeze??? i would ask to see their financial statements, incl. tax returns, equipment & lotion purchase histories, and even their computer records since they've opened. you may not understand the records... but try to get them anyways. mention that you're going to have someone in the industry review them for you. they shouldn't mind to any of those requests. did they mention why they want to sell?

05-24-2006, 06:22 PM	#9 (permalink)
lucky7_93021 Join Date: May 17 2006 Posts: 13 Rep Power: 0	Re: Is the juice worth the squeeze??? i will definatly get all those things before moving forward and make sure to have the right people review the paper work. i did ask at one point why she was selling... but i can't remember for the life of me what it was. I will find out and repost. the salon along with tanning also offers Body Treatments, Brazilian Waxing, Facials, Massage, Microdermabrasion, Relaxing Massages and Skin Care. Most of that money is not accounted for in the profit I believe since it's a split with the massuse and estitician. the owner just takes her half in cash. is there any way to prove that?

05-24-2006, 06:29 PM	#10 (permalink)
lucky7_93021 Join Date: May 17 2006 Posts: 13 Rep Power: 0	Re: Is the juice worth the squeeze??? Oh.. here is a list of what tanning equiptment she has... (2) 250 ambitions (1) Sundash Standup (1) Ergoline 650 (1) Mystic Tan (3) Sunvision ZX30's (1) Starpower (1) Velocity UWE 918 She also has all the equiptment for the spa including a microdermabrasion machine... this will all be paid off in the sale and she is putting the estimated worth at $150k.

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