A local business has asked you to consult about the direction and growth of their business.

Not all information is available – use web searches/personal knowledge to make reasonable assumptions for the values used!

Currently, the business has 1 sauna room, 2 massage rooms, and 3 tanning rooms. The business owner is worried that the new franchise tanning place, which is cheaper than what they can charge will force the owner to eliminate the tanning option as the price of tanning is as low as they can go. The owner would replace the tanning beds with massage beds. One single and the other two rooms would be opened to have a couple massage area. This would also eliminate the front desk staff who is paid $12/hour as each masseuse would be responsible to do their own cleaning and transactions.

Currently the tanning beds earn $7,000 gross for 5 months, the remaining months they gross $1,000 a month. Electric cost for the tanning beds are $500 per month, every 8 months all of the bulbs need to be replaced at a cost of $1,000. They also need a front counter person to wipe down all beds before and after each guest for appearance and sanitation requirements.

The building owner leases 1200 square feet at a cost of $2400 per month. The owner has 3 employees that are part-time as they do specialized services that the owner cannot do. The owner works 12 hours per day 6 days a week and has on average 50 hours of billable time (i.e. working with a client). The average rate is $50 per hour

Write an explanation of what you would advise the business owner to do.

Answer rating: 100% (QA)

The owner should adopt a specialized policy under which he should provide the services to the custom... View the full answer