salon is worth ?

[TangerineTan]

yes I have thought about that , they do not advertise in the phone book , they do no advertising at all . Thats what I dont understand ? maybe lazy , maybe just happy with what they get ? they have been in business for 6 years .

[SandiGirl]

FYI ~ only 3% of my customers come from Yellow Pages.

[SandiGirl]

They may not have an ad in the Yellow Pages, but they're listed in it if they have a phone...they do have that don't they?

[Tanning Queen]

People want to know the age and style of beds for a few reasons. If they are good beds, then it would be worth more. If they were new beds, they would be worth more. If they were HP beds, they would be worth ALOT more. BUt they arent. They are cheap ETS beds that you think are the bestest ever.

I cant tell you if the client base is worth anything for the simple fact that they dont have one! IF they gross $66k, they dont have a client base that is worth a dime.

But lets get beyond the current line up and issues at hand. Is there really room for growth? YOu siad room for one more bed. But is there enough electric to run one? Is there enough AC to keep it cool? WHat are the lease terms on the salon?

[TangerineTan]

yes there is enough electric , as I am an electricion by trade , there is enough room for one big bed or maybe two stand ups ? there is a 400 amp service 3 phase and 100 amp single . also what makes ets beds so bad ? is it just personal use of them , or do customers complain ?

[TangerineTan]

the leae terms are 3 years more , and yes I would be intrested in moving it , but it also is on the most traveled main road in our town , of over 100thousand people .

[Tanning Queen]

I have never liked ETS. Every idiot that thinks tanning is easy and wants to open a salon starts with them cuz they got a postcard in the mail saying it only costs $38 a month to own a bed! There are MANY companies out there that are better and will tan better, more comfortable, etc. If your competition has ETS, then why would you want the same? Ask Brian about how they are to repair. HE will tell you they are boat anchors.

Since you mentioned some demographics, how bout some real ones? What is the income for 5, 10, 15 mi radius? How many white? How many women? How many in the age bracket of 24-35?

WHat about other locations on that street? Can you expand into another spot next door maybe?

[TangerineTan]

actually they place right next door is avalible its about another 1500 sqfeet , I actually had the guy on here do the demographs average income is 76k a year average age is 34 and white population is at 84k and white pop is a 85 percent . 3386 in the age bracket of 24 to 35 , we also have one of the biggest fitness centers 2 miles down the road and planed on advertising with them . there is a fitness place and a upscale hair salon in our same building .

[Tanning Queen]

OK, I have another question. Is this the same salon you were thinking about in Feb?

[TangerineTan]

nope that one was a dump

[Tanning Queen]

ok, so it seems you are friends with every salon owner in Kenosha! LOL!

[TangerineTan]

ya some what

[BIG AL]

Tangerine, now that you have had these ladies whacking you across the ears with a newspaper, let me give you my point of view. Ets is usually the bottom of the barrel as far as tanning beds go. They sell alot of beds to new salon owners because they have a very good sales force and new salon owners don't know very much about beds.

So if you want my best advice... listen to the ladies.

[joetann]

Stop the insanity. If the only way you value a business is by what the net or gross is you really don't know much about business at all! The Net or Gross valuation is just a measure of the businesses current state of management or mismanagement. There are a lot of good businesses out there that can be had cheap based on Net or Gross value. The true value in the business is what the potential is in that business or industry if you were to fix the mismanagement.

So, what the business is worth on the books and it's potential value are in most cases two completely different things. Warren Buffet buys good companies when they are worth nothing!

Tangerine .... no offence ..... you sound like a knuckle-head. A knuckle-head for not knowing shit about what you are getting in to and a knuckle-head for listening to other knuckle-heads. That dog of a salon that you are looking at is only of some value if it does a minimum of 15,000 visits per year. If this is the case, it is making about $4 per visit. That sucks! Any 1/2 brain can turn that $4 in to $8..... Any 3/4 brain can turn that in to $12 ..... and any one with a whole brain can turn it in to $16+. Do the math 15,000 visits multiplied by???? that gives you the potential! I use 15,000 as the minimum amount that any one should consider when looking at doing this business. For me personally, I would never consider looking at one of these unless it did a minimum of 30,000 visits.

Having said all that .... how do you turn $4 in to $16? Sorry, that show is only available on Pay-Per View and not on this network!

You should probably just stick to your regular job and leave the tanning to the professionals that have made tanning what it is today!

Back to "How many Tangerines does it take to make lemonade?"101

[Tanning Queen]

So we are knuckle-heads for telling him that he shouldnt pay more than $10k for the salon? SOrry, but that IS the value of the salon CURRENTLY. Now sure, if he is smart and knows what to do and has some money to market and upgrade and things like that, he should do well. But the potential of the salon is not based on its current state. If it was, it wouldnt be for sale and wouldnt be grossing $60k. I wouldnt pay more than $10k for this salon. Doesnt mean I couldnt turn it into a profitable one.

[BIG AL]

Joetan, Warren Buffet may do just that, but he pays what they are worth now, not what they could be worth in the future. That's kind of how he made his money.
30,000 visits in a six bed salon? You haven't been on Brian's pipe have you?

[TangerineTan]

I here you all , I will find out tomarrow , and be sending out pictures and so forth on how we are doing .it also brings around 13500 a year , with no advertising ,

[sunsally]

Originally Posted by TangerineTan

well at 4 beds new times 7000 base and one new at 13000 and one stand up new at 9000 , to me that is That is around 45 to 50k new , yes I understand you all dont think they are worth much , but hey at half that they are worth 25k , and yes I understand they are truelly only worth what some one will give ya , but hey the bank doesnt mind that , they are sunstar beds .

Couple of things:

1. Check the "reality" of their net. If it grosses 61K - take out 25K for rent (you said 2100/mo). This gets you to 36K.

Payroll - at $7/hour, for 70 hrs/week, including taxes, etc -- is about 30K. So now you are at $6K.

Electric is more than that. Also have phone, credit card fees, bank fees, licenses (if any), cost of lotion, cost to re-lamp, advertising,....

So -- bottom line - it is NOT making ANY money currently - it is probably running at a loss of $20K/year.

The way it LOOKS LIKE it is making money is they work the hours themselves - and don't pay themselves. So they show only 8K on the books - instead of the 30K that is realistic. The fact is - to view this as an INVESTMENT - even if you "choose" to work the hours yourself, you have to factor in a "cost". You aren't investing in an "opportunity" to now work 70 hrs/week for free just so you can say you broke even!


SO - from a "profitability of the business" valuation - it is worth $0.


2. From an "asset purchase" evalution, as you note, the equipment new is about 50K and this equipment could easily get $25K on the used market now. So from that standpoint, just paying for the value of the equipment, the lotions, front desk as well as the "value" of the buildout vs. doing yourself from scratch (even though you don't 'own' the buildout) -- you could definitely justify a selling price of $25-35K.


3. From an "opportunity" standpoint -- if you contrast this with building from scratch (assuming you would consider that), you have at least SOME "reputation", consumer awareness, data base etc. Which has a "value" -- even if hard to determine exactly what - compared to starting at ground zero. How much is that "worth"?? Well, basically it all comes down to how much MORE do you think it can make?! Because it has to start making enough to cover ALL the expenses (including payroll, even if it is just to pay yourself $7/hour) AND pay back what you give them to buy it in the first place!


To "break even" - it probably needs to be grossing more like $85K/year. To pay you back what you would pay to buy it - it should be making more like $100K/year.


If you think it can make $100K/yr rather than the current $60K - it could be a good investment. If not - walk away.

[TangerineTan]

Thanks That is what I was looking for sunsally , you speak it how it should be , not rude just straight to the point .

[rcknep3]

You'll get alot of good advice here, some you may like and some not so much but it's all worth thinking about. I just purchased a salon and it was listed at $75k (before I came across it and the seller did not know I saw the old list price). When I came into it, he had it for $50k. Looking at the numbers and advice from everyone I figured it to be valued at 30-35K. I didn't think they would drop again but I said thanks for the info but I was going to look for something in the 30-35k range. They said ok, 35k and they would finance 1/2 over 2 years with no interest and wait to start making payments for 6 months to avoid the slow season. You never know what you can get out of a desperate seller just make sure the business is worth it. Mine had gross sales of about $65k and netted almost $20k but was run poorly with alot of potential. Use the good advice here and just some judgement of your own just don't get emotionaly involved.