Buying an existing 2-salon business. Need feedback!

immikhan · 01-20-2005, 08:15 PM

I have offerred to purchase an ongoing business consisting of two tanning salons, 18 beds each, in good demographically located areas. Together, they gross $370K (2004). Owners Benefit is stated as $108K. Owner claims they cost him $625K for equipment, buildout, etc. He wants $500K (Crazy). I thought of offerring him $325K. Not a franchise, good, clean operation.

What do you guys think?

immikhan

tanu01 · 01-20-2005, 08:19 PM

We need more info !!

DWhite6872 · 01-20-2005, 08:20 PM

How old is his equipment? What is their net?

JohnnyComeLately · 01-20-2005, 08:48 PM

His offer is too high, and yours seems a little low if the sales numbers are correct and equip in good condition. We'll def need more info

MATT A · 01-20-2005, 09:15 PM

What type of equipment do they have? How old is it? How many clients do they have in their database? Tax info? What numbers are they doing? Some people don't care to ask this but I do. How many people do they tan a day? Busy season? Slow season?

immikhan · 01-20-2005, 09:20 PM

OK. Sorry. Here's some more info:

History: Opened in 2001. Both businesses have consistent sales increase each year and have been profitable every year.

Marketing Strategy:

Both businesses were researched and placed in the highest demographic locations for this type of service. These Tanning Spas experience some of the highest sales volumes for this type of business in the state. The owner has an excellent information system in both locations. The information system allows you to pull off all sales information, example: (daily sales per bed, sales per bed per hour, total sales per hour, cost per bed per hour, daily P& L, Etc). Security against theft includes obtaining customer fingerprint to access service. Very sophisticated escalating customer sales pay plan to insure sales increases to large established customer base.

Facility:

Both highly visible storefront locations have 18 tanning beds with 2300 to 2500 Square feet of space. These businesses are well laid out, shiny clean with the most attractive modern tanning beds. The beds come in three levels with sound systems and ventilation.
The customer service counters have modern computerized registers and leather high quality seating areas. The stores are equipped with the Premier Tanning equipment supplied by Tan America.

Employees: 3 each

Computerized Systems: State of the art information systems. Example: Sales and Cost analysis per unit, to include power cost per minute, per bed bulb life, projected life and average cost per minute.

Reason for Sale: The owner has multiple businesses and wants to concentrate in other areas.

General Information:

These are very professional high visibility businesses with great growth potential. They are well laid out and shine with cleanliness. The current owner would help train the new owners.
Financial Notes:

Annual receipts: $ 370,811
Owner Discretionary Cash Flow: $ 108,130
Inventory: Approximately: $10,000
Furniture, Fixtures and Equipment: Total $ 625,830 in Assets

DWhite6872 · 01-20-2005, 09:49 PM

There are so many variables...only research and your own personal situation. I like to open our own salon, I have not seen any exsisting salon owner price their salon the right way. If this is the only way to get the salon because of owner financing then great go for it if it works....but if you do not need special financing the look at opening your own salon vs. buying an exsisting salon.

sizzlestan · 01-20-2005, 10:12 PM

Thing that jumps out at me is the 29% net profit (Owner Discretionary Cash Flow: $ 108,130) with only $370k for BOTH stores combined. Either the owner is working all the hours or something is fudged. Maybe I am wrong but with too hi-end salons (your words) I do not know about the percentages unless the owner paid cash for everything to start. In that case he isnt throwing in asset depreciation or he is adding that as income. Do yourself a favor and get a CPA to go over financials. Have them recreate the business for the past 4 years. It would be worth paying someone a few thousand to paint you a true picture then to believe the hype, buy in at a high price and kick yourself into bankruptcy a year from now because you didnt to your homework. Especially at those prices.

tanu01 · 01-21-2005, 06:53 PM

Still sounds like his start-up are a bit over stated. And asking price is to high. Tanning salons in some ways totally
different than any other biz out there. Kinda like buying a boat,not a home.
Check with your CPA.
Bob

suntanztanning · 01-21-2005, 07:55 PM

http://www.tantalk.com/viewtopic.php?topic=2342440&forum=29

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01-20-2005, 08:15 PM	#1 (permalink)
immikhan Join Date: Jan 20 2005 Posts: 4 Rep Power: 0	I have offerred to purchase an ongoing business consisting of two tanning salons, 18 beds each, in good demographically located areas. Together, they gross $370K (2004). Owners Benefit is stated as $108K. Owner claims they cost him $625K for equipment, buildout, etc. He wants $500K (Crazy). I thought of offerring him $325K. Not a franchise, good, clean operation. What do you guys think? immikhan

01-20-2005, 08:19 PM	#2 (permalink)
tanu01 "The Man" Join Date: Mar 4 2003 Location: ohio Posts: 3,977 Rep Power: 7	We need more info !!

01-20-2005, 08:20 PM	#3 (permalink)
DWhite6872 Waiting Confirmation Join Date: Apr 22 2004 Posts: 5,189 Rep Power: 0	How old is his equipment? What is their net?

01-20-2005, 08:48 PM	#4 (permalink)
JohnnyComeLately Join Date: Oct 2 2004 Location: San Diego Age: 38 Posts: 905 Rep Power: 5	His offer is too high, and yours seems a little low if the sales numbers are correct and equip in good condition. We'll def need more info

01-20-2005, 09:15 PM	#5 (permalink)
MATT A Police Department Join Date: Sep 6 2004 Location: Awaiting Posts: 15,532 Rep Power: 31	What type of equipment do they have? How old is it? How many clients do they have in their database? Tax info? What numbers are they doing? Some people don't care to ask this but I do. How many people do they tan a day? Busy season? Slow season?

01-20-2005, 09:20 PM	#6 (permalink)
immikhan Join Date: Jan 20 2005 Posts: 4 Rep Power: 0	OK. Sorry. Here's some more info: History: Opened in 2001. Both businesses have consistent sales increase each year and have been profitable every year. Marketing Strategy: Both businesses were researched and placed in the highest demographic locations for this type of service. These Tanning Spas experience some of the highest sales volumes for this type of business in the state. The owner has an excellent information system in both locations. The information system allows you to pull off all sales information, example: (daily sales per bed, sales per bed per hour, total sales per hour, cost per bed per hour, daily P& L, Etc). Security against theft includes obtaining customer fingerprint to access service. Very sophisticated escalating customer sales pay plan to insure sales increases to large established customer base. Facility: Both highly visible storefront locations have 18 tanning beds with 2300 to 2500 Square feet of space. These businesses are well laid out, shiny clean with the most attractive modern tanning beds. The beds come in three levels with sound systems and ventilation. The customer service counters have modern computerized registers and leather high quality seating areas. The stores are equipped with the Premier Tanning equipment supplied by Tan America. Employees: 3 each Computerized Systems: State of the art information systems. Example: Sales and Cost analysis per unit, to include power cost per minute, per bed bulb life, projected life and average cost per minute. Reason for Sale: The owner has multiple businesses and wants to concentrate in other areas. General Information: These are very professional high visibility businesses with great growth potential. They are well laid out and shine with cleanliness. The current owner would help train the new owners. Financial Notes: Annual receipts: $ 370,811 Owner Discretionary Cash Flow: $ 108,130 Inventory: Approximately: $10,000 Furniture, Fixtures and Equipment: Total $ 625,830 in Assets

01-21-2005, 06:53 PM	#9 (permalink)
tanu01 "The Man" Join Date: Mar 4 2003 Location: ohio Posts: 3,977 Rep Power: 7	Still sounds like his start-up are a bit over stated. And asking price is to high. Tanning salons in some ways totally different than any other biz out there. Kinda like buying a boat,not a home. Check with your CPA. Bob

01-21-2005, 07:55 PM	#10 (permalink)
suntanztanning Join Date: Jun 8 2003 Posts: 302 Rep Power: 6	http://www.tantalk.com/viewtopic.php?topic=2342440&forum=29

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