Starting out from scratch/ Taking out a small loan?

[moondog]

My question is this. What options do do you take or advise when starting out with nothing, as in no vending machines or product? What is the best way to acquire a vending machine? I see that a typical standard quality machine averages around $3,500.

 

Is taking out a small business loan a smart move?

 

I am not looking at creating a full time business. I'd rather have this start out as a small side job to compliment my income and free up some time for myself. 

 

So ultimately my hurdle is I don't have $3,500 to throw down on a vending machine. I'm going to community college and pursuing other opportunities as well and would like to create some assets for myself. 

 

Any advice I would greatly appreciate it.

 

Thanks,

 

Cody

If you want a small part time gig, the the most common approach is to find an auto body shop with 15 to 20 employees or any similar type of blue collar location and talk them into letting you install a soda machine there.  I say most common because these places tend to be the ones that a new vendor can get but we do have one member (Muncha Bunch) that started out with a premium water park account in the Kansas City area and financed all new equipment directly through USI Vending and it made perfect sense from a cash flow position.  Unfortunately he did the same thing with his second account which was not nearly as profitable and the lease payments ate him alive on that one.

 

You can set up a decent soda machine  for about $1,000 for a simple auto body type account including inventory, change in the coin mech and moving costs (you can't move these beasts by yourself). Other things will also enter into this equation such as the type of vehicle you own and your ability to store inventory.  Your first step is to gain a much better understanding about what you're getting into.  You can read through this forum or buy RJT's book which will synthesize it for you more quickly.

[RJT]

Here are just a few folks that have used my services and what they said. In these threads a few people talk about my services or my book. 

 

http://vendiscuss.net/index.php?/topic/9517-my-experience-with-pro-vending-consultants-rjt/

 

 

Another thread

 

 

http://vendiscuss.net/index.php?/topic/11276-round-2-with-pro-vending-cousultants-rjt/

[orsd]

RJT, I appreciate what you're trying to do here, but the problem is that even though you have offered them this generous resource, you have left them with the ability to determine whether or not your service was worth the $750. Since they are determined from the get-go, that your service is not worth it, there is the danger that they would (intentionally or unintentionally) cause it to be a self-fulfilling prophecy if they took you up on the offer, not believing that it would work. :/

 

 

I understand but I am confident that I can save them or make them well above the $750 to the point they cant deny the fact. No matter what they have to keep an open mind and be willing to listen. Don't worry I have been down this road before (on here) I have been here since 2010 and it happens from time to time. The fact is the proof is in the pudding as they say. I have the proof (by satisfied customers) and that is what matters. Vending is a small world and because of the internet people that feel they have been shorted will complain in a second. Bad word travels like wildfire but good news travels slow. You can find complaints about many vending type businesses (locators, machine companies, suppliers, etc) but so far I dont have that and been around a long time under the same name and participating on the same forums for years. 

 

Oh sure some may think I am a pompous golpher at times but that is not my intent and another reason I don't like the written word at times. It has to much room to be interpreted the wrong way. The fact is I give people a good value and have results.  

 

Also I am a man of my word and can only expect anyone that took up this offer to do so in good faith and expect the same out of them.  

For a guy that want to grow quickly and is sure they will be in it for the long haul your consulting is most likely worth it, but for a guy that just wants a side source of income like the OP it may not be.

BTW, do you have an example of what you would offer in a consultation that is more than what thoroughly reading (90% of content on) the forums for a couple years would bring?

I am not trying to accusatory here, just putting out my current situation to see if it is worth it.

[RJT]

For a guy that want to grow quickly and is sure they will be in it for the long haul your consulting is most likely worth it, but for a guy that just wants a side source of income like the OP it may not be.

BTW, do you have an example of what you would offer in a consultation that is more than what thoroughly reading (90% of content on) the forums for a couple years would bring?

I am not trying to accusatory here, just putting out my current situation to see if it is worth it.

 

Worth it? It is free if I don't make or save you the $750. If I make you or save you the $750 (and you pay)  it is still free because I saved you or made you more than the $750.  Want the "secret sauce" (as some here call it)  then just give it a shot what have you got to loose? 

 

Speaking of reading 90% of the content here. First their are thousands upon thousands of post. Second a lot of the information is so fragmented. Lets and not complete because a post died or the wrong people where giving the wrong advice. Then you have to decide who is right and who is wrong. They only way to do that is follow each person and see who has responded with most the right answers. Just like that thread the other day about combo machines. That guy has had much success with combo machines and told of some high revenue.  If it would have never came out he was in Australia where the prices are so much higher the new person reading the 90% of content would assume combo machines are the way to go.

 

I am not saying this is not an awesome forum and very helpful on many levels. but it is just really hard to get it all in and keep it straight by just reading content. That one missed piece of info could cost you because you didnt read and understand 100% of the content. Also the fact some info is just plain not correct.  

[orsd]

See, i don't like to be locked into a commitment.

For example, I could decide to go into bulk vending or other types.

In addition I may not be able to follow your advice- I have a full time M-F commitment and so many manufacturing places I can't do, large locations I cannot get because I can only service once a week, etc.

I have little doubt that you can help vendors grow and make over 750, but that is only if they want to grow a lot.

I however an only looking for a part time thing so I do not want to be pressured to grow- and if I don't grow I an simply wasting your time.

[RJT]

See, i don't like to be locked into a commitment.

For example, I could decide to go into bulk vending or other types.

In addition I may not be able to follow your advice- I have a full time M-F commitment and so many manufacturing places I can't do, large locations I cannot get because I can only service once a week, etc.

I have little doubt that you can help vendors grow and make over 750, but that is only if they want to grow a lot.

I however an only looking for a part time thing so I do not want to be pressured to grow- and if I don't grow I an simply wasting your time.

 

No offense but you have not been in vending all that long you only do it part time, and you don't want to be "committed" to grow yet you seem to question my advice I give an awful lot.  You think the advice I have given is a "bad idea",y yet you have never gotten a large account, and probably never made much or any effort to do so. So I am not sure why you think I give such "bad advice" or my idea that people can get large accounts is crazy. Have you ever really tried to get a large account? Have you ever had one and lost it because you didnt know what you where doing? If not how can you speak from experience and say they cant be gotten, or someone would loose them. If you did get one and loose it did you share that knowledge of how and why? Of course a less experienced person would have a hard time in both getting and keeping them if they have no clue how to get them or keep them. However, their are fixes for that like hiring a consultant or hiring a person that has been in the business with the experience. 

 

I have been in vending 15 years help run two larger vending operations (one is still in business and I am friends with the owner the other was sold to Canteen) . I was in sales and management (operations) from the start. I was not a route driver, service tech, etc. I have been running my own vending operation and consulting business for over 5 years and written a book that is pretty well respected and recommended, yet you think I am giving bad advice? Not sure I understand. Matter of fact have you even read my book? It cost a whopping $2.90. 

 

Since you seemed "skeptical" of the advice I was giving I offered you the service to try for free and only pay if I saved or made you the $750 the service cost you. Then you want me to then provide more "examples" about my consulting. Then you still are not sure it is "worth it" because you don't like being locked into a "commitment". 

 

See here is the thing. You along with many others on here has had varying degrees of success and much deserved. But because of this you (and others)  don't see the value in hiring someone in consulting. Some think this should be the "school of hard knocks". That people learn from their mistakes and are a much better person and operator for it. Really? If you want my opinion I will give you the same advice my dad always gave me. You want to start a business? Great go work in the industry for someone else for two years and then decide. This way you get paid to learn.

 

 I mean come on it is 12 months of unlimited consulting for $750. That's $2.05 a day in cost to have someone with my experience on speed dial to help you make decisions about your business. I end up with more change in my pocket at the end of the day than that. No offense but as much as it cost to be really serious in vending if someone doesn't see the value of that I really cant help them and wish them much luck.

 

Now to sound like that pompous golpher again. No I don't know everything (never claimed I did) but I know more than many that participate on here and challenge anyone to find where I gave bad advice that cost someone.  I can find plenty I either saved from screwing up or helped them make a good decision. I can also show you people that made plenty of money because of my advice. 

 

Like I have told others it is like medicine you don't have to take it that is your choice. However if you knew the medicine would help you why wouldn't you. 

 

This is another reason I left the forum (along with being busy with my business) is people seem to want to gang up on me from time to time and to be honest it get pretty old. Sure if I was some sleazeball that rips people off or performed poorly and did not provide good service for people on here then sure fire away. I participate on here and give lots of FREE advice because I don't mind but at the end of the day we all have to eat. Part of the way I eat is consulting. So do I "use" this forum for some gorilla marketing? You bet I do but I think I give way more in the form of free advice than I ever make from picking up the occasional consulting client. The ones that have either used my services or read my book have no complaints and very happy with what I have provided. In the end it is pretty frustrating to take my time (for free) and then get beat up like I am trying to rip someone off. Now if I was trying to sell you combo machines "with locations" doing all healthy for $12k a machine then sure I would deserve to be beat up on.

 

I love the vending industry and what it can do in the form of helping people create their own destiny. It is one of the few industries I know that is always in demand, the average person can do it with some ability and desire, it can be started from home part time and grow into a multi million dollar business. That is why I don't mind participating on here and helping people with some answers to their questions.  One of the sole reasons I wrote my book and called it The Truth about Vending is because I saw so many people get into vending and get either straight up ripped off or get sold on the idea this was a "get rich quick" industry. Matter of fact when I told my old boss I had written a book on vending he said "you are going to give away all our secrets". I told him 98% of the people that read my book will NEVER get into vending because they find out it is actual work. I also told him it would keep the ones that do try their hand at it from going out and screwing it up for the current operators by offering dumb stuff like $1.00 bottles and cold food machines in 40 person accounts. He laughed and said you have a point.   

[Growliebusters]

No one here has answered my question yet. Did you make more than a $750 mistake since you got started in vending? If you could have saved more than $750 in savings or mistakes would you have done it?

I am just saying consulting is not for everyone for what ever reason but it has a great value to many.

I have absolutely made much more than a 750 mistake. I jumped in head first and cracked the noggin wide open.

I saw an oppertunity and ran. Did I have then sense to hire am expert? NO

Did I spend WAY more than I should have? YES

WOULD I have hired someone? Not likely.

Do I now need to hire someone? I probably should.

This forum has been a major learning tool for me, I likely would have failed long ago without all of you helping me along.

I now need to go another step in the process and not sure how or where to proceed.

A consultant at that price seems more than reasonable to me.

Failure is not an option for me, so I have managed to make a go of it on multiple low end accounts. Expanded some over the last 8-10 months.

I started from scratch, got a loan and the (coughchina junkcough.)machines.

Would I do it again? HELL YEAH, just differently.

Not sure it this helps the discussion or not, but I think there is some value to one on one training/guidence from someone experienced.

[NYvending]

Vending is my newest venture as of late but in the 15 years since I left college I've been in corporate America, started 3 businesses, and own a franchise. A good consultant can be a huge asset to any business and sometimes it's even worth it to learn why you should NOT go into a particular business. Investing in knowledge is never a bad choice so long as you've verified the source you are spending your money with is reputable. You want to minimize risk so the more of your total equity you expose on a venture the more worthwhile a consultant becomes.    

 

The OP's question is a good one, it's a question I had to decide on when I started only I'm very well capitalized but none the less I considered buying used machines off craigslist for less than $1K however I have no means to transport a machine so I would have had to have the machine picked up by a freight company, delivered to my storage space then later shipped again to an account. I had no contacts who could move the machine so Pilot wanted $450 per move so 2 deliveries is $900 plus who knows the long term condition of the machine so at $1900 plus unknown repair costs and being a newbie I wouldn't know exactly what I was buying I ruled this out.

 

Second I looked at refurbished machines particularly AMS but I found the refurbs while viable weren't that much cheaper than new machines. It saves about $1K but you give up 5 years of warranty and the ability to finance the equipment with some vendors. I come from an investment background so I like to finance things and play the spread. I could buy the machine outright but I prefer to buy a new machine at 11% rate and price my items at a 65% margin so my bottom line net is around 30-35% which beats anything on wall street. This is just a personal preference but I like to keep my own cash in the bank and let someone else's money work for me and establishes a good credit history for a new business. Nothing wrong with spending your own money either some people feel better being debt free so do whatever is more mentally comfortable for you.  

 

Another thing I like from prior businesses I've owned is keeping equipment as uniform as possible. I went to a vending machine wholesaler and the machine I personally liked best is USI's futura combo machine. Since I've started I bought out another local operator so I have inherited some other machines I will eventually replace but all my new accounts get a new machine so I can finance it with latest technology and credit card reader as I want redundancy so I know how to repair the machine and my service times are consistent as well reporting on my entire route as I only plan to service once a week at most so I want to know in real time when that day is rather than just making a guesstimate. I'm aware this is not the most popular choice on the forum and I understand the reasons as many here will have larger scale operations than I ever will. I got into this business to build a really tight route of 10-15 accounts that I service every 7-10 days. In the NY metro area I've yet to add an account that does less than $500 gross monthly so 10-15 machines is $5000-$7500/month a nice chunk of cash for 1 day a weeks work and the machines pay themselves off in a year while I keep my own cash available. Many of my choices would be incorrect for someone looking have 100+ accounts but that's why you should spend a good amount of time researching the potential business and depending on how much capital you're looking to spend hire a consultant. I had a clear plan of what I wanted to build so I know what my route will look like when it's finished so now I've been very quickly able to get a strong head start because I know which potential accounts fit my routes goals and which ones do not.

 

To the OP speaking from someone new to vending but having owned multiple businesses I'd say your finishing college and the future is bright and full of possibility. In your position I would opt for refurbished machine from a manufacturer for your first few accounts and keep your costs low. The reason being simply until your doing a job you won't know if you actually LIKE it. Keep your costs low incase you find you don't like vending you can sell the accounts off cheap or even walk away from them with minimal loss. I got into vending because I own a similar business and I LOVE this business. I'd say it's a hobby for me but that's not accurate as I wouldn't do it for free but I love the return on investment and I don't have a board of directors or a golpher boss to report to. If you find you love it then your business will grow as you will want to reinvest more of your time and money into it. If you find a career you love and would rather do the 9-5 behind a desk then you can keep vending a small side commitment or cash out and move on. While vending is a simple business it's not for everyone nor is business ownership in general. You're young so try as many jobs as it takes till you find one your passionate about, whatever that job may be if you do it better than anyone else the money will be there.       

[Morris Cody]

Thank you every one. I took the last hour reading every post and writing down notes.

 

I'll go ahead and explain my mentality and myself a bit more.

 

So right now my schooling is towards Animation and I finished up my Audio Engineering certificate program this past spring. I'm 27 years old. I am not in a relationship nor do I have a kid (I am in no hurry for either option). So it is easier for me to save money.

 

So to tell you right now, I am not cut out for the 9 to 5 job. I absolutely hate it. I worked in a warehouse for 6 1/2 years before it drove me insane (of course the break rooms were full of vending machines so I have an idea of what sold well). I eventually had to find a job that would be flexible with my schooling. Working this lower paying job is starting to drive me crazy but it works for school at the moment but I still have 2 years to go and I am not too keen on wasting 2 years when I can start to build some assets now.

 

I do not see how vending would be something I don't like. I also said in my original post that this was a part time gig I wanted to do but I am totally open to the idea of growing as long as it is not consuming my life. In my personal opinion I see too many vending machines offering the same products. Where ever I go it is usually the same products. I believe there is potential in business in offering some things that everyone else is not offering. I also am looking into the idea in the future of producing a product of my own. Having a vending machine would be another avenue for me to place it in. 

 

With my animation/film skills I can do my own marketing and videos and go after other assets as well. This is why I do not want vending to consume my life. 

 

Of course all of these plans need to be executed in different stages and unknown events are sure to change things.

 

So some notes I took away from these post were

  * Get accounts before the machine. So I can determine the type of machine that works best for the location.

  * Acquire refurbished machines over new ones (for the most part with maybe some exceptions)

 

I was asked where I was finding machines for around $3,500. I was looking at a Seaga 40 selection machine. Most of the sites I visited were offering these price ranges of $2,500 and above.

 

I am not sure where the best place to look for refurbished machines are but I know this is the rout I need to take. 

Note: I live in Lawrence Kansas so I expect that I would have my best bets looking in Kansas City

 

Also since I do not have a family to take care of, which gives me more free time then a lot of other posters on here, I am willing to get another job to save up some money to buy a machine.

 

I don't see how difficult it would be if say I was running 3 machines starting out. I get giddy thinking about it and see myself visiting the machines every day taking notes on what product is moving and introducing myself to the people that work in each location and possibly getting feedback from what the customers wants. 

 

And RJT thank you for the information you have gave. I plan on getting your e-book to compliment my studies. 

[orsd]

The Seaga is a PIECE OF golpher golpher RUN FORREST RUN.

No, seriously run, they are cheap chinesium crap.

Actually, start out with soda machines, single prices if your feeling cheap today (bout 400, 700 refurbished) or get Dixie Narco E series, Royal GIII, Vendo x20 and x21 (bout 500-800 used, 1200 refurbished), which will allow bottles and cans as well as other beverages. Even if you acquire a newer machine I still recommend cans as they have longer shelf lives, are easier to handle, machines hold more, and cost less.

When your have about 5 soda locations grossing approx 2-400 a month buy 5 snack machines. This is you you can spread case lots of snacks without spoilage. (Good units are AP 7600, AP 113, AMS (all), Crane/ Nationals are a crapshoot, the older ones had minute flaws and were flimsier than the AP's, but the newer ones are flimsy crap too. Rowes are OLD but they were TANKS, some parts still available, some like em some hate em, Polyvend, Glasco, Lectrovend were pretty small, you'll most likely have trouble with parts availability but there are some still nursing them along on here.)

[RJT]

The Seaga is a PIECE OF golpher golpher RUN FORREST RUN.

No, seriously run, they are cheap chinesium crap.

Actually, start out with soda machines, single prices if your feeling cheap today (bout 400, 700 refurbished) or get Dixie Narco E series, Royal GIII, Vendo x20 and x21 (bout 500-800 used, 1200 refurbished), which will allow bottles and cans as well as other beverages. Even if you acquire a newer machine I still recommend cans as they have longer shelf lives, are easier to handle, machines hold more, and cost less.

When your have about 5 soda locations grossing approx 2-400 a month buy 5 snack machines. This is you you can spread case lots of snacks without spoilage. (Good units are AP 7600, AP 113, AMS (all), Crane/ Nationals are a crapshoot, the older ones had minute flaws and were flimsier than the AP's, but the newer ones are flimsy crap too. Rowes are OLD but they were TANKS, some parts still available, some like em some hate em, Polyvend, Glasco, Lectrovend were pretty small, you'll most likely have trouble with parts availability but there are some still nursing them along on here.)

 

Hey, thats my line "run forrest run". lol

 

He is correct stay away from Seaga all together. Crane, USI, AMS, (AP maybe) for snack machines. Dixie Narco, Vendo, Royal for drink machines. 

 

No sure why you say Crane is a "crap shoot" because they are one of the best machines ever built. They like all others have had small issues but they take care of any issues.