immikhan

OK. Sorry. If you couldn't tell already, I'm a total newbie to this business.

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

suntanztanning

How about some basics to start with. How much is the rent, power and phone bill each month for each location? What did he spend in 2004 for lotions at both locations. How about advertising and insurance cost as well?

I would look at the above numbers very hard. Do the math and go from there.

The re-lamp alone will run you at least 12k each year. I would think payroll would near 75K minimum if you run one of the stores yourself.

Without knowing any answers to the above here’s the way I see it. This is very rough but just looking at it from here I can see these figures being somewhat close.

Rent $84,000.00 per year for both
Power $24,000.00 average per year for both
Phone $3,600.00 per year for both
Insurance $6,000.00 per year for both
Lotions $30,000.00 per year for both
Water & Sewer $1,500.00 per year for both
Towels, Cleaner & Misc. $4,000.00 per year for both
Payroll $75,000.00 (not counting you) for both
Advertising $8,000.00 per year for both
Re-Lamp and Parts $15,000.00 for both
TOTAL $251,100.00
Plus $108,000.00
= $359,100.00

If I’m even close the basic math works. If the books are cooked in any way everything changes. Don’t take any of the above as gospel. There is much more to consider before you take the leap. I just wanted to put some figures together for myself to see if it added up. Do the same math with the real numbers. Also look at the bank statements. That will tell the tail for sure. If he claims that he didn’t bank all of the money you’ve got trouble. You can’t purchase any business based on what the owner says. Every figure has to be verifiable either using the bank statement or tax forms. I like the bank better because it’s harder to fake those. IRS forms can be faked. Be careful no matter what. 370K is a lot of money to throw into a black hole.

BigLeo

Boy, I wish I had those kind of numbers. If it makes that kind of profit, I would say buy it dude. But, the bigger question is how much do they want for the business? Just curious. $625 thou in assets. Must be a really nice operation.