07-24-2007, 12:43 PM | #1 (permalink) |
Join Date: Apr 21 2004 Location: Frisco, TX
Posts: 1,502
Rep Power: 20 | How to Purchase an Existing Salon You must approach the purchase of an existing salon with the same evaluation process as opening a new salon. This starts with the evaluation of the location demographics. In addition are a list of questions you must ask. Name and address of salon Square footage of salon How many tanning systems in salon Type and description of each tanning system and manufacture date. When did the salon open How many active clients in the data base (tanned in the past 12 months) Gross & Net income for 2004, 2005, 2006 based on tax returns. What percentage of gross where lotion sales Complete tanning price structure in detail How many tons of AC in salon What type of advertising do you do and how often How much did you spend on advertising in 2006 What type of signage do you have in your salon? What is the dimension of salon? What are the dimensions of each tanning room? What is the monthly rent? How many months left on the lease? You must calculate the changes that are required to make this a profitable salon and calculate the cost associated with the changes. These cost must be considered part of the purchase cost. The worth of the salon should be based on 2 to 2.5 times net profit depending on the age and condition of the salon. If the salon is less than 2 years old, the value of the equipment must be considered if it is new. If a salon is for sale it is typically struggling or failing, as the potential buyer you have the leverage. |
07-24-2007, 12:52 PM | #3 (permalink) |
Join Date: Dec 2 2004 Location: NC
Posts: 180
Rep Power: 20 | Re: How to Purchase an Existing Salon I agree with Brandy. The list is a good considering some people just see how much they can make in one busy month and only subtract the rent! And then forget about the slow times. |
07-24-2007, 07:41 PM | #7 (permalink) |
Join Date: Sep 17 2005 Location: Southeast
Posts: 374
Rep Power: 19 | Re: How to Purchase an Existing Salon What about 1. Insurance Costs 2. Is the lease able to be transferred to another owner. 3. What are the terms of the lease and the lease renewal increases per cost for rent and CAM Charges 4. When was the last time the beds had the lamps changed and where is the proof. 5. Is there an existing maint contract with the bed manufacturer or distributor. 6. How many clients are on EFT and what type and amounts. 7. How long is left on their contracts, are there contracts 8. What's the story of the current employees 9. Are there any judgments. liens, or outstanding disputes against the business 10. Are you purchasing as an asset only purchase or buying the name and all other goodwill 11. What is the current average monthly revenue versus cost to run the salon 12. Is the salon upgradeable as far as new beds, different and more powerful types, is the electrical able to handle this or will it cost more to do so 13. Have all of the payroll, property, state, federal, unemployment, etc. etc. taxes been paid and up to date 14. Do not consider the value of the equipment as new if it is less than 2 years old. These beds are like cars, you lose 30% the day you drive them off the lot. 15. Check for active clients in the last 6 months, not 12. 12 Months is way too long, and also check for the return and consistency of each client. How much does each client spend on average. 16. Check the competition, is there a new guy in town that just opened within the last year or so. Try and find out what they are doing, which is hard, but check the running averages of the salon for sale and see if it has decreased over the same time period. So much more to check than just this, but remember, any business for sale is usually a bad deal, not always, but there has to be a reason. |
07-24-2007, 10:30 PM | #10 (permalink) | |
I love Derf!! Join Date: Mar 12 2002 Location: Undisclosed Secure Location
Posts: 2,636
Rep Power: 26 | Re: How to Purchase an Existing Salon Quote:
A tanning salon should not be confused with a winning lottery ticket. | |
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