luckyfind79

I am a newbie at this and I was hoping for some honest advice. I am planning on opening a salon next year Jan. 2009. I want to research every angle before I go ahead with my plans. Here is my situation:

It would be in a small town in Tennessee (less than 10,000). There are two salons 5 miles out of town with 8 beds or less. The only one in town has 3 beds! It is rundown, dirty, smelly, and owned by an old lady that really does not seem to care about improvement. Everyone in this town mostly young women 18-30 something loves to tan, but they all complain about their options. Most of them drive out of town to a salon 5 miles away at this lady's home business because it is clean.

My husband owns a sucessful jewelry store and property in the middle of town. It has easy road access and is in a great location. He has already added a hair salon on the left side of him which has been doing great for the past 3 years. Now he wants to add a building on the right side and rent it out or sell it to me to start a tanning business. (I would think this could save me some money if we owned the property)

I would only have 900-1000 square feet, but I could design it from scratch to suit my needs.

What do you think? How many beds could I fit in there? Would it make $?

eileen

luckyfind it sounds as if you are going to get a good deal if your husband actually owns the location...that is a great start. you are also allowing yourself plenty of time to research equipment and the expense of upgrading or putting in new electric to handle the equipment. those are usually your biggest expenses. i'm pretty sure a member here put a smaller salon in something that size that turned out beautiful. go to lewdyju and ask her and make sure you ask her about her floor she did herself to! goodluck, i'm sure others will add to some ideas. :)
http://tantalk.com/members/lewdyju.html

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"under exposure to UV rays is as dangerous as overexposure....this is D life" eileen

Elise

I have 7 large rooms in my 1200 sq ft space. If you visit my website, and go to the gallery page the "Eaton" store is the small one. But, designed to be incredibly spacious!

It's cracking me up how right you are about southern belle's wanting to tan! We have them coming into our shops like they've been in a desert with no water. (Well, I guess we have been in a drought here for some time now...)

Another thing - both of our stores are in small towns with no other focus-built tanning salon's. There are beauty salons that offer tanning in the back, but it's nasty and you have to clean your own beds! In Eaton, we are right next door to a gym which has their own bed that you must clean as well. Yuck.
Many would say not to open in a small town. I disagree completely. You'll be so glad you did! Your town will support you!

One last thing: I woudn't personally open in a small town without owning the beds out-right. I'm very thankful to not be making monthly lease payments on beds. Heck, I wouldn't ever want to have lease payments regardless of where I was located.

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www.liquidtan.net

sunsally

Tell us more about leasing Elise - what do you base this on?

Elise

What do I base it on? Personal experience and common sense. Especially in a smaller town of less than 10K, you do not want more payments. When JASON comes, you don't want to drown. I understand it's all relative - BUT, if you lease new beds, the price is the same if you're in L.A. or if you're in Eaton, CO. I couldn't justify that added expense in a small town, for a new, niche business. If you own everything, as I do, you don't have to worry about it and you still have the comfort of warranty.

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www.liquidtan.net

luckyfind79

I know what you mean about small town dirty salons. I have to clean my own bed everywhere I go around here! They also never clean and the rooms are filled with dust bunnies! I think if I kept my salon clean I will already have an advantage.

Would you lease beds or how about buying used? Could this save more $ in the long run?

Elise

Of course, it depends on your business plan. I created a 5 and 10 year. It made more sense for me financially to buy the beds cash. I'm so glad I did. I'm not saying (sunsally) that there is no room for leasing. All I'm saying is that in some situations - it's just plain not smart. If you have the moola to buy cash - the only one benefitting from the lease is the leasor.
I LOVE to go shopping, so let me explain it further in my lingo: Why would I go to the mall, go to 10 stores, apply for 10 department store cards, buy on each one, then have all that interest to pay when I could have just used my debit card and been done with it? I don't care about the 10% off instantly if I am not able or forget to pay off each card by the first billing date to avoid paying interest. PLUS all those inquiries and pulls on your credit report? You're wasting money and dropping credit score in one fell swoop.

I have to get to work! Have a great day everyone!

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www.liquidtan.net

sunsally

Thanks for the clarification Elise. As a salon owner, equipment salesperson, consultant and now leasing sales VP, I find there is a lot of confusion regarding leasing. Heck, I've learned some things myself now that I am on that side of the fence.

The key here is a few things:

1. As Elise stated - do you have the money to buy it outright.

2. If so - is it a better "investment" to pull it out and buy the equipment and no longer have access to that money? Are you better off spending it, or saving it for other things (e.g. buildout, rent or utilities in slow season, etc)? Or investing it in other things and making a return (e.g. CD's, stocks,..)

3. If NO (if you do not have the cash - or enough to do everything) - is it still a good "plan" or are you going in undercapitalized?

4. If it IS a good plan - are you getting good rates or being ripped off?


At Highline Capital, since we are one of the very few "direct" leasing companies that do tanning, you cut out the middle man - the broker. Our rates are the lowest of any company I've seen yet offering tanning leasing rates. However - we only work with clients with better credit. If you have lower credit - you are left to working with companies that may charge outrageous rates! I saw one quote (and actually, they had GOOD credit) for 44% APR!!!

Most start-ups can't get more than $35K in lease money from other companies - Highline has no limit.


In the end - it doesn't matter if you are in a small town or a large one, opening a big salon or a small one. Either the business makes sense financially, or it doesn't. Investing your OWN cash in something so you don't have payments can be a bad decision. It all depends on if the business plan makes sense and can be successful.

sunsally

By the way -- understand that in business -- your bed salesperson, landlord, utility company, bank, lease company -- they are ALL in it to "make money". The key is understanding WHAT you are committing to - and making sure that makes sense for your business - before you sign anything.

In some towns and with some business plans, $10/s.f. rent could be too high. But I know salons that can pay $35/s.f. and make sense! (although not very many!!)

sunsally

BTW - for this particular situation, while I know many salons in small towns that are very successful, the fact that there are 2 8 bed salons just 5 miles away MAY mean your area is already "saturated" enough.

New upcoming salon owners tend to focus on what they feel are the "shortcomings" of the existing businesses. There may be many. But it is a huge advantage to BEING an existing business with a clientele base, happy existing customers who are "comfortable" there even if it isn't the greatest, etc. Also, oftentimes they can have lowered costs if some of their buildout and equipment is already paid off.

Do your research very carefully. Even though you own the property, there is considerable expense associated with building the actual BUILDING, and the interior "buildout", and putting in equipment, and doing the advertising to start attracting clients. In a 900-1000/s.f. size salon in a small population town it might be very hard to generate enough profit to pay back that kind of investment.

Since we are going into busy season now - plan on spending some time parked in front of those salons in the other town to see how busy they are. Count customers for an entire DAY on March 12. Do it again on April, May, June, July and Aug 12. Make sure there is enough volume for you to "split" the customers that now go to those 2 salons across the 3 of you. Because you won't create "new" customers by opening - you will just redistribute the ones that already tan.

Happy researching - welcome!