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I’m new to the vending business just looking for ideas to expand


Vendingvulture
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Hello I’ve started a vending business about 2 years ago and purchased an existing route with 4 machine on 3 locations snack and beverage. I was working at the time and lost my job so decided to try it full time the beginning of this year. Over the course of 2017 I grew my business from 3 locations to 20 with over 30 machines. I’m just looking for suggestions on expanding I just feel I’m in a slump and should be progression a lot faster than I am.

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It sounds like you are doing just fine.  Just keep grinding.  Keep knocking on doors.  Just push through the slow times.  You make knock on 10 doors and get 4 new good accounts.  The next 10 accounts you may not get a single one.  Just keep knocking or doing whatever has gotten you this far.  

 

One thing you can do is look for an account where you can get more than one account in one sell.  We went into a local gym/ymca and got the account.  We got that account and another gym/ymca about 15 minutes down the road because they are owned by the same company.  Getting that "one" account really got us two.  Going into talk to them, we knew that they were linked and the same company would be in both locations.  There's a local car-wash that we may soon go after.  The car-wash company has 8-10 local car-washes so if we sell that one car-wash, we may get 8-10 accounts out of the deal.  I'd tell you to look for potential accounts like these.

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Youre not too far off from where I am after 2 years, although I got started with bulk vending and quickly expanded into full-line. I'm also still working a PT job, so I'm not really depending on the sales for income. Just keep plugging away and adding locations and machines. I've done a combination of that and purchasing routes/locations to grow to the size I am now. Buying a route is an excellent way to grow, especially if you can do so with seller financing. Like Southeast said though, just ensure it's the right price and makes sense for you, especially considering this sounds like your main source of income.

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As other's have said, if you buy a route, double/triple check to make sure everything is in order.  You don't want to over pay for something and then be still paying for it years down the road.  We are in the process of buying a route that will pay for itself in about a 10 month period (hopefully less).  The seller is letting us finance it through him at no interest and pay him as we work the route.  This is something you want to look for.  You don't want to have it hanging over your head for years to come.  And as you hopefully already know, try and avoid getting into a lot of debt.  The last thing you need to be doing is paying towards interest on machines that you owe on.  It sounds like you are itching to make a big/crazy move.  Just don't get antsy and make an impulse decision.  If something comes up, throw it on here and some of us will help you weigh your options.

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This is very helpful information. Thanks guys just let you know a little about my situation, yes this is currently my main source of income. I just signed a contract for a route of 4 locations and 6 machines grossing about $1900 in sales and I’m making a $1000 month payment for it. The contract is for 18 months. I think it’s a slim margin to work with but I’m trying to pick the sales up and let the route pay for itself. 

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As you'll find from those numbers you'll be working those accounts for free for 18 months, or even losing money for that time.  You also overpaid for them if that's all they are doing whether they are brand new machines or not.  That is not the way to successfully grow your business.

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So the route is doing $1,900 a month in revenue ($22,800 a year) and you are paying him $18,000?  Is that accurate?  If so, that seems pretty steep.  Hopefully the equipment included is top of the line machines.  What are the machines?  

 

Just as a comparison, we are in the process of buying a route where we pay for it over a 10 month period.  The break-even point for this route purchase will be about 8.5-9 months.  That's assuming a 40% margin after cogs and other expenses.  Going off those margins (that's just our average yearly margins), it will take you 23.5-24 months to pay for the route you purchased.  After 9 months, I will start to turn a profit.  It will take you almost 2 full years to make a dime.  That just seems crazy high to me, unless the machines are really really really nice.  

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Yes I’m starting to think it may have been a bad decision but it was mainly because I don’t have the capital to purchase that math machine or to start it from scratch. But that’s correct after about 18 months it will be paid completely off and then I will start making profit. But I believe I can increase the sells. Some of the machines are older actually some of the oldest machines I’ve dealt with. 

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I was about to start a similar thread.  But don't want to post the same topic, so hope I am not hijacking this one.

The small route I was looking at is 4 machines.  2 soda and 2 snack.  They are about 2-4 years old USI machine.  The route generates about $8500 a year and he is asking $7000.  

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46 minutes ago, Vendifull said:

I was about to start a similar thread.  But don't want to post the same topic, so hope I am not hijacking this one.

The small route I was looking at is 4 machines.  2 soda and 2 snack.  They are about 2-4 years old USI machine.  The route generates about $8500 a year and he is asking $7000.  

$40 per week per machine won't cut it for long. The machines might be worth $7K, but the sales are not. 

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26 minutes ago, lacanteen said:

$40 per week per machine won't cut it for long. The machines might be worth $7K, but the sales are not. 

These would be my 1st machines.  Not my primary source of income, just something to learn from and build on.  And a couple of miles from my house.  But I understand what you are staying.  Thanks for your input. 

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The equipment sounds nice/new, but as lacanteen stated, those accounts aren't barn burners.  Ask how he came to that evaluation.  If he puts any value on the accounts, I'd just explain to him/her that there isn't much justification in paying any amount of money for accounts that size.  You'd pretty much just be purchasing the machines at that point.  If you purchase this route, you won't make a dime until almost 2 years in.  That's if you keep the accounts and everything goes according to plan.  Not a very strong ROI imo.

 

It would take a lot more work, but you could take that $7,000 and buy 10-15 used machines.  Find the accounts and place them yourselves.  With the same investment and a little bit more leg work, you could have a route doing $50,000+ a year.  You would learn along the way and truly find out if you like vending or not.  Your machines wouldn't be as nice, but you would learn how to repair them as you grow.  If you decide you've had enough at any point along the way, you won't have too much invested.  Hopefully you will have easily broken even by that point.  That's how most of us would advice you to start out.  

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3 hours ago, CapitalCityVendingLLC said:

The equipment sounds nice/new, but as lacanteen stated, those accounts aren't barn burners.  Ask how he came to that evaluation.  If he puts any value on the accounts, I'd just explain to him/her that there isn't much justification in paying any amount of money for accounts that size.  You'd pretty much just be purchasing the machines at that point.  If you purchase this route, you won't make a dime until almost 2 years in.  That's if you keep the accounts and everything goes according to plan.  Not a very strong ROI imo.

 

It would take a lot more work, but you could take that $7,000 and buy 10-15 used machines.  Find the accounts and place them yourselves.  With the same investment and a little bit more leg work, you could have a route doing $50,000+ a year.  You would learn along the way and truly find out if you like vending or not.  Your machines wouldn't be as nice, but you would learn how to repair them as you grow.  If you decide you've had enough at any point along the way, you won't have too much invested.  Hopefully you will have easily broken even by that point.  That's how most of us would advice you to start out.  

Thank you for the input. I have thought about going that route.  But as you stated, the machines wouldn't be as nice.  I would think it is a hard sell when you are replacing nice/newer machines, with ones that aren't.  I do agree on the ROI.  Definitely would want a better ROI.  But what appeals is for a startup,  the machines are close and and on the new side.    Again, great points and THANK YOU!!!  This is why I ask the pros.

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3 hours ago, CapitalCityVendingLLC said:

The equipment sounds nice/new, but as lacanteen stated, those accounts aren't barn burners.  Ask how he came to that evaluation.  If he puts any value on the accounts, I'd just explain to him/her that there isn't much justification in paying any amount of money for accounts that size.  You'd pretty much just be purchasing the machines at that point. 

Yes, this is what he pretty much stated when I talked him down a little.  He noted the value of the machines.  

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