03-28-2013, 06:46 AM | #41 (permalink) | |
Team TanTalk Join Date: Nov 23 2004 Location: ITA Member & Berman Supporter!
Posts: 3,136
Rep Power: 25 | Re: Going to take over salon? Quote:
Earlier you said that $400/day - now, "in season" - was a GOOD day at this salon! You seemed to imply that wasn't "average", but rather spectacular. Now, keep in mind that tanning is very seasonal. The average statistics showed that salons make approximately 75% of their yearly revenue from Jan-June and 25% the rest of the year. Of that, about 42% came in March-May. So until you get actual accurate numbers for the business you can't be sure of anything - but I wouldn't "count" on an immediate and significant increase in revenue. | |
03-28-2013, 08:40 AM | #42 (permalink) | |
Team TanTalk Join Date: Nov 23 2004 Location: ITA Member & Berman Supporter!
Posts: 3,136
Rep Power: 25 | Re: Going to take over salon? Quote:
Again, until you know otherwise, the rent should be calculated at $4,000. MOST landlords would look for a price INCREASE going forward - not decrease. $500-600 seems very low for electric - unless you aren't very busy. And if you aren't very busy - you aren't making much money. Granted - this is a SMALL salon without many beds. But in tanning - if you are busy and making money - you have a big electric bill to go with it! The $1000/relamping is just an estimate. For the number of units you have here and the amount of use, it may be high. Again - if you aren't spending much on lamps, you probably aren't very busy - or making much revenue. Just so you understand -- relamping your beds could be between $300 for the Cobra up to $1000 for an i- bed. High pressure can run up as much as $3000. So it does add up. Payroll - you had previously mentioned they were open 68 hrs/week. So even if you are working, for free, have to include that as part of the 'investment" to see if this makes sense. If $10.25/hr is the wage there - also have to count on taxes, payroll fees, etc. So I'd say estimate more like $12/hr x 10 hrs/day x 30 days/month or $3600. If you are going to add 2% commission on everything (Why??), and you are thinking revenue will be $8500 - 30,000/mo that will be an extra $200-600/mo. So plan on $3500-4000/mo payroll Products would include the spray solution ($200-300) plus lotion sales. If your lotion sales were 2000/mo this would be $500-750 plus the spray. I'd estimate product at $750 if you are slow........and upwards of $4000 if you were to actually get to $30k/month. They mentioned an equipment lease - need to add that in. Other things to factor in: -Computer maintenance fees -Insurance -Cleaning supplies and other supplies Finally, need to consider the cost of your debt service. That is, if you pay $40K to BUY the business, have to "pay yourself back" from the revenue as well as pay all the other bills before you can consider anything extra left over as "profit". On $40K, consider that about $1k/month for 4-5 years --- even if you are just "paying yourself back". So my estimate for this salon would be: $4000 rent $3500-4000 Payroll $1000-2000 all utilities, internet, computer software, etc $1000 Debt Service $1000 Advertising $600-1000 (??) equipment lease $200 insurance $200 supplies, misc $1000 lamps/bed maintenance $750-1500 product Basically $13-15K/month or $150-180K/year | |
03-28-2013, 08:43 AM | #43 (permalink) | |
Team TanTalk Join Date: Nov 23 2004 Location: ITA Member & Berman Supporter!
Posts: 3,136
Rep Power: 25 | Re: Going to take over salon? Quote:
What makes you think this is a good salon that just needs marketing? Also - adding a high pressure bed will be $10-20K, even used. It is HIGHLY unlikely you will immediately come in and be able to pocket enough to pay that out, but even if you did, it would be considered another investment. So now the total investment would be $50-70K. | |
03-28-2013, 08:47 AM | #44 (permalink) | |
Team TanTalk Join Date: Nov 23 2004 Location: ITA Member & Berman Supporter!
Posts: 3,136
Rep Power: 25 | Re: Going to take over salon? Quote:
What makes you think you can double the sales very quickly (assuming it is actually grossing $8500/mo now)? And what makes you think they can be tripled? Also, recognizing the seasonal nature of the revenue, if the salon is making $8500/mo now, that means it could be making just $2k/mo in the fall. It is CRITICAL to see how the salon has done each month since opening and get a LOT more data from these owners!!!! Realize - a salon of this size, making $30k/sales/month, consistently all year -- would be virtually unheard of. Even a salon making $360k/year would put it in probably the top 5% of salons in North America. For a salon this small, with this equipment mix, and the strong competition you have mentioned, and the current sales you have seen - I would be surprised if they are grossing $100k/year. | |
03-28-2013, 08:58 AM | #45 (permalink) | |||
Team TanTalk Join Date: Nov 23 2004 Location: ITA Member & Berman Supporter!
Posts: 3,136
Rep Power: 25 | Re: Going to take over salon? Quote:
Quote:
If you are a serious buyer, have an attorney and an accountant get involved and have them request the business records. Nobody would buy a business without a thorough review of all records. Based on working there - what are the daily sales currently? How many customers are seen/day? What is the breakdown of how the current equip is used - for example what percentage do spray tans vs red light vs the Ibed vs the Cobra? What percentage of the sales are product vs services? Is there a membership (EFT) program? How much do they do in membership sales/month? Quote:
The biggest thing isnt if the equipment is worth it. But sure, it is. They are reasonable beds, but not necessarily a line up that can make enough money to pay off the costs for this place. Nothing you have said so far tells me this is an investment that will pay off. I would NOT pursue this - with what you have shared so far. | |||
03-28-2013, 02:47 PM | #48 (permalink) |
Join Date: Nov 19 2010 Location: GA
Posts: 933
Rep Power: 14 | Re: Going to take over salon? You said, I would work about a full time 40h a week in the salon if need be for the first few months, but ideally I don't want to have to live in the salon. What I mean by this is not that I don't want to dedicate myself to the business, I do. But that I wish to focus on marketing etc I think if a salon can't support itself without the owner being present, then clearly finances are way too tight.. I could tell you right now. With that attitude, you are doomed. Owning/running/managing a business is a 24/7 career. If you think you could own any business and work on your schedule, you are totally clueless and will be doomed to fail. If it a career in advertising and marketing is all you seek, and NOT the responsibilities/headaches of business ownership, i suggest you go to Madison Ave. My gut feeling is, you are not 'entrepreneurial' to succeed |
03-28-2013, 04:41 PM | #49 (permalink) |
Team TanTalk Join Date: Jul 13 2004 Location: Menomonie, Wi. Age: 82
Posts: 3,145
Rep Power: 22 | Re: Going to take over salon? I have really enjoyed the goings on, back and forth with you and Sally. I have come to the conclusion, that you don't have a clue on how to run a business, and like Black Sun states, you are doomed. There's no way in heck, that you are going to double you income, with so few beds. I've got 20 beds and make no where near what you are projecting. I keep my expenses under $5000 a month, and this is the reason I'm still open for business. I realize that rent is a lot higher in bigger populated areas, but your customer count and bed count has to also be a lot higher to compensate for the bigger expense. Also the current owners, seem to beating around the bush. Run away fast, and ask to work 40 hours. You'll make a lot more. |
03-28-2013, 04:52 PM | #50 (permalink) | ||||
Join Date: Mar 25 2013
Posts: 19
Rep Power: 0 | Re: Going to take over salon? Quote:
FYI I have worked in managerial, marketing and business development roles for a business that is now successful.. Quote:
ParrotHead you are simply wrong, sorry. The only place I have failed so far, is calculating the actual monthly expenses of this salon, with some helpful advise from SunSally, I have corrected some underestimations and I have been crunching numbers all day, got a bit more information from the owners, who are selling the business "as is". Quote:
Here's the new monthly expense breakdown: Rent: $4000 (paid until Dec, 2013) H20 + elect: $1000 Bed Lease on 1 bed: $1000 Lotions/Products/Mystic refill: $1000 Advertising: $1000 Relamping: $1000 Payroll employee(s): $1840 (40h@$10.25+fees etc = 11.50/h) Employee commission: $400 approx Payroll myself: $2000 (40h+@$10.25+fees etc = 11.50/h) Insurance: $200-300 Phone/Internet: $100 TOTAL: $13,000 approx. The Salon is currently making (with absolutely NO ADVERTISEMENT AT ALL): A new re-evaluated AVERAGE monthly sales of $4000 Based on a daily sales avg. of approximately $150 (sadly) High of $400/Low of $0 Losses per month: -$8000-9000 month (if paying rent) Losses per month: $4000-5000 (if taking rent out of the equation) Now, one could even say that taking over this salon which is currently at a major loss, is still more doable than opening a new salon, which would have massive startup costs, and guaranteed losses in first few months, which would arguably be way way worse than taking over this salon. With that being said, at this point I'm reconsidering and leaning more towards not taking over this salon. Simply because I was under the impression that it was "breaking even" before. Which has now been uncovered as a lie. It will require a tremendous amount of work to pull this place up off the ground, although I would still say, much less work than a new salon! The only value in this business here, are the beds and lack of rent: - UWE Ibed - UWE Idome - UWE Silverbullet - UWE Cobra - Beauty Angel (Red light therapy) - Mystic Tan HD and with an estimate of their worth in combination with NO RENT, would therein lie, if this business was worth buying for $40-50k. And this is now where the owner(s) argument lies: Quote:
The figures as of recent have really discouraged me from pursuing this, but there is still a chance I would go ahead, IF it made sense in the equipment worth, lack of rent and the fact that I know I can market this salon well. THE BIG QUESTION: Would YOU buy over this salon:
OR should I just walk away?? Because I fear that this is too much work for salon.. which I originally thought and hoped was at least breaking even on expenses with income. | ||||
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