Making Offer on Salon, what are their beds worth...?

[reggiewjr1]

Could someone please help me... I am in the process of evaluating a salon that is for sale and possibly making an offer on their assets. I need some ones opinion on the following equipment's current value (I believe all equipment to be from 2005):


Bed
(3) Sportarredo Holiday 45
(2) RoyalSun 32/02
(1) Sportarredo Shooting Star
(1) Sportarredo Silver Star
(1) Hex II
(1) Star Power 548

I know this isn't a great mix for my location, and I'd be looking at reformulating my strategy for equipment mix ASAP clearly. So I am looking for resale numbers that would be in line with me making my money back after reselling them (i.e. I just want them to get out of the way so I can take over and actually do the work of revitalizing a failed management.)

Any help (or commentary even) would be and is greatly appreciated.

-R

[sunsally]

The price for beds "sitting in a salon" is worth more to you if you are KEEPING them there then to someone else to buy them from you. Because they will have to factor in the cost of having them extracted and to THEIR salon and installed.

Plus - depends on condition - do they need acrylics ($200-600 or so each), relamped ($200 - $800 each), etc

Overall - as a salon owner trying to sell those beds - I'd plan on getting about $11-13K.

To BUY them - in the salon, in place, in reasonable condition and be able to USE them.......might be worth more like $25K (so the sellers might be thinking more of that range).


Either way - make sure you check the electric and room sizes. Holidays are nice Level 1's and I like the Silver Star as well. But you will need something that performs more than the Starpower at the top end. So make sure you have enough electric to upgrade. And factor that into your costs (will have to upgrade wire size to at least some rooms probably)

[reggiewjr1]

My view is FAR different... I've found posts for some of these models on this very forums for less then $2500 (saw a HEX II for <$1000). Problem is these posts are 2 years old in some cases.... so I wasn't sure if they were accurate enough. I was thinking $12.5k for the set & another $2.5k for the accounts. etc etc

All acrylics seem to be in good shape, re-lamping would be required on all from my understanding (maybe actually, salon runs about 8-10% of max capacity at this point so some might have light usage since last bulb changes if they haven't spread the usage...haven't had time to actually investigate it...)

This salon will probably go out of business if one of two things doesn't happen... either 1. I purchase it at rock bottom pricing to just get the owners out of the way (neither of them want to be there which is to my advantage) or 2. Some schmuck comes along and actually pays their asking price without doing his homework (cuz he has that type of disposable income or he's just dumb...either way its schmuck status)

I need to double check it again, I only gave the panels a once over when I was there, but I'm pretty sure all ten rooms were wired up for 220v 30Amp...

[reggiewjr1]

haha... serves me right...multi-tasking like this... after re-doing my math I guess I wasn't that far off what you said lol.... My B

[reggiewjr1]

P.S. Thank you for your input, I've been reading nearly every post on this site within the first 20 pages of each forum. You always give a proper and useful response, it's helped a lot!

[sunsally]

Originally Posted by reggiewjr1

My view is FAR different... I've found posts for some of these models on this very forums for less then $2500 (saw a HEX II for <$1000). Problem is these posts are 2 years old in some cases.... so I wasn't sure if they were accurate enough. I was thinking $12.5k for the set & another $2.5k for the accounts. etc etc

All acrylics seem to be in good shape, re-lamping would be required on all from my understanding (maybe actually, salon runs about 8-10% of max capacity at this point so some might have light usage since last bulb changes if they haven't spread the usage...haven't had time to actually investigate it...)

This salon will probably go out of business if one of two things doesn't happen... either 1. I purchase it at rock bottom pricing to just get the owners out of the way (neither of them want to be there which is to my advantage) or 2. Some schmuck comes along and actually pays their asking price without doing his homework (cuz he has that type of disposable income or he's just dumb...either way its schmuck status)

I need to double check it again, I only gave the panels a once over when I was there, but I'm pretty sure all ten rooms were wired up for 220v 30Amp...

In the end, the "right" price is anything both parties will agree to!

To get rid of all of these - and/or for other salon owners around the country to buy them from you - if you are figuring in the cost of a professional (even if you do it yourself) -- IF you were to get rid of all 9..........

Plan on about 1-3K in extraction costs (depending on if you were able to find someone local or if you had to have someone come in from out of town and therefore travel costs on top of their labor and truck....). To ship - besides the actual shipping - plan on $100/each in costs (pallet, packing materials) and another $50 each (minimum) in labor to pack them correctly to arrive safely. So another 1000 or so.

If you BUY new equipment to replace this stuff - plan on the cost of the equip, plus extraction and packaging, plus shipping, plus installation. If you buy from a salon owner or a used bed person who just "flips" beds, then plan on the time and materials to recondition the bed, clean it, replace bad parts & cracked plastics, etc etc. Plus relamping and/or new acrylics if needed.


All that said - if the 10 rooms are all at 30A - that is a much bigger issue! First - the Starpower and Hex and probably the silverstar (unless it is the 100w only model) all need to be on bigger breakers! Second - anything better you would want to bring in would need more. So before you do anything, get an electrician in to give you a quote for what it would be to upsize the breakers and wire to the rooms - and maybe add a panel if needed. Plus upgrade the HVAC to accommodate bigger beds. Those sort of changes could run you 10-25K --- and might be a dealbreaker for this location. Check that before you make ANY offer.

[reggiewjr1]

Got it!

And I'm clearly wrong about the specific ampere rating, something I will re-visit when I go there on Tuesday.

[reggiewjr1]

Financials
How long has the salon been in business under this ownership? 1.5 years

How long was the salon in business with previous owners? 7-8 years

Yearly Gross Sales: Hard to tell, probably around 100k (they only record their CC sales, the cash never sees an account...)

Yearly Net Profit: Again, hard to tell

Seller Financing Available? Probably

If yes, how much % of total sale price are you willing to finance? 30-50%

Does owner take a salary? Depends what you mean by salary...
If yes, what is the salary? No specific #


Expenses (This is not my cost projection report, just the information they've readily given so far)
What are the monthly expenses & amounts? (please list below)
Rent/lease+CAM: 1803 (Set to go to $1973 in Oct.)
Electric: Avg $500/mo
Payroll (off the books): $2000/mo
Lotions/goggles/etc: $1100/mo


Other
_________________________________ _________________________________
_________________________________ ________________________________

Does the salon make enough to cover them each month? Yes


Lease Agreement
What are the current lease terms?
Waiting on copy of actual lease, rent increase this Oct. coming will be good for three years.

Is it assumable? Talking to Landlord on Monday, he let it be assumed when business was sold last year, I expect it to be allowed this time as well.

Will new owner need to make a new deposit on the lease? Old owner requested he get his back so I assume that it will.


Clientele & Services
System used for tracking clients:
Helios 11 currently (I'm trying to decide between SalonTouch, TanTalk, and Helios 12 Ent +Hub)

How many clients are there in the database? Approx. 4000

Active 550 unique in last 18 months and non-active all the rest...?

How many sessions each month? May-April 12mo AVG 673

How many unique clients each month? May-April 12mo AVG 112

Number of outstanding sessions left on packages: ______________

EFT memberships (# of contracts, expirations, total value over next X months): They don't do EFT

Will spray tanning technician be staying on board after acquisition? Yes
If yes, what are the terms with the spray tanning technician?
She seems pleasant and well informed(she's been with the salon for 4-5 years), I've spent a couple hours with her, we haven't spoken of actual terms

Equipment
Are there any payments left on the equipment? No, it is all owned outright

If yes, which beds and how much/years left on each bed (all beds are 2005 models to my understanding currently, unsure of hours on beds/lamps at this moment)?
(3) Sportarredo Holiday 45
(2) RoyalSun 32/02
(1) Sportarredo Shooting Star
(1) Sportarredo Silver Star
(1) Hex II
(1) Star Power 548

Qty Make Model Year Age Hrs. on bed Hrs. on lamps
See above.

Last Date lamps were changed:
The end of last year :/ I don't think they actually recorded it...but sessions are abysmal (in my opinion)... some guesstimate math leads me to believe they have 150 avg hours each....

Last date they were all serviced/deep cleaned:
Unknown at this time on an individual basis. There is no set procedure in place.


Services Provided
Airbrush tanning
Tanning beds and stand-ups



Inventory
Please provide a list of the inventory.
~ $1200 - $1600 worth of lotions/goggles


Build-out
Is there room for expansion? One empty room, Barber next door might retire, not sure of exact SqFt but general impression is that it would allow another 5-6 rooms.

How much AC and Electric is there in the salon?
don't have specifics yet, two AC units (one above front door, one at rear of salon...both look old, employees commented on having to open doors to cool the place occasionally)


Competition
How much competition within 3-5 mile radius?
All being compiled.

Competitor’s Beds
Qty Make Model Year Price range of services offered
Ergoline/250 max/cayenne
Pryzma/Starship
Bodyscan/SunDazzler
Elixer
TR Extreme
Orbit/SolarT/200 MAX
Sungate
jet power


Demographics
What are the demographics of the 3-5 mile radius?
Directly across street from a grocery store plaza drawing in excess of 2.5mil in foot traffic annually.
3mile radius are three separate high schools


How many white women age 25-35 (target demo) in the 3-5 mile radius?
There are approx 19000 20-35yo females

A little about the current owner!
5 things they would improve or do differently if they were buying new:
Owner is a Mason by trade, FAILED HARD at running this business, thought he was going to be able to be an absentee owner and 'life caught up with him' (i.e. new wife, new baby, new house, etc...)
Former Owner (also the current owners creditor) does not want to be in this business any longer, she has other things to do (manage 18 apartment units, plans to retire to FL, etc) She only stepped back into the picture to help revive a failing business and to assist in the sale of the business(if current owner just shuts doors, she has less opportunity to recoup her losses with him, she already has a lien on his home.)
They perform ZERO marketing and/or advertising
They have NO website
All clients are loyal customers or walk-ins due to busy location

What is your reason for selling the salon?
See above....



Requested Documents
Tax returns for the last 3 or more years
Bank statements showing CC transactions
Print out of sales report for previous two years

I've seen a couple, but for the sake of argument, lets assume the numbers don't mean all that much for my purposes. Their concept of business (and track record) is not my concept of business.

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[Black Sun]

Active 550 unique in last 18 months and non-active all the rest...?

How many sessions each month? May-April 12mo AVG 673

How many unique clients each month? May-April 12mo AVG 112

Not enough revenue generated to keep the place afloat...this is why it is for sale...

If I am reading this correctly, "550 active over last 18months", out of 4,000 in data base.