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Old 06-20-2012, 03:20 AM   #1 (permalink)
 
Join Date: Jun 20 2012
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Smile Is this right??!

Hello everyone :) I've done some research into owning a salon and would like some feedback. Basically, my salon will have:

2 base tanning beds
1 upper level bed
1 sunless tan

and (I've decided to add other amenities)

2 manicure tables
2 pedicure chairs
2 massage rooms with tables

Total equipment cost: $17,000 - 20,000

My considered space is 3690 SQFT @ $15/SQFT = $55K/YR
Tax, electricity, gas, employment, etc., = $35,000/YR


My financial projection is:

10 tanning customers a day = $176,000/YR
12 Manicures a day = $453,600/YR
- (-)commission (60/40) = $272,160/YR
8 Pedicures a day = $453,000/YR
- (-)commission (60/40) = $272,160/YR
6 Massages a day = $907,000/YR
- (-)commission (60/40) = $544,320/YR
= $1,264,640
- $110,000 (annual fees)
= $1,154,640

end of year taxes (5%)(10% beds) = $60,000

which still leaves me with a profit of = $1,094,640

Even if my calculations are wrong by NINETY PERCENT, I would still break even. With all this in mind, I am wondering... WHAT AM I MISSING?! I know there will be hard work and bad months/seasons, but this still seems like such a great investment, I'm wondering why everyone else isn't doing it, too. Or... am I missing something?

Any advice or help would be greatly appreciated
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Old 06-20-2012, 03:40 AM   #2 (permalink)
 
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Re: Is this right??!

NO!!!!
Those #'s are beyond realistic. First off, 55K for rent a year, you will never make enough to cover the 1st month, let alone all 12.
Too much leased space for what little equipment going in...and with that equipment, never will generate a 'break-even', you will be in the red form day-one and sink further.

Total equipment cost 17-20K...no way...the tanning beds alone (quality even at pre-owned prices) will cost 25-30K, including sunless...(I know nothing about massage equip)

10 tanners a day to generate 176K??? HOW/WHERE do you come up with that? That is 300 a month..you would need 300 a day to hope for that#...and that is a stretch.
12 manicures a day to generate 453K???? REALLY????
8 peds to generate 453K??? WHO ARE YOUR CUSTOMERS? The Kerdashians??
You are soo wrong with all of the #s.....

DO NOT BASE YOUR FUTURE ON THESE PROJECTIONS!
Tanning is NOT the business to get into...lot of negativity against the industry, state and fed regs are put into law every month making it harder for anyone to survive...banks/fed grants/loans are all dried up..the SBA has tanning on its radar as a 'high-risk' upstart, meaning NO BANK/Investor would 'loan'.

To open and be a success(have a chance at survival), it can cost anywhere from 300K-500K to make it, with money in reserve to cover any unforeseen cut in business (other than a traditional 7month slow period in 'off-season).
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Old 06-20-2012, 03:48 AM   #3 (permalink)
 
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Re: Is this right??!

Thanks for your response. I am a military veteran and my husband is active duty with great credit and good savings, so we are not worried about initial rent fees or receiving a VA military loan. I've done research on commercial beds and plan on buying $3,000 - $5,000 versions. In fact, I couldn't even find $12,000 beds - not ones I would think of buying, at least. Since I am not solely a tanning salon, multiple high end beds are not my top priority. As listed above, massages and nail services will be primary profits.

Did you realize tanning salons are "not the business to get into" after you started your own?
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Old 06-20-2012, 04:03 AM   #4 (permalink)
 
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Re: Is this right??!

As for the projections:

10 TANNING customers a day with an average of $7 a session= $70/day
$70/day x 7 days = $490/week
$490/week x 30 days = $14,700/month
$14,700/month x 12 months = $176,400/year

12 manicures a day for $15 each = $180/day
$180/day x 7 days = $1260/week
$1260/week x 30 days = $3780/month
$3780/month x 12 months = $453,600

Pedicures = $22/session
Massages = $60/hour

Why are these calucations so unrealistic?
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Old 06-20-2012, 04:31 AM   #5 (permalink)
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Re: Is this right??!

Quote:
Originally Posted by Krista_Janae View Post
As for the projections:

10 TANNING customers a day with an average of $7 a session= $70/day
$70/day x 7 days = $490/week
$490/week x 30 days = $14,700/month
$14,700/month x 12 months = $176,400/year

12 manicures a day for $15 each = $180/day
$180/day x 7 days = $1260/week
$1260/week x 30 days = $3780/month
$3780/month x 12 months = $453,600

Pedicures = $22/session
Massages = $60/hour

Why are these calucations so unrealistic?
Need to check your math.
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Old 06-20-2012, 04:44 AM   #6 (permalink)
 
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Re: Is this right??!

Oh wow! Thank you MovieKing. I look like a complete idiot, I'm sure. I knew I was doing something wrong and something was too good to be true. I probably just wanted it to be true so somehow 'missed' the obvious ;)

My financial projection is:

10 tanning customers a day = $23,520/YR
12 Manicures a day = $60480/YR
- (-)commission (60/40) = $36288/YR
8 Pedicures a day = $60480/YR
- (-)commission (60/40) = $36288/YR
6 Massages a day = $120,960/YR
- (-)commission (60/40) = $72576/YR
= $168672
- $110,000 (start-up)
= $ 58,672

end of year taxes (5%)(10% beds) = $7,250

which still leaves me with a profit of = $51,422

This is much more realistic. Needless to say... I'll have an accountant. Do these number seem realistic for the first year?
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Old 06-20-2012, 05:53 AM   #7 (permalink)
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Re: Is this right??!

You're forgetting all of the expenses that go with running a business. Your 35K number probably wouldn't even cover payroll. Electric for your proposed space would be another $1000-$2000 per month. Don't forget cost of goods sold, insurance, phones, garbage, bank fees, repairs, supplies, advertising (10% of gross), licenses, dues and subscriptions, ongoing training, professional fees, etc... Unless you plan on working for free you need to include a salary for yourself.

Also with just three tanning units and one sunless you would want to go high end. Two big vhr beds, one high pressure bed and a sunless booth will run you about 125K unless you find some quality used equipment that fits in with your business plan.
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Old 06-20-2012, 06:00 AM   #8 (permalink)
 
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Re: Is this right??!

My payroll was for a receptionist at 6.50 an hour (22K/YR). The nail techs and massage therapists would work commission at a 60/40 rate. I included insurance, goods sold, supplies and repairs in my costs, but not the others (probably because I wouldn't even know where to begin!).

So... what I understand is, my business would most likely not make profit in the first year... if not the first few? If this is the case, what are the monetary benefits of starting a salon business? With such high risks and low return, it seems like I would make more money just being the receptionist at someone else's salon! And, yet, there has to be something to it....
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Old 06-20-2012, 07:20 AM   #9 (permalink)
 
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Re: Is this right??!

Quote:
Originally Posted by Krista_Janae View Post
Thanks for your response. I am a military veteran and my husband is active duty with great credit and good savings, so we are not worried about initial rent fees or receiving a VA military loan. I've done research on commercial beds and plan on buying $3,000 - $5,000 versions. In fact, I couldn't even find $12,000 beds - not ones I would think of buying, at least. Since I am not solely a tanning salon, multiple high end beds are not my top priority. As listed above, massages and nail services will be primary profits.

Did you realize tanning salons are "not the business to get into" after you started your own?
Krista..I got into it 15 years ago. Tanning was a 'HOT' industry..I have had two tanning and one hair salon with 10 stylist.

I have been a successful business broker for many years, selling/buying businesses for others as well as myself.
It is NOT a lucrative, 'build it and they will come' industry as it once was...GO FOR IT, if you feel you must. You came here fro advice, I am being honest with you. I believe, any other comments you get will back me up

I have sold it all 5 years ago when the industry started to hit roadblocks and the writing was on the wall.

I have since opened and still doing good with a coffee/Starbucks type cafe, a T-shirt biz and now looking into a Yoga Studio, which IMO is where tanning was 25years ago...very popular, very receptive by the community and bank/loan friendly.

Good Luck!
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Old 06-20-2012, 09:25 AM   #10 (permalink)
 
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Re: Is this right??!

Thank you very much for your opinion. My idea is relatively new and I am still open to other ideas of starting a business. I have no close ties or deep interests in the beauty industry. A massage business seems like it would be lucrative, as well as a nice coffee shop.

These are things I will look more into.
Thanks again.
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