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STOP talking yourself into doing accounts!


RJT

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This discussion has been great for me as a new vendor. I fit into the small sized not looking to be a large company group. My accounts are within .25 miles, all 3. Average is near 300 gross per week total from all and this is during the cold weather. I believe that these are adequate accounts for me right now because they are quick to service and manageable with a fulltime job.

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This has been a good discussion so far, both sides make strong points. It all comes down to what you want to do with your business, a question I have asked of folks a number of times.

 

If you want to build a vending company that would fetch a premium value when it comes times to sell then you probably should be using RJT's aproach because for a larger multiple route organization you have to make this kind of revenue per stop to be profitable after factoring the cost to service.

 

If you plan to keep the business small with only yourself or maybe only a couple of employees then certainly your overhead is lower and so is your cost to service and having these smaller account in your portfolio, to some degree at least, makes sense.

 

Mission,

As usual we see eye to eye on most things. The other thing for these guys to consider even if not looking that far in the future as far as selling to a larger company is growth. Growing a company with minimal cash flow is very hard. If you have mostly small volume accounts doing lower volume even with lower overhead it is hard to grow because their simply is not enough profits coming in for continued growth without continued debt. Most all companies are going to incur dept top some degree even if it is simply taking it out of your own savings. With that people even need to have a pay back plan to their savings to keep a certain amount of cash on hand for "situations" that may pop up from time to time.

 

If you want top dollar when you sell out to a larger company or even a wise investor looking at getting into vending you had better have quality accounts or you will be lucky to get one time net for your company and nothing for the equipment.  Very seldom do the big boys buy the solid vending companies either, they can’t buy them because the company will not sell because they are making enough money and don’t need to sell. They usually buy struggling companies that they keep pounding (taking accounts from them) on them until they are forced to sell to them. I am talking companies that have been in business for many years running 5 plus routes and still can’t make it work because they are to heavy with low volume, and margins, overhead simply don’t work. You can’t have the deck stacked with low volume accounts because if you do loose some of the good ones it is hard to get out of that hole quickly and sometimes means the end of a company.

 

In the end every one will have to decide what works best for them.

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In the end every one will have to decide what works best for them.

 

 

Had you incorporated more of this type of insight into your earlier posts, there would have been a lot less push-back.

 

Of course, the statement above goes completely against the message you tried to convey at the start of this thread.

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Had you incorporated more of this type of insight into your earlier posts, there would have been a lot less push-back.

 

Of course, the statement above goes completely against the message you tried to convey at the start of this thread.

 

The reason I have said that now IS because of the "push-back". In other words as the old saying goes you can lead a horse to water you can’t make him drink. Or like and old man that used to like giving me advice would tell me "son it aint medicine you don’t have to take it". If people decide that what I said has no weight and they are content that their way works best for them than is just the way it is.

 

In the end no matter the advice some people will not take it and some will discount it because they are content on the way they are doing business now and see no reason to change.

 

I have been at this a long time in many different roles and seen it with my own eyes and direct experiences of mistakes as well as accomplishments of many operators. I have seen what has worked and what has not. I have seen 30 plus year companies have to sell out simply because of some of the mistakes I have spoke about.

 

 

I will give you this example. There was a company here in my area that had been in business for a long time doing 4.5 million a year with less than 100 accounts. He was rolling in big numbers but the problem was his margins were terrible and he was bleeding in many areas of his business. His average was WAY OFF of what it should have been. He was probably 1 million off what his true number should have been. It eventually caught up with him and he was forced to sell at a fire sell to another operator. I even looked at his business and numbers and could not figure how to make it work. It took a large and very solid company to pull it off to make his numbers work. What I mean is they had deep pockets had their numbers where they should (they turn down many accounts in the area if the numbers didn’t work) they had a solid foundation. They could afford to loose some of the accounts, were strong enough with offerings, customer service level etc to raise prices to get the numbers to work.

 

The guy that was forced to sell had it all, cars, houses, boats, vacations, toys, etc but it came to a crashing halt in short order of a few years of some account losses, price increases, overhead cost rising, building your reputation on a cold food program that was second to none (he made his own food) that he was loosing money on, cheap prices, etc. He had all the big accounts turning big cash but in the end making very little profit and it cost him everything. I know this guy and have spoke with him many times about it so I know first hand his mistakes and he doesn’t mind sharing them and telling me the “what if” or” I should haves”.  

 

In short that story has two parts. The company that sold put themselves in a bad position and it caught up with them. The solid company that had a very strong strategic plan not only bought the company but turned the numbers around to make them work.

 

This is just one of many stories I could tell you of similar situations both big and small that got themselves in this same situation with the same results just on different levels.

 

 

Like Mission said if an operator is content with little but sustaining profit with little desire to use their vending operation as a means to retire on then they probably will not listen or consider the advice. If that is their goal they need to build the correct foundation to do so.

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RJT one question ( I am not trying to be a wiseass)

Explain to me how 6 machines in three 100 a week accounts is worst than 6 machines in my warehouse making 0

when the 100 a week accounts are in my geographical area?

 

You have been at vending 12 years. How many times have you pulled out equipment of one account to put it in an account you though were going to do better? Most operators just don’t do this often enough. (I have done it myself) They keep servicing it because “the equipment is paid for”, “it is in my service area” “it is across the street from a good account” etc.

 

The problem is you take those machines out of the warehouse and put them in those $100 a week accounts then when a nice account comes along you have to buy equipment and go in debt. You have to get back your ROI. Eventually this cycle can catch up with you.

 

When I said to let the other guys do these dog accounts that can also be applied to higher volume large accounts that some operator is giving them the world with low pricing, newer equipment, free napkins, sporks, condiments, visa coolers, picnic tables, etc, etc. I have turned down accounts like that also because they simply didn’t make any sense to do. I could wait and get an account that makes better sense that is service driven and not free and cheap driven. I simply don’t want to do business with these type of accounts big or small. The small dog accounts can be just as demanding many times as the big accounts and sometime worse.   

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I am amused by the fact that throughout this thread, those who disagree with RJT at least concede that everyone can find success their own way, doing what they feel is best for them.

RJT's posts, on the other hand, consistently insinuate that if you're not doing as he suggests, you're doing it wrong. There seems to be no concession on his part.

Just an observation.

--Steven

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Great posts! 

 

I  am not selling anything on here and I don't do vending. I have been in all aspects of vending. I could write a book on what I have learned over the years. Problem is I have forgotten so much of it.

 

I buy sell service move and repair vending equipment.

 

Some people retire and have a little bit of savings and want to make a little extra income. There are people who will take advantage of these people. Sell them equipment in the thousands of dollars only to find out the account won't pay for it and then end up in bankruptcy. 

 

The knowledge gained on this forum is priceless.

 

For the 1 person vending company my 2 cents is

 

Keep locations close. 2 reasons. 1 you save money on fuel and time. 2 If you get a service call you will also be close. So if your customers know you are in the area they are more likely to call when that vendor breaks down right after you leave.

 

Buy good clean equipment. CL is good if you know what you are buying. Problem is it is a tailgate warranty. Not a good choice if you can't repair it yourself.

 

Only stop when you are pretty sure you are going to pick up $100 for the stop.

 

Find your own accounts. Unless someone is getting out of the business they are just trying to dump the unwanted accounts on someone else.

 

By getting your own accounts you get to pick where they are.

 

My rule of thumb... $100 a week account = $5200 a year. You can spend up to $2600 for equipment and no more. That is all the account is worth if you decide to sell.

 

My 2 cents 

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This has been a good discussion so far, both sides make strong points. It all comes down to what you want to do with your business, a question I have asked of folks a number of times.

 

If you want to build a vending company that would fetch a premium value when it comes times to sell then you probably should be using RJT's aproach because for a larger multiple route organization you have to make this kind of revenue per stop to be profitable after factoring the cost to service.

 

If you plan to keep the business small with only yourself or maybe only a couple of employees then certainly your overhead is lower and so is your cost to service and having these smaller account in your portfolio, to some degree at least, makes sense.

 

 Steve,

 

The observation I have made is that even though I have tried to explain myself throughout this thread many times over my point just like mission vending has in the above post of what it takes for long term success some people either don’t want to listen to it or they are ignoring the facts. Math does not lie. An operator can not sustain certain numbers long term or they will catch up to you sooner or later.

 

An operator could survive 10 years ago with account averages that would be near impossible to survive today. It is just the fact of business that the cost to service accounts is only going up and not down. Just because people are operating with a certain degree of perceived success today does not mean they can sustain that long term. Sometimes that term is longer than others but it does catch up none the less. Why do you think the large companies do not go after the low volume accounts? You don’t think they are "in their service area" of these larger companies? They don’t do it because as the cost of doing business gets higher it does not make sense to do these accounts.

 

If an operator starts out being selective doing accounts that are good producers their long and short term success is much better and in the end makes them able to be in control of their business not their business have control of them. If longer existing companies don’t start getting in the same direction sooner than later they will have problems that they might not be able to correct like some of these companies I have spoke about.

 

I think some are missing other points that vending is more complex than just account x needs to do y to and the numbers work. Those numbers can change drastically if an operator is driving beyond their reasonable service area for the account, not servicing correctly, spending top much on equipment, putting in to much equipment, pricing is off, etc. Even if some of those things are off it can affect things even with the parameters I spoke of in my other post.

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Mission,

As usual we see eye to eye on most things. The other thing for these guys to consider even if not looking that far in the future as far as selling to a larger company is growth. Growing a company with minimal cash flow is very hard. If you have mostly small volume accounts doing lower volume even with lower overhead it is hard to grow because their simply is not enough profits coming in for continued growth without continued debt. Most all companies are going to incur dept top some degree even if it is simply taking it out of your own savings. With that people even need to have a pay back plan to their savings to keep a certain amount of cash on hand for "situations" that may pop up from time to time.

 

 

 

 

This (quoted above) is one of the most insightful posts ever written on this forum, and I am amazed people just blow right by it. 

 

It is funny to me to see people say things like "well I have been in the business 12 years doing it this way, so you are obviously full of BS"

 

I have been in software biz professionally making a living as a programmer for 15 years. I learn new things every day.

 

I have learned things where I realize there is a better way to do something, and it might be a technique I have been using for 10+ yrs, and one day

someone shows me a different way to do it. Has my code been "working fine for me" for my whole career? YES. Does that mean its right just because

it works ? NO. If I see something that is more efficient, more effective, more logical, more time saving, etc... I am going to admit that I have been doing

it wrong even though my technique "works". By having a closed mind about other's advice, even if what i am doing is "working" I would never have got

to the next level in my career. 

To me its crazy to push back on someone's advice just because you've been in the business X years and you are making money. I can do that too but if I 

did I would find a lot of other people out there who will come by and eat my lunch. 

 

 

What I quoted above is unquestionably a valuable insight into business. It would be foolish not to consider it. Does that mean everything RJT says is always right, or

applicable to every situation? No.

 

But it is crazy,to me, that people would not consider it, or worse yet, feel personally insulted by anonymous advice just put out to the ether...just because they have been

around 10yrs and money is coming in. 

 

Socrates was the wisest man, because he realized the limits of his own knowledge. 

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You have to run your business the way I say, or it will fail.

Anyone who disagrees is wrong.

I have seen everything under the sun regarding vending.

There is no room for flexibility

RJT, are you trying to help or are you trying to be recognized as superior?

I do agree mostly with what you are saying, as in you must gross certain numbers to survive, BUT those numbers are not identical across the country. And everyone’s needs/situations are different. To me if a machine is grossing $50 per week ($100 soda and snack account) and the equipment would be sitting in storage otherwise (costing money vs making money) then it’s a no brainer to me and my circumstances. I might be wrong, time will tell.

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Robert, I'm just commenting as a casual observer. I don't have any full line accounts so it really doesn't matter to me. I'm just pointing out the "follow me or fail" tone of your posts.

--Steven

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You have to run your business the way I say, or it will fail.

Anyone who disagrees is wrong.

I have seen everything under the sun regarding vending.

There is no room for flexibility

RJT, are you trying to help or are you trying to be recognized as superior?

I do agree mostly with what you are saying, as in you must gross certain numbers to survive, BUT those numbers are not identical across the country. And everyone’s needs/situations are different. To me if a machine is grossing $50 per week ($100 soda and snack account) and the equipment would be sitting in storage otherwise (costing money vs making money) then it’s a no brainer to me and my circumstances. I might be wrong, time will tell.

 

I am glad you agree with most of what I have said. I am not trying to be "superior" I am just passing along facts that history and basic business principles says works and what doesn’t work. This is not isolated to the vending business it is ALL BUSINESS. Run a retail store selling widgets? Then you daily cash register (per customer) transactions have to be a certain amount to work. Same applies to restaurants, factories, transportation, catering, you name the business sector and it is the same. I don’t care what part of the country or world you are in the principles are the same. This varies wildly depending on size of operation but still the same.

 

I learn new things everyday about the vending business and am fortunate enough to have a vast resource base of current and former operators. Some of these operators have been in the industry 30 plus years with varying degrees of success. I speak with them frequently about the industry and one thing is always the same and that is the basic financial principles I spoke about. I learn as much from the ones that didn’t make it as the ones did and sometimes even more.

 

I think all of us no matter the size want to be in control of our business and not have it in control of us. The way to be in control is your business being on strong financial footing. I don’t want to have small margin accounts that control me. I want high margin accounts that give me the overall financial stability that if I loose some it doesn’t put me in a position that I am at risk of loosing my entire company.

 

Like I have said in other post, sure you can be “successful” with $50 a week accounts by working out of the family mini van, your garage, using Sam’s Club as a warehouse, using older equipment etc if that’s your idea of success and your are happy with that. I am not “talking down” about this style of operators at all. I am just saying they can’t get to a level where they can retire on such a business model.

 

Let me ask you along with others what their true definition of a successful vending business? If you could create your perfect scenario as a vending operator from inception to getting out of the business, what would it look like? How would it play out?

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If your goals are to grow the largest vending company in your area(s) then your path is probably the way to go because of having to pay route drivers and new equipment etc. If you are just trying to build a SMALL business to make a simple living, replacing a JOB and the 9 to 5 grind that most people endure, then I think $100/week accounts will do just fine, in my limited humble opinion.

 

Let’s look at a simple scenario with say 40 accounts each grossing $100 per week. 40 accounts x $100 = $4000 gross per week. Ok cost of goods is usually around 50% (conservative), so $4000 x 50% = $2000/week net. $2000 week net x 52 weeks = $104,000 per year pre tax. I do understand that there are other expenses such as breakdowns, insurance, fuel, maintenance, etc that also must come out of that number, but take a guy who makes $30k per year working the 8 to 5 grind and show him these numbers and he will be excited.

 

Most of my accounts do better than those numbers (some don’t by the way), but I do see how those numbers will work.

 

RJT, I have bought and read your book and I respect your experience and knowledge, but I’m having a hard time agreeing with the “follow me or fail” as Steve mentioned. As with anything, I think there is always a degree of flexibility and no one person has all the answers for all areas and all scenarios.

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Retirement from vending is not my goal, creating an excess of money in my family for the purpose of an annual vacation is. It is apparent that everyone has different goals from this discussion and many others.

BTW loose versus lose significantly different context. Not trying to be condescending I just noticed a trend of use.

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If your goals are to grow the largest vending company in your area(s) then your path is probably the way to go because of having to pay route drivers and new equipment etc. If you are just trying to build a SMALL business to make a simple living, replacing a JOB and the 9 to 5 grind that most people endure, then I think $100/week accounts will do just fine, in my limited humble opinion.

 

Let’s look at a simple scenario with say 40 accounts each grossing $100 per week. 40 accounts x $100 = $4000 gross per week. Ok cost of goods is usually around 50% (conservative), so $4000 x 50% = $2000/week net. $2000 week net x 52 weeks = $104,000 per year pre tax. I do understand that there are other expenses such as breakdowns, insurance, fuel, maintenance, etc that also must come out of that number, but take a guy who makes $30k per year working the 8 to 5 grind and show him these numbers and he will be excited.

 

Most of my accounts do better than those numbers (some don’t by the way), but I do see how those numbers will work.

 

RJT, I have bought and read your book and I respect your experience and knowledge, but I’m having a hard time agreeing with the “follow me or fail” as Steve mentioned. As with anything, I think there is always a degree of flexibility and no one person has all the answers for all areas and all scenarios.

 

that number comes down a LOT when you factor taxes and the same benefits the 30k guy gets. running a business is a hell of a lot of work compared to "working for the man" 

there are a lot easier ways to double your income than starting your own business. i feel like i am doing the work of 5 ppl in my vending biz. jm2c...

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If your goals are to grow the largest vending company in your area(s) then your path is probably the way to go because of having to pay route drivers and new equipment etc. If you are just trying to build a SMALL business to make a simple living, replacing a JOB and the 9 to 5 grind that most people endure, then I think $100/week accounts will do just fine, in my limited humble opinion.

 

Let’s look at a simple scenario with say 40 accounts each grossing $100 per week. 40 accounts x $100 = $4000 gross per week. Ok cost of goods is usually around 50% (conservative), so $4000 x 50% = $2000/week net. $2000 week net x 52 weeks = $104,000 per year pre tax. I do understand that there are other expenses such as breakdowns, insurance, fuel, maintenance, etc that also must come out of that number, but take a guy who makes $30k per year working the 8 to 5 grind and show him these numbers and he will be excited.

 

Most of my accounts do better than those numbers (some don’t by the way), but I do see how those numbers will work.

 

RJT, I have bought and read your book and I respect your experience and knowledge, but I’m having a hard time agreeing with the “follow me or fail” as Steve mentioned. As with anything, I think there is always a degree of flexibility and no one person has all the answers for all areas and all scenarios.

 

 

 

Let’s take you example and look at it closely. Let’s say you numbers are correct. However what is your true net in this example? Are all the machines paid for in full with all your money invested back in your pocket or reinvested to grow? How much is insurance, repairs, sales tax, self employment tax, etc? Factor all that in and let’s look at even closer.

 

That is the bigger problem people miss all the time in vending. I can assure you vending is probably one of the most tried business ventures of them all. This could be the guy that buys a couple machines to try the business to the guy that goes in great debt to try it. How many are successful? There are MANY that fail. Just look at the number of vending operators in a given area compared to any other business like restaurants, c-stores, retail, etc, etc the list goes on. The go look on CL and see how many machines are for sale in your area? If they are not being sold by a refurber they are being sold by mostly failed vending operators that tried their hand at the business. I can promise you these machines very seldom come from successful vending operators because they continue to refurb them. I have only seen once or twice in my vending history a successful vending operator selling off machines to the general public. They mostly come from failed vending operations.

 

I see and hear these stories all the time. I get calls constantly from people that look for advice because they got themselves in trouble in vending either from the start or have been operating for a while and are struggling. The number one thing that comes up every time is low volume accounts is the main contributing factor. Like I said before other factors are doing even the larger accounts that simply don’t make enough money (true net money).

 

This has nothing to do with "follow me or fail" at all. This has to do with basic business principles and math.

 

 

You didn’t answer my question I posed?

 

Let me ask you along with others what their true definition of a successful vending business? If you could create your perfect scenario as a vending operator from inception to getting out of the business, what would it look like? How would it play out? You only answered about a particular situation.

 

If vending is ONLY a passive or extra income based then it might work. This has nothing to do with building to be the biggest vending in your area this has to with how personally successful you can be within your own business. Remember that example I gave of the guy doing over 4 million a year? He was one of the biggest in his area and failed.

 

Like dogcow pointed out that 30k a year job would not be bad (depending on what it was) after you look at the time and effort put into what it would take to run that 40 account company you gave as an example. I can show you companies making the same amount with half those accounts and making more net money.

 

I can also show you companies like you referenced that are stuck and can’t grow because they don’t have the net profit. They are stuck and can’t go anywhere without taking on considerable debt. They simply can’t add anymore accounts because they physically cant do them based on the number of hours in a day and week. They are one accident away, one broke leg or other health related issue to sink them. One small thing and the whole house of cards fall. Don’t get me wrong all start up businesses is probably this point a few times before they get over the hump and move on. It is a dangerous game that has sunk many people.

 

You talk about the 30k a year job is a grind, I assure you getting to a level that you cant go beyond because the numbers are not their to do it is more of a grind, headache, stress than any 30k a year job working for the man.

 

Other than retired or other hobby type folks looking for extra income people that get into vending are looking at it as a long term career that they hope one day they can retire from. They may not say that in the beginning but that is their ultimate goal. With that takes strategic planning and making adjustments as needed to adapt to the ever changing times of vending and doing business in general. Even that guy punching a clock likes knowing he has stability in his finances and his long term employment goals. I don’t think many on this forum don’t think about (or they should) retirement one day. With the looks of thing Social Security is no guarantee when some of us retire so we had better plan accordingly.

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I'm gonna listen to this guy instead.... He supports both arguments. Warren Buffett's 10 Ways to Get Rich

 

With an estimated fortune of $62 billion, Warren Buffett is the richest man in the entire world. In 1962, when he began buying stock in Berkshire Hathaway, a share cost $7.50. Today, Warren Buffett, 78, is Berkshire's chairman and CEO, and one share of the company's class A stock worth close to $119,000. He credits his astonishing success to several key strategies, which he has shared with writer Alice Schroeder. She spend hundreds of hours interviewing the Sage of Omaha for the new authorized biography The Snowball. Here are some of Warren Buffett's money-making secrets -- and how they could work for you.

1. Reinvest Your Profits: When you first make money in the stock market, you may be tempted to spend it. Don't. Instead, reinvest the profits. Warren Buffett learned this early on. In high school, he and a pal bought a pinball machine to put in a barbershop. With the money they earned, they bought more machines until they had eight in different shops. When the friends sold the venture, Warren Buffett used the proceeds to buy stocks and to start another small business. By age 26, he'd amassed $174,000 -- or $1.4 million in today's money. Even a small sum can turn into great wealth.

2. Be Willing To Be Different: Don't base your decisions upon what everyone is saying or doing. When Warren Buffett began managing money in 1956 with $100,000 cobbled together from a handful of investors, he was dubbed an oddball. He worked in Omaha, not Wall Street, and he refused to tell his parents where he was putting their money. People predicted that he'd fail, but when he closed his partnership 14 years later, it was worth more than $100 million. Instead of following the crowd, he looked for undervalued investments and ended up vastly beating the market average every single year. To Warren Buffett, the average is just that -- what everybody else is doing. to be above average, you need to measure yourself by what he calls the Inner Scorecard, judging yourself by your own standards and not the world's.

3. Never Suck Your Thumb: Gather in advance any information you need to make a decision, and ask a friend or relative to make sure that you stick to a deadline. Warren Buffett prides himself on swiftly making up his mind and acting on it. He calls any unnecessary sitting and thinking "thumb sucking." When people offer him a business or an investment, he says, "I won't talk unless they bring me a price." He gives them an answer on the spot.

4. Spell Out The Deal Before You Start: Your bargaining leverage is always greatest before you begin a job -- that's when you have something to offer that the other party wants. Warren Buffett learned this lesson the hard way as a kid, when his grandfather Ernest hired him and a friend to dig out the family grocery store after a blizzard. The boys spent five hours shoveling until they could barely straighten their frozen hands. Afterward, his grandfather gave the pair less than 90 cents to split. Warren Buffett was horrified that he performed such backbreaking work only to earn pennies an hour. Always nail down the specifics of a deal in advance -- even with your friends and relatives.

5. Watch Small Expenses: Warren Buffett invests in businesses run by managers who obsess over the tiniest costs. He one acquired a company whose owner counted the sheets in rolls of 500-sheet toilet paper to see if he was being cheated (he was). He also admired a friend who painted only on the side of his office building that faced the road. Exercising vigilance over every expense can make your profits -- and your paycheck -- go much further.

6. Limit What You Borrow: Living on credit cards and loans won't make you rich. Warren Buffett has never borrowed a significant amount -- not to invest, not for a mortgage. He has gotten many heart-rendering letters from people who thought their borrowing was manageable but became overwhelmed by debt. His advice: Negotiate with creditors to pay what you can. Then, when you're debt-free, work on saving some money that you can use to invest.

7. Be Persistent: With tenacity and ingenuity, you can win against a more established competitor. Warren Buffett acquired the Nebraska Furniture Mart in 1983 because he liked the way its founder, Rose Blumkin, did business. A Russian immigrant, she built the mart from a pawnshop into the largest furniture store in North America. Her strategy was to undersell the big shots, and she was a merciless negotiator. To Warren Buffett, Rose embodied the unwavering courage that makes a winner out of an underdog.

8. Know When To Quit: Once, when Warren Buffett was a teen, he went to the racetrack. He bet on a race and lost. To recoup his funds, he bet on another race. He lost again, leaving him with close to nothing. He felt sick -- he had squandered nearly a week's earnings. Warren Buffett never repeated that mistake. Know when to walk away from a loss, and don't let anxiety fool you into trying again.

9. Assess The Risk: In 1995, the employer of Warren Buffett's son, Howie, was accused by the FBI of price-fixing. Warren Buffett advised Howie to imagine the worst-and-bast-case scenarios if he stayed with the company. His son quickly realized that the risks of staying far outweighed any potential gains, and he quit the next day. Asking yourself "and then what?" can help you see all of the possible consequences when you're struggling to make a decision -- and can guide you to the smartest choice.

10. Know What Success Really Means: Despite his wealth, Warren Buffett does not measure success by dollars. In 2006, he pledged to give away almost his entire fortune to charities, primarily the Bill and Melinda Gates Foundation. He's adamant about not funding monuments to himself -- no Warren Buffett buildings or halls. "I know people who have a lot of money," he says, "and they get testimonial dinners and hospital wings named after them. But the truth is that nobody in the world loves them. When you get to my age, you'll measure your success in life by how many of the people you want to have love you, actually do love you. That's the ultimate test of how you've lived your life."
 

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I am glad you agree with most of what I have said. I am not trying to be "superior" I am just passing along facts that history and basic business principles says works and what doesn’t work. This is not isolated to the vending business it is ALL BUSINESS. Run a retail store selling widgets? Then you daily cash register (per customer) transactions have to be a certain amount to work. Same applies to restaurants, factories, transportation, catering, you name the business sector and it is the same. I don’t care what part of the country or world you are in the principles are the same. This varies wildly depending on size of operation but still the same.

 

I learn new things everyday about the vending business and am fortunate enough to have a vast resource base of current and former operators. Some of these operators have been in the industry 30 plus years with varying degrees of success. I speak with them frequently about the industry and one thing is always the same and that is the basic financial principles I spoke about. I learn as much from the ones that didn’t make it as the ones did and sometimes even more.

 

I think all of us no matter the size want to be in control of our business and not have it in control of us. The way to be in control is your business being on strong financial footing. I don’t want to have small margin accounts that control me. I want high margin accounts that give me the overall financial stability that if I loose some it doesn’t put me in a position that I am at risk of loosing my entire company.

 

Like I have said in other post, sure you can be “successful” with $50 a week accounts by working out of the family mini van, your garage, using Sam’s Club as a warehouse, using older equipment etc if that’s your idea of success and your are happy with that. I am not “talking down” about this style of operators at all. I am just saying they can’t get to a level where they can retire on such a business model.

 

Let me ask you along with others what their true definition of a successful vending business? If you could create your perfect scenario as a vending operator from inception to getting out of the business, what would it look like? How would it play out?

 

Virtually no one is going to have a "perfect scenario" so it would be silly to even compare things to that.  This is business and the best decision could be the wrong decision while the worst decision could be the right decision.  You simply never know if you had the right answer until after you give it a shot.  Regardless of that, I think everyone's point here is that you made a clear statement that people need to stop going after "dog" accounts.  On the flip side, you say it is okay to do that if they think it is successful.  So why even bother to make such a post?

 

I have several "dog" accounts and I consider myself successful.  Like most people, I did not have the capital to start off with a bunch of equipment or buy a small business.  I had to start from the ground up while simultaneously working a full-time job.  To top it off, I was going to school full-time.  I have managed to grow my business substantially in the past 3 years (I worked for a company before I started this) but I did it by buying cheap equipment and getting "dog" accounts.  If it weren't for those "dog" accounts that I got then (and still have now), I might not have the capital to get anything at all at this point.  These "dog" accounts have gotten me where I am at today and I wouldn't be hardly anywhere without them.  It is the reality of things.  You simply can't build your business with the assumption that you will have perfect conditions.  If you rely on perfect conditions in order to build your perfect business, you are probably going to fail once reality hits you in the face and you aren't prepared for it.

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"some people either don’t want to listen to it or they are ignoring the facts.

The problem is you take those machines out of the warehouse and put them in those $100 a week accounts then when a nice account comes along you have to buy equipment and go in debt. You have to get back your return on investment. Eventually this cycle can catch up with you". RJT

 

I get it now, I have seen the light, Can I get an AMEN flock. Halleluia  I have drank the cool aid

Your suppose to buy a bunch of machines store them in your warehouse and when and if the right account comes along you install them and you are not in debt. Wow what a revelation 

So now all I have to do is take care of a couple of little minor details but other than that no big deal

 

 

1) How Can I buy the good machines that I will need for these great accounts I am going to just waltz in and get and not be in debt?

2)How can I least a warehouse space to for all these machines and also store all the product that I am going to need for the great accounts I am about to get (Because the divine one has already said that using sams as a warehouse is just loserville)

and not be in debt?

3) How do i pay for insurance for the machines and warehouse and a phone for all the phone calls I am about get to put my machines in all these great accounts and not be in debt?

4) the upside is I do not need to pay for a vehicle or gas, or sales taxes because:

I DO NOT HAVE ANY MONEY COMING IN

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"some people either don’t want to listen to it or they are ignoring the facts.

The problem is you take those machines out of the warehouse and put them in those $100 a week accounts then when a nice account comes along you have to buy equipment and go in debt. You have to get back your return on investment. Eventually this cycle can catch up with you". RJT

 

I get it now, I have seen the light, Can I get an AMEN flock. Halleluia  I have drank the cool aid

Your suppose to buy a bunch of machines store them in your warehouse and when and if the right account comes along you install them and you are not in debt. Wow what a revelation 

So now all I have to do is take care of a couple of little minor details but other than that no big deal

 

 

1) How Can I buy the good machines that I will need for these great accounts I am going to just waltz in and get and not be in debt?

2)How can I least a warehouse space to for all these machines and also store all the product that I am going to need for the great accounts I am about to get (Because the divine one has already said that using sams as a warehouse is just loserville)

and not be in debt?

3) How do i pay for insurance for the machines and warehouse and a phone for all the phone calls I am about get to put my machines in all these great accounts and not be in debt?

4) the upside is I do not need to pay for a vehicle or gas, or sales taxes because:

I DO NOT HAVE ANY MONEY COMING IN

why does your premise start with buying machines that you have no location for, wouldnt the first logical step to be finding a location otherwise how do u even know what u need? 

vending as im sure u know is hugely capital intensive, more so than any other business i can think of off the top of my head. why would u go into the vending biz with no money 

 

most ppl on here critical of RJTs point seem like theyre missing the gist of what hes saying or start from weird presuppositions 

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The problem is you take those machines out of the warehouse and put them in those $100 a week accounts then when a nice account comes along you have to buy equipment and go in debt. You have to get back your return on investment. Eventually this cycle can catch up with you.

 

Because earlier today the divine one made the above statement and by making this statement I assume he has equipment in the warehouse  waiting for the "nice accounts" he has been talking about without going into debt. Therefore in order to be a faithful follower I have to have machines in the warehouse without being in debt. ( still working on that one though)

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Few make it big........ To make it big you have to be willing to go all in. You have to be a salesman.

 

In the late nineties I had a guy I moonlighted for who did just that. Went all in. He partnered with 2 other guys. They rented a warehouse together. He had 1 good account making about 400 a week and several that were dog accounts. 

For a year or so he worked maybe 1/2 a day 3 days a week. working out of a ford 1/2 ton van. These guys moved from warehouse to warehouse for the next year or so.

Then he bought out another vendor who was selling out. Gave a premium price. dollar for dollar for 2 routes. 1 route was 90 miles away 3 accounts making $1000 plus a  week. Had to be serviced everyday.

He bought a warehouse and slept there putting everything back in..He couldn't make payroll a lot of times. I had came up with the idea about refurbing pop machines that we were able to buy locally stripped for $50 each. There was a good market for these and it was a way for me to make money. They all needed cooling decks so I rebuilt the decks and he did the rest.

That was how he made the payroll.

 

Today his annual sales north of 20 million. In 15 years.

 

Another example was a customer of mine who started around the same time. Landed a account with 100 employees. It grew to well over 700 employees. He kissed butt. Buying new equipment every time they expanded. It went from $200 a week to $70,000 a year. 1/2 of his route was tied up in this account. They told him they wanted more pop selections so he purchased a new D/N 501-E. Put it in and a week later said they didn't like it and he had to remove it. He grew his business by buying accounts from the 20 million guy. The 20 million guy wanted this account and would only offer him 38 cents on the dollar for his route.

 

So one day he gets a call from the 20 million guy saying they need to have a talk. He lost the account to the 20 million guy. Gone......  25 pieces of equipment with most of it less than 10 years old nowhere to go but storage. 

 

This business decide to go with the micro market

 

You have to have a business plan and be willing to go out and sale to get good accounts. Know your products, know your equipment. If you are not a good salesman then find someone who is.

 

Some of the big vendors will sell their old equipment to people who are not in their service area. When buying equipment be careful. I don't buy anything sight unseen. CL is ok if you can fix it yourself. If not then you need someone you can trust to help find good equipment. 

 

In my business I get to see it from many angles. The big guy and the small guy. The small guy can do a better job hands down.... This is the guy I want to work for. I love it when the little guy wins.

 

The knowledge gained on this forum is priceless. My goal is to help and support what ever my customers decide. The thing I hate most is setting equipment for a customer and picking up others at the same place. It  saddens me when I have to call them and tell them they just lost a account.

 

Most of the time you will not loose a account from good service but you will if you don't service it good. 

 

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"some people either don’t want to listen to it or they are ignoring the facts.

The problem is you take those machines out of the warehouse and put them in those $100 a week accounts then when a nice account comes along you have to buy equipment and go in debt. You have to get back your return on investment. Eventually this cycle can catch up with you". RJT

 

I get it now, I have seen the light, Can I get an AMEN flock. Halleluia  I have drank the cool aid

Your suppose to buy a bunch of machines store them in your warehouse and when and if the right account comes along you install them and you are not in debt. Wow what a revelation 

So now all I have to do is take care of a couple of little minor details but other than that no big deal

 

 

1) How Can I buy the good machines that I will need for these great accounts I am going to just waltz in and get and not be in debt?

2)How can I least a warehouse space to for all these machines and also store all the product that I am going to need for the great accounts I am about to get (Because the divine one has already said that using sams as a warehouse is just loserville)

and not be in debt?

3) How do i pay for insurance for the machines and warehouse and a phone for all the phone calls I am about get to put my machines in all these great accounts and not be in debt?

4) the upside is I do not need to pay for a vehicle or gas, or sales taxes because:

I DO NOT HAVE ANY MONEY COMING IN

 

I see we are back to being nasty again and name calling and not having a civil conversation but I will address what you said once again.

 

First off you are the one that gave the situation of having the machine sitting in the warehouse. I NEVER said anything about buying machines before having accounts. Matter of fact in my book I speak about NOT doing that. If you go read the OCS thread that you praised me on for doing such a great job explaining I even said the same thing about buying OCS equipment before you have the accounts.

 

To your questions you will always be in some form of “debt” with your company. The main focus is not getting upside down with more out than you can pay for. Or being upside down where you debt is great than the liquidation of your company at any given point.

 

You seem to ignore example after example I give only to pull out a couple of points from each post and take that out on context and miss the BIG picture I am trying to get across.

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