going to buy a distressed salon

[SandiGirl]

Financial Summary: Salon opened March 1, 2002

2002 Profit & Loss 2004 Profit & Loss

Income $40,538.88 Income $79,552.77

Expenses $55,654.41 Expenses $62,638.30



2003 Profit & Loss 2005 Profit & Loss

Income $63,064.61 Income $80,087.77

Expenses $69,598.64 Expenses $74,069.21



Payroll is $36,000 a year and is included in the expenses.

Did that cut and paste weird or do they seem to go in the hole every other year?

[nemisis]

so including the salon ya looking at, 6 salons in entire city, and population of 60,000. it is over saturated, unless the other salons are outside ya 5 mile radius. How many miles does this city span?

go to the salon ya looking to buy, drive from it to each competitor, see how many miles from the salon to each other. each salon within 5 miles of the salon ya buying is competing with ya.

[nemisis]

Did that cut and paste weird or do they seem to go in the hole every other year?

first 2 years they did.

[SandiGirl]

Originally Posted by nemisis

so including the salon ya looking at, 6 salons in entire city, and population of 60,000. it is over saturated, unless the other salons are outside ya 5 mile radius. How many miles does this city span?

go to the salon ya looking to buy, drive from it to each competitor, see how many miles from the salon to each other. each salon within 5 miles of the salon ya buying is competing with ya.

Or use mapquest.

[SandiGirl]

Originally Posted by nemisis

first 2 years they did.

Ahhh yes, it's tricky.

[hiii98]

there is only 1 salon within the 5 mile radius and its really small and old. This is far more impressive in my opinion...well it should be anyhow

[EliteMike]

Okay, first nice detailed list, although I don't think anyone needed to see such a detailed list. Inventory is only worth the cost.

What is their percentage of product sales to tanning?

75-80 is WAY too hot you need to be closer to 65-70 in the salon. go in there and turn it down, see where the temp hovers at. I don't think the landlord is being honest with you on that one. Find out what the size that unit, don't just take his word. This is very important if you are serious about making a nice salon. MANY clients don't like to be dying of heat in the beds.

how old are the beds? After further inspection are there any physical damages on them?

Heck, my electric bill is more expensive than your rent that pay's all utilities. I wouldn't sign a 10 year lease there, but if you can do a 2 or 3 year lease, what do you have to lose. Just don't dump a lot of money into it.

[hiii98]

i'm not sure how old the beds are and they have a updated system for turning the beds on and off at a centralized point. Also using Tan Tracks software to run the business. The inventory i displayed does not reflect these new upgrades.

[SandiGirl]

My house is set to 72 and it's warm when I walk in. It needs to be able to cool that down if need be. WHO the hell has the heat set to 80, other than reptiles!?!?! But at least he says it's expandable.

[SandiGirl]

Originally Posted by hiii98

i'm not sure how old the beds are and they have a updated system for turning the beds on and off at a centralized point. Also using Tan Tracks software to run the business. The inventory i displayed does not reflect these new upgrades.

Those 6 timers should be linked to a manager which connects to the computer and controlled by Tantrack. It can run separately but then chickypoos can put their friends in with no record.

[SandiGirl]

Originally Posted by hiii98

there is only 1 salon within the 5 mile radius and its really small and old. This is far more impressive in my opinion...well it should be anyhow

But why aren't people tanning there? People don't care about an absentee owner. Why isn't it busier if there's only one other place? You need to find out how many people they're tanning a day....especially this time of year when it's peak season.

[hiii98]

He mentioned something about having it program so chickypoos (lol haha) can no longer do that...which i could bet the farm on is going on rampantly right now.

Any conclusions on this new updated information? I need to talk to my relator tomorrow about writing up a purchase agreement and lease. Or turning tail and running!

[hiii98]

But why aren't people tanning there? People don't care about an absentee owner. Why isn't it busier if there's only one other place? You need to find out how many people they're tanning a day....

The one report i printed out from tantracks showed they did 187.00 in sales for the day, had 522 "active" (whatever that means...) accounts. And the place by no means appeared dead to me, pretty lively actually.

[EliteMike]

well I've been disappointed when my salon doesn't get close to 1 grand for the day. Bodies don't aways mean profit

[SandiGirl]

Originally Posted by hiii98

The one report i printed out from tantracks showed they did 187.00 in sales for the day, had 522 "active" (whatever that means...) accounts. And the place by no means appeared dead to me, pretty lively actually.

You can run a sales report for the last 6 months, a year or whatever. You can run how many tanners tanned....not are active....reports are fun.

[hiii98]

8 Beds total = $40,000 in beds (used)
(3) 10 minutes lay downs (Dr. Kern Beds)
(3) 20 minute Lay downs (Dr. Kern Beds)
(2) stand-ups (Sun Dome Speed Systems XL48


that was written up 2 years ago. What do you believe these beds are currently worth? Part of me wants to tell him to keep the beds and i'll just sign a lease and buy all new.

[SandiGirl]

Brian or Anne can tell you what they're worth. Keep them and slowly upgrade once you get in there and see if it's worth it.

[nemisis]

perhaps the chicky poo's are pocketing some money, ya can bet they are if the owner is not around.

[sunsally]

Originally Posted by hiii98

8 Beds total = $40,000 in beds (used)
(3) 10 minutes lay downs (Dr. Kern Beds)
(3) 20 minute Lay downs (Dr. Kern Beds)
(2) stand-ups (Sun Dome Speed Systems XL48


that was written up 2 years ago. What do you believe these beds are currently worth? Part of me wants to tell him to keep the beds and i'll just sign a lease and buy all new.

Depends what you are paying for them.

Personally, I would never buy a Dr. Kern bed. Several of the models run particularly hot (e.g. so hot tanners get off early because it is too warm to continue to lay in the bed) so if you have those not a combination with a salon that is 80 degrees to start.

Not sure what a "20 min" vs "10 min" bed is necessarily, but lets assume they are all base beds. You might get $1K each to sell them and you could replace them with GOOD used for $2-3K each. But you wouldn't want to do just base beds, you would want upgrades too. So a CHEAP retrofit of this salon would be to bring in 2 L1 bed for maybe 5K, maybe 1 laydown L2 to go with the 2 Sundomes for maybe 6K, and 2 L3 for maybe 22K total. So 33K investment (plus delivery & install), your quick paint job, new signage and name, maybe move some walls, perhaps an airbrush system or used spray booth..........you invested $45-50K.

Plus what you pay them.

Or - you keep the equipment, and hope somehow you can do double the business of the same equipment that has always been there (which is unlikely....)

$50K/yr in payroll and rent. Other expenses (insurance, advertising, phone, credit card fees, ...) another $10-25K/year.

So call it $75K/yr in expenses. CAN it make enough money to pay you back your 45-50K investment, plus what you pay the landlord ($25K?) AND make more than that so that it actually is a profitable INVESTMENT? How much? How fast?

If you can gross $100K (a 20-30% improvement), then you'll pay back your investment by about the end of year 3 and THEN start making something from it.

If you can gross $125K (remember - I think it is on pace to do $60K this year, so this would be DOUBLE) - you might be seeing profit by Feb 2010 or so.


As for the A/C - if you don't have at least 7 tons, with the beds I'm proposing, you don't have enough. More would be better, but less will never cut it.

[Tanning Queen]

DOesnt cost anything to get a detailed report on demographics. Call Steve Underhill and ask him for help. He wouldnt charge you to ge tbetter demographics. SMU Consulting. He has a banner on here.

Interesting that now the rent went from $650 to $1200/month. And a 10 year lease?????? Do you have to personally guarantee that? If so, you are stuck paying that even if you close. Some landlords dont allow you off the lease even if you sell the space to soemone else. They just add their name so you BOTH are liable. NOT good.

7 tons of air would be only for the beds. You still need another ton or so to cool the reception and hallways better. If it is 80 in the salon, it is 100+ in the beds while you tan. If you are regulated, you wouldnt pass. If you arent, soon enough your state will be. Either way, it is bad for the clients and the equipment.

6 beds is really tough to make alot of money with. Too many stand ups in my mind. I would say add another bed instead and have 1 booth.

SO now they are asking $75k?????????