AnonBeauty
Member
Hi
This is quite a unique/random scenario i'm sure but it would be great to get your thoughts. I am posting under an alias as its a touchy subject.
A friend of mine owns a series of buildings, one of which has been running as a beauty salon for 20 years. Its been in the hands of the previous owner for 8 years and the reason I say previous owner is because my friend has just has to evict the tenant/repossess the building due to non-payment of rent for the past 2 years.
The court has awarded him the entire contents of the salon in partial payment of the debt and so its essentially a fully functional salon. He's offered me the tenancy as is, as it would save them clearing out the place and putting it back to an empty shell before re-letting.
It did have 1 full time employee and 1 part time with the owner there some of the time, it has 3 treatment rooms plus a spray tan room and is in a high street location.
The first thing that came into my mind was why did it fail? Unfortunately I don't have access to the last 2 years accounts as hard copies weren't in the salon and I don't have access to the isalon system. What I do have is the accounts for 2004-2010 plus the daily cashing up sheets for most of February.
From looking through the February details it appears it took around £9k in treatments for the first 3 weeks of the month, £600 in retail sales and £5,000 in gift certificates and pre-paid treatments. The pre-paid treatments from what I can see are usually a lot less, however the previous owner decided to go out with as much money as possible and offer clients £4k of treatments for £500. The values of the treatments vary but are mostly between £25-£100 with the odd receipt for £300, having spoken briefly to the full time member that was there (but who has now got another job and wont consider returning) she says the majority of treatments were facials, nails, waxing but that they did get regular laser hair removal.
Looking through the information I have for previous years it was taking between £8-20k a month but it is clear that there was a shortfall somewhere. I can see the expenses put through the books for this time period were unnecessarily high which I feel contributed as well as very high equipment leasing payments. The salon is kitted out with laser hair removal/skin treatment machines, teeth whitening machines, laser lipo machines, facial scanners etc which were all brought and financed when she took over. Despite this she still took £2,000 a month out of the business to pay herself and failed to pay the rent.
Ive calculated what I think the running costs of the salon should be per month and they equate to £3,500pm which includes 1 full time staff member. Obviously this would go up to factor in my own salary and a part time person if required (although I dont have enough visibility to gauge if a part timer is needed).
My thoughts are that financially it should stack up, is there anything else that you can think to consider? I have a list of 2,000 client details plus Ive had several contact me expressing an interest in returning. Im a qualified therapist although not in laser but I predominantly run a marketing agency.
This is quite a unique/random scenario i'm sure but it would be great to get your thoughts. I am posting under an alias as its a touchy subject.
A friend of mine owns a series of buildings, one of which has been running as a beauty salon for 20 years. Its been in the hands of the previous owner for 8 years and the reason I say previous owner is because my friend has just has to evict the tenant/repossess the building due to non-payment of rent for the past 2 years.
The court has awarded him the entire contents of the salon in partial payment of the debt and so its essentially a fully functional salon. He's offered me the tenancy as is, as it would save them clearing out the place and putting it back to an empty shell before re-letting.
It did have 1 full time employee and 1 part time with the owner there some of the time, it has 3 treatment rooms plus a spray tan room and is in a high street location.
The first thing that came into my mind was why did it fail? Unfortunately I don't have access to the last 2 years accounts as hard copies weren't in the salon and I don't have access to the isalon system. What I do have is the accounts for 2004-2010 plus the daily cashing up sheets for most of February.
From looking through the February details it appears it took around £9k in treatments for the first 3 weeks of the month, £600 in retail sales and £5,000 in gift certificates and pre-paid treatments. The pre-paid treatments from what I can see are usually a lot less, however the previous owner decided to go out with as much money as possible and offer clients £4k of treatments for £500. The values of the treatments vary but are mostly between £25-£100 with the odd receipt for £300, having spoken briefly to the full time member that was there (but who has now got another job and wont consider returning) she says the majority of treatments were facials, nails, waxing but that they did get regular laser hair removal.
Looking through the information I have for previous years it was taking between £8-20k a month but it is clear that there was a shortfall somewhere. I can see the expenses put through the books for this time period were unnecessarily high which I feel contributed as well as very high equipment leasing payments. The salon is kitted out with laser hair removal/skin treatment machines, teeth whitening machines, laser lipo machines, facial scanners etc which were all brought and financed when she took over. Despite this she still took £2,000 a month out of the business to pay herself and failed to pay the rent.
Ive calculated what I think the running costs of the salon should be per month and they equate to £3,500pm which includes 1 full time staff member. Obviously this would go up to factor in my own salary and a part time person if required (although I dont have enough visibility to gauge if a part timer is needed).
My thoughts are that financially it should stack up, is there anything else that you can think to consider? I have a list of 2,000 client details plus Ive had several contact me expressing an interest in returning. Im a qualified therapist although not in laser but I predominantly run a marketing agency.
