just looking for some help

[alltans]

i have been looking into buying this salon in my area i am new to this industry all though i have done a lot of work in some major tanning salons anyway just need some input everything looks good and seller is sending me last three years of financials today please tell me what you think






Asking Price: $160,000.00 USD USA Dollars
Reason for Selling: retire
Year Established: 1983
# of Employees: 5
Yearly Revenues: $190,000
Yearly Cash Flow: $80,000
Yearly Net Profit: $80,000
Yearly Gross Income: $190,000
Total Debt: $0




Overview:

This salon has been in business for 24 years. We have 12 tanning beds and 1 California Tan Turbo-Spray unit, with a custom built spray room. The beds include 1 Diva Tower high pressure stand up unit, 1 Luxura high pressure unit,and 10 standard beds. The salon also has a full service espresso cafe in the lobby, serving sandwiches and pastries as well as smoothies, etc... We sell swimwear and accessories in addition to a full range of tanning and skincare lotion. The entire salon has been remodeled within the last year. The client list tops 8000. FF&E & Inventory included in price.


Property Features and Assets:

1955 sq foot salon featuring a full espresso cafe in the lobby, and retail display fixtures. 12 well maintained beds, and a custom built spray tan room. Entire salon repainted/remodeled in last 6 months. Hardwood floors. All new fixtures. Helios tanning software, and TMax Manager system. High traffic location in very established area with well known large retail next door, and major shopping area nearby. Located on busy main road.

[Din]

way too much money for the equipment listed.

Those are NOT high pressure units........the following pictures below are what High Pressure units are that can be purchased at $30,000-$40,000 each. What you have described are 1 VHR bed and 1 VHR standup.

High Pressure Laydown



High Pressure Standup




My opinion......you have one standup and one VHR...the rest are all base beds......RUN.....RUN like you've never run before.

Total value of that salon would probably be around $30k MAXIMUM. 10 base beds of any kind even if brand new wouldn't be worth that much in a salon. I think he makes more off the BLT sandwiches and is feeding you BS Sandwiches instead on the tanning salon.

[Uvangel]

"I think he makes more off the BLT sandwiches and is feeding you BS Sandwiches instead on the tanning salon".

[sunsally]

That said....

If you can confirm he is netting $80K per year, his asking price of $160K is just 2X profits - not unreasonable. On another thread Din suggested he preferred the multiple of 1.5X. I've seen them go for 2.5x too.

Things to find out:

1. Ask to see the last 5 years of signed tax returns. See how stable this $80K/year is - trending up, down or staying the same? Don't fall for the "well, we don't report all our revenue and we pad our expenses" line. They might, but when selling, all you get to go from is what is on paper to the IRS. Any multiple you offer will be from those figures.

2. Ask to see a break down of the revenues from tanning vs. "other". Of the "other" -- are you interested/willing in continuing all of them -- the expresso cafe, swimsuits, etc..

3. Ask to see the Helios data base. Specifically, for the last few years, you want to see the total yearly revenue (see how it compares to the numbers you asked for in #1 and #2), how many tanning sessions, how many total clients, how many unique clients. You are trying to figure out how many of the 8000 in the data base are still "active", how often they come, how much they spend per session, how much they spend per year.

4. Confirm expenses (rent costs, see some utility bills, etc). Does the $80K "profit" include a salary for the owners? Is the owner working all/most of the hours? Would you be doing the same? Make sure to figure these things in your calculations.

5. Find out how many amps of electricity the salon has (e.g. 400 amp 3 phase service or 200 amp single phase) and how many tons of air conditioning.

This may well be a great buy. The equipment is nothing special to be sure, but if they are making that much money from it, maybe they are doing something right! In theory -- you make more off of the upgrade units, and this doesn't have many. But maybe they are maximizing their bed usage, holding decent price points, and upselling on the lotion and accessories instead.

You need more information to make a good decision.

[Tanning Queen]

8000 clients since 1983?????? I would expect more seeing they have been in business over 20 years. And I would really have a tough time spending $160k for a base bed salon in today's market. Besides, how old are they beds? Maybe they are the original ones?????

[sunsally]

Not sure if they would have started Helios in 1983 - find out when that 8000 is from. But more importantly anyway is how many are "current" or "active". If they haven't been in during the past 2 years, I would think you can cross them off your list.

Since their upgrade equipment is newer, hard to imagine the base beds are nearly 25 years old. But find out.

Also - is this still a GOOD location? What might have been good 24 years ago might be losing it's luster. Is the rent at market rate (or lower?)?

Need to check on room sizes. Beds keep getting bigger. Get specific measurements (along with the Elect and AC info) as one of the variables that will tell you if you have room to upgrade (if you would want to).

There ARE base bed salons that do well in this industry. Dan Humiston, president of the ITA, is an example. It isn't MY model or the one I prefer, but it CAN work. Just collect a lot of information and, as in any transaction, don't "fall in love", but rather look at it as a business investment that either makes financial sense, or it doesn't.

[alltans]

just want thank everyone for the advice its very much appricated

[John]

$25K Cash

[alltans]

just found out that monthy expenses is 9500 which includes 3,810.25 for rent thats with triple nets and maint.

[newtan]

I am in the early stages of opening a salon. This is not an existing location, so everything is being built from the ground up (everything). It will be 1,700 SF. I will have a spray on booth, two standups a vhr standup and maybe a HP standup (the Saturn). What do you like for what space I have available. I was thinking a couple of Sungates, a couple of I-Beds, not sure about what to use for level 1 and level 2 beds. I am thinking I can fit 10 beds, plus the 2 standups and a spray on. I was thinking Tan America, (either the Malibu or Santa Barbara for the lower level. Let me know what you think. Thanks

[blondjuls]

Newtan - Dont be afraid to make your own thread.

People around here will be more than willing to help, but you wont get many answers by posting a topic in someone else's already existing thread.

Welcome to the site.

[danggirl]

Originally Posted by newtan

I am in the early stages of opening a salon. This is not an existing location, so everything is being built from the ground up (everything). It will be 1,700 SF. I will have a spray on booth, two standups a vhr standup and maybe a HP standup (the Saturn). What do you like for what space I have available. I was thinking a couple of Sungates, a couple of I-Beds, not sure about what to use for level 1 and level 2 beds. I am thinking I can fit 10 beds, plus the 2 standups and a spray on. I was thinking Tan America, (either the Malibu or Santa Barbara for the lower level. Let me know what you think. Thanks

Stand ups are a big over rated, with some great VHR's people will opt to do the lay downs. You probably won't need more then 1. As for HP, go for a lay down, 360 before stand up. Sungate is a great bed, if you go with that, pass on the Ibed and use that money for a HP, it will yield better sales in the end.

[Stephen Underhill]

You must see tax returns, It appears that the price of this salon is to high unless all numbers can be verified.

[sunnyday]

deffinitely look for well documented income through tax returns and bank statements. don't buy it if they say most of their revenue comes from cash. I had looked at a few salons for sale and the numbers were really fudged. get proof.

[danggirl]

Dont buy no where near his asking price. Offer from $10-$20K range and if he doesnt like that offer then forget it. In this day in age of salons selling like hot cakes look at any salon that has good growth and doing well in your area, and offer them money for there salon(s).

The best businesses that are for sale are the ones that are not. Just remember that.

[lvmyself]

Does anyone know the cost of the Saturn HP standup and what is the ship time.