Obviously check your liquor laws, but in most states you don't
need a license if you are giving it away.
On Wed, Feb 24, 2016 at 11:29 AM, Chuck McCown <ch...@wbmfg.com
<mailto:ch...@wbmfg.com>> wrote:
So, become a church...
*From:* That One Guy /sarcasm <mailto:thatoneguyst...@gmail.com>
*Sent:* Wednesday, February 24, 2016 10:23 AM
*To:* af@afmug.com <mailto: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 <mailto: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
<mailto: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
<mailto: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
<mailto: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 <mailto:forre...@imach.com> |
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