Indoor Tanning Salon Entrepreneur The Buzz


Life is hectic. Beaches may be polluted. And resorts are distant and expensive. As for the local weather, it can be too unpredictable to achieve an even tan on a consistent basis. What's a person to do?

For those eager to darken a shade or two, the indoor tanning salon waits with open arms and booths. Indoor salons mean no more painful sunburns and annoying bikini lines. And staff employees are always on hand to offer helpful tidbits on skin care.

For those who know enough to wear protective eyewear and to stay awake in the comforts of a tanning booth, the salon is a relaxing way to darken a shade during the lunch hour. And the introduction of spray-on tanning in salons has increased both the safety and popularity of tanning salons.

Money Talks

Joining in on this lucrative market comes with a price. Entrepreneurs may shell out as much as $300,000 for a salon with stand-up equipment, luxury sun beds and super beds. After the initial investment, ongoing expenses include the operation of sun lamps, electrical consumption by tanning beds, and the daily maintenance of salon equipment.

Fixed costs of operating a salon include rent, insurance, labor, and loan payments. And with the fierce competition in this industry, budgeting for advertising and promotion may be essential to the ultimate success of your business.

"We overspent on the first store," says Keith Lipman, president and CEO of the Phoenix-based Energy Tanning salon and a distribution company called Suntan Express.

"Just our glass-block wall and desk... [were] $8,000. The location cost $130,000. Tanning equipment can cost anywhere from $2,500 to $30,000 [per item]. We were smart and opened with used beds. We cleaned them up, re-bulbed them, and they worked out fine."

Despite high start-up costs, and a few mistakes, Lipman and company vice-president Randy L. Eddlemon raked in $80,000 by the end of month one.

While costs may seem high, the average salon breaks even at only 20 to 30 percent of maximum capacity. Popular salons often generate up to three times break-even costs annually. This can translate to a nice salary for the successful entrepreneur.

The return on investment varies, but the typical tanning salon offering 10 pieces of sun tanning equipment will bring in between $150,000 and $300,000 per year.

Harry Jones is director of marketing for Palm Beach Corporation, which owns Palm Beach Tanning Studios. "A middle-of-the-road salon will cost about $10,000 per bed to open," says Jones, adding you shouldn't go too small just to save money. With high fixed costs, "a six-bed salon will hardly make you a good living, even if it is successful."

Keith Lipman suggests an alternative route for people eager to join in on the sun-tanning craze. "Hook up with a franchise. They have the support of the corporate umbrella."

Lipman and Eddlemon's current project is to turn their own business, Energy Tanning, into a franchise for entrepreneurs who are overwhelmed by the sky-high cost of business.

Bad Competition is the Best Competition

The ideal place to open a location, according to Sun Business, may be within spitting distance to your nearest competitor!

This is especially true if the competition runs a shoddy business; perhaps they don't properly clean and sanitize equipment. If your competitor is popular, despite a poorly run business, the outlook is excellent for the entrepreneur who runs a pristine operation.

Competition can get ugly in this business, says Lipman. "Salons undercut each other, and almost always talk bad about each other. Quality educated salons, such as ours, have increased business due to positive press and the education of our clientele."

Once you have loyal customers, however, your work isn't finished. A successful salon seeks new clients while encouraging existing customers to return.

Another way that Lipman increases business is by attending trade shows. Conferences are usually sponsored by leading trade journals, including Looking Fit magazine, Tanning Trends, and Today's Image. Frequenting trade events will keep the new owner up to date on regulations, state-of-the-art equipment, and important safety information.

A Head for Business

To be successful in this billion-dollar industry, a future entrepreneur must be savvy in marketing and business. Whether formal or informal, having business smarts is the key to pulling off a high-cost venture.

"My vice-president, Randy L. Eddlemon, has a financial education. My education was some college, three years with the Cook County sheriff's department and eight years with Bally Total Fitness. They gave me my business background on how to run a club," explains Energy Tanning's Lipman. He also created a thorough business plan.

Jones, of Palm Beach Tanning Studios, also has a business management background. He says the key to the successful tanning salon entrepreneur is to "know the business, know the clientele, have lots of luck, and a bit of money to help when nobody comes to tan."

Tanning Trends

"There has been tremendous growth in the tanning industry and I see that continuing for the next decade. The trend is, and will, move to the mega-salon that offers 30 or more tanning units with discounted pricing," says Jones.

Becoming educated about the future trends of the industry, developing a thorough business plan, and obtaining solid financial backing is always valuable advice. This is especially true when it comes to high-cost ventures. Business survival in this thriving industry demands knowledge -- long before tanning salon entrepreneurs have their grand opening celebrations.

Links

Small Business Planner
Learn the basics of starting a business