madisun

Don't shoot me because I am new to this and don't fully understand the workings in the industry.

Background: I am in a contractor in Wisconsin. One of our clients who had multiple salons, got into some other business ventures that went south, and is consolidating some salons and appears to just be doing a overall re-organization. Because of this, he is liquidating about 20 beds, some stand-ups (with and without facials), some 15 minutes lay downs (with/without facials), etc. On the other side, I have some vacant properties needing to be filled.

My questions are more demographic related...

One option that i have available would be to put 4-6 beds in a town of 5500 people. Town is located 12 miles from next biggest city, which has (2) 10-15 bed salons.

In the small town, the local hair salon has (1) 15-minute bed which they are getting $8.00 a session for basically.

Another small town 8 miles north has a 4-bed salon, consisting of (1) 15-min. stand up, (1) 20 min & (1) 30 min. and (1) broken bed. They sell minute packages starting at 100 minutes for $20.00.

Gender is spilt about 50/50, ave age is 37, with about 26% of each gender below 35. Growth rate of around 2% a year, a alittle slow. Ave income is around $42K, which is ok for around here.

Based on these things and all the knowledge you all have in the industry already, if i was to purchase 4-6 beds and put them in a suite in this small town, assuming i lease the space for $1000/month to myself, and hire talented individual to run it (I dont know what going rates are in this industry), Can it Cash Flow?

What are you seeing for daily use %? Obviously I can't see it being busy 100% on all beds at all times, but can you reasonably assume 50%? What kind of scenario do some of you use in your business plans? What kind of swings do you see from in-season to off-season?

This is not something I want to dump 150K into, so i am just trying to see if i can make something work and meet the needs of the people and capture of the tanning market that is traveling outside of the city for services.

I can run my numbers backwards knowing what i have in capital investments and what I need to see as a ROI, I just lack the industry specifics to get to that point. Its an investment that i could see paying off, and maybe become a job for one of the kids in the future.

Any and all advise is greatly appreciated.

parrot head

In a town with a population of only 5500 doesn't give you a great number of eliglble tanners to chose from. How many of those 5500 are teens under the the age of 16. They can't tan in Wisconsin. A really nice salon with 6 real nice beds might draw some business from other close small towns. People would love to have another place to tan other than a hair salon that, I'm sure, doesn't change their lamps. A multi-bed salon will draw small groups of young people because they like to tan all together. Check the beds that are for sale and determine what the amp draw is and total the amps to see if your breaker box will handle 5 or 6 beds. Also, check the beds to see if they are single phase or three phase. They might have to be re-wired. This is simple for some beds, but difficult for others. I'm also in Wisconsin, so if you have any other questions feel free to contact me.

madisun

I am from Menomonie, in Madison now. You are right next to Log Jam, right? My family is all still up there and active in the city.

Back to your response. I was thinking 5500 was a little small to draw from. To draw from the towns around is even harder since they are mostly unicorporated areas. Several employee's girlfriends and wives drive into Madison (<20 minutes) to go tanning and probably just coordinate it with everything else they come to town to do. I was just looking to capture that small market possibly before they got out of town, but as I read more and more threads, it seems like a 4-6 bed is harder to cash flow to begin with, let alone a market area the size of small subdivisions.

All the beds are single phase if i remember correctly. The last one we built out was 3 years ago i believe.

I do have one other possiblity, in a larger city, but its right next to a SNAP fitness, on another one of our buildings. I don't know if SNAP is really a competitor, but it seems easier for someone to just add $13.00/month on their membership then come next door and do a whole seperate set-up.

Anyways, it lays out to be a 9 rooms plus reception/seating/display area. There is a seperate laundry room, etc. I just priced this out for someone else, so the buildout cost, on the highend, is 100K total, 50% is landlord cost, 50% is tenant. So this has the 400amp main, 7.5 ton RTU, etc, etc. But then i look at dropping 50K, and sit back. It would hvae to be a 5-year lease being that other partners are involved, Etc.

Does it look like the larger place is more feasible? And then with a larger place is larger bills...........

parrot head

Yep, you're right! I'm right next to the Log Jam. Snap does take some customers for the mere reason of convience. Fitness centers suck on equipment and who wants to tan in "A" bed after some big burly sweaty guy gets done and doesn't clean the bed? Would you? I've got four fitness centers in this little town, and they do take a piece of the pie. Now, back to your other question; I do think the larger facility would have much more potential. You are going to have to at least 3 different levels of tanning beds and also room to grow from there. 7.5 tons of a/c is not enough, but 400 amp 3 phase should be enough for 10 plus bigger beds. Hopes this helps a little.