Thinking of opening up a tanning salon, any thoughts

Hey,

Came across a friend of a friends who is selling his tanning salon. Says when he bought the company 3 years ago(10 year old company) it was on the verge of bankruptcy. Some major changes included: Mega-renovations, better tanning packages, and a much friendlier customer-oriented staff. Reason for selling is, he wants to test different waters, and doesn't have time to keep an eye on his salon. He says he has papers to prove it has been doing quite well, and even admits to down times during the summer months. Also to mention, he has another location which he just opened up, and eventually wants to sell, but says, due to the fact that there is not much proof of how well the store is doing, it would be very difficult to find a serious buyer.

What do you guys think about running a tanning salon business?

I have really been thinking about it lately. My take is, it is a 10 year-old company - I take it over, then next year buy the other store, and depending on how well I can run the business, open a few more locations until it is GTA renowned. One day, I may be able to franchise it out.

On the flip side, I see the market being far too saturated with tanning salons, and with the media blaming skin cancer on fake tanning, the industry has taken a plunge over the years. Then again, I have heard the argument where tanning is less harmful than the actual sun UV rays.

Any advice would be appreciated.

Were you interested in running a business prior to this opportunity landing on your lap? If so, no worries. If not, think about your motivation to do this.

Soliciting advise like on RFD is a good beginning.

Have you done any research?

Is it a cyclical business? Definitely seasonal - is the cash flow in season enough to offset the fixed expenses in the offseason? How many tanning salons are there in your proposed market area? How many are 10+, 10, 5 and 1 years old? What appear to be the keys to success in this business?

Who goes to tanning salons (age, sex, ethnicity, income level...)

How often do they go? Is it a repeat business type of activity or do people who are about to go on a vacation get a "starter tan"? What is the tanning behaviour?

What are the needs/wants of a tanning customer? Is it quick in/out access whenever they want to go? Clean tanning beds? Safe UV rays that don't cause skin cancer? Latest techology? Ancillary services like spas, massages, manicures, hair removal...?

Market saturation - if this is true, then what do you think you can do that would be unique relative to the customer's needs/wants.

10 year old company - existing base of customers? or after 10 years are those customers too old to want to use the services - what is the churn or turnover of customers? Could it be on the brink of another bankruptcy?

How stable is the staff? Now that summer is coming, will there be turnover and a lot of work recruiting the right people for October?

How much influence do you think the media has and will have in future regarding the link between tanning and skin cancer? Will you be able to counter that or use the media to help grow this business? If salon tanning is less harmful than actual suntanning, can you market this successfully? Is there an industry association that can pool marketing budgets efficiently?

One of the conditions you must impose is that you/your accountant review the books prior to agreeing to the purchase. Probably sign a non-compete and confidentiality agreement and then dig in to see if everything is kosher.

You will have to spend a lot of time planning - this will not guarantee success but will minimize the chance of failure!

Originally Posted by Canucklehead

Were you interested in running a business prior to this opportunity landing on your lap? If so, no worries. If not, think about your motivation to do this.

Soliciting advise like on RFD is a good beginning.

Have you done any research?

Is it a cyclical business? Definitely seasonal - is the cash flow in season enough to offset the fixed expenses in the offseason? How many tanning salons are there in your proposed market area? How many are 10+, 10, 5 and 1 years old? What appear to be the keys to success in this business?

Who goes to tanning salons (age, sex, ethnicity, income level...)

How often do they go? Is it a repeat business type of activity or do people who are about to go on a vacation get a "starter tan"? What is the tanning behaviour?

What are the needs/wants of a tanning customer? Is it quick in/out access whenever they want to go? Clean tanning beds? Safe UV rays that don't cause skin cancer? Latest techology? Ancillary services like spas, massages, manicures, hair removal...?

Market saturation - if this is true, then what do you think you can do that would be unique relative to the customer's needs/wants.

10 year old company - existing base of customers? or after 10 years are those customers too old to want to use the services - what is the churn or turnover of customers? Could it be on the brink of another bankruptcy?

How stable is the staff? Now that summer is coming, will there be turnover and a lot of work recruiting the right people for October?

How much influence do you think the media has and will have in future regarding the link between tanning and skin cancer? Will you be able to counter that or use the media to help grow this business? If salon tanning is less harmful than actual suntanning, can you market this successfully? Is there an industry association that can pool marketing budgets efficiently?

One of the conditions you must impose is that you/your accountant review the books prior to agreeing to the purchase. Probably sign a non-compete and confidentiality agreement and then dig in to see if everything is kosher.

You will have to spend a lot of time planning - this will not guarantee success but will minimize the chance of failure!

This is an excellent post!

Much things to consider, and I must absolutely do the research.

Thankyou

Honestly - talk to the staff and the customers. In a casual conversation, they'll really open up and let you know what they think of things.

I've seen a salesguy who, before he goes to any client, research the client through the employees there. He then finds out every little detail, and can tailor his pitch accordingly.

there are only 2 factors that can help in opening up a business:

50% luck
50% money

without the two, you are no where.


Every market is saturated, think about it...the research part of it is the most work of all...

the quickest way to making a buck is to buy a franchise...tim hortons, subway...etc...but only god knows how long the wait is...

My best advice would be to not take anything on the guys word, you need to do what is called 'due dilligence' on the business. Get up to date financial statements, and then take them to an accountant to have him/her look at them, if you aren't familiar with such things. If he doesn't have good financial statements, then that is a big warning sign that he's either overstating potential profits, or is not very organized, whihc can mean headaches for you if you go ahead with the purchase.

The next step is to have a lawyer review the business details and advise you of any issues.

Have you researched the health hazards of tanning salons..which there are many?

Originally Posted by sleep deprived

Have you researched the health hazards of tanning salons..which there are many?

No I have not. Does not seem like people care. I can pull up 10 pages of health hazards from smoking, and that doesnt seem to stop people. People have always and will always use tanning as a means to not only look better, but feel better about themselves; I do not see this concept fading anytime soon.

Originally Posted by smokeylovelove

No I have not. Does not seem like people care. I can pull up 10 pages of health hazards from smoking, and that doesnt seem to stop people. People have always and will always use tanning as a means to not only look better, but feel better about themselves; I do not see this concept fading anytime soon.

That, and a lot of people only use tanning as a temporary solution - like before vacation, etc....

With this limited exposure the health risks from the bed are really minimal.

Originally Posted by smokeylovelove

No I have not. Does not seem like people care. I can pull up 10 pages of health hazards from smoking, and that doesnt seem to stop people. People have always and will always use tanning as a means to not only look better, but feel better about themselves; I do not see this concept fading anytime soon.

Fair enough...I personally would have problems having a business that I knew had health risks associated with it. The risks to tanning is similar to that of exposure to the sun.

http://www.who.int/mediacentre/factsheets/fs287/en/

The tanning industry has a high failure rate. Unless you're well capitalized or the current owner provides you with Reviewed Engagement level financial statements, I would be weary.