Aside from a clearly defined corporate structure, how does one get paid in this particular scenario? That's something I've never understood and quite frankly been concerned about? In a labor driven hourly billing, it would seem more simplified.
But in this case, I can't do anything beyond sell some retail and ring stuff up, I can't even do a skin examination for tanning as i understand the regulations. Not that there will be any excess for a couple of years, I would occasionally like a cheeseburger and not a cheap one either, I'm talking a whole mcdouble, two all beef patties. But that's something I truly do not understand, especially if I were to solely buy out the partner and the daughter stayed because as best I can tell her income is the entirety of her labor and that's not something that could continue. For chair rental it's 75 a week base and it works 25% beyond 300 in services. I would be inclined to say that's what she should be doing, if I were to station an it shop there it would be under an arrangement similar in nature. I believe this was at one point how it was, personal income was the 75 percent remaining. But at some point she blurred the line between the operating revenue and the personal income. When I see more financials I am hoping not to see personal expenses paid from the business account, I know I will though, I watched my sister bankrupt my brother in laws chiropractic business by using the huge desktop ledger checkbook, literally going to the store with that massive thing hanging out of her purse. In a sole proprietorship, I could see putting all the revenue into the business and paying out a salary from it but in an asymmetric partnership where the larger percentage is held by the non producer how does that work? This would not be a today question, I'm well aware that I won't see any positive numbers for some time, but I will have to be paying the bank from somewhere. That previous operational expense did not include repayment terms of the financing. That is a separate matter, I intend the business to essentially owe me, I have some equity in my house, which also has somehow gone up in value, and I got into it with straight mortgage instead of any of that first time home buyer or usda type stuff, but it cost me some percentage points. But I walked away with none of the strings. When I go to my banker, as if me even showing up in his office wanting to go into business won't get him laughing enough, when I ask to refinance my house to fund it and ask for a lower interest rate to boot, after the ambulance gets there with the oxygen to get him back to a manageable state enough to tell me to gtfo out of his office I'll tell him I also want to resign the yearly 5k note we take out for a startup buffer. I'm probably off base with this, but the reason for wanting to finance this way is that if the whole venture failed, and we had to bankrupt the whole shooting match, I'm screwing me, not the bank, I'm old fashioned and believe you bank locally, pay a little more, but you get a small amount of moral satisfaction you also don't screw your banker. I was offered a percentage point less with a national lender when I bought my house when I was shopping mortgages, probably a terrible decision, but my money stays in the community my fastest swimmers have to grow up in. At some point though, the business would need to start paying back that debt. On Feb 23, 2016 9:50 PM, "Lewis Bergman" <lewis.berg...@gmail.com> wrote: > Hmmmm. OK. The only thing I would say to all of the previous is don't > confuse recurring revenue with income directly related to hourly effort. If > you don't actively service the client you don't get paid. You take a week > vacation, you don't get paid. > I know you know that but that is really different from a WISP. Having said > that, I own a service business and do OK. > > On Tue, Feb 23, 2016, 9:06 PM Josh Reynolds <j...@kyneticwifi.com> wrote: > >> From what I've seen on the internet, there's probably a sub-reddit for >> that. >> >> On Tue, Feb 23, 2016 at 9:02 PM, That One Guy /sarcasm >> <thatoneguyst...@gmail.com> wrote: >> > Well, that's the gist of it, but it would be kind of weird to say it >> that >> > way. It might could be that maybe sometimes after hours I might get >> > undressed and cover myself in hair gel put on an apron and some hair >> rods >> > and curl up in the pedicure chair eating hard candies and telling >> myself how >> > pretty I am, but I'm pretty sure deep down inside that's what everybody >> > wants to do, only I could actually have a chance to live that dream. >> > >> > On Feb 23, 2016 8:57 PM, "Chuck McCown" <ch...@wbmfg.com> wrote: >> >> >> >> OK, the main take-away seems that have wanted to be a hairdresser since >> >> you were five... >> >> >> >> From: That One Guy /sarcasm >> >> Sent: Tuesday, February 23, 2016 7:42 PM >> >> To: af@afmug.com >> >> Subject: Re: [AFMUG] Ot buying a salon >> >> >> >> >> >> That was the 3-5 year plan, her build the clientele, which is going >> >> swimmingly, and we learn the business, which I have been, but neither >> >> component are at the point of venturing out new, that's the then. >> >> >> >> And yes, women are very much married to their beautician, more so than >> >> their husbands. >> >> >> >> I guess I wasn't clear, the current daughter owner doesn't want to >> exit, >> >> even if there is a full purchase, other than losing her baby, as it >> were, >> >> she very much wants to stay on, and she has a client base, I suspect >> many >> >> off the books, and the other full time chair wants to stay as well. I >> know >> >> she has a lot of off the books clients. The off the books would be >> >> addressed, that's also a lawyer liability discussion regarding the >> potential >> >> skeletons. As bad as that does sound, I can't go into the details due >> to >> >> time (it would be a book) it's a manageable issue, because I knew >> about it >> >> and when I brought up the issue, there was no deception, it was kind >> of like >> >> office pilfering, only it was accounted for by both on personal tax >> returns >> >> so assuming the lawyer reviews and signs off on it as not being a >> liability >> >> then it's a quiet benefit if the lawyer red flags it, it's a show >> stopper. >> >> But there is a decent amount of clientele is the point. >> >> >> >> The daughter owner to clarify, has been in the industry for over twenty >> >> years, six of her people have moved on to start their own salons under >> >> agreeable circumstances, I'm good friends with one of them, and have >> >> verified the reputation hit is not irreparable if the internal issues >> >> resolved. Benefit of small town living. >> >> >> >> A major component of the breakdown is that a mom and daughter went into >> >> business without a very clear and detailed business arrangement. The >> mother >> >> funded, the daughter worked, and nobody talked to one another. I've >> been >> >> doing work for the mother for ten years, so I'm more privy to the finer >> >> details of the situation than most potential "investors" would be. >> I've also >> >> been thinking about and looking at various aspects of the salon >> industry >> >> since I was 5 and accompanied my mom at night to clean on regularly at >> >> night, they always had a dish of hard candies, so obviously they're a >> >> magical place. That and the fact it's a loose cash industry that has >> little >> >> legitimate value as a neccesary service but women would sooner skip a >> rent >> >> payment than miss a nail appointment, it's crack for the housewife. >> >> About 8 years ahoy when I saw a purse for 42 bucks that I know cost >> ten in >> >> the purse bin that they can't keep full at my friends salon, I realised >> >> there is potential. I actually had looked into ad driven WiFi hotspots >> >> attached to vending machines that dispensed small retail electronics >> as a >> >> neat idea to approach salons with until I priced industrial vending >> >> machines. >> >> >> >> I don't see salon ownership outside of franchising as a get rich quick >> or >> >> at all thing, but I do see it as a good residual income to adjunct >> another >> >> income. This particular scenario actually is ideal because the >> particular >> >> arrangement allows me to maintain my current job since I can't legally >> do >> >> much of anything in the salon beyond running a broom. It also solves a >> long >> >> term conundrum I've had regarding alternatives to my current job in >> that I >> >> can go out on my own as a simpleminded it contractor and match my >> current >> >> income and pay rent, but not insure my family, the location and >> available >> >> space within is a good brick and mortar, and a lot of the salon client >> base >> >> at this particular salon is my target market, the small to tiny >> business and >> >> wives of business owners who wouldn't violate my current non >> enforceable no >> >> compete. Plus I've been building my role into something that can be >> >> outsourced for the last three years, leaving the opportunity to have >> cake >> >> and eat cake til it goes stale and molds. >> >> >> >> I am rambling about all this because of the request for advice from >> >> experience, like I said, not to be argumentative, but to hear why my >> grand >> >> ideas are destined for failure, that's not sarcasm, it's a much less >> >> expensive way to find out than just doing it the hard way and ending up >> >> living under a bridge in my minivan feeding my family whatever scraps >> I can >> >> muster from the dumpster behind McDonalds. >> >> >> >> On Feb 23, 2016 7:49 PM, "Lewis Bergman" <lewis.berg...@gmail.com> >> wrote: >> >>> >> >>> You should primarily look for tax returns. They represent the minimum >> a >> >>> person is willing to represent as their income. Assets in a business >> like >> >>> that seen pretty few and lie value. Probably easy to get an idea of >> what >> >>> used equipment would cost. >> >>> >> >>> From your description it sounds like they have a bad reputation and I >> >>> think I would rather start with nothing and work to go above zero >> than start >> >>> will below zero and try to claw back to it. >> >>> >> >>> I may be wrong but my wife is attached to her hair dresser; aren't all >> >>> woman? Why not try to recruit some good hairdressers and start your >> own? >> >>> >> >>> I imagine the half life of a customer in that business is about three >> >>> weeks. I would bet you'll lose most of them during the negotiations. >> Lastly, >> >>> never think the person running a successful business doesn't earn the >> margin >> >>> they make. Unless you have the pockets to find this I would suggest >> your >> >>> wife find a successful salon to work in, build her clientele >> diligently, >> >>> then if she still wants to own one, start her own when she has the >> customer >> >>> cash flow to make the jump. >> >>> >> >>> On Tue, Feb 23, 2016, 6:57 PM That One Guy /sarcasm >> >>> <thatoneguyst...@gmail.com> wrote: >> >>>> >> >>>> Salons are service industry with subcontractorish environments, so >> it's >> >>>> not all that different than wisp, except it's all broads. >> >>>> The salon my woman works at is failing, poor management decisions, >> >>>> partners who are family (mother funded, daughter managed) mother >> owns 51 >> >>>> percent daughter 49. At one point it was an established and >> successful >> >>>> business, but feelings got hurt, partners fighting, a staff coup >> that took a >> >>>> substantial amount of clientelle, facilities not maintained. No clear >> >>>> company structure as far as owners getting paid. A 7 thousand dollar >> and 13 >> >>>> thousand dollar note owed to the mother partner, etc. Management >> software >> >>>> client capture went from over 800 clients to under 200 captures over >> a one >> >>>> year span indicating to me the "staff" quit putting a lot of >> services on the >> >>>> books and was pocketing the cash. It was an llc but they quit paying >> it and >> >>>> transferred it into what they refer to as a partnership with the 51 >> 49 >> >>>> thing, I have not seen that documentation >> >>>> >> >>>> I assume a lot of this could be correlated to many of your purchases >> of >> >>>> family run wisps. >> >>>> >> >>>> This has the potential to be turned around, the salon had a good >> >>>> reputation, and volume at one point, and its the only full service >> one in >> >>>> the town, so it's not completely failed. There also is room to >> incorporate >> >>>> some other sources of revenue into the mix. >> >>>> >> >>>> The 51 percent partner wants out, they would like to simply recoup >> the >> >>>> majority of their outstanding debt and was their hands of the matter. >> >>>> Initially this was offered to us for 7k but that left an outstanding >> >>>> liability of 13 on the business to the same person, and that note is >> secure >> >>>> via a mortgage extension. That didn't sound like a good risk so we >> told them >> >>>> to get a better proposal consisting of buying out that half of the >> >>>> partnership as well as a second proposal for buying out the entire >> >>>> partnership. The "assets" including minimal revenue of a single >> occupied >> >>>> station for a year was informally estimated at around 34k. >> >>>> >> >>>> The daughter partner who is the primary "contractor" had a 45k >> recorded >> >>>> revenue. I don't recall the revenue from the other occupied chair of >> the 5 >> >>>> chairs and the retail had substantially dropped, I suspect due to it >> >>>> becoming free when nobody was looking. >> >>>> >> >>>> Recovery could take place, as they offer the full spa set of >> services, >> >>>> however they currently are limited in their massage and facials by >> >>>> contractors who don't show up. This can be resolved fairly quickly >> for the >> >>>> massage therapist by recruiting one I'm aware of who is looking for >> a new >> >>>> place to operate because her stand alone office did not generate the >> revenue >> >>>> to justify the expense and overhead. Also my it job has allowed me >> to build >> >>>> good personal relationships with a lot of beneficial businesses, >> primarily >> >>>> the beauty school for recruiting fresh "contractors" to fill the >> empty >> >>>> chairs, they just don't come with clients. >> >>>> >> >>>> This is a more rushed scenario than I would prefer, this was a 3-5 >> year >> >>>> plan, but circumstances presented. Our lust for business ownership >> stands to >> >>>> cloud judgement, and that in itself is enough to walk away. >> >>>> >> >>>> We have a meeting later this week for presentation of the proposals. >> >>>> What I don't know is what documentation in particular I should >> request. I >> >>>> can ask for "financials" but I don't know what that actually means, >> or what >> >>>> further information to ask for. >> >>>> >> >>>> I'm reaching out here because you guys are my favorite cheap dates, >> and >> >>>> a lot of you have experiences more valuable than any advice I could >> pay an >> >>>> attorney for. After this next meeting is when our expenses start, so >> we need >> >>>> to be able to make a personal judgement at that point if it's a good >> enough >> >>>> opportunity to go to a lawyer and start paying for the non refundable >> >>>> advice. It's also when we make the decision of how foolish we want >> to look >> >>>> in front of our bankers. I like my banker though, and he might be in >> poor >> >>>> spirits and need a good laugh. >> >>>> >> >>>> Smart me knows this is not the right time to take risks like this >> when I >> >>>> only have 7 short years til my boy needs a college education and if >> this >> >>>> goes south, mom and dads financial support will be out. But the >> potential >> >>>> makes it worth looking at, like watching a train wreck. There are >> also some >> >>>> other long term prospects this makes possible so that benefit alone >> makes it >> >>>> well worth an investigation. >> >>>> >> >>>> I really would appreciate some sage advice from experience in small >> >>>> business. >> >>>> >> >>>> >> >>>> From what I have seen, there is no formal business structure, in >> other >> >>>> words I don't see >> >
