Buying a distressed salon

Larry · 06-20-2002, 12:51 PM

Don,

I need to add another salon to my portfolio. I'm intrigued that you mentioned on another board that the lease is a major consideration for the seller, and is a sorta "hidden" cost for the buyer. I'm with you there.

So, I've got a couple more questions:

1. How can you distinguish a salon with bad management but good potential from the others?

2. What are a couple of pitfalls I'd want to avoid?

3. What do you say to bring the seller down to earth, when it's clear he thinks he has a little goldmine?

Thanking you in advance for taking the time to help a lame newbie like me.

Chippp · 06-20-2002, 01:45 PM

No one sells a gold mine!

K-tina · 06-20-2002, 03:41 PM

Chippp,

I disagree. There could be several reasons a person(s) would want or need to sell their business. Here's a few examples: long-term illness, spouse relocation, starting a family, ruined the family, early retirement for many hours of running the "Gold Mine".

I don't plan on owning a tanning salon for the next 30 years. I plan on making this a successful business right now!! Don, please accept my apologies, I did not mean to get off the topic.[ This Message was edited by: K-tina on 2002-06-20 14:44 ]

tangirl · 06-20-2002, 09:18 PM

Chippp -

I have to disagree also. Some people don't realize that they are sitting on a gold mine. Others are just too lazy to do the work necessary to reap the benefits of the gold mine.

Our first salon was in distressed mode when we purchased it. It took 6-8 months of redecorating, educating, and lots of cleaning to turn it around. We've now developed a wonderful reputation.

Our second salon was also in distressed mode when we purchased it. In fact, it still is. We only signed the papers 3 weeks ago.

But, I can say that both are gold mines just needing some TLC to turn them around.

tangirl · 06-20-2002, 09:21 PM

Larry -

Make sure to research every aspect of the situation. Talk to the current landlord. See if they would want to completely renegotiate a lease. Find out what the reputation of the current owner is. Find out the reputation of the salon and its management.

Make sure that the current owner does not owe back taxes on the salon. Ours did.

Make sure that the current owner does not owe money to anyone else (electric company, leasing company, distributors, etc.).

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06-20-2002, 12:51 PM	#1 (permalink)
Larry Join Date: Jun 23 2001 Posts: 46 Rep Power: 0	Don, I need to add another salon to my portfolio. I'm intrigued that you mentioned on another board that the lease is a major consideration for the seller, and is a sorta "hidden" cost for the buyer. I'm with you there. So, I've got a couple more questions: 1. How can you distinguish a salon with bad management but good potential from the others? 2. What are a couple of pitfalls I'd want to avoid? 3. What do you say to bring the seller down to earth, when it's clear he thinks he has a little goldmine? Thanking you in advance for taking the time to help a lame newbie like me.

06-20-2002, 01:45 PM	#2 (permalink)
Chippp Join Date: Apr 19 2001 Posts: 2,556 Rep Power: 8	No one sells a gold mine!

06-20-2002, 03:41 PM	#3 (permalink)
K-tina Join Date: Dec 18 2001 Location: South Posts: 365 Rep Power: 7	Chippp, I disagree. There could be several reasons a person(s) would want or need to sell their business. Here's a few examples: long-term illness, spouse relocation, starting a family, ruined the family, early retirement for many hours of running the "Gold Mine". I don't plan on owning a tanning salon for the next 30 years. I plan on making this a successful business right now!! Don, please accept my apologies, I did not mean to get off the topic.[ This Message was edited by: K-tina on 2002-06-20 14:44 ]

06-20-2002, 09:18 PM	#4 (permalink)
tangirl Join Date: Jul 6 2001 Posts: 2,184 Rep Power: 8	Chippp - I have to disagree also. Some people don't realize that they are sitting on a gold mine. Others are just too lazy to do the work necessary to reap the benefits of the gold mine. Our first salon was in distressed mode when we purchased it. It took 6-8 months of redecorating, educating, and lots of cleaning to turn it around. We've now developed a wonderful reputation. Our second salon was also in distressed mode when we purchased it. In fact, it still is. We only signed the papers 3 weeks ago. But, I can say that both are gold mines just needing some TLC to turn them around.

06-20-2002, 09:21 PM	#5 (permalink)
tangirl Join Date: Jul 6 2001 Posts: 2,184 Rep Power: 8	Larry - Make sure to research every aspect of the situation. Talk to the current landlord. See if they would want to completely renegotiate a lease. Find out what the reputation of the current owner is. Find out the reputation of the salon and its management. Make sure that the current owner does not owe back taxes on the salon. Ours did. Make sure that the current owner does not owe money to anyone else (electric company, leasing company, distributors, etc.).

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