Black Sun

Find it hard to believe he is making money...well, take that back...he is not profiting from this business. He may be 'making enough for payroll and expenses', but not beyond that. Are you planning to work for free with no potential of growth?

The #'s, as Sally has pointed out, simply do not add up. You yourself said there is a better salon near by...the equipment sux, as explained, would need replacing, re-lamping at best...can not compete in present state.

I say, it will close because I have been at this (business broker/buying/selling businesses/small biz owner for 30 years) awhile and the signs are there.

99% biz owners say they are selling 'due to health', 'pregnant', spend more family time'. 'other interest'...in other words, they tell you everything but the truth.

If this was a money maker, trust me, it would not be for sale..at least kept for the profits if there were any and place a good manager to run it to free up 'owner time' to pursue 'other interest'.

Business is all about profits/making money. Other than that, it is a waste of time and money to keep it afloat.

For what it is worth, in its present state based on what you presented here, my offer would be take over the lease and 10K cash.

However, you would still need a good 50k to upgrade, if it has the potential (capacity for additional AC/electric/upgrade beds)

House of Tan

I did an evaluation on a salon that I was looking at, similar to this one.

They were asking $85k

I offered $6,200

They countered with $30k

I countered with $7,500

They declined.

End of story.

In business, never fall in love with anything.

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Startbucks

jonnyd

Yes I think as more people find out about how much nicer the other salon is the more customers he will lose over time. I agree 100% never to fall in love with a business nicely put. Also do you guys know who is reliable for back taxes because I am almost certain that he is not paying the tan tax. I am not saying to buy his salon. I am just curious for future reference who is reliable for this?

Brian Oshman

He would be. This is why you do an asset sale so you don't acquire liability.

jonnyd

If you do a asset sale would you need to change the business name or how does that work?

Black Sun

Absolutely change business name...especially one that the IRS may eventually come after (assuming he has NOT paid taxes).

Completely isolate yourself from any affiliation. If there are any suspicions of any unscrupulous dealings, no matter the biz, stay clear away. Things will eventually come back to haunt you and bite you in the a$$, even tho you had no personal connection with former biz.

Here is a true example. I know of a well established hair salon/spa in business for over 20 years..very well respected for quality service. About 5 years ago, both the IRS and GA Dept of Revenue (it was located in Atlanta) literally placed a padlock on the front door while the business was open. Both employees and customers taken by surprise, ordered by agents to evacuate premise. Stylist were forced to leave with nothing but shears and combs in hand.

The owner of all those years never paid federal/state or employee tax..owed millions in interest/penalties. Eventually someone re-opened a hair salon there once the lien on biz was removed (landlord unable to rent or re-take suite while under lien. So another 'entrepreneur' assumed they would take over the space fully equipped and re-open a salon...within six months they were forced to close....no stylist/no customers would go near the place..even tho under 'new-ownership/management/name', there was a bad stigma..it was well known in the neighborhood what had happened, customers/stylist kicked to the street with personal belongings locked up in a building with no access until padlock removed a year latter...

Which is why, do your homework and research deeply when taking over an existing business. Sellers will hold back the truth to get away from hidden problems that hope to pass on to the first victim...use a lawyer/cpa to thoroughly check records...demand back IRS/State records on the business from 5-7years back, or first day of operation...and as Brian said, do an asset sale only