wickedtan

I apologize if I am repeating my questions. I was away from my computer if anyone had responed to me on Sunday. I am looking at an exsiting salon to buy. Her price seems extremly high. It seems to me that I can open my own salon for less than her asking price BUT she was "cash flow" VIP! Salon is vey clean, beds 5 years old, good location etc. This process I began 2 weeks ago and seems to be moving way to slow!~ Am I just impatience? Also funding... How are most salons aquired, borrow the money, own capital invested? Help!

bsmart

Its not uncommon for a salon owner to ask 3 Times their GROSS revenue. If thats in-line with her asking price, don't be too surprised. Cash Flow is a key factor to consider. She has an established market share, and that takes time to come by.

Financing is a trick. If you have equity in you home, now would be a great time to refinance and use that up-front money to woo a financier.

wickedtan

Thanx bsmart. Wow I was going to underbid her asking price by $100k. I thought she was wildly overpriced! Hmmm still think I will make a less of an offer but I do not want to insult adn make a grave mistake sue to ignorance of this industry. Her revuenes have dropped 30% over the past 16 months. Thanx again.

Tanfast

I am in the process of trying to sell my salon in Wisconsin. There were 3 other ones for sale in my city. Two have sold. Mine and one other is still available. One of them started at $130,000 and ended up selling for $50,000. A salon is only worth what someone is willing to pay. Good luck with your new venture:)

fungirlz

Its not uncommon for a salon owner to ask 3 Times their GROSS revenue. If thats in-line with her asking price, don't be too surprised. Cash Flow is a key factor to consider. She has an established market share, and that takes time to come by.

This is very true............
Consider the client base.......

Bsmart....I have missed you...nice to see you today........

C

wickedtan

Well we are meeting today to discuss a list of questions I had for the seller. I will better informed after today and then I must go a bidding! I checked out a new location incase I choose to just open my own salon. The rent on a triple net is $3300 per month, $22 per sq.ft. wow! That is high does anyone agree or is this the $50k question? Will it be able to generate enough cash flow to support such exspensive overhead?

Tanfast

That is a hefty rent. What is it per square foot? We pay only $8 a foot. You will have to have a pretty big salon and some money coming in to pay that for rent. What does anyone else think about that? Is that out of line???

Rich

For what it is worth, nobody in their right mind would pay 3 times gross. Lets say that a salon does $300,000 a year and nets $100,000. At 3 times gross that would be $900,000 sales price and it would take 9 years to pay cash flow it not taking into account taxes on earnings or interest on debt. Take it all into account and you are looking at forever to pay it off. I would sell tomorrow for 3 times gross, anybody would. If you could get 1 times to 1.5 times a whole lot of salons would think about it real hard. At 2 times you would have salons lined up from here to Pittsburgh. When I was in the video business and Hollywood and Blockbuster were killing each other buying up mid sized chains they paid 1.5 to 2 times for excellent cash flowing operations and they choked on those prices. But then again, I could be wrong.

wickedtan

Well I am holding out on my offer until next week. I have found a great location. Across from a new Walgreens, quick trip, next to 2 private country club golf courses and many other subdivisions. Maybe I am not clear on cost per square foot. They say $16 per ft. plus $3.00 for triple net. so what exactly are they saying. I understand the triple net cost but is the cost per sq.ft what??? help!

Tanfast

Just figure out how many square feet you have and multiply it by $16. The triple net is divided by all the people in the strip mall and figured on your square feet portion also.