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Thursday
Jan172013

A Little Known Secret

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... is that hairdressers and salons (where I'm from they're called "beauty shops") rarely go out of business. At least the better established ones don't.

Doesn't matter whether we're talking good economic times or bad, a well run salon is a cash machine. Pure and simple.

But not all salons are equally profitable and it still takes a skilled operator to make the most of a good business.

A little over a decade ago, I got a call from a woman desperate to rent her commercial building. The most likely prospect was someone wanting to open a hair salon and her Realtor suggested she remodel it for that specific purpose.

What questions should she ask? What did she need to know?

What's interesting is just how little has changed. For the most part, I would offer this same advice today.

Take some time to look into your potential tenant's background --

Do they have experience in this field or did they just graduate from beauty school?

Do they have an established client base or are they planning to "wing-it"?

Will you be expected to finish out the building and if so, to what degree?

What kind (how much) of liability insurance does she currently carry and do you need her to get a new policy (for your benefit)?

Is she in this for herself or are there other "silent partners"?

Has she applied for and received the proper licenses and permits?

What's her business plan? Her past experience? Her cash reserves?

Who's drawing up the lease? To whose benefit?

Whose doing the "books" CPA, other, or will she employ the "personal touch"?

Employees? Plans? How to pay them? Payroll reports, etc?

OK, you get the idea here, right?

Perhaps your Realtor is correct; and there might be others wanting it after it becomes a salon,... but I wouldn't count on it. Perhaps his commission is clouding his judgment a bit.

These are service businesses -- plain and simple. Pay attention to and grow your customer base and these things do very well indeed. Ignore the fact that "salons" are a dime a dozen and that you can be easily replaced (in most locales) and you'll go broke.

Like so many other businesses (restaurants come to mind), these can look deceptively simple to outsiders. After all, how difficult can it be to keep women happy, right?

Hmmm, maybe I better leave that one alone.

Anyway,... my point is that it's up to the individual business owner to make these successful. The location can be a big help to be sure, but it would be nice to know that your tenant has the skill and fortitude to make this thing work -- for both of you.

Check her out. Make sure your questions get answers and then make your decision.

Most of us have had a bad tenant or two (some of us many more than that). Personally, I can tell you I'd far rather keep the place empty than to put a weak tenant into a situation they can't handle. Too much hassle.

On the other hand, if she's the only choice...

Good luck.

 

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