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Old 05-01-2009, 10:44 AM   #1 (permalink)
 
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Should I buy

I'm thinking about buying an established tanning salon and know nothing about the industry I'm meeting with the owners tomorrow to look at the books. Can anyone give me any advised for what I should be looking for?? I've been an office manager for 6 years so I do know how to read the books but not for a tanning business. Thanks
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Old 05-01-2009, 11:54 AM   #2 (permalink)
 
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Re: Should I buy

Very easy. Look for what the FIXED COSTS are and what the GROSS REVENUE is.

If the business is a $100K or under/year business NET and CASH FLOW are not going to mean much as the owner will live off of this money (most likely).

Watch out for lease salons as you are not really buying anything but the privledge to run the place.

Look for RENT, ELECTRICITY costs as these will be your biggest monthly costs. $5k/month rent is not going to work unless you are bringing in $10K+ ave.

PM me if you'd like more info. This is just random thoughts.
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Old 05-01-2009, 12:25 PM   #3 (permalink)
 
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Re: Should I buy

How is this year sales compare to the last three years. Is there new competition in the area? How much competition is there? What are the demoghapics of the area?How many, how old and what beds are there? How many hours are on the lamps? Will you have to relamp right away? How many tons of AC is there? How many amps of electricy? Why are they selling? Do you have to do any renovation when you take over? What are they asking? What is the gross sales? What are the expenses?
Some other things you have to personally think about. Are you availble to work any hours that your open or will you have to relie on someone else? Will you be able to work longer hours than you are now? After buying the place will you be cash strapped or will you have money for marketing and the what ifs that will come up?
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Old 05-01-2009, 12:37 PM   #4 (permalink)
 
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Re: Should I buy

Yep, that too. All good stuff.

Watch out for people claiming to be "selling due to illness". Usually the "illness" is caused from being BROKE.
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Old 05-01-2009, 06:12 PM   #5 (permalink)
 
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Re: Should I buy

Don't do what I did... and that is wear a pair of horse blinders to the closing table, or even pre-sale negotitations

We bought a salon in MA and if I had to do it again... I would look at everything a lot closer... we spent years 5+ digging out of a hole that we over-paid for.

Do they have helios software? Nevermind the books... Enron had books too.

I can analyze the salon's true business from that software... something I learned after I got screwed on mine.

Then it's all based on the actual equipment... there is no guarantee your customers will like you and stay with you. The value of the equipment and age is important.

Remember, people don't sell profitable business'... they sell because it's a seasonal business and when it's good... it's great!, but when it's slow... your thumbs turn brown

Last edited by Beachbum110; 05-01-2009 at 06:20 PM.
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Old 05-01-2009, 06:24 PM   #6 (permalink)
 
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Re: Should I buy

Yeah your place is in a MINT location. Remember, there are hotdog stands in Boston that go up for sale for $100K+ and they have about $900 in equipment.

ALL ABOUT THE LOCATION. **** the last owners could have been maniacs. DO NOT ASSUME THE LAST OWNERS KNEW WHAT THEY WERE DOING.

I ASSUMED that when I saw the previous owners numbers that I would CRUSH them...and I did.
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Old 05-01-2009, 06:29 PM   #7 (permalink)
 
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Re: Should I buy

"The value of the equipment and age is important."

It is and not in a way you'd think. I'd rather have reliable used STEAL beds than new flashy plastic beds.

Plastic and flash are for people that can't/won't sell. Need to let the place sell itself and then they get no tan cause if you are clueless in one area then you are probably clueless all around.

Buy WORKHORSES that perform every time all the time.
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Old 05-01-2009, 06:30 PM   #8 (permalink)
 
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Re: Should I buy

"you" meaning whoever not anyone specific.
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Old 05-01-2009, 06:42 PM   #9 (permalink)
 
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Re: Should I buy

I don't know... flashy is in these days.

but your right... we had to flip our old POS equipment from the previous owners to higher-powered (and faster) beds and booths.

also, there is no loyality in tanning... people will flip for a newer place (with flashier equipment) a mile up the street and if you don't maintain the place (lamps, cleaning)... bye bye customers.
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Old 05-01-2009, 06:48 PM   #10 (permalink)
 
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Re: Should I buy

Oh... and that example of buying a hotdog cart for $100k because of the location... How happy would that guy be with the swine flu epidemic, which is a perfect example of how you can't put a lot of value on returning or "good faith" business.

One hot dog recall... and your wenier cart better be able to convert to a mini-bar or something.

Just don't get fooled by promises, or dreams... or "black money" ... if it aain't in the computer or on the books, assume it doesn't exist.
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