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Old 05-10-2011, 02:30 AM   #1 (permalink)
 
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What is this salon worth ?

Hi , I came across a salon that's up for sale right now in my town and wanted to see your opinions on what this place is worth - or not .
-only tanning salon in the 8 mile radius
-beds are pretty shitty, 5 dated GardaSun
(20min) and 1 Sun Capsule VHR (20min also) .Note:
all bulbs need to be changed this year ,
owner bought 1200 hr bulbs in 2009
The overhead : rent - 23,000/year
insurance - 1800/year
PG&E-3400/year
etc - 12,000/year
TOTAL: 38,000/year + avg 20,000 for employees
gross 2010: $ 85,000
net 2010: $27,000
I've watched the salon from outside and I'm also a customer and there is a lot of people going in all the time. I think the owner is doing pretty much everything wrong - selling sessions by minutes and unlimited memberships only which I think is crazy . I think if I add Versa Spa and replace couple existing equipment for high pressure 12 min beds and advertise the place I can get customer base from the whole 12 mile radius . The closest versa spa or any kind of spray tan is not for another 15 miles. I see potential in this place. What do you think ?
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Old 05-10-2011, 06:44 AM   #2 (permalink)
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Re: What is this salon worth ?

How can you gross $85,000 and net $27,000? The salon is probably not even breaking even.

How about:
COGS - Lotions
Repairs and Maint
CC Fees
Utilities are less then $300 per month??
Lamps
Advertising
Software fees
Telephone
Payroll fees
Garbage
Payroll (30K+)
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Old 05-10-2011, 09:37 AM   #3 (permalink)
 
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Re: What is this salon worth ?

would the electrical support upgraded beds? How about the room sizes? (just something to think of...i bought a salon years ago that I could do nothing with since I didnt look into those 2 things...I had to move my salon to do any upgrading)
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Old 05-10-2011, 10:57 AM   #4 (permalink)
 
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Re: What is this salon worth ?

Robert: all the other fees like cc, repair, telephone are included in "etc" and are included in the overhead . I included payroll "20,000" in the overhead also .
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Old 05-10-2011, 11:53 AM   #5 (permalink)
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Re: What is this salon worth ?

I assure you that you cannot run a succesful salon for anywhere near $1,300 per month excluding rent and payroll!
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Old 05-10-2011, 12:48 PM   #6 (permalink)
 
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Re: What is this salon worth ?

I think Robert is right about the $1300/month. However, it may very well be possible that you can purchase a salon, do things better, add equipment and turn into a successful business. However, there area a lot of factors you must consider. You stated "I think if I add Versa Spa and replace couple existing equipment for high pressure 12 min beds and advertise the place I can get customer base from the whole 12 mile radius" First, just adding a versa spa and 2 hp beds could easily cost $30-50k used. Most likely based on info you provided there will not be the electrical to support 2 hp 3 phase beds. Add another 5-10k in electrical upgrades. $20k for payroll would only = about 40 hours a week worth of $8/hour employee's. You must be assuming that you will be there at least 40+ hours a week.

So if after you purchase business and have access to another 50k in cash and are prepared to make nothing for at least the next 12 months, perhaps you could make it a successful salon down the road.
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Old 05-10-2011, 08:31 PM   #7 (permalink)
 
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Re: What is this salon worth ?

38,000=overhead + 20,000 payroll= 58,000
read the numbers again , I don't see where you got 1,300 per month to run this place !
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Old 05-10-2011, 10:34 PM   #8 (permalink)
 
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Re: What is this salon worth ?

I think they ment that would be your take home each month for yourself.

Well you will see a nice income spike by dumping minutes and going with a system that allows you to be paid per session.

Take the advise of others and find out if this place has 3phase coming in and what size panel it has, and if it can be upgraded. Also room sizes. You can find some nice used HP units for 10,000-17,000 each, don't know where that person got 30-50k . I've seen spray booths as low as 5k, but perhaps keep your cost down and start with a hand held airbrush system.

Their advise though is good, and I'd recomend the same even though I did the oposite. I have never had "working capital" with each of the salons I opened. All have been profitable. I do not recomend doing what I did, but it can be done.

That salon though is pretty much worthless. Last I heard about gardasun beds, they where garbage. I'd say maybe 10k only because of the build out, stand up unit and client base. You could turn it into a great salon, or not, but so you know your first couple years you will just be learning, and in a few years, you will laugh at what you think you know now. But thats when the $$$ really start to kick in, when you really know what your doing.
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Old 05-11-2011, 06:47 AM   #9 (permalink)
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Re: What is this salon worth ?

ETC + PSEG + INSURANCE = $1433 per month excluding rent and payroll.

IT IS NOT POSSIBLE TO RUN A SUCCESFULL SALON AT ABOUT $1,400 per month. (sorry missed the ins # before)
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Old 05-11-2011, 10:14 PM   #10 (permalink)
 
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Re: What is this salon worth ?

I totally agree that a profitable salon would cost more $ to run then what she is spending right now but again she is doing everything by minutes and the equipment is very cheap . That is why I'm asking your opinions on revamping the place - getting different beds and a spray tan machine , changing the minutes to point system ,etc
The only concern I have is the place is fairly small so there will be no room to expand .
As of now I am going through the costs and seeing if it would be worth to maybe start a new place elsewhere from a scratch .......?
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