going to buy a distressed salon - TanToday - Helping Salon Owners, One At A Time, Since 2000!

hiii98 · 3rd May 2008, 01:30 PM

Hi guys i'm a newbie here, and i'm just about to buy a tanning salon, my first one ever. The realtor helping sell the salon is actually trying to talk me OUT of buying it, but there might be other motivations for his decsions. Anyhow the salon is in distress and has no one owner and has been mismanaged if managed at all. There are a total of 8 beds and the entire place looks great. The current owners representative only gave me a profit loss statment and list of active accounts. Also two previous owners went out of business owning this very shop. I have many years of business experience and i've looked at over 10 other salons in my state and this is by far the most potential and the cheapest. Could i go over the p&l statement with you guys and if you could give me a rough idea of what will happen moving forward from those numbers it would be key to my decision making process at this point.

danggirl · 3rd May 2008, 01:33 PM

Sure run it by. But it sounds already like you should just run as fast as you can.

hiii98 · 3rd May 2008, 02:08 PM

The Oasis · 3rd May 2008, 02:15 PM

HI - I am a newbie also. Opening my own salon soon. But, I am also an accountant. A profit/loss statement is ok - but you will definitely want to see their balance sheet. You notice that the profit/loss doesn't have any of their liabilities listed?!! They could have major outstanding loans, or other stuff laying in the weeds that they aren't showing you.

What is their asking price, what kind of equipment is included?

SandiGirl · 3rd May 2008, 02:23 PM

Why is the realtor saying to stay away from it?

What do you think their errors were and what will you do differently?

Tanning Queen · 3rd May 2008, 02:25 PM

Show me the tax returns for last 3-4 years. This sounds like a dud anwyay.

SandiGirl · 3rd May 2008, 02:25 PM

That's quite the cable and internet bill they have.

What was the gross for 2007?

SandiGirl · 3rd May 2008, 02:27 PM

Am I missing the rent?

Tanning Queen · 3rd May 2008, 02:29 PM

HOw is the internet posted twice?

Tanning Queen · 3rd May 2008, 02:30 PM

Where is the electric?

Tanning Queen · 3rd May 2008, 02:31 PM

What is the "expense account" for?

Tanning Queen · 3rd May 2008, 02:31 PM

No insurance?

SandiGirl · 3rd May 2008, 02:38 PM

Quote:

Originally Posted by Tanning Queen

HOw is the internet posted twice?

Good catch!

JustTans23 · 3rd May 2008, 02:46 PM

That was their gross profit with 8 beds during January to April? Make sure you get a full year of statements and not just 4 months. Also, that report is generated from Quickbooks. If you don't know how to use Quickbooks correctly when you enter information it can get messsed up very easily. My quickbooks report showed I grossed double what I really did and I thought I was doing everything right.

Anyway, unless I'm seeing things that P&L is only for 4 months. You want to see one for at least a full year and like oasis said. You need a balance sheet.

Brian Oshman · 3rd May 2008, 04:07 PM

Don't take the total shown and divide it by 4 and then multiply it by 12 because it won't be nowhere near that high. Jan.-Apr. is the busiest time and it is downhill from there. Bet it is more like 40K a year gross.

This place is a dog. Find out why. Don't pay anything for it. Take over the lease and assume all of the equipment if you want it but find out why it makes no money. See how (if any) advertising is done. Get tax returns and a full years profit and loss statement. Get electric bills. This is a good baromerter to see how much the beds are running. If they are only a few years old then that can be figured by total hours on the beds too.

hiii98 · 3rd May 2008, 06:15 PM

Quote:

Originally Posted by The Oasis

HI - I am a newbie also. Opening my own salon soon. But, I am also an accountant. A profit/loss statement is ok - but you will definitely want to see their balance sheet. You notice that the profit/loss doesn't have any of their liabilities listed?!! They could have major outstanding loans, or other stuff laying in the weeds that they aren't showing you.

What is their asking price, what kind of equipment is included?

they claim they have no outstanding commitments or loans.

They are asking 35,000 includes 8 beds 3 standup and a rent around 650 a month. Also i plan to work full time there.

hiii98 · 3rd May 2008, 06:17 PM

Quote:

Originally Posted by SandiGirl

Why is the realtor saying to stay away from it?

What do you think their errors were and what will you do differently?

the current errors are the landlord of the mini mall owns the business so they have little interest in the business itself and more interest in a paying long term tenant. He gave me several stories of maritial affairs ect with pervious ownerS and claims the problems were not financial...

hiii98 · 3rd May 2008, 06:18 PM

Quote:

Originally Posted by Tanning Queen

Show me the tax returns for last 3-4 years. This sounds like a dud anwyay.

hmm, i agree i really wish i could see them too, but they claim not to have any... as the previous owner has them and is no longer in the mix (now owned by the landlord of the mini mall)

hiii98 · 3rd May 2008, 06:19 PM

Quote:

Originally Posted by JustTans23

That was their gross profit with 8 beds during January to April? Make sure you get a full year of statements and not just 4 months. .

the business was taken over by the landlord in January and he claims to only have records from that time period moving forward...

JustTans23 · 3rd May 2008, 06:22 PM

something seems a little fishy about that. See if you can get the contact info for the previous owner or something.

3rd May 2008, 01:30 PM	#1 (permalink)
hiii98 All Star Join Date: May 2008 Location: At a salon near you. Posts: 180	going to buy a distressed salon Hi guys i'm a newbie here, and i'm just about to buy a tanning salon, my first one ever. The realtor helping sell the salon is actually trying to talk me OUT of buying it, but there might be other motivations for his decsions. Anyhow the salon is in distress and has no one owner and has been mismanaged if managed at all. There are a total of 8 beds and the entire place looks great. The current owners representative only gave me a profit loss statment and list of active accounts. Also two previous owners went out of business owning this very shop. I have many years of business experience and i've looked at over 10 other salons in my state and this is by far the most potential and the cheapest. Could i go over the p&l statement with you guys and if you could give me a rough idea of what will happen moving forward from those numbers it would be key to my decision making process at this point.

3rd May 2008, 01:33 PM	#2 (permalink)
danggirl Veteran Join Date: Oct 2006 Location: Maryland Posts: 370	Re: going to buy a distressed salon Sure run it by. But it sounds already like you should just run as fast as you can.

3rd May 2008, 02:08 PM	#3 (permalink)
hiii98 All Star Join Date: May 2008 Location: At a salon near you. Posts: 180	Re: going to buy a distressed salon

3rd May 2008, 02:15 PM	#4 (permalink)
The Oasis Rookie Join Date: Apr 2008 Location: WI Posts: 48	Re: going to buy a distressed salon HI - I am a newbie also. Opening my own salon soon. But, I am also an accountant. A profit/loss statement is ok - but you will definitely want to see their balance sheet. You notice that the profit/loss doesn't have any of their liabilities listed?!! They could have major outstanding loans, or other stuff laying in the weeds that they aren't showing you. What is their asking price, what kind of equipment is included?

3rd May 2008, 02:23 PM	#5 (permalink)
SandiGirl Hall of Famer Join Date: Jul 2006 Location: Canada Posts: 3,776	Re: going to buy a distressed salon Why is the realtor saying to stay away from it? What do you think their errors were and what will you do differently? __________________ ************************************************ *************** Grammar Tip of the Year - Apostrophes are for condensing and belonging...NOT pluralizing. SandiGirl ~ Changing tanning forums one apostrophe at a time.

3rd May 2008, 02:25 PM	#6 (permalink)
Tanning Queen Moderator Join Date: Nov 2004 Location: Six degrees left of nowhere Posts: 4,184	Re: going to buy a distressed salon Show me the tax returns for last 3-4 years. This sounds like a dud anwyay. __________________

3rd May 2008, 02:25 PM	#7 (permalink)
SandiGirl Hall of Famer Join Date: Jul 2006 Location: Canada Posts: 3,776	Re: going to buy a distressed salon That's quite the cable and internet bill they have. What was the gross for 2007? __________________ ************************************************ *************** Grammar Tip of the Year - Apostrophes are for condensing and belonging...NOT pluralizing. SandiGirl ~ Changing tanning forums one apostrophe at a time.

3rd May 2008, 02:27 PM	#8 (permalink)
SandiGirl Hall of Famer Join Date: Jul 2006 Location: Canada Posts: 3,776	Re: going to buy a distressed salon Am I missing the rent? __________________ ************************************************ *************** Grammar Tip of the Year - Apostrophes are for condensing and belonging...NOT pluralizing. SandiGirl ~ Changing tanning forums one apostrophe at a time.

3rd May 2008, 02:29 PM	#9 (permalink)
Tanning Queen Moderator Join Date: Nov 2004 Location: Six degrees left of nowhere Posts: 4,184	Re: going to buy a distressed salon HOw is the internet posted twice? __________________

3rd May 2008, 02:30 PM	#10 (permalink)
Tanning Queen Moderator Join Date: Nov 2004 Location: Six degrees left of nowhere Posts: 4,184	Re: going to buy a distressed salon Where is the electric? __________________

3rd May 2008, 02:31 PM	#11 (permalink)
Tanning Queen Moderator Join Date: Nov 2004 Location: Six degrees left of nowhere Posts: 4,184	Re: going to buy a distressed salon What is the "expense account" for? __________________

3rd May 2008, 02:31 PM	#12 (permalink)
Tanning Queen Moderator Join Date: Nov 2004 Location: Six degrees left of nowhere Posts: 4,184	Re: going to buy a distressed salon No insurance? __________________

3rd May 2008, 02:46 PM	#14 (permalink)
JustTans23 Hall of Famer Join Date: Jul 2007 Location: MA Posts: 2,392	Re: going to buy a distressed salon That was their gross profit with 8 beds during January to April? Make sure you get a full year of statements and not just 4 months. Also, that report is generated from Quickbooks. If you don't know how to use Quickbooks correctly when you enter information it can get messsed up very easily. My quickbooks report showed I grossed double what I really did and I thought I was doing everything right. Anyway, unless I'm seeing things that P&L is only for 4 months. You want to see one for at least a full year and like oasis said. You need a balance sheet. __________________ There are always two choices, two paths to take, one is easy, and it's only reward is that it's easy

3rd May 2008, 04:07 PM	#15 (permalink)
Brian Oshman Off The Chain Moderator Join Date: Nov 2004 Location: The Sun Doctor, Califon, NJ Posts: 5,928	Re: going to buy a distressed salon Don't take the total shown and divide it by 4 and then multiply it by 12 because it won't be nowhere near that high. Jan.-Apr. is the busiest time and it is downhill from there. Bet it is more like 40K a year gross. This place is a dog. Find out why. Don't pay anything for it. Take over the lease and assume all of the equipment if you want it but find out why it makes no money. See how (if any) advertising is done. Get tax returns and a full years profit and loss statement. Get electric bills. This is a good baromerter to see how much the beds are running. If they are only a few years old then that can be figured by total hours on the beds too. __________________ Three can keep a secret if two are dead.

3rd May 2008, 06:22 PM	#20 (permalink)
JustTans23 Hall of Famer Join Date: Jul 2007 Location: MA Posts: 2,392	Re: going to buy a distressed salon something seems a little fishy about that. See if you can get the contact info for the previous owner or something. __________________ There are always two choices, two paths to take, one is easy, and it's only reward is that it's easy

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