djvicsor22

Hello everyone,

I am looking to purchase an existing tanning salon. The area is upper middle class on a main street with a ton of foot traffic. The place has modern decor. the rent is a great price for the area. The type of beds and equipment that are included ETS 755 LAY DOWN, ETS SS756V STAND UP, REJUVISUN 34, SUNDOME, AND A VERSA SPA SUNLESS SKIN CARE SYSTEM. and a custom spray tan station. I would love to know what you guys think would be a fair price and what that equipment is really worth. I would say they make 8-10K a month. I did visit a few weeks back during the week and about 10-12 clients showed up during the hour I was there (was a unannounced visit). Rent is 2100.00. Would love to hear your thoughts. And have a Happy New Year to all.

sunsally

You need a LOT more information in order for anyone to give you any reasonable reply.

In order to consider buying it - ask them to see their tax returns as well as computer records to verify income as well as # of unique customers and # of tans.

A salon with a rent of 2100/month will have a "breakeven" of approx $8k/mo ($3K payroll, $1K utilities, $2K lotions, bank charges, insurance, advertising, set-aside for lamps & maintenance, software tech support, supplies,....) or about $100K/yr. That is BEFORE you add in your cost to buy the place (even if you have a wad of cash to use, have to figure in a cost to 'payback' that investment).

That would be very difficult to make with just that lineup of equipment.

For a "value" on the equip - at today's used prices probably $35-40K. Having them already there and installed saves you several thousand from buying it elsewhere and having it shipped and installed. If you have to relamp, you are probably looking at a few thousand dollars. New signage? That can run another 1-2K.

Fair price would depend on whether it is profitable now or not. I'm guessing it may not be.

djvicsor22

thank you,

I have not seen tax returns yet, but lets say they made on avg 8000.00 a month. and they ask 75k. would an offer of 35k be crazy

sunsally

First - tanning is a HIGHLY seasonal business. The "busy season" is generally Jan-June (esp Feb-May). The slow season is nicknamed JASON - July, Aug, Sept, Oct, Nov.

Industry statistics show that the AVERAGE salon makes 75% of their year's revenue in the busy season - and 25% in the slow. Industry statistics show that an average salon makes 15% of the year's revenues in April - and 3% in September. So if they were making $8K in September - they might be making $40K in April and that would be great. However, if they were making $8k in April - they might be making $1500 in September and that would NOT be great! That's why you MUST see tax returns - and hopefully computer/cash register information to show the month-to-month flow.

All that said - if they WERE making $8K/month --- that would mean they were PROBABLY just breaking even. So would an offer of $35K be crazy? Yes. Just because they are asking MORE - it isn't a "deal" if you are paying to buy something that isn't profitable. Paying $35K to get something that breaks even would be like just handing them $35K for the heck of it.


Understand - MANY people "forget" to include payroll in their numbers, thinking "I'll just work it myself and keep that money as 'profit' ". It isn't "profit" if you are working for free. You MUST factor in at LEAST the minimum payment you would have to pay someone ELSE to work it for you - and with taxes, typical hours, typical wages -- that winds up at about $3K/month. Now - if you CHOOSE to work the salon yourself for free (because you have no job now and need no job and so want to work 70 hrs/week as a volunteer hobby?), that will help on CASH FLOW - but it still doesn't make it "profit". You HAVE to figure in payroll to see if it is profitable or not. Otherwise use that money and put it in the stock market or go to Vegas or something else.

$35K might be a reasonable price for the equipment. But if it isn't making money - I would walk away and invest your money somewhere else. Tanning is a VERY difficult industry for MOST to make money in the last few years - unless you really know what you are doing, I wouldn't recommend taking on a losing business or starting up new unless you have a lot of business expertise.

Black Sun

Find it hard to believe they are making 10k a month, and if so, it is still not enough to make it.

Sunsally is right on. If the salon was profitable, why sell?

I'd walk, invest in another biz. Tanning is not the shinning light it once was.
Take your 35K and buy a rental property or two, or something with a better return.

Brandy1

Why would someone 'forget' payroll? That cost should always be included. Even if it's yourself.

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