What are you doing to control cost?

[will.vend]

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?

[Profits]

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.

It's a lot more than 1%. It's 8.3%.

[antoniocinisi]

I am extending service cycles,adding locations and not speeding as much,in addition to some of the things you do.

[sherlock]

I'm doing a little bit of the above.

Combining two smaller routes into one long day of work.

I'm also driving slower and extending service cycles.

What I'm working on next is pruning my route.

I know these are all things that should be done regardless of gas-prices.

But, now that gas is going up, I figure NOW is a great time to change my approach on these things.

I also used my motorcycle for a few business things.

In the past I would have just gotten into my truck if it was vending related.

I liked the peace of mind of knowing I had spare parts, business paperwork, and many of my tools with me.

Now if I'm off to a repair call or a business meeting (I'm in negotiations for 2 small routes), I just load a backpack and hop on the motorcycle instead of my gas-chugging truck.

[Jax Snacks]

Yea, gotta watch that speed as well. Those speeding tickets are nasty.

Here is one other thing I have done not yet mentioned to save some money. But it may ruffle a few feathers. I make my own displays! How radical! Now I have always done my own candy display for many years and never paid for a single candy display.

I also stopped using live displays on the one inch toys 3 years ago and also on the two inch toys 6 months ago. The cost of those live displays can add up on a large route. Now before freaking out, these displays are very professional, colorful and laminated. Some times the supplier will have a “flat version” of the display if you ask. For example, I had a two-inch yo-yo ball machine sell out and it had my home-made flat display. A&A designed a flat display for another vendor and he in turn sent it to me. So no, I am not anti-display (like one-ball is)! But I have not seen a drop in sales by using flat displays over live displays. And it saves me money as well. And I just like making my own displays!

[Hillbilly]

Hey Jax, I noticed in another thread that you will fill some machines only and collect every other time. How many locations do you do that with and how is it working for you? I think I may incorporate that. I could service a lot more in one day if I did so. I'm sure it would save me some gasoline. Especially with the 8 cylinder beast that I drive.

[The Mage]

I sometimes think of the economy as the weather, and our businesses are like trees. Sometimes it is calm and beautiful, and we can grow easily during that time. If a mild storm hits, not usually a problem, but when a big one hits, weak branches fall off, and the weak trees also fall. You want to keep your business (tree) strong at all times, preparing for the next storm, but at times you will have to find some of the weak branches and remove them to keep the tree (business) strong.

You should only need to make a few changes to shore up things when the economy weakens, or expenses climb. If you need to make a lot of changes, it might show that you weren't as prepared as you should have been, and the result is a nice slap in the face from the economy.

This is a good time to learn, and do not forget these lessons when things are going smoothly again.

[havending]

I have been extending service cycles for a while now. I go 8 to 12 weeks and it works. Making displays is not an option for me just not enough time. But i do use printed displays when ever i can. I have also been using toys longer than i would normally. Reordering same product. I have also been going to more one inch .50 machines. The hold 250 caps vs. a two inch machine holding 160. That also helps provide the longer cycle. I will also do quick fills and not collect. Im in and out in 10 min.

[Jax Snacks]

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 extending service cycles for a while now. I go 8 to 12 weeks and it works. Making displays is not an option for me just not enough time. But i do use printed displays when ever i can. I have also been using toys longer than i would normally. Reordering same product. I have also been going to more one inch .50 machines. The hold 250 caps vs. a two inch machine holding 160. That also helps provide the longer cycle. I will also do quick fills and not collect. Im in and out in 10 min.

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.

[antoniocinisi]

How does filling the machine and not doing the split save cost besides time donyt u still drive there

[jj54]

BOUGHT 5 SPOTS FROM KELLY, THE 5 SPOTS ARE AT THE CITY WHERE SAMS AT. THAT 50 MILES FROM WHERE I LIVE. I GET SUPPLY AND RUN MY ROUTE WELL BE LOOKING FOR NEW STOPS

[Jax Snacks]

How does filling the machine and not doing the split save cost besides time donyt u still drive there

Because I don't have to drive to the other 120+ locations every 30 days.

The unintended consequence of extending the service cycle, is handling the gravy locations that need more attention.

[Hillbilly]

Theoretically, it would save the time, thus allowing more time to handle more stops. If 2 routes were close enough to do in 2 trips you might possibly combine it into 1 and eliminate the drive home mileage from 1 of the routes.

[havending]

When i quick fill i dont stop at every location.

Locations really do not notice the longer cycle. They are getting larger payouts and to them it seems like they are getting more. They are getting the same but it seems like more.

[Team Mass]

My main focus has been on acquisition which is probably the complete opposite of everyone else. I have been stopping by locations and focusing on only adding stops along my previous existing locations.

I've made one huge improvement and will probably continue to do so shortly. I've started building predictors which estimate how many days before a machine runs dry or out of toys at a location. I'm still getting the bugs out of it but it appears to be working. I take this information and build a route based on when it runs dry. Normally about a 1 week before it predicts and service them. This way I'm only making stops when needed and saving time. This works good for more of my accounts because not every account needs to be serviced every month. I have a lot of accounts in one small territory which has also helped alot. I have a few account which need service every 14 days and other every 3 months so making sure to schedule properly has been the biggest cost savings.

Also increasing the vends (a big expense has already been paying off).

[jamesjmcgough]

With our gas price here in Costa Rica @ USD $5.26 a gallon, I have further resolve to increase(saturate) our locations in the center of our cities. We have the luxury of a great transportation system here that allows me to take buses from one end of the country to the other and almost all transportation uses terminals close to the city centers. Before you say "NO WAY!!! remember this is a business that provides a living and not just a sideline that provides a few bucks extra for many of us here. I understand that not many regions in the US have access to such a public transportation system. Easy for me to hit several centers at 1/10th of the cost of fuel vs. driving. Easy to load a supply of capsules and candy into a backpack and wheeled job-box to hit my highest yielding locations to restock and collect. I feel for you guys who cannot arrange your locations so close as to cut down on your fuel expenses, however....are you paying $5.26 a gallon for gas and getting the equivalent of 20 cents per vend?

If you are complaining now with your average gas cost @ $3.91, what will you think when gas hits $5.00? Remember, as fuel costs rise, so will your cost of goods that you vend. Someone has to absorb the cost of product transportation. It will eventually be your burden.

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.

The next couple of years do not look so pretty for your bottom line my friends....start kicking your noggins for cutting costs, densify your locations and streamline your operations wherever you can. 6 bucks a gallon is not so far away. Closer for me unfortunately than for you.

[Jax Snacks]

I guess every vendor needs to determine how much territory they are comfortable with. I have resisted those long distance hauls and stayed with in a 40 to 50 mile radius. Maybe those with the longer hauls will re-evaluate their extended territories. Some may even sell off those far-away territories.

Public transportation in America? Yea, right! It’s just not in our mind set unless you live in New York, Boston, Chicago, Philadelphia or DC. Sometimes I think that Americans have revised the founding father’s message to “Life, Liberty and the Pursuit of driving an automobile”! America had a decent train system in the 40’s and 50’s. Then something called the interstate highway system was constructed. Bye-bye trains!! Hello grid lock and oil dependency!!

The political will (and money) is just not there to build any new train tracks. Our new governor just killed Obama's high-speed bullet train from Orlando to Tampa. The attitude of public transportation is somewhat split between the parties. With our current "bounce-back" political party system, nothing on that scale will ever get done. One ruling party approves something, then the other party kills it after they get voted in - and on and on. Reminds me of the movie "Dumb and Dumber"!

Ever consider investing in some start-up bio-fuel company stocks? Now may be the time. Cars are here to stay!

[The Mage]

There was a pivotal point in America's history when one city actually decided whether we were going to use cars as our main source of transportation, or use public transportation, and the choice was cars. With our bent on freedom here, it kind of makes sense to me that we would choose this route.

With our busing system it can take hours to get to a destination and back, and it shuts down in the evening, meaning you are stuck if you want to go somewhere late. Depending on when the bus arrives, I can often be at a destination before the bus even gets there.

Back to the subject at hand, as mentioned above, it makes a lot of sense to expand on your current route, or add to a current location. Little or no extra driving, yet more income.

I dumped one location that wasn't my worst just because it was so far off of my regular route. It was a slow location, but not my worst one. But it cut at least half a hour off of my route.

[timberframe50]

I realize this is an older thread. I just got back from TJKing. Everything I needed had gone up. BB were 9 and today 13. 4 way rack was up 8 in a month. Gum up 2 a box. Toys all up about 2 per 250 count.how can anyone control cost with these type of increases.

[dperry]

Here's a simple solution. Tack on a service fee on all your commission accounts. I've started doing that with my bigger locations. When I'm handing out a $40+ commission, they don't notice the $3.00 fee. It goes right into my gas tank.

[mission vending]

Here locally they have been talking on the news that after the flooding coming down the Mississippi recedes that the analysts expect to see gas go down about .50 a gallon, which IMO is nothing but very good news.

[havending]

You mean you just skim off top without discussing it with location owners?

Thats what it sounds like to me.

I know that a bag of toys or balls have gone up here and there a buck or two. And yes gas is up and down. But in the grand scope of things its not enough to really make a big deal on the bottom line. Everyone should be selling 27 mm balls at .50. Ok so it goes up a dollar a bag! Who cares your at 8% cost. Sell your two inch at .75 and 1.00. one inch at .50. The small hits you take for fuel and product wont matter. Also call or write your congressmen and tell them to stop making the paper dollar. If the us only had dollar coins we could all retire early.

[West Coast Vend LLC]

This is a great topic.

The cost of doing business is quickly taking money out of all our pockets. I have to analyze everything I do. Gas is the biggest consumer of profits from what I can see. I have reduced the number of trips to stores by half. I use to check them about every two weeks to see if they needed anything. Now I call them to check. It saves me gas and I get the same results. There are also accounts that I have warned about their volume vs. the amount I am paying them in commission. They understand that I can not pay them the same commission percent when the price of gas continues to go up. I have also moved up to 50c items to recoup my shrinking profits. Finally, shipping costs and product costs will kill you if you don't check your invoices very carefully each time you order new products. Make sure you include the shipping costs when you are figuring out cost per piece. Since we are in a nickel and dime business, you have to count every penny. It's the only way you will make it through the tough times we are in.

Gary

[dperry]

I will tell the location owners of the fee they are being charged if they are ever around when I do it, but yes, I tell them. I also don't do it to all my accounts. I only do it to the big accounts where I give them a large commission. I still have a number of charity accounts, and there's no point in doing it to them.

[Jax Snacks]

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!