New Salon~ Run or Jump?

[Tan_Lines]

Ok, I know I'm probably going to get the "run as far as you can", but just looking for some opions and could use some experienced help. I'm looking at a salon pre-existing that the owner wants to retire from and has sold a few others he had going.

The good thing is this salon was built by him after he already had a couple of others, so he built it knowing some of the problems already. He has put in two air conditioning units, plenty of electrical, storage room, etc. It has 9 large rooms with an area in the back for a spray tan or stand-up unit. He currently has beds in 7 of the rooms mostly older equiptment (I'll list them below). The building space is about 1450 sq. ft.

Last year 2006 it grossed $93,000 mostly tans, and some on lotions. Operating expencies were about 72,000 which includes 5 part-time girls (he is an absentee owner).
No advertising was done in the last couple of years, and the location is very neat and very clean.

It is located on a major intersection but I do not know the exact demographics of the area, but well populated including some hispanic, but also a lot of major industrial and offices in the surronding 5 mile radius. There is one other salon within one mile with all new Ergoline equiptment, and high prices (base beds $8.00 per sesson, up to $24.00 for the Ergoline 600).

I just happened to be looking for a salon (my first) when I ran into this one and the price was lower than anything else I have seen here in California. He had a couple of other people interested, so I had to make a decision and after a few days, I gave him a down payment. Now, after learning a little more, I'm not so sure if I can turn it around to something I can make a living at or not. I'm just waiting for the property owner to get an approval on me for the lease, so I thought I would see if you all think I should go ahead and give it a try, or run and loose my deposit. I know it will need some up-grading in the next few months (i.e spray tan and/or HP), but is it worth giving a try? Thanks, and sorry for the long post.

Equitpment:
3- Sundash tanning beds (fairly new)
2- Purtan 30
1-Purtan 36
1- Purtan Elipse
Plus computer software, counter, lotions, etc and a database of about 2,800
Price is about $30,000.00

[lewdyju]

He is asking $30,000?
$8 - $24 is not high prices BTW, pretty average, my base price is $9

[Din]

Originally Posted by Tan_Lines

Equipment:
3- Sundash tanning beds (fairly new)
2- Purtan 30
1-Purtan 36
1- Purtan Elipse
Plus computer software, counter, lotions, etc and a database of about 2,800
Price is about $30,000.00

In my opinion....you should be paying 1.5 times the net profit of 1 year to find an approx. value of the salon.

He's netting $20k/year x 1.5 = $30k

OR

Some will look at the value of the beds to get a rough estimate if it's a newer salon that is not yet profitting but has NEW equipment of value.

3- Sundash tanning beds (fairly new) $2500ea
2- Purtan 30 $1000ea
1-Purtan 36 $2000ea
1- Purtan Elipse $5000ea

$17,000 approx in equipment without giving hours and years and not knowing what a fairly new means.

So you should be looking to pay between $17,000-$30,000 for the purchase of the salon. An offer of $22-$25 should be good if you want to go ahead with the purchase.

Also, by telling us 2 a/c units and electrical means nothing unless you give us specs and figures....it's not just a matter of adding a HP bed later. Does it have the room to do so...and by room i don't mean just an empty room, but is the room big enough to hold it as well as showpiece it...12x12???? How about the electrical to handle it? A/C to handle it??? Saying he put it in and should know what is needed doesn't mean anything.

Some salon owners are just dumb and do things without knowing or researching and then it's too late so they sell it off and get out while they still can.

I think you have gone in and put a deposit well before you were ready to open a business or start your own without researching. I think you are going in blind....and even if it's a good deal that you will not make it easy as you need to read a lot before you take over.

I'm not trying to be mean...i'm trying to tell you to be educated about what you are getting into.....it could ruin you if you don't know what you are doing or getting into and based on such vague information that you have given and the fact that you gave a deposit without knowing this info....you're in for a heap of trouble.

[Tan_Lines]

DIN~
Thanks, no I don't think it was mean....probably true, but here we are. I know he explained the A/C to me at first, but too many things to learn to remember exact size of units at that time. And the rooms are large, about 2 feet space at either end of the current beds, but don't remember the exact size of those either. Just wanted to at least get some opinions even with my lack of knowledge and of the exact dimentions.
I plan on re-painting and adding better decor at first, along with some advertising at least locally, slowly trying to build up clients at first, and probably adding a HP or spray within a couple of months. I know it's a challenge, but sometimes that's good.

[Din]

Don't forget...you are buying at the absolute WORST TIME of the year. July is the first month of the slow season. You will not see income until at least December. So make sure you have at least 6months of bankroll saved to keep you afloat until then or you are doomed before you even start.

If expences are $72,000/yr that's approx $6,000/mth which means you need about at least $30,000 in the bank when you open or you will close quicker than you open.

Look at brining in some good beds such as 52lamp VHR beds to replace some of the current units.

HP would be a good addition.....and a Standup before you bring in a spray tan for sure.

[Tan_Lines]

Thanks again....yes, I do have some extra money available for getting by, but I also work full time right now, so my plan is to continue with my current job and work on (and in) the salon after work and on the week-end some until I see if I can get things going a little better. Right now there are 5 part time employees to run the place as the current owner only comes in the area about once a week, so it can pretty much run on it's own for awhile.
Thanks for your advice on the beds, I was thinking a spray might be the most important addition to draw in new customers, but maybe not.
Let me know what you think would be a good up-grade bed to begin with (maybe used for now), but let me know.

[Din]

Get a Suncapsule Standup....that will be your strongest tanning unit.....then to get an upgrade laydown, you should consider the Ambition that Renaissance has for sale here....it'll run ya about $15k but it's a good bed.

Look for a 46lamp or bigger for a good upgrade and to get good $$$ per session. Anything smaller would be a waste.

Ideally 52lamp/160W+ would be ideal for a $25-$28 session price tag and then look at HP beds. There are Sunsport 2021's for sale, Sportareddo Kombi for cheap also....quite a few selections out there right now for HP....pick one up. $30+ session on them.

[BigLeo]

Leo says not to get into this industry unless you have lots of cash reserves. Too much competition, the industry has matured. Too much capacity, chasing too few tanners. I think the shakeout will last for at least a few more years. Even those who are doing "ok" are not immune to this shakeout.

I say stay away from tanning for now. If you can acquire the equipment at a great price, buy it now, put in storage and open in the peak.

i know some of you pros are going to hate me for posting this, but it's a fact.

[FIT]

Big Leo and many others on this site speak as if every climate / location is the same. Don't let him discourage you. I opened 3 months ago and heard all the negative feedback. I tried to explain why I thought my area could be different but noone wanted to hear it.

If you have a business background and good common sense (sounds like you do if you've already assessed your comp) than you have an opportunity to make money in any industry.

Most important thing for you to figure out is if the "upgrades" you are talking about to improve your salon are possible.

1. Do you have adequate HVAC to allow you to put in a big VHR and/or HP? If not do you have the funds to add another unit?

2. What is your electrical service. Chances are with that bed lineup you have 400 amp service. You will be pushing it to add some bigger beds to that lineup. Some in here will tell you don't have enough but opinions vary. How much would it cost you to upgrade to 600 amp service (would you have to trench under the parking lot - or does it come from a pole)?

3. How well is your competition doing? How many years have they been in business? Do they keep their salon clean? Do they excel at customer service? Do they have room to expand? Do they have the funds to upgrade if you put in better equipment? Ergoline is nice equipment but not the best. Do they have HP? If they don't that should be your first investment! It will give you the competitive advantage you are looking for. However, if your competition has the means to add it your advantage will be short lived.

ESSENTIALLY WHAT SERVICE CAN YOU PROVIDE THAT YOUR COMPETITION DOESN'T?

4. What SIGNIFICANT changes can you make the instant you open your doors? Your first few months in business can make or break you. As a new owner you are immediately going to attract anyone who isn't happy at their current location or anyone who has previously tried your location and wasn't satisfied. It is a chance to win over your competitions customers. If they come in after you've opened to see the same bed lineup and same employees you've pissed away that opportunity.

5. Do you know how to market (without spending a fortune)? Any of your local newspapers will likely do a free story with pictures when you open your doors (they think they may get your advertising dollars down the road). But you have to CALL THEM and set it up. Does the business database include e-mail addresses? Your business should have a myspace page. There are too many opportunities to list but buying tons of radio and newspaper doesn't sound like an option for you initially.

There is a wealth of knowledge and knowledgeable people on this site but you will have to learn to filter out some in here.

Best of Luck!

[MsHotTan]

One bonus that sticks out in my mind is that the salon survived with an absent owner. If you plan to work it yourself and save a lot of wages, your definately going to be better off.

[Alan @ TanToday]

There is a reason why salons are sold in July by their owners. We closed our salon the week after 4th of July to stop paying expenses with no revenues in sight.

[FIT]

One bonus that sticks out in my mind is that the salon survived with an absent owner. If you plan to work it yourself and save a lot of wages, your definately going to be better off.

but I also work full time right now, so my plan is to continue with my current job and work on (and in) the salon after work and on the week-end some until I see if I can get things going a little better. Right now there are 5 part time employees to run the place as the current owner only comes in the area about once a week, so it can pretty much run on it's own for awhile

...

[MsHotTan]

BUT her being there after her other job and on weekends is sure a lot more than the absentee owner was there once a week. Consider losing the full time job if your thinking of THIS as your career move/choice. I personally dont see how absentee salon owners survive.

[Tan_Lines]

Thanks everyone for all the input.....Yes, I do have some funds for getting by until the slow season is over, and yes, my plan is to work the salon full time, but I may have to wait a few months until I can get the customer base up by dong some advertising and I'm going to be doing some re-decorating (dressing the place up it's very stark right now).
Fit, that's what I was thinking as my competition does not have HP as far as I remember. Only Ergo 600 (facial HP) so I think an HP unit will give me something for new customers, and also for current customers to up-grade to (more $$ per session )
Deal should be done in the next 2-3 days, just waiting for the prop. owners to finish lease, so try not to be too hard on me hopefully I will be on here for awhile (Tan Today is the best forum!)

[Stephen Underhill]

Originally Posted by Tan_Lines

Ok, I know I'm probably going to get the "run as far as you can", but just looking for some opions and could use some experienced help. I'm looking at a salon pre-existing that the owner wants to retire from and has sold a few others he had going.

The good thing is this salon was built by him after he already had a couple of others, so he built it knowing some of the problems already. He has put in two air conditioning units, plenty of electrical, storage room, etc. It has 9 large rooms with an area in the back for a spray tan or stand-up unit. He currently has beds in 7 of the rooms mostly older equiptment (I'll list them below). The building space is about 1450 sq. ft.

Last year 2006 it grossed $93,000 mostly tans, and some on lotions. Operating expencies were about 72,000 which includes 5 part-time girls (he is an absentee owner).
No advertising was done in the last couple of years, and the location is very neat and very clean.

It is located on a major intersection but I do not know the exact demographics of the area, but well populated including some hispanic, but also a lot of major industrial and offices in the surronding 5 mile radius. There is one other salon within one mile with all new Ergoline equiptment, and high prices (base beds $8.00 per sesson, up to $24.00 for the Ergoline 600).

I just happened to be looking for a salon (my first) when I ran into this one and the price was lower than anything else I have seen here in California. He had a couple of other people interested, so I had to make a decision and after a few days, I gave him a down payment. Now, after learning a little more, I'm not so sure if I can turn it around to something I can make a living at or not. I'm just waiting for the property owner to get an approval on me for the lease, so I thought I would see if you all think I should go ahead and give it a try, or run and loose my deposit. I know it will need some up-grading in the next few months (i.e spray tan and/or HP), but is it worth giving a try? Thanks, and sorry for the long post.

Equitpment:
3- Sundash tanning beds (fairly new)
2- Purtan 30
1-Purtan 36
1- Purtan Elipse
Plus computer software, counter, lotions, etc and a database of about 2,800
Price is about $30,000.00

You should evaluate this salon just as though you are opening a new one. If you will send me an email I will send you a questionnaire that will allow me to evaluate this salon.