My family owns a small strip mall and one of the tenants is a beauty salon. The tenant has a hard time keeping current on the rent, even though we have been renting it to her for a very low rent (30% below market). She is a long time tenant and I would like to have her stay, but it really doesn't make financial sense (I doubt she will be able to pay a rate closer to market).
Her salon specializes in African American hair. This is fine, however the building is located in a community that is only 2% African American, with the remainder being hispanic. The salon occupies a 2,000 square foot space and a family-oriented salon (e.g. Supercuts), would have great potential (the adjacent area in back is all residential). But the demographics just don't support a specialized AA salon like her's. I've suggested to her that repositioning the salon as a general family salon that caters to customers of all races might improve business significantly, but she seemed resistant to the idea, and I'm not sure it work work anyway. It's her business however and all I care about is whether she can pay the rent.
Options I'm considering:
- Asking her to leave while offering to buy her business assets (salon equipment, fixtures, etc.), then reopening the (2,000 sq ft) salon under a new brand with management that I hire, or putting the business on the market after a facelift. I'm thinking that this would probably be the best option.
- Proposing that she downsize her space to 1,000 sq ft and opening a new general salon in the other 1,000 sq ft, under new management that I hire. Probably not ideal, as her space might still be underutilized.
- Asking her to leave and starting a Supercuts, Fantastic Sams, etc. in the space. Also probably not ideal, due to franchise fees and the customer base would be surrounding residents, with growth coming from word of mouth rather than drive-by business, which diminishes the value of the franchise name.
Questions:
Would 1,000 sq ft be large enough for a salon?
How difficult would it be to find a good, hard working and above all, trustworthy manager to run the new salon?
How much equity would I need to offer to interest qualified candidates?
Considering that this is mostly a cash business, is it even possible to run a salon effectively without the owner or his/her family members present?
I have my own career and would not be able to spend a lot of time there, after setting up the business, nor would any immediate family members.
What are the best ways to estimate number of customers per day for a proposed salon? Just sitting in front of nearby salons with a counter for a week?
Any good sources of average operating expenses, equipment/buildout costs for a salon and other relevant statistics/info?
Thanks for reading and sorry if I'm asking any stupid questions. I know very little about this business right now (I'm an accountant), but would like to learn.
Her salon specializes in African American hair. This is fine, however the building is located in a community that is only 2% African American, with the remainder being hispanic. The salon occupies a 2,000 square foot space and a family-oriented salon (e.g. Supercuts), would have great potential (the adjacent area in back is all residential). But the demographics just don't support a specialized AA salon like her's. I've suggested to her that repositioning the salon as a general family salon that caters to customers of all races might improve business significantly, but she seemed resistant to the idea, and I'm not sure it work work anyway. It's her business however and all I care about is whether she can pay the rent.
Options I'm considering:
- Asking her to leave while offering to buy her business assets (salon equipment, fixtures, etc.), then reopening the (2,000 sq ft) salon under a new brand with management that I hire, or putting the business on the market after a facelift. I'm thinking that this would probably be the best option.
- Proposing that she downsize her space to 1,000 sq ft and opening a new general salon in the other 1,000 sq ft, under new management that I hire. Probably not ideal, as her space might still be underutilized.
- Asking her to leave and starting a Supercuts, Fantastic Sams, etc. in the space. Also probably not ideal, due to franchise fees and the customer base would be surrounding residents, with growth coming from word of mouth rather than drive-by business, which diminishes the value of the franchise name.
Questions:
Would 1,000 sq ft be large enough for a salon?
How difficult would it be to find a good, hard working and above all, trustworthy manager to run the new salon?
How much equity would I need to offer to interest qualified candidates?
Considering that this is mostly a cash business, is it even possible to run a salon effectively without the owner or his/her family members present?
I have my own career and would not be able to spend a lot of time there, after setting up the business, nor would any immediate family members.
What are the best ways to estimate number of customers per day for a proposed salon? Just sitting in front of nearby salons with a counter for a week?
Any good sources of average operating expenses, equipment/buildout costs for a salon and other relevant statistics/info?
Thanks for reading and sorry if I'm asking any stupid questions. I know very little about this business right now (I'm an accountant), but would like to learn.
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