redclipse

Im looking at a 6 bed / 1 standup bed salon for sale. Its in Phila. suburbs with about 10 salons within 15 miles. Rent is 1700/month, elctric avg. 1200/month/. insurance about 400/month. The 5 reg beds are Solaris 100(bought in 2001) And the super bed + standup Im not sure about. Current clients seem to be low from their POS paperwork I read. Total income in 2003 was $85,000 before bills + taxs. In 2004, $69,000 befor bills + taxes. They are asking $55,000. What would you guys say is a reasonable offer to make? Thanks in advance for any input:)

sunsally

Without full information, 1 rule of thumb is monthly expenses tend to run about 4X rent. If that were true, the annual expenses for this salon would be $81,600.

If you figuring paying someone (even yourself!!) a minimum of $7/hr for 12 hrs/day for 7 days/week, that would make payroll of $2520/mo. Plus adding advertising, other utilities (phone), supplies (lotions, bulbs), etc etc etc. I'd say 80K/yr is likely. And that assumes all the beds are paid off of course - you wouldn't be taking on any leases.

SO - how much do YOU want to offer for a salon that MAYBE broke even in year one (which is tough to do in the best of circumstances) and then got LESS successful the following year??

Without seeing the rest of the numbers, I'd say they should hand the keys over to you to allow them to avoid getting 'stuck' with the rest of their building lease commitment and you see if you can make a go of it. Otherwise, I can't see being interested.

redclipse

Thanks for the reply -I wanted to get a 2nd opinion on it. Definitely seems like they are in a bad money situation & Im not going to pursue it. Thanks again Sunsally for taking time out to respond. I have read & gathered alot of the info you have posted & it has educated me alot. Thanks

mr belvedere

Saved another one Sal! Way to go!