going to buy a distressed salon

[aimeekat]

mmmmm... tasty!

[hiii98]

he responded to my offer by now saying I am responsible for the entire buildout... But accepted all my other terms.

I dont think that is good enough. I dont want to put electric and AC into the additional 530sqft space. I wouldnt know where to begin, and dont want to think about the price.

"How much are you willing to spend on this place to bring it up to par"

30-50k

[brownsuze]

Signing the areement of sale -- $4500
New walls -- $5k-$10k
more AC & elec -- $10-15k
decor/ paint/ office materials $2-4k
Insurance $2-3k

There's $20k + and you haven't bought a bed or lamp yet... Not to mention every day stuff like payroll, phone, internet, marketing materials...

And don't forget we're going into slow season, so don't count on the income for the next few months even covering/ exceeding those bills, you might still be dipping in to capital just to stay afloat til Dec...

And REALLY think about how hard it will be to recoup that. How many $8 tans will it take to get that $20k back??

FYI, I split the cost of my AC & elec upgrades with my landlord and he's letting me pay back my half over the lease period. See if yours might do something similar? (IFFFFF you decide to proceed)

[hiii98]

Signing the areement of sale -- $4500
huh?

New walls -- $5k-$10k
he will be paying for this expense

more AC & elec -- $10-15k
unneed for the first 6 months


decor/ paint/ office materials $2-4k
bull, way over priced.

Insurance $2-3k
quite possibly

[aimeekat]

How many times have you done this Suze? Oh, wait, as a matter of fact you just did it again, right? AND Brian O said you did good.

Hiii98, what price would you put on the "build out" that you clearly state that you'd be responsible for? Walls are absolutely part of buildout. Or do you mean that you're going to stick with the small rooms and not do any demolition? What about flooring that you admit needs to be replaced.

[brownsuze]

Originally Posted by hiii98

he responded to my offer by now saying I am responsible for the entire buildout... But accepted all my other terms.

Originally Posted by hiii98

New walls -- $5k-$10k
he will be paying for this expense

Which is it? You're responsible or he is?

Originally Posted by hiii98

more AC & elec -- $10-15k
unneed for the first 6 months

So you plan on putting in this in Dec/ Jan??? Regardless, its still an expense you will have to pay, makes no difference if its now or then...

Originally Posted by hiii98

Signing the areement of sale -- $4500
huh?

First month plus a security would be around $3k, dunno about where you are but some states landlords can escrow up to 3 mo. rent as security. (which would put you even higher than my $4500)

Originally Posted by hiii98

decor/ paint/ office materials $2-4k
bull, way over priced.

You don't think couches and chairs and art and paint, as well as things like printers and ink and paper and such could be $2k?? Well I suppose "to each his own."

Originally Posted by hiii98

Insurance $2-3k
quite possibly

Should be exactly in that range. I don't know anyone who pays less than $2k, and for the amount of units you have, could easily be $3k. This can also be dependant on how much your landlord requires you to have, and can go up if he requires to be on it, as well as his mortgage co., and if he has a managment co. etc.

Since he'll be paying your electric you don't have to worry they'll want a deposit. If so, that could easily be another $1-2k, so there's a savings...

You'll aslo need to think about things like towels, lotion stock (and other retail), laundry (on site? drag home?), uniforms, credit card machines, signs, brochures, websites, advertising, client cards (waivers), professional associations (Smart Tan, ITA, etc) & certifications, cleaning chemicals and materials -- don't assume they're there now, or that what is there will meet your standards.

[brownsuze]

O! Will you be operating this under your old LLC? If not, another $800ish to create a new one. And bank acct. -- the bank will want $1k just to open the acct.

[brownsuze]

O that should be AGREEMENT OF SALE. aka the lease/ assumption of business.

You'll want a lawyer to look that over very carefully. Another $800 for the lawyer... (I'm assuming there is no biz broker, that you have no representation in this other than yourself, right?)

[brownsuze]

Good point about the demo Aimee. So not only the $10k to build new walls, but maybe another $4-6k to demo the old walls! (labor, electrician, permits, dumpsters, inspections... they all add up so FAST!!!)

[brownsuze]

Flooring you can do cheap I bet, say $3 a SF installed... another $4500, if they don't change a fortune "extra" for moving the beds...

[brownsuze]

Who's got a calculator?? Where are we $$-wise?

[SandiGirl]

Who says there isn't chairs and stuff already? He's not building a new salon...just prettying up a dumpy one.

[brownsuze]

Most of the "prettying up" means new lobby decor, coat of paint, new towels and amenities, etc.

Why do exactly the same thing and expect anything different to happen? Why bother doing this at all if you're not going to go balls out?

[eyecandytanning]

If I could move for 20k I would do it in a hearbeat. I calculated out it would cost me about 50k to move...but that includes moving the salon. 20k seems low to redo an entire salon.

[brownsuze]

I think its smart to guesstimate that just getting and "prettying up" the place should be around $30k. Spend the other $20k of your budget as $12k capital expenses (covering bills you didn't expect) and $8 on 2-3 new beds/ booths. Wait til next summer to see what new stuff your budget can handle for year 2.

I bet you're thinking $12k on capital expenses is "bull way over priced." Trust me, better to have that in the bank than *wishing* you had it... trust me when I say you NEVER KNOW what might happen.

[rcknep3]

Ok, I took over an existing salon that needed updating and not a dump. decor/ paint/ office materials $2-4k is very realistic. I just put down about $800 for paint alone (I'm assuming you have all the tools/skills to paint yourself). Don use crap paint or you'll be doing it again. Ceiling paint, customer wall colors, trim, doors. 5 gallons is $100+ and doesn't cover as much as you think to make it look nice. I then spend $300 on new room tables/shelving. Spend another $200 to update lighting fixtures. Had to put up some cheap wall art to replace the cheap looking posters, $200. Signs, plants - $100. New Vacume (don't assume it's anygood as I did) - $200. Decent lobby display shelving - $200. New salon towels (I will bet you need to replace them all) - $100+. There is over $2000 right there. I still have to remove carpet and put down hardwood which I'll do myself. I'll have put in about $4000 to update, not redo, my salon. At that is with zero labor as I am doing this myself.

[Tanning Queen]

Stop giving him advice at this point. He obviously can do everything cheaper and better than what we say. He double talks so much I dont think he even knows what is the truth anymore...

[hiii98]

Originally Posted by aimeekat

How many times have you done this Suze? Oh, wait, as a matter of fact you just did it again, right? AND Brian O said you did good.

Hiii98, what price would you put on the "build out" that you clearly state that you'd be responsible for? Walls are absolutely part of buildout. Or do you mean that you're going to stick with the small rooms and not do any demolition? What about flooring that you admit needs to be replaced.

I'm not going to do the deal period if i now have to do the buildout. Thats why that expense is zero.

[hiii98]

Originally Posted by brownsuze

O! Will you be operating this under your old LLC? If not, another $800ish to create a new one. And bank acct. -- the bank will want $1k just to open the acct.

sorry you dont know what your talking about. An LLC costs 150 where i am located. I'll be operating under my own formed LLC. Also THE LANDLORD/OWNER IS PAYING THE BUILDOUT.. this includes AC and ELECTRIC and WALLS. Stop treating me like this is my expense that i'm too stupid to realize the costs for.

[hiii98]

Originally Posted by brownsuze

O that should be AGREEMENT OF SALE. aka the lease/ assumption of business.

You'll want a lawyer to look that over very carefully. Another $800 for the lawyer... (I'm assuming there is no biz broker, that you have no representation in this other than yourself, right?)

sorry no lawyer to pay since i wont be hiring one. This was written up by my real estate agent who deals in commercial deals all the time. Hes NOT a real estate lawyer but i'm more than comfortable with him handling this. So yet another expense that doesnt exist. Quit trying to scare me.