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Hiring help to manage routes


imperialv

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There was a thread about this topic some months back. My opinion and the general consenus was a full time route guy ought to be able to do 250K annually.

With 20 machines this sounds like a part time gig for you, at least right now.If you are struggling to provide good service which ought to be your best selling point over the big operations then you need to look at hiring some help.

If its someone you then at least you can consider passing on the background check.

If it was I`d start him at 8, go to 9 after 30 days then after some period of time a little bonus or incentive pay like 5% of sales over whatever baseline you establish.

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RIGHT NOW I HAVE 20  LOCATIONS WITH 29 MACHINES  I COULDNT LET ANYONE ELSE RUN  ROUTE UNLESS IT WAS MY GF SHE KNOWS EVERY LOCATION

I COULDNT TRUST ANYONE WITH MY MONEY AND PRODUCTS 

If thats how you have decided to run your business then there is nothing wrong with that but he was asking about hiring help.

One further point is if you do decide to hire someone it is absolutely imperative that you some sort of cash accountabilty system in place. Yes, even friends and family will steal from you. The accountability system will keep the honest people honest. If someone is determined to steal from you they will.

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At what point or how many machines do some of you have before you decide to hire someone to  help you manage your routes. I currently have about 20 machines and struggling some. How much do you pay these guys?

imperial I assume you have a full time job that keeps you busy and vending is your 2nd income, if your struggling with that few machines Im thinking you need some advice or instruction on how to manage your route more efficiently, hopefully you will be able to read and learn here on the forum how to do that. If you would like to pm me I would be glad to answer some questions.

I personally dont think I will ever hire a "route" person, there are to many ways for them to cheat you, instead I am looking to hire a part-time person to work in my shop. I could be alot more efficient if I had someone in the shop organizing, cleaning machines, refurbing machines, building racks and staging routes etc.... I would also take this person on routes with me but I would never send them alone. I would pay them around $10.00 an hour.

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My business is at that point with 150 machines and it is definitely a full time gig.  My revenue is in the neighborhood of $250k annually.  In order to add any more locations, I will definitely require help.  My alternative is to sell off a few locations to free up a day and try and acquire more locations to fill the 'hole' I have created.  It isn't easy finding someone you can trust, but it is possible to put a cash accountability system in place to at least discourage the theft.  To that end, I have already started taking weekly machine readings on my machines to record revenue.  Any route person would also have to record the readings when doing the route.  I can then match the readings against the revenue collected in order to keep him honest.  If he has to buy gas or supplies, he can take that money from the days 'collection', keep the receipt in the collection bag and the numbers should still add up.  However, just because I have a system in place, I am not ready to give up the control that comes with running the route myself.  Every account is set up differently in order to maximize collections.  All my variations would probably drive the average driver to distraction, trying to keep up with them.  Every big operator I know recommends standardizing things in order to make it easier for your route drivers.  This makes sense if you have lots of big accounts where your driver can just fill the machine and come back a week later  'or two days' to a machine that is basically 'wiped out' and needs to be totally refilled again.  Those accounts are the easy ones and I have 5 of those.  There is little to no danger of any product going bad because the volume that moves through the account keeps anything from going bad.  However, ALL the rest of my accounts require some intelligent thought in order to keep the product from going stale in them.  Some soda columns are only going to get half filled.  Some snack machines are going to only be filled 4 deep or 6 deep or whatever depending on usage.  These variations are what I am afraid of a route driver 'screwing up'.  My current 'wastage' of product is very low, but I would expect anyone I hire to drive that number up significantly and I don't have the answer to how to instill in them that knowledge that I have to keep the wastage low.  Until I do, I think I keep running the route myself. 

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My business is at that point with 150 machines and it is definitely a full time gig.  My revenue is in the neighborhood of $250k annually.  In order to add any more locations, I will definitely require help.  My alternative is to sell off a few locations to free up a day and try and acquire more locations to fill the 'hole' I have created.   It isn't easy finding someone you can trust, but it is possible to put a cash accountability system in place to at least discourage the theft.   To that end, I have already started taking weekly machine readings on my machines to record revenue.  Any route person would also have to record the readings when doing the route.  I can then match the readings against the revenue collected in order to keep him honest.  If he has to buy gas or supplies, he can take that money from the days 'collection', keep the receipt in the collection bag and the numbers should still add up.  However, just because I have a system in place, I am not ready to give up the control that comes with running the route myself.  Every account is set up differently in order to maximize collections.  All my variations would probably drive the average driver to distraction, trying to keep up with them.  Every big operator I know recommends standardizing things in order to make it easier for your route drivers.   This makes sense if you have lots of big accounts where your driver can just fill the machine and come back a week later  'or two days' to a machine that is basically 'wiped out' and needs to be totally refilled again.  Those accounts are the easy ones and I have 5 of those.   There is little to no danger of any product going bad because the volume that moves through the account keeps anything from going bad.   However, ALL the rest of my accounts require some intelligent thought in order to keep the product from going stale in them.   Some soda columns are only going to get half filled.   Some snack machines are going to only be filled 4 deep or 6 deep or whatever depending on usage.   These variations are what I am afraid of a route driver 'screwing up'.  My current 'wastage' of product is very low, but I would expect anyone I hire to drive that number up significantly and I don't have the answer to how to instill in them that knowledge that I have to keep the wastage low.  Until I do, I think I keep running the route myself. 

BINGO!!!!  ;D

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Wow,  this has been some great information. Currently I do have a full time job but my goal is to become full time vending. I am struggling with staying organize but just signed up for trial of vend trak. I will definitely sign up for this program.  I never thought about the point of increasing spoilage due to their lack of knowledge. Always something to learn in this business.

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Thanks for the information packed posts.  I'd have to ask, if one hires a help and has a big account, or even several big accounts, how much are you paying this person and is there enough spread for you the owner?  If there is enough spread, would you mind sharing what that figure is?  Is 250K annually a gross figure or is that net?

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$250K annual is the gross figure.  Just for analysis, figure half of that or $125K as COGs and that leaves $125k of which $25-40k is for expenses like insurance, vehicle costs, equipment repairs and replacements.  That should leave you with $85-$100K to pay yourself and a driver if you have one.  I think mission would argue that the $85-100 figure is too high and should be figured at $50-$65 after expenses.  Since I have yet to complete a full year at the higher gross figure (I only did $25k gross in 2009 and bought a bigger route in 2010.) my numbers may not reflect reality.  See my revenue reports in about 8 months when I have a better handle on this!

$1000/wk would be an average amount to pay a driver and $500 is low in my area.  So you would be paying the driver somewhere between $25-$50k roughly which would leave $35-$50k for you in theory.  I have yet to hire a driver so maybe some others can give you a better idea of what their experience is.  However I do know the above are going rates for drivers in my area with even higher figures for guys with BIG routes doing far more than $250k in some cases.  (I have heard of one company paying his guys $6-$7k mos althouh they are pulling in $10k a week on their routes!)  I have yet to take that plunge into hiring because I feel I need more gross and more net in order to be able to pay a driver and still make what I want to make.  In the meantime, I drive which means I pay myself and I am satisfied with that.

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Somewhere between the range of number that Willis mentions will be your reality based on my experiences, 60-85K on 250K gross

Let me mention a couple of additional points for consideration, personally, IMO, making the leap from owner operator to having employees is probably one of the greatest hurdles any small business has to overcome. Taking the step away from direct operations, taking the hit in income until you grow some more, the reduction in free cash flow and the obligation of meeting payroll all are challenging, more so when they all happen at once.

On top of that there is the needed change in mentality from working for your business to working on your business. For those that want to grow their business beyond the owner operator point, again IMO, this point is the the most important thing to master and is why many owner operators fail to successfully make the transition from an owner operator to a business with multiple employees. 

In 2003 I had a partner and two employees and did over 870K, In 2005 I sold the majority of my interest to my partner to get out of that situation. After growing my business back to the point where I again have a couple of part time helpers I am faced with making that transition again, and I am not sure that I want too. I am having more fun and fewer headaches as well as making more $$ than I did with more than twice the revenue.

If you do hire someone I'd suggest a reasonable base pay appropriate for you area and then some performance based incentive pay structured around gross revenue and cost control.

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My route is very strongly a part time one still, but I have run FT businesses before.  Anyhow, often when it gets to the brink of where you are starting to need help, but yet maybe not quite there yet, it's a good idea to look at efficiency. 

Often you can make your load a lot lighter by making your route more efficient, whether by installing tracking equipment, keeping better records or simply mapping out your route better.  Eventually you just have to hire someone.

Just my 0.25 cents  ;D 

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I just started with vending last Dec.  Went into Full line in May  and I met another vendor here in town. He been doing it 20 years.  Has 4 part timers and 1 full time guy.  Over 250 accounts.  He asked me come on and help. He  is and does with his guys.  Give them  X amount cash start off.  Shows you accounts and tells you volume of account and lets you run route and buy product.  Sometimes even supplies van if have enough stops.  And then at end of week you sit down with him and split 50/50.  He knows what account does and trusts you but will check if he suspects guys dishonest.    I always wonder myself what I will do when get to big.  Mission how do you keep your guys honest and keep track?  Please pm me ideas how set up a system manage drivers in future.

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I just started with vending last Dec.  Went into Full line in May  and I met another vendor here in town. He been doing it 20 years.  Has 4 part timers and 1 full time guy.  Over 250 accounts.  He asked me come on and help. He  is and does with his guys.  Give them  X amount cash start off.  Shows you accounts and tells you volume of account and lets you run route and buy product.  Sometimes even supplies van if have enough stops.  And then at end of week you sit down with him and split 50/50.  He knows what account does and trusts you but will check if he suspects guys dishonest.    I always wonder myself what I will do when get to big.  Mission how do you keep your guys honest and keep track?  Please pm me ideas how set up a system manage drivers in future.

What this guy is doing is EVADING payroll taxes. Which BTW is illegal. It may have worked for him for and may continue to do so for a long time. If/when someone gets hurt or gets pissed and files for unemployment after getting fired then he will really come to regret the decision to run things the way he has.

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or if you don't mind, how about letting us all know.

OK here goes.

I believe that I am my businesses best asset and that anytime I spend not on the route is counterproductive.

Two part time guys. One is my warehouse guy. He is responsible for breaking down deliverys, rotating inventory, taking truck to Sams and loading for me.

The other rides with me three days a week and if I want a day off he drives alone. Really simple accountability is meter readings, every machine, every stop. A simple spreadsheet tracks revenue and weekly deposits to compare. Its not exact but it works within a hundred bucks a week, less than .1% variance from meter readings.

As for bonus, I allocate 1% loss of product for damaged,  give away or out of date. If the actual loss is less than that its split up on a quarterly basis.

Let me know if you want more info.

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What this guy is doing is EVADING payroll taxes. Which BTW is illegal. It may have worked for him for and may continue to do so for a long time. If/when someone gets hurt or gets pissed and files for unemployment after getting fired then he will really come to regret the decision to run things the way he has.

You're making a lot of mistaken assumptions by saying they're somehow trying to pull one over on the system.  There are a lot of ways to pay people, and there's a lot of ways to incentivize people to work for you, while not actually having employees.  Do you know what it means to be a contractor?  There's millions of people who make a legitimate living working for companies, and thousands of companies who's sole purpose is to give you a reason to generate cash flow... all while not being employees.  This doesn't have anything to do with flying under the radar, or somehow acting in an illegal manner, it's simply a different way of doing things.

None of these things indicate or even imply that tax avoidance is taking place.

Each contractor is responsible for filing their own taxes.  The company sends a 1099 to the IRS deducting their wages.  The IRS is well aware of companies that function this way, and it's completely and totally 100% legitimate.

What he's likely trying to avoid is the headache and all the red tape that come with having employees.

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OK here goes.

I believe that I am my businesses best asset and that anytime I spend not on the route is counterproductive.

Two part time guys. One is my warehouse guy. He is responsible for breaking down deliverys, rotating inventory, taking truck to Sams and loading for me.

The other rides with me three days a week and if I want a day off he drives alone. Really simple accountability is meter readings, every machine, every stop. A simple spreadsheet tracks revenue and weekly deposits to compare. Its not exact but it works within a hundred bucks a week, less than .1% variance from meter readings.

As for bonus, I allocate 1% loss of product for damaged,  give away or out of date. If the actual loss is less than that its split up on a quarterly basis.

Let me know if you want more info.

Thanks Mission!

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You're making a lot of mistaken assumptions by saying they're somehow trying to pull one over on the system.  There are a lot of ways to pay people, and there's a lot of ways to incentivize people to work for you, while not actually having employees.  Do you know what it means to be a contractor?  There's millions of people who make a legitimate living working for companies, and thousands of companies who's sole purpose is to give you a reason to generate cash flow... all while not being employees.  This doesn't have anything to do with flying under the radar, or somehow acting in an illegal manner, it's simply a different way of doing things.

None of these things indicate or even imply that tax avoidance is taking place.

Each contractor is responsible for filing their own taxes.  The company sends a 1099 to the IRS deducting their wages.  The IRS is well aware of companies that function this way, and it's completely and totally 100% legitimate.

What he's likely trying to avoid is the headache and all the red tape that come with having employees.

If this guy provides the van then this is tax avoidance and he is breaking the law. With out the van he could probably make the "contractor" case, but with a provided van these guys are employees.

JD

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If this guy provides the van then this is tax avoidance and he is breaking the law. With out the van he could probably make the "contractor" case, but with a provided van these guys are employees.

JD

There are several reasons why this is illegal, providing the van is only the most blatent.

Somewhere, someone once posted a list of 20 questions asked by the IRS to help determine if someone was an employee or contractor. I've got a copy from the Texas Workforce commission,  but no form number to reference. :(

There are several questions that fail on the determination of employment status as a contractor.

I do use an independent contractor for moving my machines, that is a perfectly legitimate arrangement. He provides his own truck, equipment, insurance, he has an investment in his business, he can realize a profit or loss, and he works for others.

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Yes he mite be trying to avoid some taxes.  But he is trying that contractors route and say we must file our own.  And van is provided but you must pay gas and all major repairs split 50/50.  I'm just taking oppurtunity to cash flow and learn and build my business legit way. 

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  • 7 months later...

I had a question about hiring help. I just got a new job that will now take up most of the morning and daytime hours so some accounts I will not be able to service because they will be closed when I get off of work. What is the best way to go about servicing these accounts? Should I just hire someone to run the entire route or just the few machines I will not be able to get to? Im more concerned about the best way to handle expansion while working FT for now

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