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Old 02-01-2014, 01:37 PM   #11 (permalink)
 
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Re: Potential Salon Purchase - Need Input

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Originally Posted by DH View Post
My place has 11 beds in 2000 square feet with 600amp 3 phase using 21 tons A/C and we MORE than double the $82k in revenue you are looking at. If your area can support a salon, start from scratch and forget this dog.
Unless you are in a very low populated area you should be doing a lot more than doubling those numbers with a 11 system 2000 sq ft salon. You may want to look a what changes you should be making. However your advice of simply opening a new location may be correct except in most cases it is a greater savings to start with an existing location.
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Old 02-02-2014, 08:03 AM   #12 (permalink)
 
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Re: Potential Salon Purchase - Need Input

Thanks all for your input. There are other things I have discovered in the last day as well which lead me to forget about this salon. In reviewing the P&L they only had 10 months of rent in the 2012 numbers and only 11 months in the 2013 numbers. Hmmmmm,,,,,,

Of course, notwithstanding the rent issue, looks like like a universal point of view is that this business is not worth saving, even if almost free.

Appreciate everyone's input, just confirmed my gut feelings,,,,,
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Old 02-03-2014, 08:30 AM   #13 (permalink)
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Re: Potential Salon Purchase - Need Input

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Originally Posted by DH View Post
Rent $16,000
Insurance $2,000
Utilities $6,000
Cost of Goods $3,000
Phone,Internet $1,800
New Lamps $5,000
Other Maintenance $10,000
Labor $20,000
Marketing $2,000-$5,000
Accounting fees $1,000
Legal fees $1,000
Unforcasted expenses $10,000

TOTAL: $81,000

Reinvestment %10 of revenue

The value of the equipment is ZERO. The value of the build out is ZERO. You're buying the business only. I'd pay one year PROVABLE profits only for this salon at best if you really want it but think you can start a salon for equal or less money. This salon is most likely out of date (at the end of it's usable life) and in need of major upgrades to remain viable.

This is pretty spot on. However, the Labor/payroll is ACTUALLY closer to $36k/year -- assuming paying about minimum wage, some commissions on sales, all the taxes, and open about 70-80 hrs/week.

My guess is the "owner's discretionary income" was actually what they took for "labor". So they sat there, open to close, 70-80 hrs/week - for $22K. Not sure your wife would want to sign up for THAT!

Agree with all. The beds ARE outdated, but they CAN tan you if properly lamped and maintained. You CAN make money from a salon like this - maybe. But not as it stands. It is NOT actually profitable currently.

I'd pass.
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Old 02-07-2014, 01:51 PM   #14 (permalink)
 
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Re: Potential Salon Purchase - Need Input

I have a different take on this opportunity. I would buy this store and run it for a year and use the profit to slowly change equipment. Your break even cost is closer to 50-60K, so yes, at 85K gross revenue, I can see you putting $25K in your pocket, if you are willing to be there 40 hrs a week.

The trick is to buy this place for 15-20k with as little up front money as possible. I wouldn't pay more for it, and I wouldn't pay for it all up front; spread it over at least 18 months.

You can get upgrade beds for 1,500-2,00 each; add a couple each year. It can be done.
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Old 02-07-2014, 01:58 PM   #15 (permalink)
 
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Re: Potential Salon Purchase - Need Input

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This is a perfect example of how brained washed this industry has become.
There is nothing wrong with a 28 or even a 24 lamp base bed. You will get a tan and be happy unless told differently.

Manf. telling telling everyone you must go bigger to win - Bull
I agree with you. These are old school beds, but they are all metal and very sturdy. They are easy to work on and will not break. Why not use these beds to make money with? If the people who are currently going there like them, why would they all of a sudden NOT like them.

People in large urban areas think everyone on this site lives in the same areas. They don't. In this part of the USA, this may the best tanning salon within 25 miles of them. Everything is relative.
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Old 02-07-2014, 02:01 PM   #16 (permalink)
 
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Re: Potential Salon Purchase - Need Input

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Originally Posted by DH View Post
My place has 11 beds in 2000 square feet with 600amp 3 phase using 21 tons A/C and we MORE than double the $82k in revenue you are looking at. If your area can support a salon, start from scratch and forget this dog.
Your revenues might be double his, but I bet that your expenses are triple his. Again, it is all relative.
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Old 02-07-2014, 02:57 PM   #17 (permalink)
 
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Re: Potential Salon Purchase - Need Input

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Your revenues might be double his, but I bet that your expenses are triple his. Again, it is all relative.
Peach sometimes some of the things you say is so ridicules. A salon must spend money for marketing. If you feel a business should only seek business that comes through the door because you are there which is what it sounds like, well you have no grasp of business what soever. With a business model you create operating budgets based on projected income. I hate when I hear people say I can't advertise because I can't afford it. If you are not willing to market your business you should expect to fail.

When people visit this forum we can only hope that they can tell the difference in good and bad advice. Knowing that many people come to forums looking for help and end up giving advice is important. If it sounds reticules, it probably is.
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Old 02-07-2014, 03:11 PM   #18 (permalink)
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Re: Potential Salon Purchase - Need Input

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Peach sometimes some of the things you say is so ridicules...

When people visit this forum we can only hope that they can tell the difference in good and bad advice.
Well said
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Old 02-08-2014, 10:31 AM   #19 (permalink)
 
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Re: Potential Salon Purchase - Need Input

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Originally Posted by Steve Underhill View Post
Peach sometimes some of the things you say is so ridicules. A salon must spend money for marketing. If you feel a business should only seek business that comes through the door because you are there which is what it sounds like, well you have no grasp of business what soever. With a business model you create operating budgets based on projected income. I hate when I hear people say I can't advertise because I can't afford it. If you are not willing to market your business you should expect to fail.

When people visit this forum we can only hope that they can tell the difference in good and bad advice. Knowing that many people come to forums looking for help and end up giving advice is important. If it sounds reticules, it probably is.
Steve, I usually try to defend you, but it is getting harder and harder. Are you spelling words wrong on purpose? We are talking about an established salon here with an established clientele. This person is trying to determine the value of the business. Not what it could be but what it is. You don't pay people for "potential".

As far as advertising goes, I agree that you need to market your business. But if I am in a position to buy this business, and I am trying to decide what to do first, dropping a bunch of money on ads wouldn't be my first action.

Many of the folks who come on this site live in small town rural USA. Your big city high powered ad campaigns would be a waste of money for them.
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Old 02-08-2014, 10:47 AM   #20 (permalink)
 
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Re: Potential Salon Purchase - Need Input

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Originally Posted by House of Tan View Post
Well said
Unlike the rest of you experts, I don't give advise. I always explain what I do or what I have already done. And I have been doing it
for 22 years successfully. But according to you, people like me shouldn't exist in this industry. The fact that I do, indicates that most of you don't know what the ___ you are talking about.
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