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Old 10-10-2006, 12:14 AM   #1 (permalink)
 
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I think I've come to the right place.

First off, hello to all of you out there. I spotted a sign posted in a business 3 weeks ago, "tanning salon 4 sale, busy, busy business, 23 yrs. in business". For my DH and I, the timing seems perfect! I phoned her, and after a couple of meetings, I'm still interested, and I don't know why, but I feel this is something I have to do. She is asking 20K., OBO. She has owned it for 5 of those 23yrs, but she just got a full time job that pays benefits, and cannot do both jobs. 1000 sq. ft. building (very COOL, and chic!), no air, 3 beds are 10 yrs. old, the 4th has cracked acrylic, and two standup units with dressing rooms. I do believe all of the units need new bulbs. I think the location is great, $650 a month, plus utilities. I do think she has lost alot of clients because of her other job, she is only open four hours per eve., M - F, and 4 hrs. on Sat. I will be seeing her books on Wed. of this week, what should I look for? I know while many of you are reading this, you are thinking to yourself, "What is she thinking?". My dream would be to get new, or almost new equipment, and a walk in sunless booth. Maybe I just need reassurance from those of you (providing there are any) who started out scared shitless, and with such prehistoric equipment. I know I am a people person, and do have a way of making people comfortable, is that, and money, enough to make a profitable business? My husband is all for it, but he is an over the top optimist. I want to thank you for allowing me to "sound off". Any advice, I'll listen and sort it out. I'm sure I'll be back with more questions, I like to learn as much as possible. By the way, I am from Michigan........and it's getting cold!
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Old 10-10-2006, 12:28 AM   #2 (permalink)
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Re: I think I've come to the right place.

FYI: you'll be purchasing this salon in the middle of slow season if you pick it up.
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Old 10-10-2006, 07:40 AM   #3 (permalink)
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Re: I think I've come to the right place.

Ok - I'll start....

1. Rent is very good -- that alone makes it attractive

2. When you say "no air" -- does that mean there is no air conditioning?? If so, plan on an expense of at least $10K -- that is critical! That is a critical question to ask her (or the landlord) - how many tons of HVAC are there? Also condition of the furnaces since it is 23 years old and you are in Michigan going into the heating season. Make sure landlord would cover those if they needed replacement (or have a HVAC guy come out and give you an estimate on their life expectancy and current condition and replacement costs if necessary)

3. Need to also find out the electrical situation. How many amps are there total, what sort of amps and wire size running to each room. My guess is it only has 200 amps, which will limit you. Again, have an electrician come out and give you an analysis of what it has, and what it would take to upgrade it if necessary.

4. The equipment probably has very little value at all. Find out the manufacturer of each bed, the model, and the hours (there is an hour counter on each bed, often located on the back of the bed, or underneath on what is called a "ballast tray" where all the battery looking things are contained). This will help you assess value.

5. If it JUST needed to be relamped, assume (assuming the beds are basically smaller base beds as well as the two standups) that you are looking at a cost of at least $3500 (the standups will be about a grand each) and could be more. The acrylic will cost you another $200+.

6. If it has been there for 23 years, lots of people know about it. On the other hand, if it has been driven into the ground the past few years, everyone will now be avoiding it. Can be very hard to turn that around. Shortened hours, poorly maintained equipment are the DEATH KNELL of a business and substantially reduce it's value.

OK...so you are getting the idea. Now - do this (besides the above estimates on THIS business):

1. Assess ALL the local tanning competition. Salons as well as beds in hair salons. How many, what kinds of equipment, do they look/seem nice, etc. Do a full scale competitive analysis - walk in as a potential customer, see how you are treated, get pricing information, look over the equipment, etc

2. Drive around and scout out other "Great" locations that are empty. Call the realtors and find out about rent rates to see how they compare.

3. Begin writing a business plan and assessing your finances. For THIS business, as you have planned it now, you would be spending $20K or best offer, then throwing out the equip (so no relamp costs) or MAYBE selling/trading it for a SMALL profit (less than 5K). 4 beds, 2 standups and a spray booth, could run anywhere from 25K to 100K depending on what you did. Cheaper is not necessarily better, nor is more expensive a guarantee. But plan on that expense, on top of the purchase price. Also plan on some significant advertising initially (5-10K in the first few months?). Licenses, insurance, probably need more lotion inventory, etc. Now you're looking at more like a $100K investment, even on the lower side.

Do that, check back in with your results, and tell us if you are still interested. If so, we'll go from there!

Good luck -
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Old 10-10-2006, 11:35 AM   #4 (permalink)
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Re: I think I've come to the right place.

Does sunsally rock or what?
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Old 10-10-2006, 03:06 PM   #5 (permalink)
 
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Re: I think I've come to the right place.

Listen to Sunsally, she gives GREAT advice!
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Old 10-10-2006, 03:27 PM   #6 (permalink)
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Re: I think I've come to the right place.

^^^^^AGREE^^^^^^^^
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Old 10-10-2006, 04:04 PM   #7 (permalink)
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Re: I think I've come to the right place.

ANOTHER CASE CLOSED FROM SUNSALLY!

not much left to say!

what i will say is this sounds like the salon i bought and still own. the cheap rent, size, selling price, old equipment, great location, and even the known name. except i have A/C.

I didnt do any of the stuff Sunsally mentioned and im still here. But that was just plain stupidity! ILL ADMIT I WAS ONE OF THE PEOPLE WHO THOUGHT ID SIT BEHIND THE DESK AND MAKE MONEY.

Put it this way i never even asked how much the rent was.....i just got so excited i could afford and was about to own a business i totally dropped the ball on any kind of common sense investigation. i was only 26( is that a good excuse) LOL

what i found was the clients that were still coming just wanted a clean profesionally run salon that gave results. so thats what i gave them first.

fresh coat of paint
new lamps
fixed little things that old owner thought were no big deal
opened with real hours
advertised new owners/ new management
mailed offers to members who left
added towels/wipes/ coat hangers and seats to rooms
changed price structure to hide increase in price
1 brand new upgrade machine ASAP
another 1 or 2 new/ used (new looking) machines each year after that
digital timers and computer system
accepted credit cards and much much more!

its been 4 yrs my salon has a full remodel and 8 machines from 6
all but 2 machines have been replaced.
the biggest package when i purchased salon was 1 month $65
now the biggest is 1yr $600 (and i sell it)

my closet comp sold 1 yr after i bought my salon and now that owner is closing the doors next month.

my better bigger comp has also sold since i came in and is now copying what i do!

it can be done but be smart about it and do what sunsally suggested...

i didnt find this site untill i already made my purchase and i must say FINDING IT HAS KEPT ME IN BUSINESS AND PUSHED ME AHEAD OF THE LOCAL COMP!
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Old 10-10-2006, 05:18 PM   #8 (permalink)
 
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Wink Re: I think I've come to the right place.

Boy..thanks for the replys! (also the PM's some of you have sent me) The books scare the **** out of me though. She keeps telling me,"This is a cash business you know" Well I DO know what she means, she didn't report most of the money, and the books won't show it. Too bad for her, because I believe the books help you sell a business. After researching the last 14 days @ 10 hrs. a day, I've come up with what I think her equipment is worth. I'm not adding the 1 bed ( Sonnen Braune Wolff System)with the cracked acrylic ( even though it can be repaired), as it is right now, it will not generate any revenue. 3 Montego Bay Classics (10 yrs. old), and 2 Sun Capsules XL with changing rooms, I think I read 787288 hrs on one of the stand ups, those are at LEAST 5 yrs old. I'm thinking approx. $300 for each bed, and $650 for each standup. And as I said they all need new bulbs, they have been in there for a little over 2 yrs. So I'm down to what is the name worth...NOT $20K..do any of you have any ideas??
The AC issue, they have run a tanner out of this place for 23 yrs. with no air, I don't know how they could stand it, but they did, I can't believe the units have lasted that long with no air. (Or the clients...LOL ) I will be meeting with her tomorrow, please wish me luck, and send along any more ideas/info you may have.
I have one more option in the bag for a lease, but it is $950 a month, on a very busy road (rural) near a community college and a University, and has AC. (BUT I would have to purchase all new/used beds.)
You guys are great for taking time out of your day to reply!!
I know I'm babbling, but I'm scared
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Old 10-10-2006, 09:38 PM   #9 (permalink)
 
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Re: I think I've come to the right place.

Hope I don't disappoint you but I don't see much here for 20K!!! I think I would shop around for rent and start new! Sounds like you will have to repair a bad image anyway! Good Luck!
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Old 10-10-2006, 10:21 PM   #10 (permalink)
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Re: I think I've come to the right place.

Does the salon have a data base? computerized? or are they just client cards? I would guess that an existing client base of 2-5 thousand names would be a 5K value to me.... it would cost me about 5K of advertising to bring in these clients.

Location? Is it a great location? Is there room for expansion? If so, might be worth a couple K for the location. All said, I wouldn't pay more that 15K... unfortunately, a lot of business owners think their businesses are worth a lot more and it becomes an ego issue.

Sunsally & Carribean tan man both give very good advice. Good Luck.
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