Club Cheetah

Hey everyone,

My name is Mike and I've been lurking around on here mostly reading and doin my homework.

I am looking into the purchase of a salon in Arvada Colorado in a pretty good location. The interesting part of this sale is it's a "Asset only" sale. The owner of the salon has minimal paperwork from the salon and I am not able to obtain bank statements or tax returns. I am basically buying the name, equipment, and lease. The salon is operating currently and I did make a quick stop in. The interior was appealing and while I was inside there was a customer.

The salon is located next to a movie theatre, "adult entertainment" store, and several apartment complexes.

As far as the inventory goes I will be receiving the lotions, swimsuits, computer, T max, credit card machine, EFT, and beds. They have the interior set up with all 9 beds.

The beds are as follows:

1 Lt 36 leg bed
1 Tropical 41 UPP
1 UWE CPS plus
1 Big Bear
5 Pure tan beds

The condition of the beds and bulbs is unknown to me at this point.

They were originally asking 50k for this but have come down recently. I have the ability to get about 25k cash and they are willing to finance the other half.

Any thoughts before I continue? I just don't wanna drop the cash on something that's not worth anywhere near the profits available.


Thanks
Mike

navigatin1

RUN!!!!!

Or if you must have it...Maybe 15k....Maybe!

Michelle N

My gut tells me that $50k is way too much since he has no way (or isn't willing to show you any way) of proving what it actually makes. Assett only is the prices of the equipment in it's present condition, then you will want to subtract for lamp changes for every single bed. Is he working with mostly cash and therefore has no way to prove the salon income?
Take a look at your neighbors too. Will an adult entertainment store be a deterant for you? I know that I wouldn't let my kids go tanning in a place that is next to adult entertainment, but that's just me.
I am sure that you are going to get a lot of info on this post so be prepared as many are very blunt on their opinions. Don't take it personally, but listen to the veterans. They didn't get where they are by making unwise decisions and not learning from their mistakes.
You would also be wise to talk to the landlord to see what the current rent/lease is and if it is up to date and whether it is paid in cash or check. Not having any kind of paper trail makes me think that the person is not wanting to pay taxes on the true income of the salon.
Good luck.

Club Cheetah

50k does seem a little steep and I'm not even sure what he has. From what the business broker said the guy does just take cash out and report whatever he feels like at the end of year. I've been thinking that I would rather wait until something a little more "legit" comes up instead of getting starry eyed over my first salon.

As it is now I work full time as a Paramedic and just wanted some extra income on the side. I have no problem putting the hours and effort in but don't want to find out I have an absolute nightmare once I sell my car for the cash.

Mike

todaysimagetan

Mike
If someone is not able to give you proof of what they are making I would suggest not to buy the place. He knows how much he is making. That is why its up for sale.
I cant imagine that he has no records at all. Ask him for the credit card statements and come back and tell us what his monthly gross is per month on the cc's and I can tell you around what he is probably grossing a year.
The tanning industry has taken a beating the past five years and unless the owner can show you for sure that the salon is making money you should not invest in this business.
The current assets are probably not more then 10-15k as others have stated