Advice: Buying a Tanning Salon

[NaughtyAlysha]

The owner of the place where I tan is wanting to sell... cheap. He says he's in financial trouble and wants to move back to Michigan immediately. He asked me tonight if I was interested in buying the place, but I don't know what to say. I asked for his books, to get an idea of what we're talking about, but his roundabout numbers were a gross of only $10,000 a month, and less in the slow months (summer). He only has one part-time employee, plus his partner and him (he's gay, not that it matters).

The building is leased ($800 a month), and the place has 2 beds and 2 stand-up booths, so it's not a big place at all. He says that in order to add beds, we would have to upgrade the electric to a phase 3 at a cost of a couple thousand bucks. The current electric bill is around $300 a month, he says. The place is really bland looking now, and could really use a woman's touch to make it look better. It's in a strip mall, in a highly residential area, so there's plenty of potential customers nearby. He doesn't advertise now, and you can barely even read his sign from the road (it's yellow lettering on a white background).

So, I figured I would ask on GFY, the place everyone comes for medical, relationship, and even business advice... Anyone have any experience with a tanning salon? Should I stay away, or pursue? I'm heading out to dinner now, but I'll come back in a bit and see what the GFY experts think. Thanks!

[xclusive]

Sounds like you could make a killing in it actually...

[tungsten]

I dont have experience with such businesses but it seems lucrative to me

[Sly]

It sounds like its turning some profit and could also be an undervalued business. Might be worth looking into. Sounds like a good opportunity to get into some brick and mortar.

[MrIzzz]

if juicy lived nearby you would make an easy 1k a week just from his sessions

[shuki]

I have experience in the Tanning industry and recently sold my position in 2 salons. I am also looking to build a few from scratch on my own. Hit me up if you have any questions. I can most likely guide you.

[MBS Auto]

Electrical and Maintenance are the 2 Keys in the Tanning business.... The electrical bills are HUGE, and the Bed/ bed maintenance is HIGH

It is a great business otherwise since labor cost is low !!! This is a big plus you can divert most of the operations money into marketing and build membership base

good luck

[RyanL]

Sounds like you could make some money with it..
A little tlc, a couple advertising dollars and you're good to go

When you say he's selling the place for cheap, how cheap is cheap?

[jt420]

seems like you already have a plan to turn it around and make a nice profit. good luck with your ventures.

[emthree]

How much is he looking for?
Do you have time for such a thing with your schedual?

[yuvalus]

I bought into a business once. The claimed he had to quit for medical reasons. I looked at his books and they seemed fine. The problem was the accounting was faked and never done.

MAKE SURE YOU GET THE BOOKS AND TAKE THEM TO AN ACCOUNTANT FIRST!!!!!!

I nearly went bankrupt and got sued because of the mistake I made and had little to no legal course of action.

[SuckOnThis]

We looked into it a few years ago and my corporate attorney advised me against it. Too much liability risk, just about every dermatologist will tell you tanning beds cause skin cancer.

[shuki]

With the limited info we have we can get a small view of the picture. If you can ask the owner these questions:

1. Is the lease net or gross?
2. How many years left?
3. Can you extend the lease? Is there an option(s) in place?
4. Try to speak to the strip center landlord too. Make sure the lease is still in good standing.
5. What is there currently in terms of power? Single Phase? 3 phase? Total amps?
6. How many tons of AC are there?
7. Do they use a computer system? If so what software do they run? Can you look at the database etc?
8. What kind of beds and booths?
9. How many hrs of tanning time on each unit.
10. any repairs made to any of the beds? List problems?
11. What inventory is there?
12. What is the gross per month for the last 3 years? 1-12months
13. How many total people in their database?
14. How many active people? Active meaning have tanned in the last 30-90 days.
15. How many daily tanners do they get each month? 1-12
16. What is their price structure like? (we want to see if we can raise it)
17. Hours of operation?
18. Tans broken down by hour. (we want to see if we are open durin important hours etc)

After we collect this data we can see if it makes economic sense.

Also try to get an idea of the $$$ he wants for the place. See if he will take back paper.

Hell if it looks good I may want in with you

[Semi-Retired-Dave]

Originally Posted by shuki

With the limited info we have we can get a small view of the picture. If you can ask the owner these questions:

1. Is the lease net or gross?
2. How many years left?
3. Can you extend the lease? Is there an option(s) in place?
4. Try to speak to the strip center landlord too. Make sure the lease is still in good standing.
5. What is there currently in terms of power? Single Phase? 3 phase? Total amps?
6. How many tons of AC are there?
7. Do they use a computer system? If so what software do they run? Can you look at the database etc?
8. What kind of beds and booths?
9. How many hrs of tanning time on each unit.
10. any repairs made to any of the beds? List problems?
11. What inventory is there?
12. What is the gross per month for the last 3 years? 1-12months
13. How many total people in their database?
14. How many active people? Active meaning have tanned in the last 30-90 days.
15. How many daily tanners do they get each month? 1-12
16. What is their price structure like? (we want to see if we can raise it)
17. Hours of operation?
18. Tans broken down by hour. (we want to see if we are open durin important hours etc)

After we collect this data we can see if it makes economic sense.

Also try to get an idea of the $$$ he wants for the place. See if he will take back paper.

Hell if it looks good I may want in with you

Damn, great reply.

[Frank The Tank]

its funny that you post this as a friend of mine in NYC only three months ago had a similar experience and is now making triple what the previous owner had by making a shrewd investment and updating the site ... go for it

[NaughtyAlysha]

Just adding a few things before I head out... He says his total overhead is about $2500 a month, including insurance, electric, rent, etc., but that does not include what he pays the part time girl.

However, $10,000 a month is what he makes just in the busy season (now). During the summer, he barely makes $3000 to maybe $5000 a month. Subtract the bills, and that's only a $500 profit. I wasn't thinking of me running the place myself, but maybe giving it to my daughter to run... or maybe my brother. But, I'd like to make a few bucks as well.

He wants $10,000 for everything. That includes the 4 units, the timers, the cash register, his computer system, and all of the lotions and extras.

I just don't feel like blowing $10,000 on a waste.

[Sly]

He wants $10k? How much is the equipment valued at? I don't know anything about tanning but it seems like a good deal. What he makes now doesn't mean thats what you'll make. Girly the place up, make some improvements, do some advertising, make it a nice warm atmosphere, etc.

[shuki]

Originally Posted by CyberAge-Dave

Damn, great reply.

Thank's Dave

It's funny but a lot of people have no idea how lucrative the Tanning industry can be.

I recently walked away from a lease in Boston. We were negotiating for 8 months and finally we decided to say fuck you to the landlord. The project was going to be close to 1 million and he was asking for stuff that was ludacris. The location was great but there will be others.

I am not saying that it is easy money but once you have a formula down it is an easy one to grow with. One of the benefits is that it doesn't require skilled labor and that is a plus.

[shuki]

Originally Posted by NaughtyAlysha

Just adding a few things before I head out... He says his total overhead is about $2500 a month, including insurance, electric, rent, etc., but that does not include what he pays the part time girl.

However, $10,000 a month is what he makes just in the busy season (now). During the summer, he barely makes $3000 to maybe $5000 a month. Subtract the bills, and that's only a $500 profit. I wasn't thinking of me running the place myself, but maybe giving it to my daughter to run... or maybe my brother. But, I'd like to make a few bucks as well.

He wants $10,000 for everything. That includes the 4 units, the timers, the cash register, his computer system, and all of the lotions and extras.

I just don't feel like blowing $10,000 on a waste.

Alysha,

Run down my list of questions and see if you can get an answer to most if not all from him. If he is tight for cash he won't have a problem with any of the questions.

The $10,000 asking price isn't the aspect to be worried about as it sounds like a reasonable amount. What you need to find out is if you can cover expenses during the year and still make it out with profit.

[FelixFlow]

not to mention...tanning salons are great places to recruit potential new talent!!

[shuki]

Originally Posted by FelixFlow

not to mention...tanning salons are great places to recruit potential new talent!!

Very good point

[ChrisExtreme]

I just got back from tanning, need to look sexy for Vegas

[Hey You . . . I Know You!]

It sounds very exciting, but be careful! That guy could be in serious financial trouble for any number of reasons, so see if you can determine why he was NOT able to succeed with this particular business (and make sure it is something(s) that you can correct).

Do you have a name for the business? Should we start suggesting names!

[lunchbox]

the salon i go to had had 3 new owners in a year...i only go before big parties or holidays and theres always a new staff..

[slapass]

Wow good stuff here. I was just looking at a similar business. A few points I came up with:

Total man hours needed to run it?
Cash business? Employee theft?
Do you need a merchant account?
Get his tax returns. Every expense will be on there and if he deducted it, you would have it too.

Something cool. Does he have an exsiting and old client database? Does he mail them?

Good luck!

[cool1g]

a good friend of mine has opened up several salons here in LA in the past 2 years and is doing VERY well. though we LA peeps tan alot LOL...

[OzMan]

Originally Posted by SuckOnThis

We looked into it a few years ago and my corporate attorney advised me against it. Too much liability risk, just about every dermatologist will tell you tanning beds cause skin cancer.

Agreed.

Once it becomes public knowledge that UVA and UVB BOTH cause skin cancer tanning salons wil be avoided like the plague.

[SuckOnThis]

Originally Posted by OzMan

Agreed.

Once it becomes public knowledge that UVA and UVB BOTH cause skin cancer tanning salons wil be avoided like the plague.

And all it takes is for one customer to develop skin cancer, whether or not it was caused by tanning. Fighting a multi million dollar lawsuit doesnt sound like fun to me.

[shuki]

It is obviously a concern but look at what tobacco does to you.

It's not as if it new news that UVA/UVB can cause cancer.

The industry is getting bigger every year but your correct in realizing that it is something to be concerned with.

[Babagirls]

my advice is to have the latest tanning beds installed. other than that, i have no clue lol

[thewebgarage]

I own a tanning salon shot me an email. I know a lot about it. I'll be happy to talk to you in detail about it. thewebgarage at aol

[thewebgarage]

one thing right off the bat is. $300 month electric bill in cali is about 25 tans per day. Slow season your drop off is more than 50%.

An electric upgrade is a major challenge. Its not simple and when yous tart dealing with contractors and the city its not quick. I would avoid upgrading the electric. and not a few thousand dollars. best case would be 10,000.

I have noticed in tanning like adult there is a lot of advice. but unlike adult a lot of bad advice.
icq - 163884884

[hyper]

Originally Posted by OzMan

Agreed.

Once it becomes public knowledge that UVA and UVB BOTH cause skin cancer tanning salons wil be avoided like the plague.

thats why Allah invented release forms

[UniversalPass Pete]

What is the bottom line, How much is he asking? and what's the NET profit?

I am by no means an expert, but if you can pay under 2XAnual net, it is a good investment.

[Alex]

10k a month gross.

With about 3k to cover electrical, employment, and rental fees.

Thats about 7k a month.

Depends on how much he wants for it.

[SuckOnThis]

Originally Posted by hyper

thats why Allah invented release forms

Release forms are bullshit.

[r3ap3r]

If it looks like you are going to turn a profit in the long run then I believe it is worth looking into.

[sean416]

Originally Posted by UniversalPass Pete

What is the bottom line, How much is he asking? and what's the NET profit?

did you read the thread? all of those questions were answered.

[misty_dayz]

Based on the small amount of information it certainly seems something worth looking in to. One of my main questions would be, can you expand at all, is there room? With room for only 4 people max at a time it does limit you during the really busy hours.
If there is room for expansion you may want to consider carrying things like bathing suits, wraps etc. A friend of mine starting carrying bathing suits, from the very expensive to the economical and she does extremely well with them. Many of her customers come in to tan prior to a vacation and most can't help picking up a new bathing suit or two for their trips.

[chase]

Originally Posted by OzMan

Agreed.

Once it becomes public knowledge that UVA and UVB BOTH cause skin cancer tanning salons wil be avoided like the plague.

Maybe not...I mean, the sun causes skin cancer, but people still lie on the beach all summer, lol.
Sounds like it would be something to think about, and if you do it, I get free tans, right? lol

[crockett]

just think you could add in some Tanning bed spy cams and really rake in ther bucks

[detoxed]

Originally Posted by SuckOnThis

And all it takes is for one customer to develop skin cancer, whether or not it was caused by tanning. Fighting a multi million dollar lawsuit doesnt sound like fun to me.

Bankrupt the business? by the time that happens you'll have made some good profit

[NaughtyAlysha]

Originally Posted by shuki

With the limited info we have we can get a small view of the picture. If you can ask the owner these questions:

1. Is the lease net or gross?
2. How many years left?
3. Can you extend the lease? Is there an option(s) in place?
4. Try to speak to the strip center landlord too. Make sure the lease is still in good standing.
5. What is there currently in terms of power? Single Phase? 3 phase? Total amps?
6. How many tons of AC are there?
7. Do they use a computer system? If so what software do they run? Can you look at the database etc?
8. What kind of beds and booths?
9. How many hrs of tanning time on each unit.
10. any repairs made to any of the beds? List problems?
11. What inventory is there?
12. What is the gross per month for the last 3 years? 1-12months
13. How many total people in their database?
14. How many active people? Active meaning have tanned in the last 30-90 days.
15. How many daily tanners do they get each month? 1-12
16. What is their price structure like? (we want to see if we can raise it)
17. Hours of operation?
18. Tans broken down by hour. (we want to see if we are open durin important hours etc)

After we collect this data we can see if it makes economic sense.

Also try to get an idea of the $$$ he wants for the place. See if he will take back paper.

Hell if it looks good I may want in with you

The lease is for a space in a strip mall... There's a nail salon, a Curve's women's fitness center, a barber shop, a hair salon, a pizza place, an ice cream shop, and another 6 or 7 other stores in this center. His rent is currently $800 a month, and the lease was just renewed in November for another year. Part of the lease deal is that no other place can have a tanning bed, including the women's fitness center. They have exclusive rights to tanning, so long as they stay in the building.

He has single phase power, but says we will need to upgrade if we want to add beds. The place has 4 units now (2 beds, 2 booths), but could probably be made to hold 6 or 7. The place looks drab, though, and I know I could really improve on that. There is no theme, no color scheme, no anything... just walls... purple walls.

He is open from 9AM - 9PM, and he has a few tanning packages:
1 month unlimited for $35
10 visits for $40
2 months unlimited for $50
There may be others, but I can't remember offhand. He also sells single visits for like $6 or $7. Of course, he sells the lotions and accessories, which he said are all marked up 100%, norm for the tanning industry.

The stand up booths have 300 and 500 hours on them. One bed has 500 hours, the other has 1000. He has a computer system, but the beds aren't tied into it. It's just for his own purposes, but it comes with the sale. He has timers for the beds, up by the cash register. All of that is part of the sale as well. He does not have a credit card machine, and does not take credit cards, something that I would definitely change.

That's all I know for sure now... Thanks for your help.

[Screaming]

if you have the money to get it started i would say go for it, you seem to know how to make it make money

[chase]

Originally Posted by NaughtyAlysha

He does not have a credit card machine, and does not take credit cards, something that I would definitely change.

Good Lord, woman-that alone would translate to quite an increase in proifit!!!

[NaughtyAlysha]

Originally Posted by Screaming

if you have the money to get it started i would say go for it, you seem to know how to make it make money

Actually, I have no idea... lol. I know that I would make some changes, but rather or not those changes would help or not, I don't know. I have the money, but don't want to piss it away for something that isn't worth it. Hell, I just spent more than $10,000 on my boobs and some lipo... and THAT was worth it!

[NaughtyAlysha]

Originally Posted by chase

Sounds like it would be something to think about, and if you do it, I get free tans, right? lol

You betcha!

[NaughtyAlysha]

Originally Posted by chase

Good Lord, woman-that alone would translate to quite an increase in proifit!!!

That's what I would think... maybe even a recurring billing plan, like a website.

[Trixie]

I have always heard tanning salons are a fantastic investment. For 10k and with so many obvious quick improvements you can make to increase revenue, it sounds like you will have a sweet cash cow if you go for it!!

[shuki]

Originally Posted by NaughtyAlysha

That's what I would think... maybe even a recurring billing plan, like a website.

This is exactly how large scale salon operators set up their business. It is called an EFT. Gyms do it too.