Do you want to open a salon?

[Brian Oshman]

Someone sent me an E-mail from this board looking for some advice. I thought I would post it here too.

I've been reading your posts on the forum for a while now. You definitely know a lot about the industry and are well respected on the site. I hope you can answer a question for me.

I read your comments discouraging people from opening a salon with $200,000 thst it's not enough, that they are not buying enough equipment, don't have enough electric or A/C.

Are you just trying to get them to be realistic, do you really think they can't make money, are you just playing devil's advocate?

I'm not trying to be confrontational...I just want real advise. I ask because I plan to open salon in a rural area with only about 60,000 people about half of them white. It is also a college town (small) with tanners not included in the demographics. There is no dedicated tanning salon, though there are a few beds in hair and nail salons, gyms, etc. I've talked with contractors, realtors, attorneys, manufacturers, etc. and I've really done my homework...I have a degree in finance and have done the P & L's, cash flows and build-out estimates. It still looks profitable for me to open with 7 beds and a sunless.

My question really is "Why won't it work?". What is the reason behing your advise? What am I not seeing?

Hope you're willing to help. I really am seeking constructive criticism and objective advise.

Thanks,

Here's my reply:

Well let's see,

First off, electric upgrades cost lots of money. An overhead service upgrade can run 8 to 15 thousand and if you have to trench a parking lot to go underground you are looking at 20 to 40 thousand just for electric.

A/C will run you about 15 to 20 thousand for about 10 tons.

These two upgrades will chew about a third of your budget right there. Always try to negotiate these things in your lease as they are upgrades to the landlords property but you may end up paying for a good chunk of it depending on how negotiations go.

An HP bed will tax the electrical service for 100 amps three phase and 3 tons of A/C alone to run properly and the cost of a bed like this is in the 40 thousand dollar range.

Large VHR beds will need 60 amp three phase and 1.5 to 2 tons of A/C. Beds like this cost in the range of 20 to 35 thousand dollars.

Your smaller beds will consume about 30 amps to 50 amps a piece and need 1 ton of A/C and be in the price range of 5 to 15 thousand dollars.

Now we are approaching that $200,000 budget and we haven't even started the build out yet which can run 75 to 150 thousand dollars for construction costs.

Next is the timer and computer system, sound system, security systems, furniture, retail stock, and dozens of misc. items that you will need to purchase to complete the package.

Now that we invested about 300,000 dollars we need to advertise. Now keep in mind that this business is seasonal with three to four good months of moneymaking. The rest of the time you sit around bored off your ass with no customers coming in still having to cover rent which is in the range of 3 to 5 thousand a month plus other basic expenses. If you decide to lease all of the equipment you are looking at paying large sums of money per month on top of that all the while when there are no customers coming through the door. If you open in the off season, you will struggle to stay alive which will take even more money to make it to the first busy season.

It can cost onwards up to 10K a month just to break even before you even start to make a profit and that doesn't count payroll for employees if you decide to work all the shifts at 80 to 100 hours a week.

The season is typically from Jan. to June with Mar. Apr. and May being the best months so you need to stockpile money to cover those expenses in the off season. Now if it is your first year, you better have a fat bank account to pull you through or you are done. Figuring how many hours you are open and calculating your income based on the beds being full from morning until night 24/7/365 is unrealistic. These distributor projections are nonsense. They are designed to show income potential and not actual revenue which will be much lower. Just a sales tool for the bed distys. Pipe dream numbers for naive.

You need deep pockets to open and run a business like this. The industry is getting harder and harder to compete in and the cost of opening a salon continues to grow. Labor and materials continue to increase. If you are going to lease everything and milk every line of credit and put your house on the line are you prepared to live in a box under the bridge if it fails? More salons are failing today in record numbers. The boards are filled with used equipment and salons for sale or liquidation. It never used to be like that.

Think long and hard if you really want to do this. There are other businesses that are more profitable and worth investing in today that don't require as much capitol and still generate nice year round income. Competition has really set in and it makes it tougher to split the pie up among all of the other salons cropping up.

Banks have taken a beating too in the recant past due to saturation and the high failure rate that has blanketed this industry. It will get tougher and tougher to get financing for this too since a lot of financial institutions have gotten burned.

I hope this advice gives you some insight.

Brian Oshman
The Sun Doctor
908-797-0716
Brianoshman@aol.com

I'll leave this post here for a while then I'll move it to the gold mine.

[Din]

Hit the nail on the head on that one....

[Tanning Queen]

Yeah, What Brian said!

[Din]

except if you open in a doctors office type setting with an office desk, no design, a wooden shelf for lotions and all low beds from ETS.....but then again, how successful are you gonna be?

Or if you buy an existing salon for cheap....but why is it cheap? Is it failing?......

Brian has it right.

[Natureboy]

Brian has it right. Though he did mention if you negotiate the Electrical and A/C into your lease, you will save huge $$ for start up costs. I just did this with the store I am building right away.

They included 600 amp three phase and 20 tons of A/C in the lease to my spot. That could have cost me 50K or better if I did that myself.

Personally, If I didn't have two stores pretty much paid off already to help "float' the new one until it gets established, I wouldn't stand a chance as it is grim in the beginning. Having two other stores for promotion helps too.

I think getting into this business now without a true recipe from a hugely successful set up is suicide. I would never start over in this business. I was just lucky enough to scrape by for many years to pay stuff off and now it is starting to come alone. Even though expenses keep going up on other things and keeping clients gets harder and harder.

I think I would rather open a laundry mat somedays. At least I understand the electrical.

[Ezliving_Jim]

This thread deserves a sticky.

[George Sklenicka]

Not all disty's project 100% utilization of equipment. (That's simply ridiculous)

The location lease negotiation is paramount to making it through the first year without burning up your savings. Always ask for more than you expect (Electrical, A/C AND Buildout costs) and see what you can get. If the space has been empty long enough, sometimes you will be very surprised what a landlord will be willing to do for you. Especially if you are willing to sign a 5 year (or longer) lease.

[Kathe]

Originally Posted by Natureboy

Brian has it right. Though he did mention if you negotiate the Electrical and A/C into your lease, you will save huge $$ for start up costs. I just did this with the store I am building right away.

They included 600 amp three phase and 20 tons of A/C in the lease to my spot. That could have cost me 50K or better if I did that myself.

Personally, If I didn't have two stores pretty much paid off already to help "float' the new one until it gets established, I wouldn't stand a chance as it is grim in the beginning. Having two other stores for promotion helps too.

I think getting into this business now without a true recipe from a hugely successful set up is suicide. I would never start over in this business. I was just lucky enough to scrape by for many years to pay stuff off and now it is starting to come alone. Even though expenses keep going up on other things and keeping clients gets harder and harder.

I think I would rather open a laundry mat somedays. At least I understand the electrical.

I second everything you just said. I can't imagine starting from scratch in this business again. Our 3rd salon would have been a killer if we didn't have 2 other successful money makers. We are doing much better since we downsized back to one. I really don't know how people do it anymore just relying on employees.

Kathe

[Derf]

Do you think franchisors give details like this to their prospects?

[FIT]

Don't want to be the lone dissenting voice but I just opened a salon (didnt finance or lease) and here was my investment.
Demolition of old hair salon - roughly $2,500
Existing 3 ton HVAC - added 5 ton $11,880
Existing 400 amp service - n/c
Lumber / drywall / paint / etc. materials $5,000
Labor for framing - $1100 (friends and myself)
Labor for drywall - $1800 (friend)
Paint - me
Tantrack software with CC software / cash drawer / printer - $1600
Computer / printer / warranty - $1600
Drop ceiling $2400
Total Electrical labor and materials $9600
Permits, etc. $1,000
Beds:
New Sport Holiday $4699 (2) = $9398.00
New KBL 3500 = $8,900
New Sport Blue Moon = $14,999.00
Used Cyclone 200W = $5500
Used Matrix = $16,500
T-max equipment = $1,300
Buck boosters = $2,500
Shipping and installation = $4500
Total beds, boosters, delivery and timers = $63,000

Grand total: $103,000 +/- $5,000 for little things

This was a complete demo and rebuild from scratch.

Rent $1750 per month (20x65 space) on only road to and from the area

Most importantly: EXPECTATIONS:

We don't think we are going to be rich. My wife is going to take a salary similar to to what she was making and anything extra is a bonus. Along with that, of course are opportunities to write off daily living expenses (which can be more money than most consider).

I came to this site because I'm so sick of the negativity on TanTalk. Everyone is always discouraging potential owners with tons of negative data that may or may not apply to their venture. Brian is obviously far more knowledgable on tanning than I am but he doesn't know my investment, lease, market, competition and most importantly expectations. There is a salon about 40 miles from me right beside a university and they CRUSH with the college students. Maybe the guy that wrote to you will have similar results with an investment of $60,000.

Best of luck to you all.

[Tanning Queen]

FIT,

I hate to say it but it sounds like you are out of electric and should really have more AC to run your place properly.

I am glad that you were able to open the salon for so little but I think you should have done a bit more homework only for the fact that if you need to expand, you are gonna have to spend WAAAAY more now than if you did it from the beginning. And I do hope you have enough for 6 mos of bills (both salon and personal) in the bank because this business can easily kill you in the slow season if you dont.

I am not trying to doom and gloom you but we are very honest here and want the best for the industry. I do try and talk people out of opening that just dont have a clue. Think that this is easy and all you have to do is open and they will come. They say that their area is different, I dont know them , etc. They will prove me wrong. Sad thing is, no one has yet. Seen them all come and go. That is why I try and save the ones that dont know any better from wasting their money.

Good luck with your new venture tho. I hope you have much success!

[FIT]

I did do more my homework and how many beds do you think I can get into a 1300 sq ft space? I built and wired 4 more rooms for future expansion and I have room for another 5 ton HVAC ( I hung them from the ceiling to maximize sq ft). The only extra expense will be reconfiguring the ductwork slightly. If I added more air I would have to add more ductwork. No different. It will not be WAAAAY more money. Where do you get that anyway? I also have an electrical closet with room for another panel. If I upgrade to 600 amps now or later investment is same. Why would put in more electrical than I'm going to use?

Air required:

Matrix 3 tons
Base beds .5-1 ton each
Level 2 - 1 ton
Level 3 2 tons

Very little direct sunlight into the building. I am centered in the strip mall and will benefit from the air around me. The only way it is a problem is if all my beds are running all the time. If they are than i will put in more air and it will cost me the same then as it would now.

Thank you for the good luck. Same to you.

[FIT]

Again I think you need to consider the expectations of people posting on this site. Some of us don't think this will lead to fortune and fame. Some of us aren't even counting on paying our bills in the beginning. This is my wife's venture. I have stable income to support our family and, yes, help the salon out in the beginning if things don't go well. You also need to consider that just because we may be opening our first salon it doesn't mean we aren't in business in another industry in the same area. Not every new salon owner is a moron. After all, you guys are still in business right? You certainly aren't staying in business if you are losing money every year and you weren't born a tanning salon operator. There will be new salons that fail, new any kind of businesses that fail. There will also be new salons that do ok, and new salons that do very well. If you don't believe that you aren't very pragmatic. We hope to be one that does well and so does the guy who wrote Brian, and you know what? We may be and may not but noone on this site can predict the outcome of every new salon in North America.

[FIT]

First off, electric upgrades cost lots of money. An overhead service upgrade can run 8 to 15 thousand and if you have to trench a parking lot to go underground you are looking at 20 to 40 thousand just for electric.

A/C will run you about 15 to 20 thousand for about 10 tons.

These two upgrades will chew about a third of your budget right there. Always try to negotiate these things in your lease as they are upgrades to the landlords property but you may end up paying for a good chunk of it depending on how negotiations go.

An HP bed will tax the electrical service for 100 amps three phase and 3 tons of A/C alone to run properly and the cost of a bed like this is in the 40 thousand dollar range.

Large VHR beds will need 60 amp three phase and 1.5 to 2 tons of A/C. Beds like this cost in the range of 20 to 35 thousand dollars.

Your smaller beds will consume about 30 amps to 50 amps a piece and need 1 ton of A/C and be in the price range of 5 to 15 thousand dollars.

Now we are approaching that $200,000 budget and we haven't even started the build out yet which can run 75 to 150 thousand dollars for construction costs.

Brian you are a very smart guy. There is no way in hell you would pay that kind of money to open a salon. Electrical and A/C are all negotiable and where in the world would you spend 75 to 150 thousand for construction?

[FIT]

Brian has it right. Though he did mention if you negotiate the Electrical and A/C into your lease, you will save huge $$ for start up costs. I just did this with the store I am building right away.

They included 600 amp three phase and 20 tons of A/C in the lease to my spot. That could have cost me 50K or better if I did that myself.

Personally, If I didn't have two stores pretty much paid off already to help "float' the new one until it gets established, I wouldn't stand a chance as it is grim in the beginning. Having two other stores for promotion helps too.

I think getting into this business now without a true recipe from a hugely successful set up is suicide. I would never start over in this business. I was just lucky enough to scrape by for many years to pay stuff off and now it is starting to come alone. Even though expenses keep going up on other things and keeping clients gets harder and harder.

I think I would rather open a laundry mat somedays. At least I understand the electrical.

May I ask then what your opening expenses were? If Brian "has it right" you spent $300,000 to open after your electrical and air was paid for by landlord?

[Papa]

BEAUTIFULLY said Brian! You weren't "Doom and Gloom", you just laid it out there. Lease negotiations are VERY much specific to the area you decide to locate in and the DEMAND in that area. If you are getting a cheap lease with everything included, you need to ask yourself why. There are deals to be had in leases and I did a lot, (ok, most) of the work on my buildout and saved a ton of money.

His entire point was not to talk you out of starting a tanning salon, but to analyze the situation fully. The devil in the details can be a killer! How many salons in or near your town have changed hands every 2 to 3 years? Why is that? Could it be because the people buying were oversold on the potential and didn't realize the costs of running a salon? Starting a salon and doing a buildout can really rack up the unforseen costs in a hurry.

[FIT]

Not trying to start WWIII, just take issue with someone making blanket statements that in some cases are not true.
1. Electrical upgrade - may not need it.
2. HVAC - his figure was fair if you start with no air - not likely
3. HP bed - 40,000 new yea but used half that - if you even purchase HP - i bet at least 50% of the salon owners on this site don't have a HP bed in their salon
4. Level 4 bed 20,000 yes - 35,000 no
5. 75,000 to 150,000 construction costs? On what planet?
6. 300,000 investment for 7 beds and a sunless? Sure it's possible if you want to throw money away but if you have half a brain it's half that!
7. Rent 3 to 5K - better be a great location for 5 grand - or big enough for 12 beds

You need deep pockets to open and run a business like this. The industry is getting harder and harder to compete in and the cost of opening a salon continues to grow. Labor and materials continue to increase. If you are going to lease everything and milk every line of credit and put your house on the line are you prepared to live in a box under the bridge if it fails? More salons are failing today in record numbers. The boards are filled with used equipment and salons for sale or liquidation. It never used to be like that.

Think long and hard if you really want to do this. There are other businesses that are more profitable and worth investing in today that don't require as much capitol and still generate nice year round income. Competition has really set in and it makes it tougher to split the pie up among all of the other salons cropping up.

If these two paragraphs aren't "doom and gloom" I'd hate to hear him go down that road. If the "vets" in here want to discourage new owners to preserve their market share then I think they should just say so. But the "blanket statements" hurt their credibility. Case in point is Tanning Queen's remark that I will pay WAAAY more money to upgrade my electric and HVAC down the road then to do it now. There is absolutely no basis for that in my situation and yet she'll repeat it over and over again. Then I find out her salon had to close?

[Brian Oshman]

It's not $300K for a seven unit dump that half the work was completed by drunken friends dumas!

My post is for a broad spectrum and was not intended to piss on anyones parade. It covers costs from the smaller top notch to the larger top notch buildouts, the key being top notch cuz that is what it takes to stay competitive.

If you got family or buddies to help defray the costs or you are able to negotiate a good lease with some of the MAJOR upgrades included then you are on the right track.

If you were to just open the checkbook then my numbers are right on. I have been in this biz for 15 years and know what I'm talking about.

Follow along now.

[FIT]

My post is for a broad spectrum... If you were to just open the checkbook then my numbers are right on.

Thank you for validating my point. Your comments aren't owner specific. Maybe you should have said, "Now because you have just opened your checkbook and have zero common sense we've invested $300,000 for a salon that could have been opened for $150,000 ...." I'm glad you've been in this business for 15 years but unless that gives you some insight into every person who is considering opening a salon you should stop discouraging people because you may be the most knowledgeable "tan master" in the industry but you can't know the intimate details of every new entrepreneur dumbas!

[Brian Oshman]

Well I know if you think that boat anchor in your avitar is the best thing since sliced bread you are a dumas!