BigLeo

I thought I would pick on those great financing companies out there who are giving away six months of free payments, one month payment and you are in. That is a receipe for disaster as far as I am concerned. The way indoor tanning equipment depreciates and loses its value, well I just don't see how these leasing companies are going to recover their money on these leases if the salon goes belly up. I've been looking at some of the websites that sell us tanning equipment, including TanTalk and I have neve seen so many tanning beds for sale. The shakeout is here folks. You high flying leasing guys out there better look beyond that BP or credit worthiness of the buyer. That equation does not work. Remember what happened to the DOTCOMS, the LBO era back in the 70's? I guess it is the cheap rates, but they are going up. There are already some talk of the coming real estate bubble. Maybe not in some major cities like NY or SF, but definitely in middle America. Nighty, nighty you greeding leasing companies who prey on indoor tanning salons.

DWhite6872

I have never seen a leasing company with no payments for 6 months...or maybe I have never asked. I think the leasing companies are way behind the times...it takes more money now then ever to start a tanning salon! I know I have had to secure 4 leases for 1 salon because noone can lend higher dollar amounts! I was sorry to see Evans leasing go, but it looks like Highline Capital is taking their place and lending big dollars to salon onwers!

BigLeo

DWhite,

You signed four leases for one salon? That's financial suicide. I know for sure that you can get three free months, six months might be stretching it a bit, but I bet if you asked they would do it. I know there are adjustable payments for seasonality being written all the time. I was not aware that Evans leasing is no longer around. Anybody know what happened. he, he, he.

ALOHATANCA

The owner of Evans Leasing has decided to retire fromthe leasing buisness.

DWhite6872

We had 4 different loans but two were bank loans with really low interest, interest only for a year and so on....

TFranssen

BigLeo, you are sooo wrong about what you said. I'm sorry if that offends you but its true. Only the leasing companies "gouging" to make a one time shot at financing for "one off" deals will go under!

I invented that program you're talking about and it works beautifully in this industry when you're in off peak season and want to purchase equipment. It's $100 down and $100 for the first six months - and if you're paying more that $100 down - someone is taking you for a ride! Although, I now work for a larger lender - the lender who accepted that flexible financing strategy for this industry is very particular about whom they finance. I, personally, do not sell it anymore, but can send you in that direction and provide you assistance in "negotiating" the term. It actually gives you a little relief during slow season and you have the benefit of buying at off-peak priced equipment!

Leasing tanning equipment is the best thing these banks have ever done! Tanning equipment is the only equipment that actually pays for itself! No other business relies as heavily on its equipment with as little man power!

I have 0% defaults with $20MM to tanning salons in 11 years, but ONLY because I care so much about my customers success and do everything I can to ensure they aren't taken advantage of on any level!

You won't see any of my customers selling equipment unless they just want newer, bigger and better! Even that is rare, as I have other customers lined up to buy the beds I've financed over the years.

The people that are going under were not given the opportunity of a successful beginning and it is very sad! However, smart business people not only succeed but their growth requires financing over and over again as they expand their business to more locations.

TFranssen

PS: Quality tanning equipment does not loose its value over the long term. There are certain 10 year old beds that people are chomping at the bits to get their hands on!

Know what you are buying before you purchase!
Take care of your equipment and trade-up every two or three years!
Certain manufacturers will trade-up and refurbish their equipment and make it like new!
You should be able to trade-in your beds every two years and keep the same payment on your new equipment as you had for your old beds!

DO YOUR HOMEWORK BEFORE BUYING A TANNING BED, THEN YOU WON'T HAVE TO WORRY ABOUT A DEPRECIATED PRICE FOR THE EQUIPMENT IN YOUR SALON, WHEN YOU WANT OR NEED TO SELL IT!


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Terri Franssen[ This Message was edited by: TFranssen on 2005-06-05 00:47 ]

DWhite6872

Quote:
On 2005-05-02 01:54:00, BigLeo wrote:
DWhite,

You signed four leases for one salon? That's financial suicide. I know for sure that you can get three free months, six months might be stretching it a bit, but I bet if you asked they would do it. I know there are adjustable payments for seasonality being written all the time. I was not aware that Evans leasing is no longer around. Anybody know what happened. he, he, he.


I can bet you that I could have signed 20 leases...and I would be fine...everyone has a different picture, and you have to analyze your picture and what you are trying to accomplish ....its not about me...or you...but about your cashflow and what you have in the bank...it is amazing how the picture changes when you have a ton of cash...

TFranssen

You're funny Dana! Really, though, each tanning room - with every piece of furniture, equipment, walls, and even the decor should pay for itself within one to two visits a day. When you choose a good demographic location and plan accordingly, leaving room for growth, you can easily accomplish paying for your lease or loan with a planned approach in market research and pricing.

If Dana had to sign four leases - because there wasn't adequate financing available at the time! It is ok, NOT SUICIDE, because adding the four payments together and dividing by the number of rooms, then by 30 days in a month - I would bet my calculations are adequate - even if it was a higher margin on the lease structure.

Does it work Dana?

DWhite6872

It is funny...we have just opened 4 locations at the same time, so yes....we have signed four leases...I guess I am from a different world....if I have 4 salons opening...and it cost us 1.6 million , I would rather borrow the money then pay cash...if I can borrow money at 6%-12% and maybe a blended 8%....I would do that all day long....as long as we make 30%-35% cash on cash....

Everyone has there own personal financial picture...you cannot judge, unless you have the whole picture!

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Any Advice given please consider the size of your market![ This Message was edited by: DWhite6872 on 2005-06-05 02:20 ]