Allow me to introduce myself

[Jchunn28]

I have been reading this forum for a while and have learned a ton of information from everybody here and have to say Thank you for that, it has saved me time and money and possibly some of my sanity.

 

So here's a little about me.

 

In July of last year I began looking for a change after spending 21 years in the trucking industry, I began as a driver and worked in management for the last 5 1/2 years, but was always away from home. I came access and ad on craigslist of a guy selling his vending business and sent him an email. Long story short it sounded good and I jumped on it in September of last year. He thought he had 70 accounts and about 100 machines located with another 100 in storage. It ended up being about 80 accounts, around 120 machines located, and 200 in storage. The machines are a mix of my own machines, coke's and pepsi's. He said he was grossing 8K to 10K a month, I figured it was more like 6 to 8 a month (and my guess wasn't far off). He had his son working for him that was beginning college and wanted out of the business. It came with some moving dollies, an old enclosed trailer (not worth towing), and a sprinter van with a blown motor (he is paying to have that fixed eventually per contract).

 

In November I purchased another small vendor out that had 13 accounts with 18 machines and an enclosed trailer for 13K (fee I overpaid on this one)

 

Here we are about 9 months later, his son still works for me we are grossing about 12K a month. I have added card readers to some machines, started using Vendsys as my VMS, trashed some machines, upgraded others and of course added and lost some accounts. I have more planned for the rest of this year for upgrades and route changes and growth as time and finances allow.

 

Only experience I had in vending was I owned a couple machines at the office where I worked.

 

So now everyone knows a bit about me be it good or bad. Lol

 

So what are some of y'alls opinions? Did I do ok or should I have walked away. It doesn't matter now because the deed is done, just curious.

[Southeast Treats]

Sounds like you are off to a big start!  Keep it headed in the right directions and you will do OK....

[AngryChris]

First off, welcome to the forum!

It's difficult to say whether you stumbled upon a good deal or not because we don't know what you paid or what the equipment is worth, but having some 300+ machines is a LOT of machines.  

Going from 6-8k to 12k each month is a significant improvement, but I have the gut feeling that you need a LOT of help with your business.  Also, seeing that you're already knee-deep in the business, I don't think it's really important to figure out whether you made a good deal or a bad deal.  The important thing to figure out is IF you enjoy doing it, IF it's profitable, and IF you should keep going.

I know you didn't necessarily ask for this, but I think you would do yourself a HUGE service by finding out the models of as many machines as possible.  If these are all full-line machines, and there are 200+ machines in storage, then we are talking about a pretty big building they are in.... who pays for that building??

There's a chance that you could quickly turn this thing around into a very streamline company and increase your profits far higher than you thought.  You could take over and make yourself a pretty good salary, or you could keep your driver (or find another) and grow the business significantly.  What I will tell you is this: Having some 120 machines on location doing 8k/month (I will stick with those numbers first), means each machine was doing $800/year on average or $66/month.  That is not good.  In my opinion, depending on your region, $30/week between a snack and soda account can be profitable, it is NOT profitable when you pay someone else to do it.  Furthermore, $30/week between a snack and soda is hard to do without having a lot of stale product.  Going EVEN further, if $15/week per machine ($66/month, $800/year per machine) is your average machine's income, that means you have SOME that do better and SOME that do worse.  I cancel accounts that do about $1500/year or less (about $15/machine).  It simply isn't worth the repairs and maintenance.. nor the rotated product.  I have had many accounts where I even canceled the account AND scrapped one or both machines.

You have raised your income, which is great, but I get a feeling that you are on a very rocky road right now and some simple advice and a simple major cleanup would make your profits soar.

[Jchunn28]

It is definitely a rocky road and I know it will take a couple years to really see trends and some good income, thankfully my spouse has a good job and picks up where I fall short on the home finances. 

 

I know I have some very old cavaliers and toms machines that will be headed to the scrap yard soon. As for the others it is a mixture of Rowe 4900 & 5900, National 148 & 158 some unidentifiable USI, Dixie narco 276(?), 501 e & t, 5500, and 600 (?), and others that are packed into the back of the shop I haven't gotten the info off of yet.  I have a few cold food machines that work, but I don't intend on placing them anytime soon  

My shop is about 2400 square foot and I pay $550/month for it and about $35/month electric. 

 

I paid $15,000 down and he owner financed $50,000 with no interest. 

 

I have some some accounts that I will be getting rid of soon due to lack of revenue and the old outdated machines will end up in the scrap yard. The good ones I will attempt to find a location for that is better than the current one after I do some cleaning and refurbishing on them.  My goal is to find a better location before I pull some of them.  I figure what does it hurt to let the account pay me 10-15 dollars a month to store my machine there. We try to rotate product out and into faster machines to avoid a lot of stales, but we do end up with them on occasion. 

 

One of of the first things I did was start bringing prices up to par. He had 20oz at 1.25, cans at .60 and candy bars at .75-.85. I have tried to space out the increases so as not to make the customers made with a lot of price increases. But I still have a ways to go. I have 20oz at 1.50 now across the board, cans are .75 (coke and Pepsi just went to $1 for cans around here) and candy bars are going to $1 for now with an increase planned either at the end of the year or beginning of next year (currently average .61 cogs for candy bars), pastry is 1.00 - 1.25 depending on lacation and chips range from .85 - 1.00 depending on location and size ( small bags .85 / large 1.00). 

His son will be leaving the end of June or beginning of July and it will be just myself running everything after that, with the help of friends on occasion. 

[AngryChris]

You are doing an excellent job from the sounds of it.  As for the pricing, considering the amount of equipment you got and the actual income, I think you did okay but it's still difficult to determine due to the vast amount of equipment and due to the fact that we don't know how many are actually worthless and how many are worth something.

I am not interested in doing this now (I don't even know where you live) but if I had the opportunity to work with you (and if my situation was different.. meaning I wasn't making a decent living already), I would absolutely LOVE to take on such a challenge as this.  Four years ago, this would have been overwhelming, but knowing what I know now... your situation is a very very odd one in that you have so many machines and so many assets to help you along AND you didn't overpay from the sounds of it, but you really paid for the equipment more than anything else.

Here is a bit of advice that I have from what you have given me:

-First, try to take account of every machine ON LOCATION.  Write the model number, the type of validator (if you can and if you know how), and the type of coin mech that is in each machine.  If you don't know what type of machine it is, take a picture of the front (a clear picture, while making sure the keypad comes out clear as the keypad can tell a lot about what type of machine you have).  

-Second, try to find out what is in your warehouse.  Even if you do 20 machines at a time.  Let's say you have 30 Rowe 4900's in there.  If you can sell them, then try to do that and sell them cheap, ie. $50/each as-is (assuming no major upgrades like a newer board with MDB components).  If you can't sell them, scrap them.  Just get rid of them.  If you have something like a DN 501e (not to be confused with a 501t or 501r or 501mc), you want to put those machines off to the side because those are GOOD machines that can be upgraded and used in GREAT locations.  Something like an old 276 (not to be confused with a 276e) might be worth scrapping depending on its condition.. or try to sell those cheap... or try to find decent locations for them.

-Third, once you have the majority of your assets inventoried, find out which machines are worth upgrading (in terms of part upgrades), which accounts are worth upgrading (in terms of switching out machines), and which accounts are worth cancelling.  

From my experiences, it takes 1-2 months for an account to equalize after a price increase.  So, once you have increased prices and the sales have equalized, you get to see a real idea of how much they will earn with normal rates.  My current rule of thumb (and I have no employees) is that I won't do less than $1,500 for a can and snack each year and I won't do less than $2,000 for a bottle and snack each year.  Anything less needs to be cancelled.

On a final note, I will tell you this: if you had to live off of the income from this business.. and you paid for the "shop" and the driver, I can almost guarantee you that you would fail.  You wouldn't fail because you don't know what you're doing as the income potential is there, but you would fail because you are paying a lot out for work that you can do yourself, and the shop expense is unnecessary in most situations but obviously you need it to store all of those machines.

If you would like some advice, I am willing to give you my personal opinion.  I don't know how uncommon I am in this industry but I started as an employee and moved on and started my own business, so I feel like I know many of the ins and outs of the business from both the driver's perspective as well as the operator's perspective, and I absolutely love a challenge and yours is one that has a HUGE potential in my eyes.

[Jchunn28]

I always tell everyone, I'm willing to listen to any advice anyone has. I have a lot to learn and a ton of hard work ahead of me. That is one of the reason I am so thankful for this forum. It has saved me some frustration already. 

[EddieMac]

What credit card readers did you go with?  I'm considering them myself. 

[Jchunn28]

1 hour ago, EddieMac said:

What credit card readers did you go with?  I'm considering them myself. 

I am using USAT. Haven't had any problems with them or their service so far. I have 10 telemetry only and 11 readers.