ist magazine February 2023

Feature

CONDUCTING A

ANALYSIS PROFESSIONAL BUSINESS

By Jerry Deveney

W hether you are a seasoned industry veteran exploring new options, planning to open your first salon, or preparing to buy or sell an existing business, a detailed analysis of the location or potential location will provide you with vital information to help you to make sound business decisions. You can conduct a basic business analysis by gathering the following info: ◆ Total Monthly Expenses: rent, labor, loan payments, insurance, telephone, Internet, software, utilities, sanitation, advertising, supplies. ◆ List All Tanning Systems: make, model, quantity of each and maximum exposure times. This will be used to de termine the operating cost per session for each unit (lamp use and electrical consumption). ◆ Hours of Operation: hours open per day, days open per month.

◆ Average Price Charged Per Session: best deal for the customer. ◆ While additional costs and factors will come into play as you delve further into your analysis, this will provide a solid foundation to begin the process. For purposes of this analysis we will use the following assumptions: ◆ Total Monthly Expenses: $6,000 ◆ Equipment: Eight, 32-lamp units with 15-minute max exposure time

◆ Average Price Charged per Session: $5 ◆ Operating Cost per Session: $.30 (lamp use and electrical consumption) The average revenue of $5 per session and operating cost of $.30 per session, provides an adjusted gross profit of $4.70 per session. Monthly expenses of $6,000/$4.70 = 1,277 sessions per month, or 43 sessions per day to break even.

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February 2023 istmagazine.com