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Old 03-22-2010, 05:44 PM   #1 (permalink)
 
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Cool opening a new salon

I am wanting to open a tanning salon, but need some help with averaging out the cost to START the business. As far as: furniture, beds, supplies, business supplies, everything you need to open a salon. I am trying to find out prices so i can see how much I am going to have to get a loan for. if anyone has a rough idea that would help a lot. Or if anyone has any advice i would appreciate it.
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Old 03-22-2010, 10:45 PM   #2 (permalink)
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Re: opening a new salon

Start here. Click the link.

Do you want to open a salon?
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Old 03-22-2010, 10:56 PM   #3 (permalink)
 
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Re: opening a new salon

Of course now you need to add the 10% of your gross tanning revenue goes to Uncle Sam. Ha!

But a really nice start up article Brian!
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Old 03-23-2010, 10:29 AM   #4 (permalink)
 
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Cool Re: opening a new salon

Brian
Those numbers seem kinda crazy. I know someone that ownes a tanning salon, and her space is probably about 1,400 sq ft. rent is around 3000 I'm sure, most of the leasing is around here. I actually helped her open and she got a lot of walk ins just by driving by. I do know that you have to advertise advertise advertise, but smaller tanning salons i don't think will be the numbers that you were talking about. I have done a LOT of research but it's hard to put it all together and I was just trying to have an estimate on how much the AVERAGE tanning salon costs to start up. Some information I found says that on average including overhead, equipment, employee costs, utility's etc. cost about 8,500 a month and the income is 21,000 busy season and 14,000 slow season. NOW ANYONE if these numbers are wrong please let me know. I would ask the tanning salon I know but considering I will be her competition, I don't think that would be a good idea. This website should be people helping out each other sometimes I don't feel like it is but, if anyone cares to help Thank you very much. TRUE ADVICE!!! please :) My husband runs a computer business so that's not the problem.
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Old 03-23-2010, 12:03 PM   #5 (permalink)
 
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Re: opening a new salon

Have you priced out cost of equipment (which will very and expect if you lease a higher interest rate because you are a new business), A/C, build out, carrying costs, staff, how many beds, workmans comp insurance, all that stuff. I can tell you that unless you have a very solid membership plan and price structure you are going to have a hard time with that break even come slow season. Also look into buying existing salons. Just because they aren't listed doesn't mean they wont sell. I bought mine and it wasn't "listed"
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Old 03-23-2010, 12:04 PM   #6 (permalink)
 
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Re: opening a new salon

You are looking at least from what I have calculated for myself anywhere between $150-$250k in start up costs including leases build out beds etc. One good bed new can run you $30k+
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Old 03-23-2010, 12:28 PM   #7 (permalink)
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Re: opening a new salon

Quote:
Originally Posted by jessilynn View Post
Brian
Those numbers seem kinda crazy. I know someone that ownes a tanning salon, and her space is probably about 1,400 sq ft. rent is around 3000 I'm sure, most of the leasing is around here. I actually helped her open and she got a lot of walk ins just by driving by. I do know that you have to advertise advertise advertise, but smaller tanning salons i don't think will be the numbers that you were talking about. I have done a LOT of research but it's hard to put it all together and I was just trying to have an estimate on how much the AVERAGE tanning salon costs to start up. Some information I found says that on average including overhead, equipment, employee costs, utility's etc. cost about 8,500 a month and the income is 21,000 busy season and 14,000 slow season. NOW ANYONE if these numbers are wrong please let me know. I would ask the tanning salon I know but considering I will be her competition, I don't think that would be a good idea. This website should be people helping out each other sometimes I don't feel like it is but, if anyone cares to help Thank you very much. TRUE ADVICE!!! please :) My husband runs a computer business so that's not the problem.
The numbers you have quoted will NOT be accurate in the large majority of salons, especially start-ups. Your costs will be HIGHER - and your revenues will be LOWER.

Payroll is $3K/mo. If you work some of the hours and don't pay yourself, fine. But that isn't "profit" - that is just working as a volunteer. It'll help for cash flow, but if/when you need to have to have staff work instead - it'll be $3K/mo. And you SHOULD plan on at LEAST paying yourself that minimal amount - otherwise just save your money and sit home for free rather than in a business!

Rent of $3K would be reasonable. Make sure that factors in taxes, insurance, etc. Some pay much more. Some less.

Electric of $1K/mo is about average. If you are paying less - you are probably tanning less and that will be a problem in terms of revenues! It'll go up depending on how much you have to run A/C, how big your units, etc

$1K in other utilities, phone, cable, software, accountant fees, cleaning supplies, "trial" lotions, theft and all that other stuff people forget to factor in.

Don't forget credit card processing fees. Cost of product to sell. $$ set aside for lamp changes. Advertising. Insurance.

THEN - there is the cost of your buildout, equipment and start up!!!!

If you pay CASH - then you should factor in a payment BACK to you for that investment! If you borrow from a bank - you pay them instead. But again - that MUST be factored in as part of your "investment" -- PROFIT is only AFTER everyone is paid for their time and investment - including yourself.


Revenues?? I know salons that Gross $67K/yr and others that do $1M. I think Looking Fit says the "average" salon is grossing about $125K?? Your revenue numbers would suggest a yearly gross of about $200K/yr. That isn't what "most" or "average" salons do in their first years.

There is QUITE a bit of information on this site to read! It will give you a MUCH less "biased" picture of revenues and costs then someone who is looking to sell you something (e.g. equipment, a broker selling you a leased space,..). Think VERY carefully before you enter as a new start-up at this time in the industry's life as well as the economy. Tanning has been hit very hard by "anti-tan" legislation and press, and the economy is horrid for "luxuries" like tanning. Doesn't mean some salons aren't doing well. But it wouldn't be a market I would enter right now if I didn't have experience and a DEEP bankroll to sink into it the first few years - money I could afford to lose if I bet wrong.

Hope that helps -
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Old 03-23-2010, 12:34 PM   #8 (permalink)
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Re: opening a new salon

Jessilynn,

What is not to believe about my advice? I have only been in this industry for let's say 19 years now. My post there covers top end of what it would cost you to build a salon from scratch and that is even before you have customers walk in the door.

Your four biggest expenses will be the electric upgrade, the A/C upgrade, the build out, and the beds. You will not run a tanning salon an a 100 amp service. You will need at least 600 amps three phase to do it right. You will need about 1 ton of A/C per bed and 1 ton per 400 square feet of space. These right here are not negotiable, you must have these two items in place or the salon will not run. Don't forget, the A/C needs power too which is why you need this much power. The beds will run fro 30 to 100 amps a piece.

This does not consider lighting, laundry, signage, etc...

Sure, your running expenses are pretty close at $8500 a month and as I said it would vary depending on location and actual beds, rent, and other expenses. Your figures do not include equipment or build out or upgrades.

It doesn't matter where the bank is located for leasing because they base there rates on market, not location. Since you are not an existing business your chances of getting a loan for a startup tanning salon are nil to none. No bank will give you money to start this unless you have considerable collateral. Do you own a home? Well get ready to put it all on black cuz that's what will be required. Tanning equipment is not easy for a bank to sell off to recoup their money if you default. It is not like selling a house or a car which everyone needs. If your credit score is less than 700 then don't even waste your time sitting down with a bank looking for a loan.

Also, you will need deep pockets to get it going. Plan on plenty of mac and cheese and sleeping on the mattress HP unit in room 6 for awhile. Plan on losing all of your friends when they get p.issed when they can't tan for free or when you just lose contact. It will be a major hit on your social life. Owning a business is a 24/7/365 commitment. It does not get easier at first, it just gets harder and harder. It can take 3 to 5 years to get a business to level out and start to turn a profit.

Let's break down your numbers a little further. You say that your friend is taking in $21,000 a month in busy, (which will only be 3 to 4 months max) and $14,000 in the slow (which is high in some months, Oct, Nov, Dec. is brutal).

Now 21,000x 3 = $63,000 and 14,000 x 9 = $126,000 + $63,000 = $189,000 revenue for the year according to your figures. We are under $200,000.

Rent @ $3,000 x 12 = $36,000

Payroll, is she working the store all by herself? If not then you are looking at two peoples salary (not counting hers) @ a rate of $8.00 a Hr. that would be $16,640 per person x2 = $32,280 for payroll. OK, Now for utilities, Electric will be your biggest one, it can be as high a $2,000 a month in busy and as low as $500 in slow. Let's just use those numbers:

2,000 x 3 = $6,000 500 x 9 = $4,500 + $6,000 = $10,500 for the year, for electric.

OK, let's go back and see what we have so far:

189,000 - 36,000 = 153,000 - 32,280 = 120,720 - 10,500 = $110,220

What have we not covered yet, Oh yeah, tele @ $200 mo. Ins. @ 200 a Mo. advertising at $1,500 a mo., Inventory @ $1,000 a mo., lamp changes @ 100 a Mo. per bed changing them twice a year, let's say 8 beds, what is that up to:

Phone 200 x 12 = $2,400
Insurance 200 x 12 = $2,400
Advertising 1500 x 12 = $18,000
Inventory 1000 x 12 = $12,000
Lamps 100 x 12 = 1200 x 8 = $9,600

= $44,400

110,220 - 44,400 = $65,820

OK,

Now, just with those expenses we have left so far $65,820. We haven't even paid ourselves yet. We haven't paid the $200,000 bank loan (which you ain't gunna get on a startup biz) @ prime +1 (200,000 x .08 = $1,334 a month in interest)

Bank loan 2000 x 12 = $24,000

65,820 - 24,000 = $41,820 and you still have not drawn a salary. Don't worry, I can keep adding more to put that in the red for you but I will stop here. As I said before, running a business is a 24/7/365 commitment. 168 x 52 = 8,736 hrs. a year.

41,820/8,736 = $4.79 an hour. And you haven't finished with expenses yet.

Tip: Buy the deluxe mac and cheese, it may cost a little more up front but it doesn't require refrigeration and has shelf life so you don't need to keep milk around.
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Old 03-23-2010, 12:43 PM   #9 (permalink)
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Re: opening a new salon

Ann, good to see ya back, and you too Tiff.
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Old 03-23-2010, 12:48 PM   #10 (permalink)
 
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Re: opening a new salon

I had someone quit so I am here till I get another one hired :) But great to be here!
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