jnnmn7

The salon has 8 20 min beds, paid for but 10 ys old. 500 clients. Located in a very busy strip mall so lots of potential for growth, it's been open 12 yrs. Only 1 competitor close by but they're only open M-F 9-7. 90K gross last yr on tax return. She's asking 20K. Seems to good to be true to me but I'm new to this. Any advice?

sunsally

Key here is NET, not gross. She is NOT making $90K/year!

If beds are paid for, your MAJOR expenses should be rent and payroll. Still, in SOME markets, that could be $90K/year right there! Payroll would be $25K by itself just to have someone at $7/hr for 10 hours/day. Add in electric, phone, water, supplies, insurance, advertising, etc. You need to find out what HER expenses have been - and then see how similar you think they would be for you (for example - are you assuming her lease, or will landlord want you to negotiate your own, maybe at a different rate?).

500 clients is NOT many at ALL for a 12 year old business. Are those "active" clients or all the people that have ever walked through the door?

The beds are worth maybe $2-3K on the used market. They probably will need re-lamping -- that'll be about $300/bed. Any cracked acrylics to be replaced will be another $200 or so. Better yet, you would REPLACE some of the beds and update the salon. Even a couple of "upgrade" beds could bring in more $$ for you -- but it'll cost you to add them!

On the other hand - you can't set up a place across the street for $20K either! So it really depends on what the costs are, what kind of "return" you are hoping for, what else you could be doing with your time (if you'll work it some/mostly) and money, etc.

If you DO buy this salon - make sure the 2 of you have an understanding about her not selling a bunch of packages right before you take over and having YOU have to "service" them while SHE takes the $$.

Get info re. her costs, and we'll try to help you figure out if they sound about right.

BigLeo

jnnmn7,

Stay away. Not enough clients. $90K revenues after 12 years in a "very busy mall"?? Nothing but base beds. No wonder they are selling out. Needs too much work. I would forget it. You'd be buying into somebody else's problem.

mr belvedere

Sounds like a good opportunity to me if you're sure you this is this business for you. Good luck.

CAYENNE2005

Quote:
On 2005-09-17 14:02:00, jnnmn7 wrote:
The salon has 8 20 min beds, paid for but 10 ys old. 500 clients. Located in a very busy strip mall so lots of potential for growth, it's been open 12 yrs. Only 1 competitor close by but they're only open M-F 9-7. 90K gross last yr on tax return. She's asking 20K. Seems to good to be true to me but I'm new to this. Any advice?


The other thread, you said it has 9 beds, two of them being standup and it was $80,000 gross. Are you looking at two salons or are we talking about the same one???

Mali

10 years and only has 500 clients.... RUN AWAY and FAST!

caribbean tan man

i say go for it if you got money to spend and treat it as a new business with same phone number maybe CHANGE name. you will need to upgrade atleast 2 beds and add a standup! probally redo interior and market the salon alot better these are things she probally didnt do thats why shes selling now!

IN MY OPINION FOR THE 20K PRICE SHE/HE IS GOING OUT OF BUSINESS AND THEY KNOW IT
IF SHE WASNT AND SALON WAS FINE IT WOULD BE MORE $$$$$$$$$ !!!!!!

BigLeo

Sounds to me like another example of over capacity in the tanning salon industry. Too many salons chasing too few tanners. The tanning salon industry needs to reach market equilibrium, so that things are in balance. Just enough customers for all the salons out there. No amount of sales promotion is going to improve things either. When you add the high cost of equipment, maintenance and electrical power, this is a tough industry to recover losses during the slow season. I would stay away from all situations right now. Leo has spoken.

MJ

Leo..you big beast!!
LOL
I agree with you on that one.

CapitalFunding

Sunsally,

WELL SAID!


"Key here is NET, not gross. She is NOT making $90K/year!

If beds are paid for, your MAJOR expenses should be rent and payroll. Still, in SOME markets, that could be $90K/year right there! Payroll would be $25K by itself just to have someone at $7/hr for 10 hours/day. Add in electric, phone, water, supplies, insurance, advertising, etc. You need to find out what HER expenses have been - and then see how similar you think they would be for you (for example - are you assuming her lease, or will landlord want you to negotiate your own, maybe at a different rate?).

500 clients is NOT many at ALL for a 12 year old business. Are those "active" clients or all the people that have ever walked through the door?

The beds are worth maybe $2-3K on the used market. They probably will need re-lamping -- that'll be about $300/bed. Any cracked acrylics to be replaced will be another $200 or so. Better yet, you would REPLACE some of the beds and update the salon. Even a couple of "upgrade" beds could bring in more $$ for you -- but it'll cost you to add them!

On the other hand - you can't set up a place across the street for $20K either! So it really depends on what the costs are, what kind of "return" you are hoping for, what else you could be doing with your time (if you'll work it some/mostly) and money, etc.

If you DO buy this salon - make sure the 2 of you have an understanding about her not selling a bunch of packages right before you take over and having YOU have to "service" them while SHE takes the $$.

Get info re. her costs, and we'll try to help you figure out if they sound about right. "