Operating Costs & Revenues

It is important for a business to set a budget for each aspect of the business and account for each separately. This will check the relative profits of each part and illustrate where improvements and adjustments must be made in the merchandising plan. Here are some of the expenses that must be considered in your salon operation: rent, utilities, professional services, telephone service, insurance, advertising, labor and equipment.

The big cost for many tanning salons is the equipment. Some salons prefer to lease equipment because of service contracts, convenient terms, tax advantages and rapid technological advances that tend to date equipment quickly. Equipment is a major expense to many salons and the cost is a major drawback to entering the business. However, the manufacturers of tanning equipment have come a long way in terms of offering enough models to satisfy nearly every budget.

Salon owners should project expenses and income before they even begin, hereby avoiding the possibility of unwelcome surprises later. The following is an example of an outright purchase of eight tanning beds, based on a slightly higher than average cost of a medium priced bed, along with many of the necessary start-up costs.

Below it, the chart showing approximate income is based on operating 12 hours a day, 25 days a month and 300 days a year. By projecting these figures month by month, you’ll start to see an accurate picture of what to expect from the business.

A large share of your income will be derived from your tanning services. The amount is based on how many sessions are given and what is charged for each session. Another portion of your total income will be derived from retail sales and from other services you provide. These too should be added into both the expense and income projections.

Of course, all of these costs and income projections are estimates and they will vary, depending on your locations and suppliers. Let them serve as a guide when considering what kind and size of salon to open. Research the actual costs in your area and adjust the tables accordingly. Then, once you’ve been open for a month or two, get in the habit of comparing the month’s bills and receipts with your projections and see if you need to make any adjustments. Also plan to set aside some money every month to cover the cost of maintenance and equipment replacement down the road. Living off of the depreciation of your equipment can give the illusion that you are making money, when in actuality, you’re just taking it out of the business.