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What are you doing to control cost?


will.vend

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Before you can analyze, you have to make sure everything is being tracked. I track all of my expenses in Quicken. All business transactions must have a receipt. Those receipts then get entered into Quicken. Most expenses are charged on a single business credit card and I cross check all charges with the Quicken register to make sure I did not miss entering anything. I breakout and categorize expenses at a low level via category codes. So I can see the separate costs for superballs, gum, candy, toys, flat stickers, displays, gas, charity fees, etc. Even spray paint and coin wrappers! It’s amazing how these things add up and can get out of control! Every month I review (and scrutinize) those expense and always look to cut them. I can also run a YTD comparison to see if I am making any headway in lowering expenses compared with last year at this time. The reports also allow me to drill down on any individual category if I wish to further investigate all transactions for that category.

Those numbers are real and will make you take action! Just one example. As I stated in a prior post, I could not believe how much YTD expenses I spent on product displays. So I started making my own displays to lower that cost.

I just made my first pallet order a few months ago to take advantage of the volume discounts and reduced shipping. I “charged” all of the shipping expense to the superballs category and still had a decent 4.3 cent cost per ball. All the other products were (in an accounting sense) shipped for free since they came along for the ride with the superballs. Of course to do this, you have to “get in bed” with one supplier. The days of me buying just-in-time inventory are over!

Good post Jax. I wish that I were as good with breaking down everything as you are. I have to pay a pro. Growing up I was lucky to learn a lot about business from my father who was the cash backer in many types of business. If you wanted to open a business and the bank said NO well then you went to my father. I spent many night and weekends washing dishes in a food place or helping pack soft shell crabs in his seafood plant or what ever else he had me do. Now back in the day he kept his numbers on the back of a scrap piece of paper and and took the cash to the bank in a paper sack that he always reused lol. And only put enough money in the bank to cover the bills and in his words the rest is "pure Profit" So when I see many of you guys doing a great job with the % for this and that and break it down to the penny it always make me think of him and laugh. I deposit all my sales and pay all the bills do all my ordering etc. But every gas ticket, invoice, hotel bill, deposit ticket and anything else vending all gets turned in to my pro. Then about the second week of the month i get a P&l to see how i did. I do have a spread sheet at home to put in sales and purchases so I always know where im at. I guess im old school in that sales less expenses = profit. Being in this business for so long I have seen lots of change. Esp on quality of product and price points. Here are the best tips I have from controlling cost.

As Jax said save on freight and product cost by ordering pallet product. I can freight an entire pallet for around 160. I also get the tiered pricing on product. Go to more hybird one inch caps. Example. fuzzy moustash from A&A in two inch is 25.00. one inch of the same product is i think 17.50 or 18.50. saves you about 7.00 per 250. They pack 4 one inch bags to a 250 box so your shipping 4 to 1. Put 8 to 12 weeks between cycles it works great. You may have to put in more heads but its worth it. I have cut hotels to 2 days a week. Use product longer and rotate thru more locations to get more use out of displays. When your done with displays always break them down and cap the toys and throw in to the junk mix.

Add your own tips

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  • 2 years later...

I am always watching my expenses to control my profit margin but lately it has gotten more difficult, all the little expenses add up and can get out of hand quick. one area that is rising quickly is gas. for the month of march I spent $440.00, the month of april I have spent 530.00. thats an increase of a little less than 1% in one month and rising everyday.

I do all kinds of things to save money, i.e. cap when i can, extend my service cycle by just a few days, go on longer routes instead of 2 smaller ones., buy enough product to have it shipped on pallets to save on shipping, etc...but it seems like all the cost are rising quicker than my budgeting is being effective.

one delicate area I have started adjusting is my commission payouts, of course this is discussed with the locations, some understand and some dont, but Im only talking a decrease of 1% across the board. to date my commissions are at 24% compared to last year of 25% so I am making headway there, but again that is a delicate thing to do with locations.

Am I missing something here? How do you guys manage your expenses in these difficult times?

Friend from 440 to 530 the increase is not a little less than a one percent is a littel less than 20%!!!!!!!!!!!!!!!!!!!!!!!!1

Maybe you are missing an electrric car.

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I am always watching my expenses to control my profit margin but lately it has gotten more difficult, all the little expenses add up and can get out of hand quick. one area that is rising quickly is gas. for the month of march I spent $440.00, the month of april I have spent 530.00. thats an increase of a little less than 1% in one month and rising everyday.

I do all kinds of things to save money, i.e. cap when i can, extend my service cycle by just a few days, go on longer routes instead of 2 smaller ones., buy enough product to have it shipped on pallets to save on shipping, etc...but it seems like all the cost are rising quicker than my budgeting is being effective.

one delicate area I have started adjusting is my commission payouts, of course this is discussed with the locations, some understand and some dont, but Im only talking a decrease of 1% across the board. to date my commissions are at 24% compared to last year of 25% so I am making headway there, but again that is a delicate thing to do with locations.

Am I missing something here? How do you guys manage your expenses in these difficult times?

I am guessing you dont use the car solely for collecting money from the machines!

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Hillbilly,

I color code my spread sheet to mark those locations that need a 30 day check up. My goal is to be in and out as quick as possible since I have 3 counties to cover. So I do not collect any cash or pay commissions. I only check the inventory and refill what ever is needed. Of course if there is a maintenance problem (like a broken coin mech), I will fix it on the spot. But you can get in and out pretty quickly when not handling the coins. Sometimes I just walk in and out since the inventory is just fine for that cycle. I used to have one location that demanded being paid every 30 days, but they went bankrupt. So every location is paid every 60 days. Now it is important to let your commission accounts know that you performing a 30 day check and only inspecting and refilling the inventory. But NOT collecting any money. On a few occasions, I have been called asking, “Where is our money”? So now I make sure to tell the location owner/manager before I leave that I was in the neighborhood and just wanted to check on and refill the inventory level and did not collect any money but will settle up with them next month.

My 30 day check list is sort of fluid and changes with the tourist season or changes if I suspect tampering or mischief at a location that I wish to keep a closer eye on. So some months it may be just under 10 locations and other months it can be as many 25 locations. A location may be removed from the 30 day check list due to a natural drop in volume or if I find that I no longer need to add more inventories every 30 days. In a strange way, some locations naturally “fix” themselves over time and just drop off the 30 day check list without any upgrades. It can take 6 months for a location to “settle in” with its buying patterns. Of course the best case for dropping off the 30 day list is when I add additional capacity, volume is constant but no longer sells out in 60 days. In any event, it is a nice problem to have.

Sorry, A bit long winded there, but wanted to tell the whole story. Or as Paul Harvey used to say, "The rest of the story"!

I have been toying with the idea (no pun intended!) of going to 10 week cycles. Have any of your locations "complained" about going to 12 weeks? Do they even notice? Just curious.

Of course they do, business owners want their money, and guess what? they want it now!!!

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Not pretty times for the large operator much less the guy who has just a few machines. Best advice from way down south is to consolidate your locations so they are close to home-base and do the best you can to stock your machines with higher margin products that will allow you to extend your service cycle. I read from a craigslist post that an operator's most profitable location was the machine his daughter had commandeered and placed in her bedroom. No gas necessary to service and his daughter's friends were the best customer.

Thats just plain stupid. Why didnt the daughter buy her own.

 

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Before you can analyze, you have to make sure everything is being tracked. I track all of my expenses in Quicken. All business transactions must have a receipt. Those receipts then get entered into Quicken. Most expenses are charged on a single business credit card and I cross check all charges with the Quicken register to make sure I did not miss entering anything. I breakout and categorize expenses at a low level via category codes. So I can see the separate costs for superballs, gum, candy, toys, flat stickers, displays, gas, charity fees, etc. Even spray paint and coin wrappers! It’s amazing how these things add up and can get out of control! Every month I review (and scrutinize) those expense and always look to cut them. I can also run a YTD comparison to see if I am making any headway in lowering expenses compared with last year at this time. The reports also allow me to drill down on any individual category if I wish to further investigate all transactions for that category.

Those numbers are real and will make you take action! Just one example. As I stated in a prior post, I could not believe how much YTD expenses I spent on product displays. So I started making my own displays to lower that cost.

I just made my first pallet order a few months ago to take advantage of the volume discounts and reduced shipping. I “charged” all of the shipping expense to the superballs category and still had a decent 4.3 cent cost per ball. All the other products were (in an accounting sense) shipped for free since they came along for the ride with the superballs. Of course to do this, you have to “get in bed” with one supplier. The days of me buying just-in-time inventory are over!

Do you pass this info to the IRS? or Governemt?

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  • 1 year later...

Lol, thats why i dont shop around for best prices, its all deductible and free money anyway, lol

I don't understand why gas price matters. I thought you could deduct it from taxes.

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If it actually covered the total cost of a vehicle, people everywhere would set up business and buy as many vehicles they wanted. You have to figure total cost down to the brakes and all wear and tear.

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  • 2 weeks later...

I don't understand why gas price matters. I thought you could deduct it from taxes.

 

I'm 2 weeks late responding to this.

 

A deduction only reduces what you would have paid in taxes. If you are in the 30% tax bracket, you would save 30¢ for every deductible dollar you spend. But you save $1 for ever $1 you don't spend.

 

A lot of people don't understand this concept, and worst of all many financial advisers don't understand this concept, so there are tens, if not hundreds of thousands of people who spend, for example, $10,000 to save themselves $3,000. The net effect is they lost $7,000 they didn't need to, and yet they think they actually did something to benefit themselves.

 

This most often occurs with houses, where people upgrade when they don't really want or need to, thinking the extra savings in taxes will help them, and thinking they might make some money off an "increasing" asset. This only works if somebody else is paying that mortgage for you (rent) and then only if you are actually covering your expenses with that rent.

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So nicely put, love this explanation! I really cant people do not understand the basics of how taxes work! Especially the seTax / 15% How will you win a game if you don't understand the rules!

"A deduction only reduces what you would have paid in taxes. If you are in the 30% tax bracket, you would save 30¢ for every deductible dollar you spend. But you save $1 for ever $1 you don't spend."

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How many vendors actually pay self employment tax?!

I'm betting a lot on here don't claim it at all.

Very few on here are full timers so it doesn't apply to them. I think bulk vendors as a group are a honorable lot and most probably file a Schedule C.

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Very few on here are full timers so it doesn't apply to them. I think bulk vendors as a group are a honorable lot and most probably file a Schedule C.

 

Full time I'm sure most do, if not it will catch up when irs starts to get notices of purchases. I'm referring more to the part time that is doing it for extra income, or growing their route. 

The reason I was asking  is I've seen lots of comments that if a person was claiming it would know. I don't personally care, but I wonder how many actually do claim everything.

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Interesting thread. The reality is this. If you want to stay under the radar you surely can and do okay for yourself. But If you want to do well, make some investments, buy some property, you need a financial history. I am not saying it needs to be complete but if you are going to buy a house let's say you will need to show you have the income to finance it, and yea showing up at closing with a suitcase full of cash won't work out so well.

BTW, congress (mostly wealthy lawyers) wrote the tax code. All the politicians caterwauling about the tax code is fluff to distract you, the rube. Think about what I just wrote. The tax code is written to give the keys to the treasury to the thinking. It is a gift.

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