Newbie, Needs advice!!!!!!!!!

[bdmd92]

At the end of July I will be purchasing a 2 bed tanning salon for about 15k, it is in a small town but in a good area, with no other salon in the area. There is plenty of room to add on to it. I will have to wait a little while to do that. The owner is selling because she no longer has an interest in it, but if you look at her records, she seems to have done fairly well but in the last 3 months there has been a major drop. Since I have agreed to the purchase I have noticed that she isnt open very much which is a concern that I will be losing the existing customers that come with the business. I know I can still make this work, and am highly motivated to do so, but does anyone have any suggestions for keeping the existing customers who I know are very turned off by her not being there and getting new customers to come in right off the start. Any suggestions would be appreciated.

[parrot head]

What kind of a deal did you make for this purchase? Did you pay earnest money up front? Tell her that you purchased the business based on the numbers in March. The numbers would natually drop from May thru June, but let her know that she is not helping your potential by not being open. Your last option might be to just not go through with the deal.

[bdmd92]

So far no money has transferred hands, she just called to ask if we could move this along a little faster by about 2 weeks. Well this is fine by me except Im not sure if the money will go through in time, in that case she will have to wait. I will make the comment about her not being open being a bad thing for business for me. I have never owned a business or bought one before, so what Im looking for is advice of things to look for and creative ways to bring her old customers back and bring in new ones. She wants to do this through a bill of Sale that her and her husband will draw up. Im just not sure what Im looking for or what to watch for and I cant afford a lawyer at this time to help me out. I know I can make this work and make it successful, not a big money maker but a good investment. I want to make sure that the bill of sale is legal and binding so any ideas of what needs to be done in that area would be helpful. She orginally wanted to close on this deal on the 25th of August. She wants me to pay for it on that day and then she will spend a few hours a day for that week training me. I get everything that comes with the business, 2 beds, supplies, decorations, customer contacts, distributor contacts. It all seems good to me but Im starting to get a little suspicious of things that she isnt being to honest. Any and all advice would be appreciated to cover my basics to get this thing started and not be on the total losing end. From a naive newbie

[sunsally]

Does she OWN the beds or are they leased (and you would still be paying on them)?

Do you have the right to "assume" the building lease at the current terms and if so, for how long?

Are all the bills up to date - electric, phone, water, etc. Make sure she pays the "final" on all before they switch over to your name.

You say "her records" looked good, but not so good lately. What "Records" did you see? Her version of statements or actual tax returns? How long has she been open? Did you see her revenues AND expenses??

You say there is "room" to add more beds - is there enough electricty and AC to accommodate more as well?

How old are the beds? What kind? How much is there in "supplies"? What sort of "agreement" do you have in place right now to keep her from running a bunch of "sales" and selling packages at low prices where she will take the money and you will have to "service" them (or if not, risk them being angry FORMER customers instead!).

Figure out what your 15K is paying for? Two beds & supplies - is it worth that much? Is it a GREAT location? Is the rent VERY fair for your town? Is there a great name/sign/interior that you would want to keep? Do they have a good reputation around town? Are the beds recently re-lamped and ready to go?

If not - you could take that SAME 15K and open up your OWN place if that is really what you want to do. Couple of nice used beds, sign, a few walls and you are at the same place she is now, without having to buy her "liabilities" - if any.

I don't think I would rely on the seller and her husband to draw up your "agreement". Consult a lawyer. Shouldn't cost much, but you need to make sure you aren't getting yourself into a bad deal! Might be fine, but better safe than sorry!

Good luck -

[bare2tan]

i agree with sunsally alot. If you have 15k to work with you could definitley make it a go in a small town by yourself.

[parrot head]

What exactly are you buying for $15,000? Customer contacts: There might not be any by the time you close the deal if she isn't open to service what she has. Distributor contacts: You don't have to pay for them. they come free with owning a business. You'll get more then you want for nothing. 2 tanning beds: They had better be 2 very nice beds with low hours and new lamps to boot. Top beds, by reliable big manufacturers.
I'd be very wary of this transaction and not do anything without an attorney. Like sunsally said, You could open your own small salon and buy 2 nice used beds. Buildout would be a question in this instince. Check it out. You'll be happy you at least looked at other alternatives.

[bdmd92]

Thanks for all your helpful advice, I will be sure to check into other options and check out your suggestions

[Laney]

I have to agree with what everyone else said.....don't jump into this yet. $15,000 is a nice chunk of money, and if you're in a small town, like we are, people are very reluctant when it comes to newbies....no matter what you open. We had a salon close down here and she contacted me to see if i would like to take over her clients. I asked her how many clients she had and told me over 1000. When I asked her how many were active she couldn't tell me.All she kept saying was, you'll be getting over 1000 clients! She actually wanted me to buy her client list and then honor all those packages that SHE had sold! When we really got to looking into it, we knew it wasn't going to be a good deal for us. Then to make matters even worse,before she closed her doors and moved everything out, she told everyone that our salon would be honoring all unused minutes!! We were totally unaware of this until someone came into our salon saying that she had minutes left at so and so's place and was told that we would honor them! We were shocked! And to boot she had old, cheap beds that were horrible and we have beautiful new beds!
What we ended up doing was telling all these people who showed up that we would give them a discount on our packages but could not honor minutes. Most of them them agreed and bought our packages but some were very upset and left. We tried to get a hold of this woman but of course she was no where to be found.
So, my suggestion would be, like everyone else said, check into it thoroughly!! If this woman wants you to buy and is trying to speed up the process, it can't be good. Hold onto your money, and check into opening your own place. You have too much at risk with her place from what I can see. Good luck!

[bdmd92]

Hi
Thanks for the advice, I have made an appointment with an attorney for next week, just to help me out, and I am calling the owner today and asking for her tax statements for the last 2years and a detailed Itemized list of what all comes with the salon. I am also going to tell that I still want the salon however we will have to stick to our orginal planned date. Does anyone have any advice for on how I can tactfully ask her not to offer any more promotions or discounts that I will end up honoring or should I just let that go? I dont want to tick her off and lose my chance at getting this salon. But I do want to cover myself 15k is a lot of money to lose. If anyone can think of anything else that might be helpful or that I should find out now, your help would be appreciated. I also want to add that I do live in a small town, but it is surrounded by many other small towns that are very short driving distances from each other. There are many other salons in the area, but where this one sits there is none in the immediate area and the area is growing. Its also kind of ironic but I live in Florida where you might think its kind of a funny place to go to a tanning bed, its kind of like selling Ice in alaska, but experience shows me that people dont have time to sit at the beach nor do they want to and want the chance to get away to relax or get a break from the kids. I think the owner of this salon isnt doing well cause she talks to the customers in a somewhat rude fashion and she likes to talk a lot. When you kind of go in there you want to run right to the bed to avoid conversation, because it will go on and on. She is a nice girl but I can see why she could lose business. I also know she dosent advertise. I do appreicate and take into consideration any ideas or opinions any of you have to offer, this site has been a great help to me so far

[exectans110]

I'm sure your attorney will tell you this, too, but you'll want to do an 'Asset Purchase' instead of buying her business. This way, you aren't responsible for her liabilities. You could have your attorney also write in to the contract that the purchase price will be off-set by the 'prepaids' she's sold. This means that if she sells monthly or yearly contracts where she collects the $$ up-front and then expects you to service these customers, your purchase price could be reduced by some amount to pro-rate the revenues back to you. Make sense?

Sally had great advice on the rest -- be sure to check out the power and the AC to be sure you can add more equipment.