Going to take over salon? - Page 2 - tanTALK

sunsally · 03-25-2013, 07:27 PM

Several thoughts.........

First - read this -- several times. Then read it again. And take notes! :-)

Tips to know BEFORE you buy a salon!!

Robert K is dead on - the "right" price depends on not only the "value" of the equipment, but the profitability of the salon. If NOT profitable - you are only interested in the value of the "assets". If it IS profitable - you are interested in that.

sunsally · 03-25-2013, 07:35 PM

Other red flags/comments:

Quote:

Originally Posted by THE_KINGDOM

So there has recently been an opportunity to take over a salon, it would be my first salon.

I haven't yet seen the books but I will be able to see them shortly.

They were saying that if I offer $50,000 or more it's basically mine, but after doing some reading I've read this is a lot to pay for a salon. I wouldn't pay more than $40,000, as it stands right now.. but I wanted some more experienced people within the industry to chime in and give me some friendly advice as to what sounds reasonable for a salon with this setup.

1. Good you are asking for more advice!

2. How long have you had this idea in your mind to buy a salon? What research have you done so far?

3. What do you base your number of 40K offer price on?

4. How did you come upon this in the first place? They approached you or you them?

5. Would you be active in the salon working? If so, would you be giving up current employment to work on this instead?

sunsally · 03-25-2013, 07:39 PM

Quote:

Originally Posted by THE_KINGDOM

The salon has the following beds:
- UWE Ibed
- UWE Silverbullet
- UWE Cobra
- Beauty Angel (Red light therapy)
- Mystic Tan HD

These are all very nice, high end units.

From your profile, it appears you may be in a major urban location (I'm not sure if your profile is available for all to see or just me, so I will keep it vague for now in case you care). What sort of market/location is this? What sort of competition is there?

You will want to find out from the sellers -- how much use are each of these units getting now? On Helios 12 they will be able to get you a report that will show revenue as well as number of tans. You are interested in:

1. Total Revenue for 2013 so far, 2012 in total and 2011 (or further back if they have it. Compare to tax returns

2. Total number of tans in each of those time frames. PER level/piece of equipment! (to see what, if anything, isn't getting used)

sunsally · 03-25-2013, 07:43 PM

Quote:

Originally Posted by THE_KINGDOM

- The rent for the space is between $3000-4000 a month I believe.
- The Salon has space for 2 more beds, in roomed off sections that are unused.

Confirm this. Is this with any CAM or Triple Net (taxes, landscaping, trash and snow removal, admin fees,.....). Is the lease assumable or will you have to do a new one? Same terms? How long? Do you have exclusivity in the "center" (if it is in a group) for tanning? Both UV and sunless?

How many sq feet is the space? How big are the empty rooms? Is there electric run to them yet? If so, what size breakers?

What is the total power for the space? Single phase or 3 phase? How many tons of AC?

sunsally · 03-25-2013, 07:46 PM

Quote:

Originally Posted by THE_KINGDOM

-

Some things in the salon should be repainted, and fixed up. I'd prob want to change all the doors to the tanning rooms to make it look nicer, although it's a big investment and I believe the landlord/building owner should be participating in the unit renovations.

You can certainly ask, but he may well have already paid for a portion of the preceding buildout and may or may not be inclined to do more. Will depend if the current tenant is behind on rent or not (and therefore the landlord may prefer a new tenant,...).....

What is wrong with the doors? In a salon that has only been there two years, that would probably be one of the LAST things I would be changing! Additional equipment would be a much higher priority in almost all cases.

sunsally · 03-25-2013, 07:47 PM

Quote:

Originally Posted by THE_KINGDOM

- I think the Salon has been around for around 2 years, but I will be able to confirm this shortly

Make sure you have confirmation that all the equipment is PAID IN FULL and actually theirs to "sell". No bank or lease financing. If there is, you cannot buy those "assets" until they are paid off first.

Note - selling after 2 years is a LIKELY red flag that it isn't breaking even....

sunsally · 03-25-2013, 07:48 PM

Quote:

Originally Posted by THE_KINGDOM

- Computer system running Helios 12 Enterprise (is this a subscription software or paid off?)
- T-max Manager G2

Yes, Helios 12 Enterprise is subscription - monthly support fees required, plus having internet available.

sunsally · 03-25-2013, 07:51 PM

Quote:

Originally Posted by THE_KINGDOM

The reasons they're selling the salon are not quite clear, but one of the owners is no longer living here, and the other partial owner/manager was really just managing the salon and just had a child etc, no more time to manage the salon.
Marketing for the Salon was never done properly so I believe there is more potential to make the salon a lot more busy with adequate marketing and better pricing etc

Again, see tax returns and confirm against Helios reports.........this will tell you if salon is making money or not -- and will show that supposed "hidden cash" as well......

What makes you believe the "marketing for the salon was never done properly"? Is it NOT busy now (if you think you can make it a lot more busy)? How much additional do you believe would need to be spent on advertising, beyond the purchase price? What sort of experience do you have in marketing and/or tanning salon marketing?

sunsally · 03-25-2013, 08:02 PM

Quote:

Originally Posted by peach

I would approach it as though I was starting a new store; check out the demographics and decide whether the area can handle the number of salons that already exist. Then investigate your total fixed costs to run the store. (rent, lights, phone garbage, etc.)

Agree

Quote:

Originally Posted by peach

Check the employees situation-do they have any, what is there pay, will they be willing to stay.

Would you want them to stay? Not always a good idea.

Quote:

Originally Posted by peach

if you are confortable after all that, look at the equipment-what is it selling for on ebay and other sites?

Depends on what you are buying - a profitable salon or equip. This equipment is IN your salon, running. Comparing it to other equipment you would have to pay to have THAT brought to your salon and installed. There is a cost to that.

Also, what is the condition of the equipment? Acrylics ok? When were lamps last changed (hours). If you compare to equipment on ebay or other sites, make sure you are comparing "same" to same".

Quote:

Originally Posted by peach

Without a spray booth, I wouldn't give $20k for the equipment.

Irrelevant now that you have shared there IS a spraybooth. And....again, it depends.........are you buying EQUIPMENT or a profitable business?

Quote:

Originally Posted by peach

Do not pay for the buildout, if he moves, he will leave it anyway.

Agree

Quote:

Originally Posted by peach

Sell the red light bed-it is overpriced and wouldn't be worth what he would want for it.

Based on what?? This COULD be the most profitable unit in the place!! Get FACTS/NUMBERS/STATISTICS - THEN, make decisions.

Quote:

Originally Posted by peach

You need some basic beds and a spray booth to go with what he already has.

If you are in the market I believe you are in, and at that rent rate, ABSOLUTELY DISAGREE you need basic beds!!

In this market, and at that rent, if you REALLY only have room for these units plus two more, you need to focus on HIGH REVENUE POTENTIAL. Also, this market is well versed in High Pressure.

A P90, while not necessarily my first choice (depends on price, competition,....) is in the right direction. A base bed (or another Cobra) is NOT!

Steve Underhill · 03-26-2013, 10:23 AM

Quote:

Originally Posted by THE_KINGDOM

So there has recently been an opportunity to take over a salon, it would be my first salon.

I haven't yet seen the books but I will be able to see them shortly.

They were saying that if I offer $50,000 or more it's basically mine, but after doing some reading I've read this is a lot to pay for a salon. I wouldn't pay more than $40,000, as it stands right now.. but I wanted some more experienced people within the industry to chime in and give me some friendly advice as to what sounds reasonable for a salon with this setup.

The salon has the following beds:
- UWE Ibed
- UWE Silverbullet
- UWE Cobra
- Beauty Angel (Red light therapy)
- Mystic Tan HD

- The rent for the space is between $3000-4000 a month I believe.
- The Salon has space for 2 more beds, in roomed off sections that are unused.
- Some things in the salon should be repainted, and fixed up. I'd prob want to change all the doors to the tanning rooms to make it look nicer, although it's a big investment and I believe the landlord/building owner should be participating in the unit renovations.
- I think the Salon has been around for around 2 years, but I will be able to confirm this shortly
- Computer system running Helios 12 Enterprise (is this a subscription software or paid off?)
- T-max Manager G2

The reasons they're selling the salon are not quite clear, but one of the owners is no longer living here, and the other partial owner/manager was really just managing the salon and just had a child etc, no more time to manage the salon.
Marketing for the Salon was never done properly so I believe there is more potential to make the salon a lot more busy with adequate marketing and better pricing etc

Knowing exactly what you are buying and what it will take to make the salon successful must be determined before you make an offer. Also remember you will need to invest more than the purchase price to make the salon successful. Determine what those additional investments will be before you make an offer. That becomes the amount of the overall investment. Otherwise you will be the new owner of a failing salon.

03-25-2013, 07:27 PM	#11 (permalink)
sunsally Team TanTalk Join Date: Nov 23 2004 Location: ITA Member & Berman Supporter! Posts: 3,136 Rep Power: 25	Re: Going to take over salon? Several thoughts......... First - read this -- several times. Then read it again. And take notes! :-) Tips to know BEFORE you buy a salon!! Robert K is dead on - the "right" price depends on not only the "value" of the equipment, but the profitability of the salon. If NOT profitable - you are only interested in the value of the "assets". If it IS profitable - you are interested in that.

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