huynhhh Posted January 20, 2015 Share Posted January 20, 2015 9 locations, 17 vendesigns in the location Net profit 500$ 4-6weeks He says gross is anywhere around 700+ To me this sounds like a stretch.. Asking price is 3k.. Thoughts? Link to comment Share on other sites More sharing options...
Rick Posted January 20, 2015 Share Posted January 20, 2015 $41 per machine per service cycle is very good, but not so high it would cause me to believe he's lying. Averaging two machines per location leads me to believe these will be in blue collar, manufacturing/warehouse spots. What I'm more concerned with is his estimation of $500 net every 4-6 weeks. Well which is it? It can't be both. If it nets $500 every 4 weeks then it nets $750 every six and there's a big damn difference between those two numbers. If he knew the truth there's no need to give ranges. It wouldn't matter how often he serviced because he'd just take the yearly total, divide by 12 and tell you the monthly gross. In my experience (again this is ONLY my experience), when a seller gives me ranges of his service cycle the machines are generally neglected, there's a good chance the vend amounts are out of whack and they are fudging the numbers. Which does not mean this is automatically a bad deal. The truth is usually 10-20% less than the longest service cycle they mention. So in this example, if a seller is telling me $500 every 4-6 weeks I'm bracing myself for closer to $400-$450 every 6 weeks and sometimes it's even worse because the yahoos set their vend amounts wide open. You need more information; ask him what product and amounts he's vending. Test vend them and figure the COG yourself if you have to, I'd be shocked if he could accurately tell you. Are these warehouses or break rooms or do we have public foot traffic from restaurants and laundromats? If everything checks out and it really is grossing $700/month (HINT...it doesn't) then it's worth very close to his asking price. But I think if you spend a little bit of time digging and educating him (sincerely, not with a condescending attitude) you should be able to get him down to the fair price (I'm suspecting $1200-$1700). Link to comment Share on other sites More sharing options...
huynhhh Posted January 20, 2015 Author Share Posted January 20, 2015 $41 per machine per service cycle is very good, but not so high it would cause me to believe he's lying. Averaging two machines per location leads me to believe these will be in blue collar, manufacturing/warehouse spots. What I'm more concerned with is his estimation of $500 net every 4-6 weeks. Well which is it? It can't be both. If it nets $500 every 4 weeks then it nets $750 every six and there's a big damn difference between those two numbers. If he knew the truth there's no need to give ranges. It wouldn't matter how often he serviced because he'd just take the yearly total, divide by 12 and tell you the monthly gross. In my experience (again this is ONLY my experience), when a seller gives me ranges of his service cycle the machines are generally neglected, there's a good chance the vend amounts are out of whack and they are fudging the numbers. Which does not mean this is automatically a bad deal. The truth is usually 10-20% less than the longest service cycle they mention. So in this example, if a seller is telling me $500 every 4-6 weeks I'm bracing myself for closer to $400-$450 every 6 weeks and sometimes it's even worse because the yahoos set their vend amounts wide open. You need more information; ask him what product and amounts he's vending. Test vend them and figure the COG yourself if you have to, I'd be shocked if he could accurately tell you. Are these warehouses or break rooms or do we have public foot traffic from restaurants and laundromats? If everything checks out and it really is grossing $700/month (HINT...it doesn't) then it's worth very close to his asking price. But I think if you spend a little bit of time digging and educating him (sincerely, not with a condescending attitude) you should be able to get him down to the fair price (I'm suspecting $1200-$1700). He is telling me all of the information is with his "accountant" and wants to meet up to look it up.. My opinion is that I don't want to waste my time meeting up if I can smell phony in him already. As I'm a pretty busy guy myself.. High school from 9-330 and I'm working 18 hours on the weekend.. So my free time is valuable to me.. I talked him down from 3900 to 3k.. All the locations are located in the heart of the city (downtown) and some locations have 5 machines in a building (almost all machines are in high rises) He told me he gets candy from the same supplier I get (which is the cheapest candy in Canada on the west coast) so I know exactly how much he is buying candy for, only question is, like you said rick, how much candy is coming out for a quarter. Any suggestions from you vets specific questions or techniques to talk this puppy down? Thanks Link to comment Share on other sites More sharing options...
Rick Posted January 20, 2015 Share Posted January 20, 2015 The only way to talk him down even further than the 25% he already went from the original asking price is to get enough information that you can talk to him in terms of Return On Investment. And that's going to take time. If your time is that valuable, I'd just pull the plug without going any further - there's easier deals out there. Assuming you decide to proceed, it sounds like you're dealing with a fairly shrewd seller. His goal is to keep the conversation about numbers as general as possible. Your goal as the buyer is to gather as many objective facts as possible. I'd start by asking what his ROI was when he bought these machines. Make that the FIRST question and he's more likely to tell you the truth. If anything, it's even possible that he'll lowball it because, in his mind, he wants to make what he's selling look as valuable to you as possible. From there you can sign a non-compete agreement and check out the route with him. Test vend and document how many pieces. After the fact, when you have some time you can go back and figure what his COG really is. Then factor in all of your regular costs like gas, taxes, charity, etc. and come up with your true monthly net based on sales. Then you're armed with what you really need to know to negotiate with him. Once I figured everything out I would share the numbers with him and where your ROI is at. Who knows, you may run the numbers and your ROI truly is 6 months. Jackpot. In that case, the deal looks good and you pull the trigger on the $3k asking price (or try to work down from there if you require even less). More than likely though, what will happen is you find your ROI is somewhere between 18-36 months. Then you can drop the bomb on him with, "So your ROI was ____ but your asking price puts me at ____ return on investment, Would you be willing to bring the price down to closer where your ROI was? If not, why?Only way to negotiate with an inflated seller is presenting them with the cold, hard numbers and allow them to go down on the price themselves. Link to comment Share on other sites More sharing options...
jmac Posted January 21, 2015 Share Posted January 21, 2015 What were his reasons for selling? If the locations are close together, i would think you could service the machines in about 2 hours. Im not familiar with those machines, maybe they take longer to service. With that being said if he nets $500 for 2 hours work, why would he sell? Also if they are the Uturn 4 selects, if the locations are slow you would have to worry about spoiled product. If the route has been serviced properly, the candy could be stale, filling 17 machines is not cheap. The way I look at it, for approx. $2000 you could order 9 new , single head Southern Beavers (with stands) and have the same amount of locations with better machines. The other option is to show up with $1500 and say take it or leave it, and be prepared to walk away if he declines. Personally I would not pay that much. Link to comment Share on other sites More sharing options...
huynhhh Posted January 21, 2015 Author Share Posted January 21, 2015 What were his reasons for selling? If the locations are close together, i would think you could service the machines in about 2 hours. Im not familiar with those machines, maybe they take longer to service. With that being said if he nets $500 for 2 hours work, why would he sell? Also if they are the Uturn 4 selects, if the locations are slow you would have to worry about spoiled product. If the route has been serviced properly, the candy could be stale, filling 17 machines is not cheap. The way I look at it, for approx. $2000 you could order 9 new , single head Southern Beavers (with stands) and have the same amount of locations with better machines. The other option is to show up with $1500 and say take it or leave it, and be prepared to walk away if he declines. Personally I would not pay that much. The reason why he is selling is because he is in school full time and has to take time off of a job to service (did not make sense to me tbh if it does net 500$) possibly because the locations are far from where he lives..? But they are all bunched up together and the reason why I am interested in this route is because it's on the way to one location, 40 minutes out where I gross 60$ On a triple (although 80% of the sales are coming from PMM and the people demand 6-7 PMMs because of previous vendor) What were his reasons for selling? If the locations are close together, i would think you could service the machines in about 2 hours. Im not familiar with those machines, maybe they take longer to service. With that being said if he nets $500 for 2 hours work, why would he sell? Also if they are the Uturn 4 selects, if the locations are slow you would have to worry about spoiled product. If the route has been serviced properly, the candy could be stale, filling 17 machines is not cheap. The way I look at it, for approx. $2000 you could order 9 new , single head Southern Beavers (with stands) and have the same amount of locations with better machines. The other option is to show up with $1500 and say take it or leave it, and be prepared to walk away if he declines. Personally I would not pay that much. The reason why he is selling is because he is in school full time and has to take time off of a job to service (did not make sense to me tbh if it does net 500$) possibly because the locations are far from where he lives..? But they are all bunched up together and the reason why I am interested in this route is because it's on the way to one location, 40 minutes out where I gross 60$ On a uturn (although 80% of the sales are coming from PMM and the people demand 6-7 PMMs because of previous vendor) they empty 2 heads in 4-5 weeks Link to comment Share on other sites More sharing options...
shepherdsflock Posted January 21, 2015 Share Posted January 21, 2015 Netting $500 on a gross of $700 sounds unrealistic, unless the guy is paying no charity or commission fees and no sales tax. Link to comment Share on other sites More sharing options...
rodney69 Posted January 21, 2015 Share Posted January 21, 2015 I disagree, 29% cog isn't likely in ca is it? Not sure, just clarifying. That's pretty low if there is pmm in there. Vendesigns are easy to service for a 4 select. 10 min tops if you don't have to change anything and if you take an extra coin tube with you even less. I wouldn't service on a 30 day cycle though. They hold a lot of product. 80.00 in them is about what I used to open them up for with mom at 9 pcs. Link to comment Share on other sites More sharing options...
rodney69 Posted January 21, 2015 Share Posted January 21, 2015 9 locations, 17 vendesigns in the location Net profit 500$ 4-6weeks He says gross is anywhere around 700+ To me this sounds like a stretch.. Asking price is 3k.. Thoughts? To give this a fare shake, how much are vendesigns in CA? Candy? In the US, 200 is to much per machine, but, maybe there out isn't? Link to comment Share on other sites More sharing options...
huynhhh Posted January 21, 2015 Author Share Posted January 21, 2015 To give this a fare shake, how much are vendesigns in CA? Candy? In the US, 200 is to much per machine, but, maybe there out isn't? Dispensing 6pmm is a 60% cog and the rest (skittles mike n Ike's etc) dispensing 9 is around 20-23% GB is 4% Netting $500 on a gross of $700 sounds unrealistic, unless the guy is paying no charity or commission fees and no sales tax. He tells me he donates or gives commission 2$ for each machine monthly Link to comment Share on other sites More sharing options...
rodney69 Posted January 21, 2015 Share Posted January 21, 2015 So according to what the numbers are, you have 29.5% cog, and your pmm is 60? Well, here the pmm's are the fastest seller about 2 to 1 or more. If it's the same there and you figure in the 2.00 a machine, then there is no way that it's right. It would be closer to 40 or 44% cog (i'm doing quick math not exact). That's without the 2.00 ea though. How much does used vendesign's sell for up there normally? Link to comment Share on other sites More sharing options...
huynhhh Posted January 21, 2015 Author Share Posted January 21, 2015 So according to what the numbers are, you have 29.5% cog, and your pmm is 60? Well, here the pmm's are the fastest seller about 2 to 1 or more. If it's the same there and you figure in the 2.00 a machine, then there is no way that it's right. It would be closer to 40 or 44% cog (i'm doing quick math not exact). That's without the 2.00 ea though. How much does used vendesign's sell for up there normally? They are my best sellers aswell.. My supplier just raised the prices on me 120(after 12%tax) for a case if 25lbs.. Seriously considering dollar mechs soon for beaver.. Any Canadians feel my pain? And have locations complain about 4pmm per quarter..? ):And as far as my knowledge (a few CL ads) they are 40-60$ each for vendesigns PS: if You started locating in British Columbia Vancouver soon.. That would be great Link to comment Share on other sites More sharing options...
jmac Posted January 26, 2015 Share Posted January 26, 2015 So did you buy the route? Link to comment Share on other sites More sharing options...
huynhhh Posted January 26, 2015 Author Share Posted January 26, 2015 So did you buy the route? He is telling me he needs a few days to gather all the service records because it is with his accountant.. He is telling me it should take a few days.. This is sketchy to me because wouldn't everyone that is legit have service records on hand anyway? He says it's been in place for 5+ years and I asked for 24monyhs.. To me it sounds like he is just making the numbers up LOL.. What do you guys think? Link to comment Share on other sites More sharing options...
rodney69 Posted January 26, 2015 Share Posted January 26, 2015 We are currently testing new staff for Canada. We'll see how it goes. I would love to find a trust worthy locator for up there and for snack and soda. Problem is, as soon as they here my standards, that's usually the end of the conversation! LOL I don't have service records past the last year currently. I would have to dig. The bigger you get the more someone else takes care of things you don't want to. I'm getting ready to hire someone for bookkeeping myself. Link to comment Share on other sites More sharing options...
havending Posted January 26, 2015 Share Posted January 26, 2015 He is telling me he needs a few days to gather all the service records because it is with his accountant.. He is telling me it should take a few days.. This is sketchy to me because wouldn't everyone that is legit have service records on hand anyway? He says it's been in place for 5+ years and I asked for 24monyhs.. To me it sounds like he is just making the numbers up LOL.. What do you guys think? Not sure why the account would need location service records. Link to comment Share on other sites More sharing options...
huynhhh Posted January 26, 2015 Author Share Posted January 26, 2015 Not sure why the account would need location service records. When I say service records I mean like records of the service $$'s not the dates.. If that's what you mean Link to comment Share on other sites More sharing options...
havending Posted January 26, 2015 Share Posted January 26, 2015 When I say service records I mean like records of the service $$'s not the dates.. If that's what you mean I'm saying that the Accountant does not work off of location numbers. They want totals. Total sales deposits and total expenses Link to comment Share on other sites More sharing options...
BouncyBalls Posted January 27, 2015 Share Posted January 27, 2015 I'm saying that the Accountant does not work off of location numbers. They want totals. Total sales deposits and total expenses Word! Link to comment Share on other sites More sharing options...
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