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Old 07-26-2009, 09:21 AM   #1 (permalink)
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Do you want to open a salon?

I have posted this before but since I am reaching a different audience here I thought I would post it here too and see what kind of feedback it gets and just to let the Newbies know what they have ahead of them and if they have thought really hard about what they are getting involved in and the costs of doing so.

Sure, this industry is a lot of fun but it is a real industry and you are going to be running a real business. Are you prepared to do so? Do you know what it takes to run a business? Opening a salon is NOT a, "Build it and they will come" type of business and it is extremely seasonal. You will make the majority of your money three to four months out of the year that will have to carry you through the rest of it.

Anyway, good luck for those that are seriously considering taking the plunge into business ownership and specifically owning a tanning salon.

Research your demographics and the amount of salons in your area. Saturation is a big factor. Can the area you are looking at support another tanning salon?

Someone sent me an E-mail looking for some advice. I thought I would post it here too.

Quote:
I've been reading your posts on the forum for a while now. You definitely know a lot about the industry and are well respected on the site. I hope you can answer a question for me.

I read your comments discouraging people from opening a salon with $200,000 that it's not enough, that they are not buying enough equipment, don't have enough electric or A/C.

Are you just trying to get them to be realistic, do you really think they can't make money, are you just playing devil's advocate?

I'm not trying to be confrontational...I just want real advise. I ask because I plan to open salon in a rural area with only about 60,000 people about half of them white. It is also a college town (small) with tanners not included in the demographics. There is no dedicated tanning salon, though there are a few beds in hair and nail salons, gyms, etc. I've talked with contractors, Realtors, attorneys, manufacturers, etc. and I've really done my homework...I have a degree in finance and have done the P & L's, cash flows and build-out estimates. It still looks profitable for me to open with 7 beds and a sunless.

My question really is "Why won't it work?". What is the reason behind your advice? What am I not seeing?

Hope you're willing to help. I really am seeking constructive criticism and objective advise.

Thanks,
Here's my reply:

Well let's see,

First off, electric upgrades cost lots of money. An overhead service upgrade can run 8 to 15 thousand and if you have to trench a parking lot to go underground you are looking at 20 to 40 thousand just for electric.

A/C will run you about 15 to 20 thousand for about 10 tons.

These two upgrades will chew about a third of your budget right there. Always try to negotiate these things in your lease as they are upgrades to the landlords property but you may end up paying for a good chunk of it depending on how negotiations go.

An HP bed will tax the electrical service for 100 amps three phase and 3 tons of A/C alone to run properly and the cost of a bed like this is in the 40 thousand dollar range.

Large VHR beds will need 60 amp three phase and 1.5 to 2 tons of A/C. Beds like this cost in the range of 20 to 35 thousand dollars.

Your smaller beds will consume about 30 amps to 50 amps a piece and need 1 ton of A/C and be in the price range of 5 to 15 thousand dollars.

Now we are approaching that $200,000 budget and we haven't even started the build out yet which can run 75 to 150 thousand dollars for construction costs.

Next is the timer and computer system, sound system, security systems, furniture, retail stock, and dozens of misc. items that you will need to purchase to complete the package.

Now that we invested about 300,000 dollars we need to advertise. Now keep in mind that this business is seasonal with three to four good months of moneymaking. The rest of the time you sit around bored off your a$$ with no customers coming in still having to cover rent which is in the range of 3 to 5 thousand a month plus other basic expenses. If you decide to lease all of the equipment you are looking at paying large sums of money per month on top of that all the while when there are no customers coming through the door. If you open in the off season, you will struggle to stay alive which will take even more money to make it to the first busy season.

It can cost on wards up to 10K a month just to break even before you even start to make a profit and that doesn't count payroll for employees if you decide to work all the shifts at 80 to 100 hours a week.

The season is typically from Jan. to June with Mar. Apr. and May being the best months so you need to stockpile money to cover those expenses in the off season. Now if it is your first year, you better have a fat bank account to pull you through or you are done. Figuring how many hours you are open and calculating your income based on the beds being full from morning until night 24/7/365 is unrealistic. These distributor projections are nonsense. They are designed to show income potential and not actual revenue which will be much lower. Just a sales tool for the bed distys. Pipe dream numbers for naive.

You need deep pockets to open and run a business like this. The industry is getting harder and harder to compete in and the cost of opening a salon continues to grow. Labor and materials continue to increase. If you are going to lease everything and milk every line of credit and put your house on the line are you prepared to live in a box under the bridge if it fails? More salons are failing today in record numbers. The boards are filled with used equipment and salons for sale or liquidation. It never used to be like that.

Think long and hard if you really want to do this. There are other businesses that are more profitable and worth investing in today that don't require as much capitol and still generate nice year round income. Competition has really set in and it makes it tougher to split the pie up among all of the other salons cropping up.

Banks have taken a beating too in the recent past due to saturation and the high failure rate that has blanketed this industry. It will get tougher and tougher to get financing for this too since a lot of financial institutions have gotten burned.

I hope this advice gives you some insight.

Last edited by Brian Oshman; 03-22-2010 at 10:48 PM.
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Old 11-13-2009, 05:48 PM   #2 (permalink)
 
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Re: Do you want to open a salon?

Maybe you can give me some advice...I am starting to freak out a little bit.
I am just about to buy a salon, and expecting to take over starting Dec.1-09
The salon is pretty basic, nothing fancy, meaning they haven't done a lot with the salon...it has 10 beds- 4-100 watt 20 min beds, 5-160 watt & 3 facials, 1 - Sun-Up 160 watt....
I am raising the price on the 160 watt beds by $2.00 at the start of the new year...they have them all the same price right now? I am trying not to make any drastic changes right off? The salon does need some slight touches, pictures, mirrors, rugs etc....any ideas on how to make the transition of new owners easier? Should I expect a huge decline? Should I offer a new owner special of sort? How can I make sure that I will keep these clients and draw in more?
I am sure that all of these questions will be based on my management but I guess mostly I am just looking for some advice...any words of wisdom?
Thanks for any ideas...
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Old 11-13-2009, 05:54 PM   #3 (permalink)
 
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Re: Do you want to open a salon?

I wouldnt start off raising prices right away till people see the changes, I actually lowered mine when I took over.
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Old 11-13-2009, 07:19 PM   #4 (permalink)
 
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Re: Do you want to open a salon?

We just started a tanning salon, and we didn't spend a fraction of what Oshman has mentioned... Of course we are not as big as Palm Beach or Club Sun but we do give personal feel and our customer base is loving the person to person feel we give them. We even get customers that had a bad experience at the bigger places I mentioned. We ran a good special for grand opening and run xx% off lotions.

I agree Don't raise prices, but advertise the 160watt beds as TURBO as they should be. TURBO=160Watt=More Power=Better Tan

You did say they were charging 100watt bed the same as the 160watt beds right?
If so I would change the way its advertised... keeping that old price for the 20min bed(100watt bed) and Turbo at what ever you see reasonable...
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Old 11-13-2009, 07:37 PM   #5 (permalink)
 
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Re: Do you want to open a salon?

Yes,they are charging $7.00/tan for all beds except an upgrade which they charge $11.00/tan
I am definately going to change the way its advertised by switching to the level way of advertising...100 watt bed= level 1....keep that price @ $7.00
then 160 watts= level 2.....change this price to $9.00
and then their "upgrade" which is a 160 watts also but it has more bulbs...can I call this a level 3 and just leave the price at what they have it at, which is $11.00.
Or should I lower that to the level 2? And then eventually work up to bringing in a new bed at level 3?
What do you think of this?
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Old 11-13-2009, 07:50 PM   #6 (permalink)
 
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Re: Do you want to open a salon?

sounds good if your clients are willing to pay by the tan. We are in a shopping center where people want month memberships, of course we get a few that get a single or 5 or 10 tan deal, but mostly mem's. We have our 100-watt at 27.99 a month and 160-watt TURBO bed at 69.99 (discounted for events and students)
I guess the general idea is getting members and creating a customer base that is consistent month to month. What do you charge for a monthly membership or do you offer that?
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Old 11-13-2009, 07:54 PM   #7 (permalink)
 
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Re: Do you want to open a salon?

we also offer package deals, never tricking the customer into a contract with fees out the ***... Thats what we have heard from several customers...they don't like being locked in.
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Old 11-13-2009, 08:12 PM   #8 (permalink)
 
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Re: Do you want to open a salon?

Right now they have monthly specials and then packaging...like 6 for $30.00 or 12 for $50.00....so I plan on having close to the same, with packages for each level...and then monthly specials too...I don't want to change too much of it...just the price on the 160 watt beds...I do think that the start of the new year would be a good time to do this and maybe just come up with a great package deal to help ease the discomfort, but I do think people will like knowing the difference between the beds...I know I do.
Thanks for your advice...:)
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Old 11-13-2009, 10:50 PM   #9 (permalink)
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Re: Do you want to open a salon?

My post is to outline the startup of a top notch high end salon. Your mileage may vary of course but it is an accurate assessment.

As for the advertising of "Turbo", "Mega", "Ultra", "Super Ultra Mega Turbo",....STOP!!!!!

This is the dumbest concept you can do. What you do is generalize your beds with all of the other uninformed competition and you will just have customers comparing pricing by names that you give the beds that all of the bottom feeder salons use.

Call the beds what they are and explain the type of tan and the amount of sessions needed to get there. The customer doesn't care nor understand anything about wattage, UVA, UVB, etc...what they will understand is that if it takes 20 sessions on your base bed to get tan and 10 sessions on your VHR bed to get tan and 5 sessions on your High Pressure bed (you know, the bed that has all facials ) and VHR tube beds ARE NOT HIGH PRESSURE, OR MEDIUM PRESSURE!!!!

Now, you sell from the top down. You explain to them that you only need less sessions on the better beds so that will equate to less visits to the salon and they will actually spend less money since they will have less expenses as far as fuel and travel and they will waste less time to get great results.

They will be saving time and money but a 25 to 30 bucks a pop you will be making more money overall when you keep the good stuff filled with bodies and you can do it with less beds since they don't need to be used 20 times a month so they are open for more people overall to utilize your establishment and it is more people to have an opportunity to sell to which is how you make more.

They will use less lotion and products but you will be selling to more people so you will be moving more product and you will not work as hard to make more money.

Also, the better beds do not have the harsh portion of the UVB spectrum, they will have more UVB but they will also have more UVA too. High pressure beds will not dry your skin like the base beds with high B fry baby lamps in them so your skin does not exfoliate as fast and the tan lasts longer and look better.

Also, forget the term, "Percent UVB". This term means nothing as far as true tanning power and if you don't use meters then you have even less clue as to what a percent of anything really is. See, the real way to measure output is in mW/cm˛.

Now, let's say that I have a lamp that puts out 25 mW/cm˛ A+B (total UV) and has an output of 1 mW/cm˛ B (UVB only) then the percent UVB is 1/25 = .04 x 100 = 4% UVB.

Now we have another lamp that has an output of 50 mW/cm˛ A+B (total UV) and has an output of 1 mW/cm˛ B (UVB only) then the percent B is 1/50 = .02 x 100 = 2% UVB.

Which lamp is stronger? Is it the 2% or the 4%?

Well it is the 2% UVB because we have all of the facts and not just the marketing hype. The UVB output between both lamps is EXACTLY THE SAME!!! Which is 1 mW/cm˛ B. The second lamp however has twice the UVA which will tan much better. You will get much more browning power out of lamp 2 even though it calculates out to less "percent" UVB.

Are you starting to see why this percent value is bull$h!t and misleading?

A reflector lamp will intensify the UVA which is what you want for a "real tan", not a reddening, fast fading one. Both lamps have the same exact UVB level and enough to get the melanin activated in your skin but the second one has the power to turn that melanin brown and get what is it we are selling? That's right, a real, long lasting tan.

So, the next time you hear that a lamp is Blah, Blah, Blah "percent UVB", then ask the question, "percent of what?"

As for what to do with your place, clean it up, re-lamp the whole place with some kick a$$ SupraŽ lamps. Add some new machines and raise prices. Do it right off the bat. Don't wait and just float along with the same old formula that is there now, that is the reason it is for sale, because it is slowly losing money. You need to invest in it or it will just die.

Put in a couple of real nice high end beds and a high pressure bed. As I said before, you need to sell from the top down. Yeah, the customers that use it will come in less individually but collectively you will be taking in much more revenue and you want the high end beds full and running. This is the level where you make your money.

DO not fall into the trap and believe that you cannot make money on high end beds or that your area will not support it because that is crap. High end beds work everywhere. It is the difference of whether or not you are a sales person or just a mere clerk chimp pushing the buttons up front.

Always tell the customer what they need, never let the customer decide on session time length and things like that. You are the boss.

Getting back to the high end beds, put some in and start making money. Raise the prices and give them new options. Some will leave but that is OK. The ones you keep will be more satisfied and a better salon will bring in better clients that spend more money. DO not bother upgrading the base beds first. They are not your money makers. Full base beds does not mean you are busy making money, it means that you are busy working harder to make half of what you can make in a quarter of the time with better equipment.

OK, now get to it. Class will resume at a later date.

Last edited by Brian Oshman; 11-13-2009 at 11:00 PM.
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Old 11-13-2009, 11:27 PM   #10 (permalink)
 
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Re: Do you want to open a salon?

Well not all of us can afford to buy/start a biz then add brand new equip... We Fix up what we bought and update..
Not everyone likes the highend places for that very reason, high prices passed to the customer...

Quote:
Originally Posted by Brian Oshman View Post
My post is to outline the startup of a top notch high end salon. Your mileage may vary of course but it is an accurate assessment.

As for the advertising of "Turbo", "Mega", "Ultra", "Super Ultra Mega Turbo",....STOP!!!!!

This is the dumbest concept you can do. What you do is generalize your beds with all of the other uninformed competition and you will just have customers comparing pricing by names that you give the beds that all of the bottom feeder salons use.

Call the beds what they are and explain the type of tan and the amount of sessions needed to get there. The customer doesn't care nor understand anything about wattage, UVA, UVB, etc...what they will understand is that if it takes 20 sessions on your base bed to get tan and 10 sessions on your VHR bed to get tan and 5 sessions on your High Pressure bed (you know, the bed that has all facials ) and VHR tube beds ARE NOT HIGH PRESSURE, OR MEDIUM PRESSURE!!!!

Now, you sell from the top down. You explain to them that you only need less sessions on the better beds so that will equate to less visits to the salon and they will actually spend less money since they will have less expenses as far as fuel and travel and they will waste less time to get great results.

They will be saving time and money but a 25 to 30 bucks a pop you will be making more money overall when you keep the good stuff filled with bodies and you can do it with less beds since they don't need to be used 20 times a month so they are open for more people overall to utilize your establishment and it is more people to have an opportunity to sell to which is how you make more.

They will use less lotion and products but you will be selling to more people so you will be moving more product and you will not work as hard to make more money.

Also, the better beds do not have the harsh portion of the UVB spectrum, they will have more UVB but they will also have more UVA too. High pressure beds will not dry your skin like the base beds with high B fry baby lamps in them so your skin does not exfoliate as fast and the tan lasts longer and look better.

Also, forget the term, "Percent UVB". This term means nothing as far as true tanning power and if you don't use meters then you have even less clue as to what a percent of anything really is. See, the real way to measure output is in mW/cm˛.

Now, let's say that I have a lamp that puts out 25 mW/cm˛ A+B (total UV) and has an output of 1 mW/cm˛ B (UVB only) then the percent UVB is 1/25 = .04 x 100 = 4% UVB.

Now we have another lamp that has an output of 50 mW/cm˛ A+B (total UV) and has an output of 1 mW/cm˛ B (UVB only) then the percent B is 1/50 = .02 x 100 = 2% UVB.

Which lamp is stronger? Is it the 2% or the 4%?

Well it is the 2% UVB because we have all of the facts and not just the marketing hype. The UVB output between both lamps is EXACTLY THE SAME!!! Which is 1 mW/cm˛ B. The second lamp however has twice the UVA which will tan much better. You will get much more browning power out of lamp 2 even though it calculates out to less "percent" UVB.

Are you starting to see why this percent value is bull$h!t and misleading?

A reflector lamp will intensify the UVA which is what you want for a "real tan", not a reddening, fast fading one. Both lamps have the same exact UVB level and enough to get the melanin activated in your skin but the second one has the power to turn that melanin brown and get what is it we are selling? That's right, a real, long lasting tan.

So, the next time you hear that a lamp is Blah, Blah, Blah "percent UVB", then ask the question, "percent of what?"

As for what to do with your place, clean it up, re-lamp the whole place with some kick a$$ SupraŽ lamps. Add some new machines and raise prices. Do it right off the bat. Don't wait and just float along with the same old formula that is there now, that is the reason it is for sale, because it is slowly losing money. You need to invest in it or it will just die.

Put in a couple of real nice high end beds and a high pressure bed. As I said before, you need to sell from the top down. Yeah, the customers that use it will come in less individually but collectively you will be taking in much more revenue and you want the high end beds full and running. This is the level where you make your money.

DO not fall into the trap and believe that you cannot make money on high end beds or that your area will not support it because that is crap. High end beds work everywhere. It is the difference of whether or not you are a sales person or just a mere clerk chimp pushing the buttons up front.

Always tell the customer what they need, never let the customer decide on session time length and things like that. You are the boss.

Getting back to the high end beds, put some in and start making money. Raise the prices and give them new options. Some will leave but that is OK. The ones you keep will be more satisfied and a better salon will bring in better clients that spend more money. DO not bother upgrading the base beds first. They are not your money makers. Full base beds does not mean you are busy making money, it means that you are busy working harder to make half of what you can make in a quarter of the time with better equipment.

OK, now get to it. Class will resume at a later date.
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