GOOD BUY??

[rowekyle]

Yes, I would definitely agree with you that this place will need some new beds, but I think I am still better off buying an existing salon with a good 4500 people in the computer, than starting from scratch?? Wouldn't you think?

I think the client base is fairly high, 4500

I am pretty sure the 32's do have facials. Definitely understand what you mean about running it just so-so. I guess I would have to put something new in to attract the customers and keep them coming in.

Yes, I will quitting my day job and work at the salon, so I will need someone else to cover the other 40 hours I am not "working" so to speak. So the figure of $20K is probably right on with taxes and everything.

I have actually tanned at this salon for a year now, and I have been visiting frequently. There are definitely a good amount of people rolling through each day however, on Thursday I am going to sit in the parking lot for at least 4 hours and see what happens throughout the day.

At what time do you guys find your salons to be the busiest? Also, if I can ask what are your gross sale to profits margins of last year just so I have an idea of what I'm looking at.

About the heating and cooling, or more or less cooling. He just upgraded all the electrical to allow for more beds as well as increased the AC, he now says he can run all the beds all day long, and keep the place at a steady 70 degrees easily. So thats a good thing. As far as electrical and cooling go I think he has done a huge portion of the work.

Thanks Again, any more info would be great!!!!

[mikejones]

if you are making good money at your current position keep it. also, this salon does not need new beds unless there is something wrong with the current ones.

[rowekyle]

Yes, I plan on keeping most of the beds but I think Sally may be right about the 28's they might not be enough.

But the basic question at hand is this thing worth the possible $190,000 I could talk him down to?

I am getting into this business to increase my current salary of 40 hours ($32,000/yr)

[sunsally]

Ok -- so let's do the math again...

You are GIVING up a job of 32K (plus benefits?, they pay the taxes?, any holidays/vacations?). So take any "profit" and take 32K off to see what "extra" you are really making above what you make now having a full time job with no liabilities/stress, but also no upside potential.

Now we're down to a "stated" profit of about 90K minus your 32K you are giving up -- or $55K+.

Next - we ask again - are his numbers legit. Could be. But let's look at Mike Jones' numbers closely (and like Mike said - just a shot in the dark, but a good starting point!)....

4 - 28 Lamp Beds - TanSES x $5/visit x 30visits/day = 150
3 - 32 Lamp Beds - TanSES x $8 x 30 = 240
1 - 52 Lamp Beds - TanSES x $10 x 15 = 150
1 - VHR Stand UP Level 1 x $7 x 10 = 70
1 - VHR Stand Up Level 3 x $10 x 10 = 100
1 - Ultrabronz Bed x $18 x 6 = 108
1 - Mystic Tan Booth x $15 x 5 = 75

= 893/day (round down to $800)
=800 x 30days = 24K x 12months = 288000

I'd agree with the Mystic guess (maybe!), and the Ultrabronze (maybe higher avg session cost here). 52 lamp bed should be more visits from what you say, and the standups are probably lower in my experience (unless you have a good stand-up clientele there).

SO - a couple of things....

1. We ALL know that tanning visits & dollars are not evenly divided across the 12 months! In fact, there really isn't an "average" month, so much as higher and lower ones. And I don't think many 12 unit salons "average" 100+ tanners year-round. I think they could have 200 in April & May -- but could be at 50 in October. Depends on how you price and market things, and your clientele.

2. We also know that, in many markets, you aren't going to be holding $5/session as an "average" price for a 28 lamp base bed. In my market, that average might be $2.50 by the time you factor in EFT customers, "free tans" for new customers, etc. My walk-in is $7.

3. BUT, Mike's math proves my exact point! With ONE 52 lamp bed, using his hypothesis, you are making as much money as the FOUR 28 lamp beds!!! And even if we don't know if these are the "real" numbers or not -- I'll bet that is pretty close!


SO -- don't sell your negotiating potential short! Put HIM on the "defensive" - make him "justify" his price. Maybe he will to your satisfaction - that's great. But just because he "wants" 200K, doesn't mean you have to pay that -- or that he might not take less. Or not. But you can't know until you try.

Ask for the following info:

1. Tax returns for the salon - last 3 years

2. Copies of invoices for the equipment (will tell you what he paid new, you can see what has been depreciated from them, give you an idea of what they are 'worth').

3. Documentation of the recent upgrading he did -- what is the total amps and air now, what size/gauge wire is run to each room (this is important when you are trying to replace smaller beds with bigger beds!) etc. Make sure it was done by certified electricians/HVAC folks so you don't have any issues down the road.

4. Ask for some "back up" documentation for the expenses he is showing. E.g. invoices for the advertising he did, copy of electric bills, etc

5. Ask for his client counts -- how many tanners each month for the past 18 months (if not the whole 3 years), how much $$ per month. This will be critical for you to understand the cash flow of a tanning salon -- and in particular, how "seasonal" or steady this particular salon is.

ABOVE ALL -- GET AN ATTORNEY AND/OR ACCOUNTANT YOU TRUST TO HELP YOU WITH THIS DECISION!! If you are a current client, you might feel "funny" asking for some of this, don't want to seem "nosy" or like you don't "trust" him. Every single thing he is telling you might be 100% legit -- but from your end, you need to KNOW that before you enter into a 200K decision!! They can be "official" and ask for some of this information you need, and it might make you both feel better about things. Plus, they should help you understand what you are looking at (esp. the tax returns, cash flows - making sure they match up, etc).

This may indeed be a very good buy. Most salons really start hitting their "rhythm" about the 3rd year. Makes you wonder why he would be selling now that it was finally getting profitable. But maybe just burnt out? Ask. Not sure if you'll get a straight answer, but I'd ask.

One last thing. Consider NOT quitting your $32K/year job right away. As we did the math, it is quite possible you could HIRE someone to work 40 hours for much less than that (even full time managers often don't make more than $10/hr plus commission). You could then "fill in" in the evenings, on weekends which would cut a little payroll there. Often the days (8-5) are the slower times in a salon anyway (usually busiest in late afternoons, evenings, although that depends on location) and might be a "waste" for you to be sitting around when it is slow. Something to consider -- especially since there "seems" to be plenty of room to pay someone else to work those hours and STILL make a nice profit to add to your current salary!

OK - you've been assigned your homework -- go get 'em! :-)

	Superior UV

[rowekyle]

Not giving up any benefits or anything like that at work, just the wage. Plus I am really amped to get into my own business, I own many online business but definitely need something physical to keep my moving!

He says he is selling because he wants to spend more time with family, after his wifes 2nd pregnancy she became really sick and has been going through a lot of surgery. This is all true as well. He owns another salon about 30 minutes away in another city that is doing very well as well, he has about 10,000 in the customer base there. So he wants to just focus on that one.

Yes, I definitely have lots to do! Ahh.!

[slowhand]

Just my 2 cents about the suggestion to possibly hire someone and you keep your job. I have been in this business since 1987 and in my experience it has been very difficult if not almost impossible to find someone to actually be responsible enough to actually always show up. If you hire someone what happens when they want a day off; do you not go to your other job so you can fill in. The other workers could fill in, but will they or can they since they may also have other jobs or responsibilies. Also if you are not there at all in the every day things that tend to come up; it's easy for the employees to let things lapse. You may be the last to know, especially since this is going to be new to you. I wouldn't do it without working there yourself, unless you are just doing it for an investment and have plenty of money to waste if it does not remain successful.