Opening a Tanning Salon Questions and Answers (FAQ)

Questions and answers regarding your tanning salon project.

What are the next steps in the process of opening a tanning salon?

As you may already know, there are many considerations when starting a tanning salon or any new business for that matter.  After you define your vision, determine your ability to commit time, identify necessary skills, information and support, and evaluate market size, stability and risk in your area, you’ll need to solidify channels of financing and secure your retail space as the next steps.

How much cash do I need to have?

Many SBA lenders will need at least 20% cash with the remaining secured through assets, i.e. equity in a home, retirement, savings, etc.  Most clients that we work with invest a total of $250 - $350k in their salon; all-inclusive.  This investment would put your required cash contribution at $50 - $70k and the rest collateralized with assets.  The banks want to limit their exposure to risk as much as possible and generally need the loan to be secured up to 90% of its value.  The old days of starting a business on 100% borrowed money are long gone and are showing no signs of returning.

What kind of credit do I need to have?

Both credit and debt are factored but credit alone isn't as important as having a low debt-to-income ratio.  Credit does count but banks are willing to work with individuals that have credit scores as low as 660 as long as they show a significant yearly gross income and low revolving debt.  The ideal candidate will have the ability to inject 20% cash, contribute up to 70% of the loan value in other assets as collateral and have the ability to make the monthly loan payment with their current income or savings assuming the salon does not make any money.

Why do others recommend leasing tanning beds so much?

Others may recommend leasing your equipment because they lack the knowledge necessary to help you obtain SBA financing or they may have a direct financial incentive to push you into leasing.  The truth is that leasing is rarely in your best interest as a new business owner because of the very high interest rates (nearly 40% in some cases) and the inflexible terms associated with them.  InSun, Inc. has a published article that expands on leasing tanning beds that you may find interesting.

Is there a product minimum that I must buy from your company to receive assistance?

No minimums.  We adjust our involvement in your project based on the size of the salon.  Fewer beds usually mean less work for our team.

Do you offer assistance with a business plan?

Yes.  Banks require business plans for new salons for several reasons. First, the process is usually effective at weeding out the weak and poorly prepared entrepreneurs. Second, the banks want assurances that you know what you are doing. Banks with money to invest may see large numbers of business plans and opportunities each week. They respond positively only to those that are strongly persuasive and the most prepared.

With that said, InSun can help you create your business plan in 2 ways. 

  • We can provide good direction and a few sample sections of our professional business plan for free.  However, when it comes to the pen on the paper, it’s up to you. 
  • For a fee, we can create the entire business plan from the ground up based on you as an individual and any partners that may be involved as well as the area that you plan to serve with your salon.  We will publish, bind and send up to 6 copies of the business plan for our fee.

Do you offer assistance with financing and securing loans?

Yes.  Beyond helping you create a professional business plan, we have several resources for financing and we can help you through the entire process. You will still need to meet the requirements of the bank but you stand a much better chance of getting funded with our help.

I have a location in mind; does it need to be approved by InSun before proceeding?

We have many tools at our disposal that will help you find and assess the best possible location for your new tanning salon but the ultimate decision is yours.  You are not required to adhere to our recommendations in any way but we would like to provide you with our input.  We have helped many clients avoid bad or saturated markets by the input we provide.

Do you help with the construction of the tanning salon?

Yes.  Anyone can draw boxes on a piece of paper and call it “salon layout assistance” but we take it to the next level and produce a complete construction binder that includes details on every aspect of your build out.  Our binder is substantially similar to what an architectural firm would charge $7,000 - $11,000 to produce.  The main difference is that we do this free for those in our program.

What is your qualification process to obtain assistance?

The financial, market, and competitive feasibility studies we conduct on the area you plan to serve will define how we proceed.  After assessing these items, we will determine any opportunities that may exist and begin the planning process.

Is there any other vital information that I need to know?

Getting funded represents the single biggest challenge for many new entrepreneurs.   There are many creative ways to borrow money but most will require a significant cash and asset contribution on your part.  If you are prepared for this before you approach the banks, you’ll have a great chance of getting an approval and building a successful business with our help.