Bulk Vending Profits

[caserri]

Bulk vending can be extremely profitable if done right. It is all a numbers game. Each machine averages a certian amount of net income each month. The operator is in direct control over his yearly income by simply controlling the number of machines he has working for him. Dont get me wrong, You are not going to get rich in bulk vending, unless your name is Folz. You will however make a decent living at it if you go full time. Its alot of hard work, just like any business. If you have the drive to succeed you will.

Each operator runs his business differently. As operators gather experience they are better equipped to know how and where to cut costs. Your profit line is measured in quarters so every expense must be considered.

If we use an example of $7.00 net profit per machine, per month, which is quite low, well that doesnt sound like much but what if you're running 500 machines? Or 1,000? That translates into a net profit of $84,000.00 per year. Just think of the difference if you were to add just $1.00 in net profit to that number each month. You'd be dancing around a $100,000. To be honest, thats more than I ever made working for someone else. I dont mean to inflate anyones hopes or preach about blue skies here but if done correctly these numbers are very attainable with some smarts and hard work.

As far as liability goes, smaller operators think they can not afford liability. If Johnny chokes on one of your gumballs then yes they are on the hook. I prefer to incorporate for personal protection. As you probably know incorporation will protect the business owner from liability, however the business assets will be at risk.

Comments?

[Ryan]

Good post.  You are spot on regarding the incorporation issue.  Even when I start my super small bulking vending business with just a few machines, I plan on establishing a LLC.  While I might not be able to afford liability insurance, at least I won't potentially lose all my assets if some kind of freak accident occurs and some lawsuit happy person decides to come after me! Plus, I feel it adds some instant credibility to my business.

[KPower]

It interesting you mentioned this since I had some questions along these lines. I am in the process of saving money to start my business. I plan in incorporating first before I even place a machine. I will also have insurance in place through state farm. They have quoted me $180 for 300k liability and they said 1 million is not much more than that. This may be because they have all of my insurance business and I get a better rate. I would hate to have something happen and I lose my house and everything else I have worked for my whole life. Peace of mind is worth the added start up cost in my opinion. Is it foolish to do this before I even know if I like the business?

[caserri]

KPower,

Is it foolish to want to protect what you have worked your whole life for? I think not. However, its hard to justify the expenses involved in starting a business that you dont even know if you will enjoy.

My advice to you is to get a few machines out there and cover yourself with minimum insurance coverage. $180 is not that much for some peace of mind. Heck that is only a little more than the cost of 1 good double head machine. I would not be too concerned with incorporation just yet as it can be very expensive depending on where you live.

What you need to do is plan your protection according to the amount of risk you are taking. Ask your insurance advisor for more on this. They will be able to tell you what the supposed risk is for any scenario. If you are just starting out, an insurance policy should do you just fine. As you grow and you have more exposure to risk then it would be wise to consider more insurance and possibly incorporation.

Remember, your best asset when it comes to assessing risk is your relationship with your insurance agent. Make sure you take the time to cultivate a good one!

Steve 

[KPower]

thanks for the response you really put things into perspective for me. The cost of the incorporation was kind of an obstacle for me and I really want to get started. Do you have any advice on getting my business licensed. Do I need a lawyer even if all I am doing is a sole proprietership? Any websites you know that can help with this?

[caserri]

Your best bet would be to visit your states website. For example http://www.mass.gov in my state. They usually will have a page or two set up to help business owners set their businesses up. What state do you reside? Maybe another member is from that state and can give you more info.

Another good resource is your local town or city hall. I'm sure they would be very happy to let you know how to go about getting started.

I wouldn't imagine that you would need a lawyer to set up a sole proprietorship, however, a tax advisor would be a very good person to know.

Here are some more resources to get you started. Like everything else on the web, one site leads to another!

http://www.nbva.org 

http://www.irs.gov/businesses/small/article/0,,id=99336,00.html

http://www.sba.gov

Good Luck!

Steve

[KPower]

Thanks for the great info. I first talked to you on vending chat. I complimented you on your website. I don't know if you will remember or not. I am in St. Louis Missouri.

[caserri]

Yes I do! Thanks again for the kind words.

I appreciate your support here on VENDiscuss.

Steve

[Alan Sampson]

According to the 2006 annual Census of the Industry compiled by Vending Times, here are the average annual revenues from these different types of machines for 2005:

 

[align=center]Number of Machines

Average Annual Revenue

Average Per Machine

Capsule Venders

695,000

$178,615,000

$257

Novelty Capsule Vender

14,000

$5,530,000

$395

Nut/Pan Candy Vender

417,000

$85,902,000

$206

Ball Gum Vender (includes about 75,000 charitable/civic organization placements)

910,000

$109,200,000

$120

All others (special-purpose and multi-purpose machines, including stickers, sport cards, etc.)

201,000

$34,170,000

$170

[/align]

If the average 25¢ capsule vending machine generates $225 per year, that unit will produce 900 annual vends or a little less than 2.5 vends per day.  Some locations obviously will do better, some worse.

We estimate that an average charity machine generates around $7.00 per month, or $84 per machine each year. This is less than one vend per day. In part, this lower sales volume is due to the secondary locations at which these machines are located and, in part, due to the presence of multiple charity machines at many locations.

[mike]

Hello All,

I wanted to know how many machines I would need to meet my profit goals.  I put together a spreadsheet in excel to work out some ROI figures.  (I don't profess this to be a business major, so please point out any inaccuracies).  A question for you seasoned pros:  What percentage of you machines do you have to relocate per year?  This would impact my ROI if I outsourced placement.

[caserri]

Mike,

Great work on the spreadsheet and thanks for sharing. First off, I would eliminate the charity + commission fields as you should never pay both commission and charity. My suggestion is one or the other per location. That doesn't mean you cant do both at multiple locations. Use your judgement as to what will work best for each location.

Secondly, On the commission/self placement, I believe your commission percentage is a bit high. I'm sure you can get away with less. 10-20% is what I have seen as "norm"

I am interested in Robs view of this as he majored in business.

As for machine re-location, I average 2% each month. Keep in mind I have a large machine count. This is not due to kick outs though. It is just me re-evaluating my routes and tweaking for best profit margin. My kick outs only are nominal.

[T BIRD]

 

I created a LLC through legalzoom.com.  I highly recommend them.  I gotta call them and see if I have to change anything because originally I thought I was getting into snack and soda vending.  I changed my mind and will go into bulk instead.  I would think vending is vending is vending right?

 

What does ROI mean?

[caserri]

What does ROI mean?

 

ROI = Return on Investment

Steve

[ANDERSONVENDING]

Steve,

First its "Return of investment" and once equipment is paid for,then it becomes "return on investment":dude:

John

[caserri]

John,

Noted, Thank you for the correction!

Steve

[Gwen]

Hey!

I hope this is the correct place for this. I Just made my first service call. I need the experts opinion on This.  I can't be sure if I got good locations or not. Maybe you guys can let me know.  Seens I don't have anything to compare it with.

first location- penut M&M 4.50; skittles 5.75 seedlings 2.50  Total12.75 (29 days in service)

second location I got 2 machines one on the register area Unit 2- 1" gumballs 5.00; Jelly beans 1.75; Mike & ikes 5.75  Total12.50

Unit 3 in the service area- 1" gumballs 1.50; jelly beans 4.75; mike & Ike 9.00  Total 15.25  ( both machines in service for 25 days)

Is this normal for a triple head machine ? What is  usually the total average per machine when it comes to triple heads?

Thanks,

Gwen

[Vendingguy]

Hey!

I hope this is the correct place for this. I Just made my first service call. I need the experts opinion on This.  I can't be sure if I got good locations or not. Maybe you guys can let me know.  Seens I don't have anything to compare it with.

first location- penut M&M 4.50; skittles 5.75 seedlings 2.50  Total12.75 (29 days in service)

second location I got 2 machines one on the register area Unit 2- 1" gumballs 5.00; Jelly beans 1.75; Mike & ikes 5.75  Total12.50

Unit 3 in the service area- 1" gumballs 1.50; jelly beans 4.75; mike & Ike 9.00  Total 15.25  ( both machines in service for 25 days)

Is this normal for a triple head machine ? What is  usually the total average per machine when it comes to triple heads?

Thanks,

Gwen

I might not be the right person, as I am new to this as well, but you are actually close to what you should expect.  However, in order to maximize your profits, you should play around with what to vend.  From each location that you posted, after the 2nd month, I would drop the products that don't produce well, and replace them with something else.  For instance, on your Unit 1, I would drop the seedlings, and go another type. ( I have found that it is better to offer the best of 3 worlds, something chocolate, something fruity, and gum.  This has worked for me, but it might not be the same for everyone else). Do this with all your machines until you have a good understanding of what sells.  One thing that you should consider though, unless you have a whole lot of machines, its probably good to stay with fewer choices of candy.  This way you don't get hit with inventory costs and excessive spoilage.  Depending on the locations and other machines at the locations, I would try to keep gumballs in 1 of the compartments.  They are cheap and give the highest return.  I have also seen that reeses and runts do well in my machines, but that is just me.

But also, look at your location.  What kind of traffic does it have, or employee base.  I have 1 tri-vend in a factory breakroom that goes above and beyond what I expected.  The reeses and runts in the machine was practically almost sold out when I checked it, but the gumballs barely moved.  I believe this is because this location has 2 other gumball only machines on site.  Next time I check it, and if the gumballs are still not moving, I'm going to change it out with frostbite chiclets and see how it does.

I don't know if this helped you out, or made it more confusing, but if you need any other advice, let me know.

[thrash]

If you are INC. do you still have to buy insurance? I thought that's why people INC. there business so they could not get sued and take everything you have worked for.     does anyone no for sure

THANKS   JR. 

[mytencents]

If you incorporate you should still buy insurance.  It'll keep your business from getting wiped out - lawsuits cost money even if you win and insurance protects against legal fees. 

Also, be sure to actually manage your business' finances separately from your personal finances or courts will disregard the incorporation.