Woodlands

I'm right on the verge of buying an existing salon. 6 beds with 2 more rooms available. The owners have several other businesses and just don't have the time to run it. This is a small town (oddly, with at least 4 other smaller tanning salons) so I know their reputation and I know what they're telling me is true. They haven't been able to work there, been depending on HS girls for employees who don't do upsells, give free tans, leave with product, etc.

I'm not sure of the square footage. I've been going there 4 years and see a steady influx of customers but I don't have an exact number for a customer list. They bought a water massage bed last year for off season with the thoughts of working out deals with local doctors but again, haven't had time. They don't advertise except in the Yellow Pages.

They are in a barely used strip mall which they used to own but can get me rent for <$1K a month. I don't know about the electric power I've been reading about here as far as expansion. Apparently what they have now is enough. They use the Helios system. Also not sure how many customers they have on file (all stuff I never dreamed of asking before I looked here!). I questioned moving it, but they said they spent $30K building it out and they are in the construction biz so it would cost a minimum of double that (probably triple) to redo myself elsewhere.

They have been closing every partial Nov, all of Dec and Jan and this year were closed until the end of March. Again, they don't have time and didn't even have time to hire someone. Their other company is a short distance and they have a few year round customers who will call them and meet them for a tan while they're closed ;)

Here's the major equipment (besides fridge, W/D, TV, computer, micro, phone system, display cases, etc):

2 2003 Sunvision ZX30
1 2003 Solaris Plus Speed 42 (3 facial tanners)
1 2000 Sunstar 52 bulb (5 facial tanners)
2 2000 Sunvision ZX30
1 2007 Aqua Massage Profiler

They have a hand sprayer but haven't used it for a couple of years because they don't have time to train employees but are asked about it often. Right now the massage machine is out front and I'd like to move it into one of the 2 "storage" rooms and even thought about bringing in a nail tech for the other room.

They have more beds/product/anything than anywhere else in town and are known for being the cleanest. I think the closest in size is 4 beds and most are hair/nail salons with 1 bed where the rooms are the size of closets. The rooms at this salon are nice sized with chairs, tables, floor mats and ceiling fans.

2 bathrooms

Income for 2006 (rounding up) - $36K
Expenses for 2006 - $23K

Income for 2007 - $34K
Expenses for 2007 - $25K

Income for 2008 (remember they've only been open 9 weeks) - $13K
Expenses for 2008 - $5400

Payroll has been running them $13K-15K a year which I could greatly reduce since they don't work there at all and I would be there full time. Their hours are 11-7 on the weekdays, 11-4 on Sat and closed on Sun so it's not completely slave labor ;) I would probably still bring in someone VERY part time during the busy season.

In addition to product, they sell costume jewelry, local HS football items (small town - sells like crazy), and have looked at selling candles. This is also a tourist town but I'm not sure how I'd convince tourists to shop at a tanning salon!!

They are asking $70K. The bank, with all the things going on with banking these days, isn't very encouraging even with offering some of my personal real estate for collateral so I may be seriously tapping into my own liquid resources for this.

They were told by a business appraiser to offer it at $97K but after reading some of the stories here, I'm wondering if even the $70K is too much???

I've run my own businesses for 15 years, but not retail, but I've worked in retail and have always done well selling. I'm bubbly ;) Their girls now SERIOUSLY DO ZERO UPSELL on the product or the massage machine which could both be good income IMO.

I also run an internet advertising biz that I do from home that I'd be able to run from there.

Any comments??

Thanks :)

MATT A

Run

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Tan Talk
Administrator

Woodlands

Really? No counter offer? I really think I can build this into something BUT I sure don't want to get sunk in the process, ya know? They haven't put it on the market yet so maybe if I say "Not that much" and they lower it, what's a good price?

The massager bought last year was $30K alone and like I said, the whole operation is by far the nicest one in town - and in the next several towns in fact ;) I swear I went to one when I was checking things out that had a particle board partition between 2 beds.

sunsally

Well, it may well have potential, but certainly not for $70K!

The aquamassage bed is a VERY hard sell to tanning clients. They probably paid 30K for that and that is part of their $70K price to you (probably also trying to recoup their 30K buildout). I'd tell them you aren't interested in that bed and let them peel that off the price right off the top. You'll make MUCH more with tanning equipment.

If anyone else offers anywhere NEAR better hours, yours will be a real detriment. 7pm doesn't really give your people that work time to get in. Saturdays we open earlier than any other day - people like to get in and get on with their errands that day.

If you work if "for free" - you are basically paying whatever you wind up paying to buy yourself into slavery. You HAVE to put a "price" on labor, even if you put it back into the business. So for even anywhere near "normal" salon hours, just at minumum wage, plan on the payroll being at least $2K/month - with most salons I say more like $3K, but you might still have shorter hours than most.

That means, expect the costs to run this place to be:

12K - rent
24K - payroll
14K - other (utilities, phone,lamps, inventory, insurance, bank fees, )

That is VERY low side estimates since this is a very small salon. I'd bump it up to be safe - so call it $50-60K/year or about $5K/month


So YOUR "true costs" will be $60K/month. It has never brought in more than $36K.

If they took away the aqua massage bed, let you walk in for free, and you just put a little money into bringing in some upgraded units - you MIGHT bring this place up to making $75K/year - maybe 100K. Hard to say - you say the town is very small and there are several other "small salons" there already.

I wouldn't pay anything - just take the rent off their hands. I doubt they'll want to do that - so I'd walk.

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Ann Wiggins Noe
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navigatin1

Honestly, tell them to pull the massage bed and try and sell it on thier own. Then take over the lease of the place.

That place has ZERO value as is. If you can take it over for nothing, you will have to drop a few thousand on updating the place as well as new lamps, equipment, etc..

unity

I did'nt even read all this. I saw the list of hardware and the times they have been closed and then saw $70k.

You would have to re-name, re-brand and get this package for maybe $20k!!! Thats not going to happen, so... RUN.

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engfant

Oh man, I was almost going to counterpoint but I can't find one. What is this $97K apprasial based on????? Get that in writing JUST SO WE CAN SEE THIS WORK OF FICTION.

In a good market that place is worth $50K. In this situation they'd be lucky to get the $36K it takes in a year. Jeez my place must be worth a small fortune.

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Woodlands

I know it sounds crazy, but this place is constantly PACKED. The only other tanning salon (as I said, the other places are nail/hair with one bed - and everyone's beds are definitely a lot older) has only 4 beds. This place is just known as being the best in town. And besides a phone book ad, they have zero advertising (and not in a high traffic area).

The massage machine is one of their main selling points for off season. They even promote it and not the beds in their Yellow Pages ad. This is a town with a lot of retirees who wouldn't come in for a tan but would come in for a massage. I'm a little hesitant to tell them to toss the massager since it always seems to be in use, it's in the YP ads and besides the YP ads, it hasn't been promoted.

Yes, I know they are trying to recoup the build out and the cost of the equipment - every business I've personally owned I've included the value of what's currently there in the sale price.

I guess I'm looking at it through rose colored "potential" glasses, i.e. stay open year long, advertise, upsell, bring in more items, etc., instead of realistic glasses,

I'll take a look at what the bank says as far as what it's worth (as I said, I think that's going to be WAY low and I was willing to cover the balance myself) and offer them that. I would GUESS that's going to be in the $30-40K range. They don't have a lease so closing down and selling the equipment would be another alternative though they haven't even marketed the business for sale yet - they asked another salon owner if she was interested in taking it over, she didn't want 2 salons and SHE'S the one who told me they were interested in selling, lol.

Thanks for opening my eyes on this. Now I just hope they can see with the same eyes!!

movieking

Go back to that salon in July, August. September, October or November and let us know how "packed" it is.

It's impossible for a 7 bed salon doing $36,000 gross revenue to ever be packed unless they have an average session price of 50 cents!!!!

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Woodlands

When I say "packed", I'm comparing it against what the other salons are doing, not to what a big salon in a big city would be doing ;) The months you mentioned usually don't have people waiting on beds and as mentioned previously, they close for most of November.

But again, I do think I have saved tens of thousands of dollars on this thread alone and I do thank everyone. This board is a GREAT source of info :)

I've gotten a lot of really good ideas here and IF they agree to sell at a much discounted rate - iffy since I think they can probably sell what they have for what I'm considering offering them - I have a lot of wiggle room to upgrade with.

Any thoughts on offering them a much lower amount BUT a percentage of 1st year profits? That might sway them to not close down.