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Old 06-10-2011, 03:59 PM   #1 (permalink)
 
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Buying a Salon...good or bad idea?

I was thinking about buying an existing salon. I'm not looking to get rich, I just want to own my own business and pay my bills. My husband makes decent money so I'm not worried there, like I said just something I've always wanted to try. In addition, I already have experience in Airbrush Tanning (I've done that PT for the last 2 years) this is something the salon I'm looking at doesnt offer, so its part of my business plan to help generate more clients/money. I havent seen any of the financials (yet) but current owner bought a "failing" salon last year, renovated it, and is now looking to flip it. He said thats what he does. He's a personal trainer by trade and isnt looking to get into or should I say stay in the tanning biz, he just fixes them up and sells them (this is not his first). He said in the year that he's owned it they made 60k....what is the average? Does that sound right? Thoughts anyone? I know the tanning industry isnt really doing so great, but can this still be a profitable business? Again, not trying to get rich here, just own a nice business of my own and make a little money doing it.
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Old 06-10-2011, 04:38 PM   #2 (permalink)
 
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Re: Buying a Salon...good or bad idea?

There are too many variables for those questions to be answered but what kind of beds are there? how many? how old? lease terms? I can't imagine someone buying a business just to flip it...at least not in this industry in the current economy. My first thought is that he couldn't make it work either.
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Old 06-10-2011, 04:57 PM   #3 (permalink)
 
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Re: Buying a Salon...good or bad idea?

7 beds 2 booths, plus space for airbursh tan(which I already own the equipment). 3 Level 1, 2 level 2, 3 level 3 and 1 level 4. I'm not sure of the age of the equipment (yet) we meet on Sunday to go over the more specifics but just wanted to get a feel for what people thought.

His reason for flipping is because, again, he never intended on staying. He said he's flipped several salons over the last 4 years. Its something he and his father do. The come in and renovate and build up clients and then sell for a profit. He is only in the salon for about 20 hours a week and has a Salon Mgr who is running it. Again, could be bull. I sorta thought the same thing you did. But he said he has all the finiancial's to back it up. The lease is a 10 year lease that he neg last year when he bought the biz. The landlord said he would honor the same terms for the new owner. (of course we'll have to be sure of that). I dont believe they offer EFT either, which is also part of my plan should be decide to take over. So if it is really doing 60k (which is gross by the way)I was just wondering if I should anticipate being successful. Of course you never know, but again just curious. What do "avereage" salons with 9 beds/booths average. On a Main St in a well populated city.
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Old 06-10-2011, 05:28 PM   #4 (permalink)
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Re: Buying a Salon...good or bad idea?

When I first started I had 10 units. Did 100k and up.
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Old 06-10-2011, 06:31 PM   #5 (permalink)
 
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Re: Buying a Salon...good or bad idea?

Not as many tanners now as was 2 years ago. Making the money depends on number of tanners, overhead, products sold. Flipping a failing salon is hard to believe, unless the previous owner was sleeping all the time and not watching his bus.
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Old 06-10-2011, 07:19 PM   #6 (permalink)
 
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Re: Buying a Salon...good or bad idea?

Im going to have to raise the BS flag on the seller
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Old 06-10-2011, 07:56 PM   #7 (permalink)
 
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Re: Buying a Salon...good or bad idea?

I have been a Business Broker for many years..almost 99% of sellers sell for reasons other than they are telling you.

Not to say he does not 'buy and flip', but I doubt seriously he does this..flipping works in real estate (buy distressed properties and 'flip them'). It is very rare that it is done with a business. The profit margins and re-couping of investment is just not there..especially after only a year. There is nothing in the business that appreciates that quickly to be profitable, espcially with a tanning salon.

have him prove to you his success with the other 'flipped businesses'.. tell him to supply you with a list..go research the truth..

Also, was that 60k his take/profit or what the salon made in sales before all expenses?

I doubt very seriously if it was profit..
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Old 06-11-2011, 01:23 PM   #8 (permalink)
 
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Re: Buying a Salon...good or bad idea?

I dont understand why anyone would want to buy a business and state "I am not looking to get rich." whats the point then? Work your butt off to break even or make a few thousand a year. Either plan on getting rich/working towards that, or dont bother. It is too risky.
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Old 06-11-2011, 02:21 PM   #9 (permalink)
 
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Re: Buying a Salon...good or bad idea?

Although I think he isn't telling all, 2 of the last 3 salons I have bought were in need of serious help and for that reason we knew enough to make the necessary changes to make them work. However, if I didn't have previous industry knowledge paired with the current state of the industry and the economy, I'm not sure I'd make that plunge.
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Old 06-11-2011, 07:58 PM   #10 (permalink)
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Re: Buying a Salon...good or bad idea?

It's a bunch of crap. A tanning salon is not something you buy and flip in this day. If it was making money he'd keep it. The seller is a flip flopping friggen foolen' fanatic felon.
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