Another Newbie Wanna-be looking for advice - tanTALK

LymTym · 06-17-2009, 06:30 PM

I'm suppose to meet the seller tomorrow night for the first time. She's advertising the salon as being worth $140K with $40k in new beds. $150k for 3 years gross revenue. Will sell for 80% discount and owner finance this with $20k down.

Salon has been completely remodeled last year and is a day spa too.

Which way should I run?

Thanks!!

Steve Underhill · 06-17-2009, 06:38 PM

Quote:

Originally Posted by LymTym

I'm suppose to meet the seller tomorrow night for the first time. She's advertising the salon as being worth $140K with $40k in new beds. $150k for 3 years gross revenue. Will sell for 80% discount and owner finance this with $20k down.

Salon has been completely remodeled last year and is a day spa too.

Which way should I run?

Thanks!!

The value of a salon is connected to net sales not gross sales. You must see the last three years of tax returns. There are a lot of questions you must ask before making a purchase. There are people at tantalk that can tell you what questions you need to ask. All questions are not related to purchase price. This salon must be evaluated as a potential investment and what changes are required to make it more successful.

MentorAmy05 · 06-17-2009, 08:50 PM

Quote:

Originally Posted by Steve Underhill

The value of a salon is connected to net sales not gross sales. You must see the last three years of tax returns. There are a lot of questions you must ask before making a purchase. There are people at tantalk that can tell you what questions you need to ask. All questions are not related to purchase price. This salon must be evaluated as a potential investment and what changes are required to make it more successful.

I agree with this.....Make certain you look at the last 3 years of returns....year to date....I can't stress enough how important this is......Even banks want to see the last 3 years, if you are applying for a loan ona business....around here anyways.

Good Luck :)

excitednewguy · 06-18-2009, 05:23 PM

Basic Business 101 stuff guys

kpower82 · 06-21-2009, 03:30 PM

Tax returns don't always tell the whole story. Many people don't report all of their earnings. Anytime you buy a business you're taking the owners word for it. See if they will allow manager occupied if you agree on a purchase agreement. It's slow season now, but a salon that grosses 150k a year should still be tanning 40-50 tanners a day in JASON.

sbt501 · 06-22-2009, 07:47 AM

If the seller is hiding additional revenue that is not on their taxes, that is to their detriment. As a buyer, if revenue cannot be proven by tax returns than it is non-existant in regards to the selling price.

Is that 150k in 3 years or 150k a year for the past 3 years? The big question is what is the net.

06-17-2009, 06:30 PM	#1 (permalink)
LymTym Join Date: Jun 17 2009 Location: Virginia Posts: 3 Rep Power: 0	Another Newbie Wanna-be looking for advice I'm suppose to meet the seller tomorrow night for the first time. She's advertising the salon as being worth $140K with $40k in new beds. $150k for 3 years gross revenue. Will sell for 80% discount and owner finance this with $20k down. Salon has been completely remodeled last year and is a day spa too. Which way should I run? Thanks!!

06-18-2009, 05:23 PM	#4 (permalink)
excitednewguy Join Date: Sep 17 2005 Location: Southeast Posts: 374 Rep Power: 19	Re: Another Newbie Wanna-be looking for advice Basic Business 101 stuff guys

06-21-2009, 03:30 PM	#5 (permalink)
kpower82 Join Date: Jun 21 2009 Location: Michigan Posts: 378 Rep Power: 15	Re: Another Newbie Wanna-be looking for advice Tax returns don't always tell the whole story. Many people don't report all of their earnings. Anytime you buy a business you're taking the owners word for it. See if they will allow manager occupied if you agree on a purchase agreement. It's slow season now, but a salon that grosses 150k a year should still be tanning 40-50 tanners a day in JASON.

06-22-2009, 07:47 AM	#6 (permalink)
sbt501 Join Date: Jan 15 2005 Posts: 204 Rep Power: 20	Re: Another Newbie Wanna-be looking for advice If the seller is hiding additional revenue that is not on their taxes, that is to their detriment. As a buyer, if revenue cannot be proven by tax returns than it is non-existant in regards to the selling price. Is that 150k in 3 years or 150k a year for the past 3 years? The big question is what is the net.

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