HA! that's the best advice ever Chuck :-) here's a "how to" from john oliver https://www.youtube.com/watch?v=7y1xJAVZxXg
On Wed, Feb 24, 2016 at 10:29 AM, Chuck McCown <ch...@wbmfg.com> wrote: > So, become a church... > > *From:* That One Guy /sarcasm <thatoneguyst...@gmail.com> > *Sent:* Wednesday, February 24, 2016 10:23 AM > *To:* af@afmug.com > *Subject:* Re: [AFMUG] Ot buying a salon > > Booze is not a bad idea, i dont know if you can just give it and not have > a liquor license, but there are no available licenses here, i think we get > one per church, so we have plenty of bars. > > A clarification on the relationship between the two, its a strained > familiar relationship due to differences in visions. Both parties are more > than agreeable to the whole scenario, I met with each separately > specifically to see what the dynamic was, I didnt want to get into a train > wreck. The more im learning of the details, there were alot of points in > time where all it would have taken was two people just stopping to talk to > one another and the disaster would have been avoidable, I think, based on > knowing the individuals, that had either one of them not been in the > mother/daughter environment, this would never have happened. > > A poor choice in the failure chain was retail, it got transitioned from > commission sales to a mechanism the keep the business floating. Once that > happened two things took place, the chairs saw no real benefit in pushing > it which was made worse by the fact it essentially equated to a pay cut, > and the financier partner saw no gain in risking bringing in any new > retail. In the schooling that costs 16k, they drill that into the girls > heads, retail, retail, retail, without it, all youre offering is a haircut > and everybody offers a haircut. Thats already been an agreed upon term, the > return of retail sales comission, and the return of loss leaders, they > completely eliminated that struggling to float. I was talking to a friend > of mine last night, she crochets artsy shit like baby covers and boob caps, > whatever. these things move like hot cakes in the salons. We had tried to > get them in the salon before, but what the owners wanted was to make profit > on them to the point it wasnt worth it for her to spend the time making > them for what they wanted to pay, on top of that they wanted to sell them > at too much markup. This girl doesnt live here, she has a real talent at > neat stuff. There are two other chics in town that make similar items, but > their styles are identical to one another, and they sell them in all the > salons. > > The old lady ended up selling them to other people in a short time for > her, like crack, ladies love crocheted crack. Id have no intention of > making profit on them, thats actually an expected cost. If i lose 5 bucks > on some tit hat, but that client shows it to her girlfriend who just needs > one as well, and were the only joint you can get them, the "staff" has the > option to discount them even further when the new customer comes in to get > one, if they can leverage it for a service and new contact capture. Women > are weird in the crap theyll drive 20 miles to buy, but the chair has the > option to grow their client base, and the shop gets a new marketing > contact, thats always worth 5 or 10 bucks "loss". > > I also have an expectation of some loss in inventory to the ether, but one > thing the daughter wanted but the financier partner couldn't justify was > surveillance. That will go in day one, the chairs will know every corner > that can legally be recorded will be. If theyre not serious enough about > the industry to know that theft is a rampant concern, theyre not serious > about growing their small business, and they can find a chair in another > salon. This may be a poor attitude as a business owner, but even a high > revenue generating thief is still a thief, I used to be a thief, so i know > what kind of trash one is deep inside and i dont want them as part of the > team. I know a couple of the salon owners overlook things. I cant do that. > This salon size has potential to reach the sales numbers quickly again to > where the premium pricing comes back, which is something they dont have > right now. combine sales motivation with a digital retail square app or > whatever that broads can but some overpriced shampoo and some nifty curling > iron at a whim on their phone from the bar in the bathroom on their night > out with friends and theres better pricing for more margin to offer as > increased commission. The way i see that, if the store is making 3 dollars > on a bottle of shampoo after commission and the pricing gains happen to > where theres room for 4 dollars on it We can give 50 cents or even the > whole dollar to the chairs in commission. So a chair that normally moves 3 > bottles a week for 9 bucks is motivated to move more, if they move 4, im > still making the same amount i would have made if i pocketed the discount > as an increase in sales, but there not motivated to sell more than 3. Im > over simplifying it, and probably completely wrong, but thats how ive > always seen retail with commission, and salon markup is high > > On Wed, Feb 24, 2016 at 9:28 AM, Cameron Crum <cc...@wispmon.com> wrote: > >> The thing about being the 51 percent share holder is that you might as >> well own the whole thing. You get to make all the decisions. Basically you >> could make it very hard for the 49% owner to make a dime off of the >> business outside of her labor contribution. I'm not saying you should do >> this, but it sounds like there is some dead weight there and it might be >> time to move on. However, your best bet is to buy the assets >> (Name,chairs,equipment,etc) of the business and leave the corporate >> structure alone. They can worry about their own debt and other liabilities >> with whatever money you agree to pay. After that it is their problem. Sign >> a new lease under the new company with the landlord and go on your way. Now >> you don't have to worry about having a boat anchor as a partner. The >> current majority owner should be able to make this decision on her own. It >> sucks for the daughter and will probably ruin their relationship if they >> have one and the mother will probably get sued if she sells it out from >> under her daughter, but oh well. I would never buy someone else's known >> liabilities especially if I knew the business was in decline. You are >> asking for trouble. They either need to clear up the liabilities before the >> sale (with proof of such) or sell you the assets only and GTFO. I'm sure >> your lawyer and accountant would agree. >> >> I would also worry about the business model a little bit. It would be too >> easy to cheat on the % side. Flat booth rent has lower upside, but more >> stability, Depending on commission from work leaves a lot of incentive to >> hide money, especially if it is a cash business. They WILL make under the >> table deals. Product is going to be a big money maker if you know how to >> push it. My wife was the AVEDA rep for SoCal for a few years back in the >> 90's, and has manged high end salons in Santa Monica and LA. She says that >> unless you make every appointment, and actually watch what every stylist >> does, it will be difficult to make sure they are being honest. The salon >> manager has to really on top of her game and somewhat of a hard ass. >> However, product in that business can have HUGE margins. You need to pick a >> pretty high end line, and make sure all the stylists are TRAINED correctly >> by the reps on how to sell the product, and use that product exclusively >> for shampoos and such. Offer them commissions on sales and make sure they >> are pushing it. When I was in college I worked on the beach in S. Padre >> Island in the summers for a beach service who also happened to be the >> Panama Jack distributor for Texas. As we rented umbrellas and chairs and >> boogie boards to people, we would push product giving free samples. They >> paid me 30% of what I brought in on product, so imagine the profit in a >> bottle of junk most of these places are selling. It is similar in the hair >> business. >> >> One last thing...free booze. Keep half decent bottles of Cab, Merlot, and >> Chardonnay on hand and maybe some decent beer for the occasional guy who >> stumbles in or the poor schlub who was dragged along by his gf and offer it >> to everyone. Don't let them get drunk, but a glass or two over an hour or >> so helps to loosen the purse strings. Feeding the dude a beer or two makes >> sitting in a salon more bearable and he might even spring for that $30 >> bottle of sweet conditioner that makes his chicks hair soft and smell good >> so he can take her home and see how fast he can mess it up. >> >> Good luck >> >> On Wed, Feb 24, 2016 at 5:41 AM, Lewis Bergman <lewis.berg...@gmail.com> >> wrote: >> >>> How you pay yourself can depend on the type of corporate form you take. >>> LLC that are pass through don't pay taxes and all income follows through to >>> the owner's tax filing via a K1. I agree with forest in that you should >>> count your salary, even though sometimes you may have to put it right back >>> in. The other side of that is if you take "excess" pay make sure to record >>> that on the books in a way you can pull that off in a presentation to a >>> potential buyer. >>> You should keep forefront in mind that you must pay no more than what it >>> is worth no matter what the present owners would like to get out of it. >>> >>> On Wed, Feb 24, 2016, 3:40 AM Forrest Christian (List Account) < >>> li...@packetflux.com> wrote: >>> >>>> I started writing a long post about how to work through this logically, >>>> but it sounds like you're already going down that path. >>>> >>>> The thoughts that occurred to me for you to consider: >>>> >>>> The business part of a failing business isn't worth anything. If you >>>> buy this, you're essentially going to have to pick up scraps (which carry >>>> baggage with them) and try to overcome that baggage. Unless you can put a >>>> hard number on the value of the going business I wouldn't consider it worth >>>> anything. And, one caution: There is a temptation to treat the existing >>>> customers (which may actually be the stylists, not the people getting their >>>> hair cut/nails done) as an asset, but you have to realize that a tarnished >>>> reputation is going to make everything more difficult than it would be if >>>> you started fresh. You have to ask yourself if gaining the existing >>>> business is worth the pain. You may actually decide that the business >>>> part of the business has a negative value as a result. >>>> >>>> Assuming the business part of the business has no value, you need to >>>> ask yourself how much are the physical things you're buying (i.e. the >>>> chairs, nail beds, etc.) worth. That's probably all you want to pay up >>>> front. Paying extra for the 'idea' of a salon seems silly. Remember >>>> things haven't been maintained so some of these are going to have to be >>>> replaced, maybe soon. So you need to look at the depreciated value (how >>>> much value they actually have left) - taking it back to a wisp, if you buy >>>> a router which lasts 5 years, 2.5 years in that router is only worth half >>>> as much, quite possibly even less. Consider that when valuating items. >>>> >>>> Assuming you could come to a purchase price that was reasonable, then, >>>> and only then should you look at the financials to see if you can make it >>>> work, including a reasonable return on investment. >>>> (Ok that sounded kinda wrong. What I mean is: Don't over pay for the >>>> assets. Don't justify over paying for the assets just because the business >>>> operation numbers (P&L) look good based on your best guesses of costs. >>>> Figure out what the assets are worth (including the business part of the >>>> business), and use that for negotiations, not any percieved potential >>>> future benefit. That isn't what you're paying for - you're paying for the >>>> assets.). >>>> >>>> A bit of a note in relation to the above is to mention that if you can >>>> make a business case for a business salon in your town, then there's a good >>>> chance you could start a salon with or without buying the existing >>>> business. That's why I'm saying 'the business part of the business is >>>> probably not worth much, especially with a tarnished reputation'. >>>> >>>> Once you get to the point of working through your business operation >>>> numbers (P&L), there are a few caveats/suggestions: >>>> >>>> 1) YOU MUST PAY YOURSELVES. This is important. Plan on paying >>>> yourselves from day one. Figure out what a reasonable pay rate is and pay >>>> yourselves. If you don't do this, you will never ever make any money at >>>> this. It's ok to escalate this with increasing load. For instance, when >>>> you start, you may only need a few hours a week... but still pay >>>> yourselves. One even worse gotcha is that not paying yourself sometimes >>>> indicates to the IRS this isn't intended as a going business and that isn't >>>> something you want to have happen. Ok, it's okay to put a bit of sweat >>>> equity into the business at first, but very shortly, you should start >>>> paying yourself for your time. >>>> >>>> 2) You must consider depreciation of equipment. You're going to have >>>> to replace that equipment sometime, you need to plan for it, and book for >>>> it. This needs to be put in your business plan from day one. That >>>> equipment you purchased costs you on an ongoing basis. If your business >>>> plan doesn't account for replacing the equipment at correct intervals, you >>>> will end up 7 years from now with an even shoddier place which is worth >>>> less than you paid for it. >>>> >>>> 3) Consider an exit strategy. How can you position yourself to be able >>>> to sell this for *more* money than you paid for it a few years from now. >>>> >>>> 4) If "your woman" plans on being a stylist there, consider treating >>>> her from a financial point EXACTLY like any of the other stylists, at least >>>> for her stylist work. That is, charge her rent for her station, etc. etc. >>>> etc. That way she will be pulling an income from the business just like if >>>> she was a stylist elsewhere. This will produce revenue for the business >>>> which it will need to pay the rent and also her salary for management >>>> duties. >>>> >>>> I think that's all I can think of for now... >>>> >>>> I do have one other reference I point ANYONE starting a business to, >>>> and thats a book/website called "business model generation". It contains >>>> tools to help people work through a successful business model. If I was >>>> doing what you're considering, I'd work through this process considering >>>> your customers as your stylists (which seems to be the normal model) which >>>> means the services (aka value proposition) you provide to your customers >>>> are things like providing a workspace, credit card processing, advertising, >>>> etc. Your goal in this business model is to fill every slot in your salon >>>> with happy stylists which you can charge large amounts of money for the >>>> quality workspaces you provide and the continuous flood of new customers >>>> your advertising provides to them. The other option is running a business >>>> model where your customers are the actual people getting their hair and >>>> nails done. >>>> >>>> I'd recommend getting a dead tree version of the book (by Alexander >>>> Osterwalder), but you may want to check the first part out online at >>>> businessmodelgeneration.com... They have a exerpt which is basically an >>>> introduction available. This isn't for everyone - some people just don't >>>> get this book. I haven't figured out a pattern about who this does or >>>> doesn't work for yet either (I'm usually wrong, so maybe it's all the >>>> people I don't think would like it). >>>> >>>> In any case, good luck. >>>> >>>> >>>> >>>> >>>> On Tue, Feb 23, 2016 at 5:57 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 >>>>> >>>> >>>> >>>> >>>> -- >>>> *Forrest Christian* *CEO**, PacketFlux Technologies, Inc.* >>>> Tel: 406-449-3345 | Address: 3577 Countryside Road, Helena, MT 59602 >>>> forre...@imach.com | http://www.packetflux.com >>>> <http://www.linkedin.com/in/fwchristian> >>>> <http://facebook.com/packetflux> <http://twitter.com/@packetflux> >>>> >>>> >> > > > > -- > If you only see yourself as part of the team but you don't see your team > as part of yourself you have already failed as part of the team. >
