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I Need Advice: Has Anyone Here Own a Salon or Barbershop?

Discussion in 'General Entrepreneur Discussion' started by EliTheGreat, Apr 25, 2018.

  1. EliTheGreat
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    EliTheGreat New Contributor

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    Has Anyone Here Own a Salon or Barbershop?

    Im thinking about purchasing my first one, only "hurdle" is I dont cut hair so I wouldnt be able to hold down a booth if a barber goes missing.

    My local barbershop is for sale by the owner for a low price of 14k. You can pay for 10K upfront and finance the other 4k. His reasoning for giving up the business is because he works two full-time jobs (one being IT for Verizon, im not sure of the other) he use to cut hair in the shop last year but broke his arm. I work at a Verizon retailer and my coworker knows the owner personally , seems like a good guy.

    On his for sale listing, he notes that the gross monthly income is 3500, and the cashflow is 2500. There are 3 barbers and 3 hair stylist in this barbershop

    3 barbers -
    Booth rent $150/wk = $1800/mth
    3 hairstylist
    Commission based I believe.

    Based on simple math I could make $23,400 a year off 3 barbers alone.
    There is a booth that is vacant (even more potential for a gain)

    Based on $2500 monthly cashflow estimate I could gain my initial investment back in 4 months. I want to gain advice and knowledge from someone in a similar or exact business here. The money is there, people will always need haircuts should I purchase this barbershop even though I dont cut hair?
    (ps Ive been to barbershops where the owner only comes to pick up checks and nothing else)
     
  2. levijean
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    levijean Bronze Contributor Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass

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    I wouldnt be worried about not being able to cut hair. But I find it hard to believe the expenses are only $1000/mo.
     
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    NanoDrake Bronze Contributor Read Millionaire Fastlane Speedway Pass

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    That's the American booth rental system, and I can tell you that there must be something to look after
    a deal only 10k, must hide something beneath

    (not considering that you will need 40/50k to launch the business)
     
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  4. EliTheGreat
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    understood. I have to look deeper as far as if the business has any debt. The business is already up and running, basically I would pay to take over the business and buying the furniture that is included in the asking price. He values the fixtures and furniture at $7500 (included in asking price). Seems like a low price I do remember my barber telling me the owner had it at a higher price ($25k +) at one point and dropped the price.
     
  5. EliTheGreat
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    rent, lights/ac , water, insurance. What other expense would I be missing here?
     
  6. NanoDrake
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    NanoDrake Bronze Contributor Read Millionaire Fastlane Speedway Pass

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    waste
    plus depends on where it is but there might be some very hidden labour laws changing that might making it more difficult ( I know California has a shady one that is a kick in the a$$) people yet today don't know if it applies to hairdressers/barbers.

    Like I said, 10k sounds low, don't fall for the "he said, she said" priced dropped from 25k, I would be even more suspicious... like if it was such a good deal (probably it isn't) why of all the other skilled barbers in town, you?
    It's the equivalent of being offered a property worth 500k for 200k...wouldn't that sound strange? wouldn't all the best realtors and real estate agents get on it like eagles?
     
  7. Bhanu
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    Bhanu Bronze Contributor Read Millionaire Fastlane I've Read UNSCRIPTED Speedway Pass

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    I would be suspicious.
    Do proper investigation before you buy this business. You dont seem to have complete info also I think("one being IT for Verizon, im not sure of the other")
    Plus I dont think this is a fastlane business ..so why waste your energy,money,time on something which seems suspicious and does not give you financial freedom in the long run ?
     
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  8. Real Deal Denver
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    Real Deal Denver Gold Contributor Read Millionaire Fastlane I've Read UNSCRIPTED Speedway Pass

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    I think this is an excellent fast lane business. It can run on auto-pilot without the owner even being present. The money is good - and it's an ongoing need.

    Hits a pretty high score for what I'd like.

    Get 3 or 4 of em, and manage them from somewhere on a south pacific island? I like it!
     
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  9. EliTheGreat
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    Wait lol. I thought a small business that I never have to walk into (except once a week) that could potentially bring in 2-2500 monthly would be considered fastlane. I would consider it in that category because It would not be my main source of income.
     
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  10. EliTheGreat
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    I like the sound of that. My goal this year was to build up enough streams that I will earn 10k a month passively. Might take 3-4 businesses but its doable. And a barbershop is pretty much recession proof
     
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    Stargazer Bronze Contributor Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass

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    Ask to see the full set of Accounts for last 3 years.

    Dan

    PS: My friend was a Personal Trainer at a gym. The gym owner retired and simply gave it to him. You would be surprised how frequently this sort of thing can happen. So in itself I do not think it that suspicious but would want to see the Accounts to get the real story.
     
  12. EliTheGreat
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    Same thing just happened to a girl I dated in Charlotte NC. Her boss at the salon is moving into RE and gave her the salon business. Some people have different exit strategies I guess.
     
  13. EliTheGreat
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    meaning bank accounts ?
     
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  14. Stargazer
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    Stargazer Bronze Contributor Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass

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    Is this not what they are called in US?

    Balance Sheets, Cash Flow Statements, Profit & Loss

    Dan
     
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  15. EliTheGreat
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    brainfreeze . Thanks alot. Given that info would really make this deal solid
     
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  16. WJK
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    WJK Gold Contributor Speedway Pass

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    Whose going to clean the building every night? How about advertising? Phones? Computers? Wifi? And so on...
    wjkbussinessbuzz.com
     
  17. EliTheGreat
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    theres 3 phones for answering apointments . Barbershops work as grassroots movements and this place stays pretty packed during the week. From speaking to the workers, Slow days would be monday and tuesday. Ive already thought of plenty of ways to drive traffic during those days. Marketing on Facebook to the locals would be a big winner. There arent any computers or wifi in this shop. Besides fixtures, a tv, 3 phones , hair dryers and hundreds of clippers, alarm system and heater & ac thats it.

    I will reinvest in the first month with updating the paint job inside the location. This is a small location.
     
  18. KLaw
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    KLaw Gold Contributor Speedway Pass

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    How much is the lease on the building?
     
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    Hi - I've own two barbershops and I can tell you that the price that he's selling it for is normal. The expenses is normal as well. Most likely if it's located in a strip mall, you only pay for your electric bill, so $1000 a month


    Hi - I've owned two barbershops and I can tell you that the price that he's selling it for is normal. The expenses seems a little off, how much is the lease? The lease should be $1000 or more by itself and you still have your electric bill. But if it is only $1000, that's a big plus. The biggest thing is keeping your chairs full...I ended up selling both of my shops because I got tired of relying on barbers, as I'm not a barber either. They would leave in the middle of the night without notice. So, when the going gets tough, you have to pay all the expenses out of your pocket until you can fill your chairs. If it's commissioned based that means you would have to be there to collect your portion or you will need to pay a manager to manage the shop for you. This business can work, you just need reliable barbers that you can depend on.
     
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  20. EliTheGreat
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    Hi ! So first , yes the business is located in a strip mall and I will get in contact with the owner next week to hopefully crunch out all the numbers so far Ive only done a little ground work talking to the barbers to get a feel of the culture they have between themselves and current owner. As they wouldnt know all the numbers (aside from their rent) I will have to ask the boss.

    I do have a few quick questions for you. Id like to know if those two locations that you mentioned were located within the same city if you owed them both at the same time? How many chairs and what was the cashflow you were looking at each month?
    And should I prepare a game plan of scouting new barbers before I commit to this shop. Because in my thinking I would want to replace a barber as soon as possible. Within a couple days. Ive been going to this shop for 2 years and Ive only seen 1 guy leave and that was because of his long commute. As of now there are 3 barbers and 3 hairstylist.
     
  21. TDIN
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    TDIN New Contributor

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    No, I bought my first one in Alabama and I sold that one to purchase my last one which was located in Atlanta. The one in Atlanta did well, I had six chairs that rented out for $175 per week, the lease was $1200 and my electric bill, cable, internet..etc fluctuated around $300-$500 a month. So my cash flow was around $2700 a month. When all the chairs are full, it was all good, but as barbers start leaving it became overwhelming and it takes a while to replace them. When you do find a replacement, most of the time they are new to cutting hair and they have to build their clientele, so you try to work with them on the booth rent, but most barbers are lazy, they want to sit back and wait on walk-ins. So, while you're interviewing barbers and if they ask you how's the "foot traffic" move on to the next one....because he's not going to put in the work to build their own business.
     
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  22. EliTheGreat
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    Wow, great info. A few things I grabbed from this. One thing is if some crazy events happen and I have to hire new barbers I would most definitely have to 10X the online marketing presence to regain new customers and their trust. If Im cash flowing the same as you did Id make my first profit in the first 6 months. Id def have to keep a few thousand in reserves before I turn a profit, for those rainy days aka empty booths.

    And you physically went and picked up the money every week?
     
  23. TDIN
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    I would stop in on the weekend, but not to pick up the money, just to check on things. The way I had it set up was, I had a "Square" cash register, when the client used their credit card the barber would process the card at the cash register and write their name on the receipts and give it to my manager. My manager would compile all the receipts at the end of the week and send me a report of booth rent owed. By the end of the week, I would have received all the booth rent that was due to me...sometimes I would owe my barbers money at the end of the week. For this service I would give my manager $25 a week off of his booth rent to basically oversee the shop while i'm not there. This method worked for me because I didn't have to chase anyone at the end of the week for my booth rent.
     
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  24. WJK
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    Check the terms of your lease. You don't want to start and find that you have to move anytime soon. I would try to buy the location ASAP. See if you can do a lease option. That way you'll have time to see if the business will work before you commit to buy the building. Be sure and talk to the Building and Safety Dept. for your town. Make sure there are no violations or court orders on the business nor the building.

    I have a self-service Laundromat that is similar in nature to what you are doing. I open it in the mornings. We clean and close it at night. I love my little Laundromat! It's a cash and carry business that gives back 365 days per year. And yes, I open it on Christmas, and even my birthday!
    www.wjkbusinessbuzz.com
     
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  25. EliTheGreat
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    Great info. And if Im not offered an option to buy the building then I should sign atleast a 2 year lease?
     

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