A_Martin92

For about a year now I have been debating the issue of whether to buy an existing salon that is in the area for sale or start a new salon...

The existing salon has been on the market for over a year and originaly askin $90,000 for a company that only gross at highs $55,000 she now wants $65,000, but all the beds will pretty much have to be replaced, the t-max system does not work(each tanner has to set their own bed), and needs a lot of updating and work. There is not another tanning salon for another 17 miles, but people drive that 17 miles and pay $40 more a package, because the owner does not replace the lamps until they burn out completely so people have to tan twice as much as going to the other salon. Plus the salon is back off the road and people who have lived here their whole life still didn't know it was there.

I was considering, but not sure if it is a good idea to open a tanning salon at a major intersection about a mile away in pretty much the only shopping center around. I was not sure if it would be a good idea to into competition with the other salon or just buy the existing salon and just do total renovation. I need advice/opinions please!

Robert K

Not enough info to give advice.

How big is the population?
How big is the current salon?
How big are the current rooms?
How much electric does it have?
How much AC does it have?

It sounds like it is not worth buying.

__________________
Robert Klem
Superior UV Technologies
(888) 526-7712 x77
robertk@superioruv.com

sunsally

If it GROSSES 55K (that is, the total revenue taken in, without any expenses taken out), then it is extremely unlikely it is running at a profit. Therefore, any purchase should be considered an "asset purchase" -- the value of the beds and equipment.


As Robert mentioned - exactly WHAT beds she has would help. Maybe they just need to be cleaned, refurbed and relamped and would tan fine - so might not have to replace all.


That said - probably STILL not anywhere close to her purchase price from what you are describing!


Sounds like the only "value" of her location is the existing rooms and electric - which really "belongs" to the landlord, not her so not really something she can "sell" - but something to balance against building new.

To build new, you will need to consider the cost of the buildout, equipment etc. Lots of threads on Tantalk about estimating those costs but they will be 50k - 300K+ depending on what you try to do.

If you opened at the new location you like - what would your rent be for how many sq feet?

A_Martin92

It is in a small country town (population of aprox. 17,000), but right on the line of a large city and it is starting to expand into our county. The current salon is about 1,200 sq. ft. and the rent is 1,800 a month. The rooms are just big enough for the beds to fit in and there are 10 rooms, but only 8 beds. In the salon currently are two sunstar zx30's, a sunstar zx 32, a sundome 548v (Being Leased), sunstar 432, starpower speed system, solaris plus 42, and a mystic tan. The electric and AC is another concern of mine, and why I may be back away. The landlord when he built the little strip mall did not do things they way they should be done (he payed people off) and the AC is broken half the time so she has to shut down because it is too hot in there to tan. He also did not do the sewage properly. The strip mall is a little rough.
If i bought the salon I know I would have to go through and relamp the whole salon, if not replace the beds, and then move locations as well.

sunsally

Well, if this is the case, then the purchase price should be $0. There is nothing there to buy. (p.s. a leased bed can't be considered part of the "assets" either since it belongs to someone else - unless she is paying off the lease).

Sounds like you either:

a. Wait her out until she closes and take over, having to upgrade the facility OR

b. Build new.


There doesn't appear to be any compelling reason to take on this facility so building appears to be your best bet in this situation.

So now your "homework" is to figure how much that would cost you in buildout, what the rent would be, etc --- and see if the business plan can support a profitable business given those numbers!

Robert K

Take the money you were going to use to buy her location and build a better one in a better location. She will then be forced to close and you will end up with her customers for free.

__________________
Robert Klem
Superior UV Technologies
(888) 526-7712 x77
robertk@superioruv.com

A_Martin92

I went and looked at locations today and got pricinig in a major shopping center and starting to figure numbers and everything now. I am deffinately going to start fresh!

Steve Underhill

Purchasing an Existing Salon Can Be a Good Investment

A quicker less expensive way of getting into the indoor tanning industry is to purchase an existing salon. However you must be cautious because there are many potential pit falls.

Some salons that are for sale are profitable and ready for a new owner with minimal changes required. A large percentage of all tanning salons are struggling or failing, typically if a salon is for sale it falls into this category. This alarming statistic is not due to a week industry, instead it is a result of new salon owners not being properly educated and prepared for success.

When evaluating the purchase of an existing salon you must approach it as though you are opening a new salon from the ground up. You must first determine the potential of the salon by evaluating the demographics. If the demographics are good you can now evaluate the salon further. Always look at the parking situation and how easy it is to access the location. You should determine all of the changes that must be made to create a successful salon. To do this you must again have the information and knowledge required to be successful. You must determine the cost associated with making these changes.

You must determine the value of the salon by asking a number of very important questions. Net profit of the salon, equipment value or a combination of both will determine the value.

Very old salons can be a problem because the rooms are typically too small. With proper evaluation, a proven plan for success that the previous owner did not have and the proper funding to make the appropriate changes will allow you to own and operate a successful salon saving a great deal of money over opening a new salon from the ground up. Major mistakes made by people that purchase failing salons: Paying more than the salon is worth, not being any more qualified to operate a successful salon than the previous owner, not identifying or making the changes necessary to create a successful salon, not being properly funded. It is just as easy to succeed as it is to fail, knowledge is power.

__________________
Stephen Underhill
Consultant
steve@smuconsulting.com

Black Sun

Why are your replies, Mr Underhill, always 'copy and paste'?

Steve Underhill

I create documents to answer specific questions and to actually expand on the question and answer. Would you feel better if I retype it each time the question is asked? This is a very effective way to respond to some questions that are asked frequently? Your problem with this is?

__________________
Stephen Underhill
Consultant
steve@smuconsulting.com