Buying an ongoing business

[crazylady714]

Hi everyone,
Just looking for some advice. There is a beauty room for sale in my local area within Tony & Guy. Its up for sale for £18,500 and you have to pay rent to Tony & Guy £866 per month. They keep all the appointments and do all the bookings and promotion within the salon. Most of the clients are from within the salon. The lady is moving away so will not be setting up near and there is not a lot else in the town apart from the chinese nail bars.
I'm going to look at the accounts and appointment book this saturday. Just wondered if you thought this would be a good idea to buy? I don't have any money to put into the business so would have to get a loan to pay for it any advice on that?
Sorry that this is so long!
Denise

 

[gemsie1983]

You will get a high quality clientelle at Toni and Guy with a high disposable income its a good brand to be linked too.

Will you be buying the business then in essence paying Toni and Guy to do your reception work? will then also be marketing your business too?

 

[crazylady714]

yes the £866 pays for reception, bookings, all electricity, water, music, use of all staff facilities, and advertising in the salon and on the window
denise

 

[jax]

Hi Denise

Not clear what the initial payment of £18500 is for? Who are you paying that to? What does that include, ie equipment, property, lease maybe?

jax

 

[michelle g]

Hi Denise

Not clear what the initial payment of £18500 is for? Who are you paying that to? What does that include, ie equipment, property, lease maybe?

jax

i was thinking the same.

 

[carrie g]

Hi Denise,
I rent a room from a Toni and Guy salon in Surrey. Like you I took over from the therapist as she was moving out of the area. I did not pay anything for her business and have pretty much had to re-build the client base, as is it quite natural for them to leave with the therapist and try new salons.
The plus points are that you work within a trusted brand, the clients may have quite a large disposable income, which means you can charge the top rate for treatments, but strangely most of my clients (having been there for a year, do not use the salon for hair.
When you go in on saturday (which may well be a little quiet as it the bank hol weekend) go into the room and close the door, and see how noisy the salon is. My treatment room is right next to the staff room and I can hear the hairdressers (mine are a noisy bunch)!!
Look in her diary to see how busy she is in say, 4 weeks and 6 weeks, if her clients are loyal they will be booking in advance.
Toni and Guy ask you to get your treatment lists printed to a high quality, using their promotional material (you are representing them) and that can cost about 350.00 per 1000.
If you have any questions please feel free to pm me and I will try to answer them for you.
Good luck
Carrie

 

[crazylady714]

hi
i've been to see the room again and have a look at the books, she only gave me the year end financial reports, which didnt tell me much apart from that she has a loan outstanding which she borrowed from her parents, (7,600) and she has a debt of £3,500 which i assume is to the bank. so really speaking i would be paying off her debts for her and she said the rest of the money is for goodwill and for all the equipment, stock the only thing she is taking is her tweezers.
denise

 

[Jacqui'snewnail]

£18,500.00 is alot of money and £866.00 a month rent is very high. You could purchase your own salon based on those figures and kit it out lush for 18 grand!

I was looking into a ready made salon a few months ago and the advice I got from fellow geeks was fantastic, have a look for it, it was titled Buying a ready made salon.

I contacted the council about vacant shops and they are far cheaper option. Basically you just submit your business plan and offer of annual rent and then the council decide. Perhaps something for you to consider?

I didnt do either option lol!! I rent a space now within a hairdressers and believe me, the outlay for that wiped out my bank balance so sod having to kit out a whole shop!! lol!!

Good Luck.

Jacqui

 

[JDs]

My question is...

Why if you are buying that business from her, would you have toni & guy be doing your appt booking? If you allow this, then they have full control and access to your clientele. And are you not in this to be self employed?

 

[crazylady714]

thanks everyone for your comments i'm still in a quandry as to what to do.
thought i might offer her about £9000 for all the equipment and stock and she what she says.
denise

 

[bombini]

I think it sounds very expensive, if it wasn't located within Toni & Guy I bet the rent would be far less.

I rent a room in a hair salon which is £30 per day and the salon also book my appointments.

My main question would be can you cover the rent ? As mentioned before you could have your own salon for that amount of money !

Also are you just going to be offering nail enhancements, manicures & pedicures & do you have an existing clientele ?

 

[Zo Zo]

I do admire ambition , but I had a quick look at your profile and unless you're hiding your light under a bushel I'd say it's early days in your career to be thinking of such a big investment. Do you have other beauty / related qualifications that you haven't disclosed?

 

[crazylady714]

i have just completed my level 2 and 3 in beauty therapy and would be offering the same services that the therapist offers at the moment. i would also like to offer some treatments that she does not, like electrolysis, ear piercing, tooth gems and i'm looking into doing a thai dumpling massage course which no-one in the area offers.

 

[oey]

I see you have updated your profile - good, avoids any confusion :hug:

I would also switch on the skin button (and posibly nails - depending on if you do nails) in your proile so it is easier to see what your areas of salon expertise are.

Good luck with what ever you decide but I do think that you would be better putting that amount of money into your own salon.

 

[Zo Zo]

i have just completed my level 2 and 3 in beauty therapy and would be offering the same services that the therapist offers at the moment. i would also like to offer some treatments that she does not, like electrolysis, ear piercing, tooth gems and i'm looking into doing a thai dumpling massage course which no-one in the area offers.

Ooooh difficult then! I would definitely give it some serious consideration, and look into getting a professional valuation done. There are people who will look at the turnover etc and work out a meaningful value for you, rather than pick a figure out of thin air, i.e. I think you implied she would be selling you her equipment and getting her debts paid off. Btw I'm not suggesting the figure has been picked out of thin air but it would be good to know if its a fair price, a rip off or a bargain

You must must must write a business plan.

Also if you are going to offer extra treatments, i.e. electrolysis, you must advertise them.

Let us know what you decide!

 

[carrie g]

Ask her for a break down of the costing, eg how much for equipment, goodwill, stock and see if she can back any of it up with receipts. Allow for depreciation on equipment. Look at her client records, if they are not kept updated, don't have full addresses etc.
The rent on the room is REALLY expensive!! My salon is within toni and guy in an affluent town in Surrey and I don't pay anything like that.
Do not be seduced by the name. Its more about how you market your room and your treatments and you!! Toni and Guy do not do any of that for you. I should know, my salon is the flagship beauty salon for toni and guy.
I honestly can't see its worth that much.

 

[crazylady714]

thanks for all the advice i'm waiting until friday until the manager of toni and guy is back from his holiday to speak to him. i'm also going to ring her and ask to see the last 6mths appointments, and also to see the last 6mths full accounts not just the financial reports for the end of the year.
i'd really like to buy it and introduce some new treatments which she doesn't do which i think would make some money, like electroylsis. i'll let you know what the manager says and i also think that the rent is high and her business is not worth what she is asking for it.
denise x

 

[jax]

Denise, also bear in mind that a bank will not lend you money for a goodwill payment..........and there is a good reason for this!!!!!!