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Thinking of selling, what's my business worth?


HansenVending

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I'm 3 years into the vending life now and as with most things I do I am getting burned out on it. I'm not wanting to sell right away but am starting to plan out other things in life and want to get a realistic idea of what I will be able to get out of it.

 

Rundown on my business:

 

Yearly sales: 2011 $35k, 2012 $46k, 2013 will be $50k+ all reported on my taxes so I can prove it.

 

5 USI 3208 combo machines at 4 high schools all located within 10-15 min of each other, machines range from $200 a month in sales to $2000+ on my best one.

 

A DN 5591 and an old Rowe 4900 snack machine located where I have my full time job that I bought but never got around to finding a better location for. They do maybe $50 in sales a month combined lol.

 

1998 Chevy Astro cargo van with shelving.

 

Including everything else I have relating to the business, spare parts, tools, bill and coin counters, spreadsheets used to track everything, and training as needed to get the next person going.

 

No contracts but I think I will try to get some before I sell. Machines have all been there 5+ years so it probably won't be hard to get them.

 

This route has more potential that I don't have time for. Previous owner did $27k in sales his last year, I've almost doubled that in 3 years by changing product and stocking them more often. I do my route in the mornings Tuesday - Friday before my other job. One machine could really use being stocked on Mondays also, other machines are 1-3 times a week.

 

That's about all I can think of, anything else I forgot? So what do you guys think it's worth?

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I'm 3 years into the vending life now and as with most things I do I am getting burned out on it. I'm not wanting to sell right away but am starting to plan out other things in life and want to get a realistic idea of what I will be able to get out of it.

 

Rundown on my business:

 

Yearly sales: 2011 $35k, 2012 $46k, 2013 will be $50k+ all reported on my taxes so I can prove it.

 

5 USI 3208 combo machines at 4 high schools all located within 10-15 min of each other, machines range from $200 a month in sales to $2000+ on my best one.

 

A DN 5591 and an old Rowe 4900 snack machine located where I have my full time job that I bought but never got around to finding a better location for. They do maybe $50 in sales a month combined lol.

 

1998 Chevy Astro cargo van with shelving.

 

Including everything else I have relating to the business, spare parts, tools, bill and coin counters, spreadsheets used to track everything, and training as needed to get the next person going.

 

No contracts but I think I will try to get some before I sell. Machines have all been there 5+ years so it probably won't be hard to get them.

 

This route has more potential that I don't have time for. Previous owner did $27k in sales his last year, I've almost doubled that in 3 years by changing product and stocking them more often. I do my route in the mornings Tuesday - Friday before my other job. One machine could really use being stocked on Mondays also, other machines are 1-3 times a week.

 

That's about all I can think of, anything else I forgot? So what do you guys think it's worth?

I think you should dump a couple of your loser accounts and replace those combos in your better accounts with a full size soda and snack machine.  I'd be burned out too if I had to stock combo machines three times a week.

 

There's nothing wrong with just keeping a couple of good accounts as a part time income if you're looking to do something else, especially considering that you'll be making north of $150 an hour with the better vending accounts - try topping that in the real world.

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Why not put the two full size machines in the 2000 account and the combo somewhere else find another location this should beef up your sales as well.I base a route also on the net gross. I value routes who already have normal pricing higher. If you gRoss 50k but your prices are low and u only keep 20-25k and comission that drops the value. Depending on your pricing id say $15,000-$20,000. Its good accounts but not many assets the machines r maybe worth 6-10k. Like a guy here locally selling a call center w 4 machines. Wants 45,000 cuz it makes 40,000. If you get the boot your paying for a new Mercedes for the price of an 03 civic.

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I think you should dump a couple of your loser accounts and replace those combos in your better accounts with a full size soda and snack machine.  I'd be burned out too if I had to stock combo machines three times a week.

 

There's nothing wrong with just keeping a couple of good accounts as a part time income if you're looking to do something else, especially considering that you'll be making north of $150 an hour with the better vending accounts - try topping that in the real world.

 

Aside from the ones at my work, only one account is a loser account, the other machines usually do over $1000 a month. Replacing the combos with a full size snack and drink might not work out that well as far as drinks because there are already at least two full side drink machines (owned by pepsi and/or coke) next to every one of my combos. That's beside the point though, this is my part time income and I'm working on moving on to other things so I want out of it eventually. $150 an hour sounds good but I have no idea how you came up with that. I don't keep exact track of all my time involved so I have only done math in my head as far as this goes but I figure after all costs I might be making $20 an hour.

 

 

 

Why not put the two full size machines in the 2000 account and the combo somewhere else find another location this should beef up your sales as well.I base a route also on the net gross. I value routes who already have normal pricing higher. If you gRoss 50k but your prices are low and u only keep 20-25k and comission that drops the value. Depending on your pricing id say $15,000-$20,000. Its good accounts but not many assets the machines r maybe worth 6-10k. Like a guy here locally selling a call center w 4 machines. Wants 45,000 cuz it makes 40,000. If you get the boot your paying for a new Mercedes for the price of an 03 civic.

 

15-20k is a little lower than I was hoping to hear. I was basing it on what I've read on here in the past, 1/2 yearly gross plus assets, which I was thinking put me in the 35-40k range.

 

1/2 sales - 25,000

USIs - 5 x 1,500 - 2000?

DN - 1000 - 1500?

Rowe - 500

van - 2000

inventory - 1000 - 3000

 

I was thinking ask for 40 and see where that gets me but be open to offers and take no less than 30. Am I being unrealistic?

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There are a variety of ways to value your business.  You can ask for 1 year's gross sales or more, one year's net plus assets, (your idea of) 6 month's gross plus assets.  There really is no rule of thumb.  If you used a broker they would ask for the moon, and charge you a pretty penny as their commission.  You need to know what you want to get out of the sale and then you can allocate the costs however you want.  The way to get the best price will be keyed on the quality of your accounts gross sales-wise and net profit-wise, the quality of your machines and how well they have been maintained (age of machines, new fronts, validators on each machine, all lights work, no handwritten labels), contracts you hold, how high your prices are and how low your commissions are.

 

Make sure you have any interested parties sign non-compete and non-disclosure agreements and if you are planning on carrying a note on this, have a good attorney draw up an enforceable contract with UCC filings so you are protected in case of a default by the buyer.  And if you carry a note, don't be understanding and lenient with the buyer - hold them to the terms of the contract without mercy.  Also be sure you get a higher price for a financed transaction.

 

Keep in mind that you will probably get a higher price from someone not already in vending, though you will have to provide more training to them.  You will also likely get your lowest price from someone who is experienced in vending because they will have bought and or sold accounts before and they know what machines are worth.  As we know, vendors are cheapskates anyway (don't everyone yell at me at once), so they will certainly beat you up over your price.

 

You can put a good value on your equipment two ways: remanufactured and location ready as if you had to buy them for the accounts today, and as is, good condition but at used, Craigslist prices.  You definitely don't want to accept less than the value of the assets including equipment, products, coin, dollies and your van, but don't expect to value your equipment for what you originally paid for it a few years ago.  Remember that it has all lost value as it has aged, so be realistic.

 

I think your valuation above is pretty close to used equipment dealer prices, depending on what you can currently buy them for right now.  Craigslist prices would be lower, of course.

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All the above is good advice...

 

The only thing I would add is don't forget the capital gains taxes you are going to have to pay.  :angry:

 

I have heard of people leasing the route for an extended period of time to avoid the capital gains tax. Not sure about all that. Maybe that could be another discussion.

 

Had a friend who sold his route on payments (not lease) and he ended up paying the capital gains all up front.  :angry: Then had to wait to recoup it over time. He wasn't happy... If the guy defaults on the load then you loose.

 

Might want to check with an attorney to see what you choices are.

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Aside from the ones at my work, only one account is a loser account, the other machines usually do over $1000 a month. Replacing the combos with a full size snack and drink might not work out that well as far as drinks because there are already at least two full side drink machines (owned by pepsi and/or coke) next to every one of my combos. That's beside the point though, this is my part time income and I'm working on moving on to other things so I want out of it eventually. $150 an hour sounds good but I have no idea how you came up with that. I don't keep exact track of all my time involved so I have only done math in my head as far as this goes but I figure after all costs I might be making $20 an hour.

 

 

 

 

15-20k is a little lower than I was hoping to hear. I was basing it on what I've read on here in the past, 1/2 yearly gross plus assets, which I was thinking put me in the 35-40k range.

 

1/2 sales - 25,000

USIs - 5 x 1,500 - 2000?

DN - 1000 - 1500?

Rowe - 500

van - 2000

inventory - 1000 - 3000

 

I was thinking ask for 40 and see where that gets me but be open to offers and take no less than 30. Am I being unrealistic?

 

Usually most of us wouldn't consider providing a snack service for an account where the bottlers have installed soda machines - it's all or nothing as sodas usually make the money.

 

Your case is much different in that you've obviously got a very high volume of snack sales going on to do the numbers you posted.  I would replace all of your combo machines with 5 wide snack machines that have 4 times the capacity of your current machines.  This should reduce your service schedule to once a week on the $1,000 accounts and maybe 6 times a month for the one that exceeds $2,000.

 

The $150 an hour figure is actually pretty accurate with good accounts like you have.  If you have $1,000 in gross sales your gross margin would be around $500.  Given that you have other expenses and it takes about half an hour to fill a snack machine, the 150 number is very much doable, especially with soda/snack accounts.  

 

Somebody once said that there is a perfect machine for each situation - you'd be much more efficient if you had the proper equipment for these accounts.

 

As for a value, if you're determined to sell out, I'd offer 10 times monthly gross (I place no value in combo machines)

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All the above is good advice...

 

The only thing I would add is don't forget the capital gains taxes you are going to have to pay.  :angry:

 

I have heard of people leasing the route for an extended period of time to avoid the capital gains tax. Not sure about all that. Maybe that could be another discussion.

 

Had a friend who sold his route on payments (not lease) and he ended up paying the capital gains all up front.  :angry: Then had to wait to recoup it over time. He wasn't happy... If the guy defaults on the load then you loose.

 

Might want to check with an attorney to see what you choices are.

That's a good point that I didn't consider, but are you referring to income tax on the number resulting from how much the sales price exceeds the depreciated value of the assets?

 

HansenVending,  you will also have to recapture any depreciation you have taken on the equipment (if you depreciated it).  You will pay income tax on any amount you realize that exceeds the current depreciated value of the equipment.  Consult your CPA to find out how this or the Capitol Gains tax might affect you.

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Usually most of us wouldn't consider providing a snack service for an account where the bottlers have installed soda machines - it's all or nothing as sodas usually make the money.

 

Your case is much different in that you've obviously got a very high volume of snack sales going on to do the numbers you posted.  I would replace all of your combo machines with 5 wide snack machines that have 4 times the capacity of your current machines.  This should reduce your service schedule to once a week on the $1,000 accounts and maybe 6 times a month for the one that exceeds $2,000.

 

The $150 an hour figure is actually pretty accurate with good accounts like you have.  If you have $1,000 in gross sales your gross margin would be around $500.  Given that you have other expenses and it takes about half an hour to fill a snack machine, the 150 number is very much doable, especially with soda/snack accounts.  

 

Somebody once said that there is a perfect machine for each situation - you'd be much more efficient if you had the proper equipment for these accounts.

 

As for a value, if you're determined to sell out, I'd offer 10 times monthly gross (I place no value in combo machines)

 

I see your point about upgrading my machines and have thought about it before, but seeing as how I'm wanting to get out of this I don't want to be buying more machines, trying to relocate my combos, and in general spending more time with the vending that I don't have. I'm also a believer in the if something is working don't mess with it idea lol. There is more potential there, I see it, I just don't have the time with my full time job and am doing good with that so I don't want to make the switch to vending full time.

 

I see how you are getting the $150 an hour, only counting the time you are filling the machine. What about filling the van, driving, counting money, going to the bank, tracking sales, paperwork, doing taxes, going to Costco, van maintenance, and anything else related, all things that need to be done and the time really starts to add up. That's where I'm getting my $20ish an hour, maybe it would be more if I didn't watch tv while I do half those things haha.

 

So you'd pay 10 times monthly gross? 50k for 10 months a year (schools) averages 5k a month. I'd take 50k tomorrow if someone offered that.

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AZVendor and rmorris, good things to think about, thank you. I haven't thought about taking payments on it and don't really think I would want to but I guess I should consider it. I thought about the tax thing too and have talked to my tax lady about it briefly. I'll see where I'm sitting after this years taxes, I think this year she will have depreciated everything but I'm not sure how all that stuff works lol. I'll talk to her again and see what my options are so I know what to expect when I go to sell.

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I see your point about upgrading my machines and have thought about it before, but seeing as how I'm wanting to get out of this I don't want to be buying more machines, trying to relocate my combos, and in general spending more time with the vending that I don't have. I'm also a believer in the if something is working don't mess with it idea lol. There is more potential there, I see it, I just don't have the time with my full time job and am doing good with that so I don't want to make the switch to vending full time.

 

I see how you are getting the $150 an hour, only counting the time you are filling the machine. What about filling the van, driving, counting money, going to the bank, tracking sales, paperwork, doing taxes, going to Costco, van maintenance, and anything else related, all things that need to be done and the time really starts to add up. That's where I'm getting my $20ish an hour, maybe it would be more if I didn't watch tv while I do half those things haha.

 

So you'd pay 10 times monthly gross? 50k for 10 months a year (schools) averages 5k a month. I'd take 50k tomorrow if someone offered that.

You've got some quality accounts there but the hitch for an experienced vendor will be the combo machines.  I doubt you'll get any bites from a newbie but a pro will want to put in some high end snack machines and those don't come cheap.  If it were me I'd talk to the locations down the road about dumping one of the bottlers - I'm guessing right now you're the only one selling 7-up etc.

 

The GPL machines are certainly decent combos but it's going to cost somebody at least 10k worth of equipment to replace them minus what they can sell them for.  40K is probably your sweet spot on this.

 

So many of us here are struggling to establish what you've got and it pains me that you're getting out,  but it sounds like you've made up your mind - good luck in your future endeavors.

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You've got some quality accounts there but the hitch for an experienced vendor will be the combo machines.  I doubt you'll get any bites from a newbie but a pro will want to put in some high end snack machines and those don't come cheap.  If it were me I'd talk to the locations down the road about dumping one of the bottlers - I'm guessing right now you're the only one selling 7-up etc.

 

The GPL machines are certainly decent combos but it's going to cost somebody at least 10k worth of equipment to replace them minus what they can sell them for.  40K is probably your sweet spot on this.

 

So many of us here are struggling to establish what you've got and it pains me that you're getting out,  but it sounds like you've made up your mind - good luck in your future endeavors.

 

No one has 7-up, no pop in schools here. If I could sell pop I'm thinking my sales would be a bit higher. I actually did ask my contact at one school about them getting rid of the bottlers because she was saying how she didn't like their service, she said they have contracts with them so there wasn't much she could do. I'm not 100% set on selling, if I got the motivation I know I could up my sales and expand, and talking about it and reading on the boards here the last few days again has got me thinking haha. We'll see what happens, but I'm glad what I want out of it is realistic, thank you guys.

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I don't know why I can't find someone like this here locally.  I have been in the vending industry since 2006, but I just hit the 3-year mark for having my own business.  I am not burnt out at all.  In fact, I can't wait to grow bigger and bigger.  It's just getting tough right now because I am too small to get loans without difficulty and I am "too big" to allow time for me to supplement my income with another full-time job.  I would love to add some more accounts!  I don't think I will be burnt out for another 15 years!  I love this business.

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I don't know why I can't find someone like this here locally.  I have been in the vending industry since 2006, but I just hit the 3-year mark for having my own business.  I am not burnt out at all.  In fact, I can't wait to grow bigger and bigger.  It's just getting tough right now because I am too small to get loans without difficulty and I am "too big" to allow time for me to supplement my income with another full-time job.  I would love to add some more accounts!  I don't think I will be burnt out for another 15 years!  I love this business.

 

Ok let me rephrase, I'm not necessarily getting burned out on vending, I'm getting burned out on having two jobs. I make more at my other one and I can sell my business, not my other job, so it's and easy choice lol.

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Usually most of us wouldn't consider providing a snack service for an account where the bottlers have installed soda machines - it's all or nothing as sodas usually make the money.

 

Your case is much different in that you've obviously got a very high volume of snack sales going on to do the numbers you posted.  I would replace all of your combo machines with 5 wide snack machines that have 4 times the capacity of your current machines.  This should reduce your service schedule to once a week on the $1,000 accounts and maybe 6 times a month for the one that exceeds $2,000.

 

The $150 an hour figure is actually pretty accurate with good accounts like you have.  If you have $1,000 in gross sales your gross margin would be around $500.  Given that you have other expenses and it takes about half an hour to fill a snack machine, the 150 number is very much doable, especially with soda/snack accounts.  

 

Somebody once said that there is a perfect machine for each situation - you'd be much more efficient if you had the proper equipment for these accounts.

 

As for a value, if you're determined to sell out, I'd offer 10 times monthly gross (I place no value in combo machines)

I agree, I avoid Combo machines like the plague...

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