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Old 05-05-2013, 05:29 PM   #1 (permalink)
 
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Arrow What To Do!!! Need Advice

My lease is up June 30, my market is so oversaturated with tanning for such a small town. 7 salons all with in 5 miles of each other. Each year my numbers are down more and more. My landlord is willing to drop my rent if i stay and sign 5 more years. To be honest my salon still needs lots of work ( beds outdated but they have good lamps, flooring needs redone all and all its needs a major makeover) Question is do i buck up and sign or sell out, or pull and move.
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Old 05-05-2013, 07:46 PM   #2 (permalink)
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Re: What To Do!!! Need Advice

Sell out, the writing is on the wall.
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Old 05-05-2013, 10:08 PM   #3 (permalink)
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Re: What To Do!!! Need Advice

I would do an evaluation as if you're going to get into the industry as a newbie.

If you'd do it all over again, go for it. If not, DUMP IT!
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Old 05-06-2013, 07:05 AM   #4 (permalink)
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Re: What To Do!!! Need Advice

Cannot offer any sort of opinion without hard #'s.
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Old 05-06-2013, 09:17 AM   #5 (permalink)
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Re: What To Do!!! Need Advice

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Originally Posted by markee88 View Post
My lease is up June 30, my market is so oversaturated with tanning for such a small town. 7 salons all with in 5 miles of each other. Each year my numbers are down more and more. My landlord is willing to drop my rent if i stay and sign 5 more years. To be honest my salon still needs lots of work ( beds outdated but they have good lamps, flooring needs redone all and all its needs a major makeover) Question is do i buck up and sign or sell out, or pull and move.
1. Are you making a PROFIT? And by profit, if you are working yourself, make sure you include in your numbers a payroll cost for yourself - even if you don't take any.

2. How much is he willing to drop the rent?

3. When you consider a "major makeover" - how much do you think that would cost?

4. If you decide not to renew - what do you think you could get today either to sell it to a prospective new owner - or just to liquidate?
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Old 05-06-2013, 09:24 AM   #6 (permalink)
 
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Re: What To Do!!! Need Advice

It is doubtful that you would succeed in any demographic area with 7 salons within 5 miles of each other. I would; 1) move to a location with better odds or 2) sell out, or 3) Store it and wait for some market consolidation to occur.
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Old 05-06-2013, 09:25 AM   #7 (permalink)
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Re: What To Do!!! Need Advice

In terms of Option #3 - moving - you would have to consider:

1. Cost to move
2. Cost to set up a new location

Assuming you would move OUT of that highly saturated market - you would be going to a new market - and therefore you shouldn't consider that any of your current customers/revenue would follow. So treat any thoughts of MOVING your salon like you would starting over from scratch (other than what pieces of equipment, if any, from your current salon, you would keep)
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Old 05-06-2013, 10:21 AM   #8 (permalink)
 
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Re: What To Do!!! Need Advice

Makeover cost shoulde be about 5,000
Hoping he will drop the rent down by $300
My numbers are really down since Plant Fitness moved in across the street
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Old 05-06-2013, 01:13 PM   #9 (permalink)
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Re: What To Do!!! Need Advice

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Originally Posted by markee88 View Post
Makeover cost shoulde be about 5,000
Hoping he will drop the rent down by $300
My numbers are really down since Plant Fitness moved in across the street
A rent drop of $300 gains you $3600/year.

How much has Planet Fitness impacted you? They offer tanning for $10/month. If their equipment performs as well (or better) than yours, then if I'm a tanner I only keep going to your place if I don't ALSO want a gym membership. But since the gym and tanning combined is only $20, if the equipment is similar or worse, I'd join the gym and tan there, even if I didn't want to workout there.

Makeover for $5000? For new floors, "major makeover" and new equipment installed? I think you may be low on your estimate.

For the 5 year lease - do you have to Personally Guarantee it? So that if you close the business, you are still personally responsible for the balance of the lease? 5 years is a VERY long time in a market that is oversaturated and declining..........
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Old 05-06-2013, 01:34 PM   #10 (permalink)
 
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Re: What To Do!!! Need Advice

Planet Fitness has better equipment and have made and impact of about 32,000 a year
My Uncle Does hard wood floors, and my electric is done for free. But even at that with impovement i dont think i would come out making a profit, since i dont have the best beds in my market.
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