I'm stuck!

[Boazcat]

We got started in vending 13 months ago.  We bought locations from a lady going out of business -- 6 locations.  We've added a couple more and lost a couple here and there -- not a big problem. 

2nd biggest customer closed down and that one hurt...  We had just upgraded their combo to a fullsize pop and snack. 

Added a 6 story office building and have slowly added 5 combos into their very small breakrooms on each floor.

Another nice location is possibly in the works.  The problem -- We don't have any money to buy machines.

We've borrowed money from the bank for purchases, when that ran out -- we maxed out the one credit card we have. 

With that big customer gone, we aren't making enough money to even make our loan payments.  Things keep breaking and we are having to use my Lawn business money to keep the vending business afloat. 

We deposit over $1,000 a month, but our expenses are killing us. 

What do you all do when you want to expand, but can't get the funding?  I've looked into 3rd party machines, but Coke runs their own vending routes here with their employees.

My wife enjoys this business and it is a good part time job, but not when we aren't making any money!

[mxer518]

Coke runs some huge routes here in my area but they still give me all the machines I want. I would sit down and look at what you have going and see where costs can be cut, a great way to do this is by servicing them only when they need it. One of the best ways for you to dig out fast is to take some serious time and go locate as many soda machines as you possibly can and get them all set up as third party machines. They will start making you money the day they are placed which could help you stabilize until you get some better locations for snack and soda. Also did you loose that good account due to something that you had done in the location or was it something on their end?

[tedk]

I agree with mxer518 about Coke. They run there own routes here too, but I can still do 3rd. party. Talk to your machine guy about terms. Mine gives me 25% down then 30,60,90 days for the balance or a straight 30,60,90 days. If you aren't already using refurbs, ask about them. They can save you a lot of money.

Ted

[coinvestor]

In some places Coke and Pepsi will not do third party vending. In my area they won't. They will do "full service" vending and pay me a commission, but only if the location sells 110 cases a year or more.

What happened to the equipment from the place that closed? Can you locate that?

JD

[whaletail116]

What do you do when you can't expand?  You don't expand.  Going further into debt is only going to make those loan payments harder and harder to make.  If you want some extra funding to be able to purchase a few more machines, put in some extra hours at your day job.  Deliver pizzas a few nights a week until you earn $5,000.  Then use that money to purchase new machines.  I'd highly advise you to use an alternate route rather than accrue additional debt.  Debt is dumb.

Also, be patient.

[Jax Snacks]

I know nothing about full line.  But, have you considered the bulk side of the business?  The equipment is much cheaper and there are some deals out there.  One place to start would be to "upgrade" your existing accounts with a bulk machine.  The margin on gumballs is very good and some people want a "cheaper" alternative to buying an "expensive" package of candy.  MM Peanut, Gumballs and Mike & Ike would be a good starting point for a bulk triple.  The two machines may compete with each other, but who cares - you own both of them anyway.  There is a full line vendor in my area that is doing this and wants to buy some of my bulk equipment to set next to his snack machines.  He pays no commission or charity fees and had no competition in his break rooms - pretty sweet (no pun intended).  Just make sure you get a machine that can vend gumballs - so the Vendstar 3000 is a no-no.  A double head vending MMP and Gumballs would be your best bet in a breakroom IMO.

Jax

[Mercury]

Great advice!

When you find yourself in a hole.........STOP DIGGING!

Merc (who is slowly digging himself out of said hole!)

What do you do when you can't expand?  You don't expand.  Going further into debt is only going to make those loan payments harder and harder to make.  If you want some extra funding to be able to purchase a few more machines, put in some extra hours at your day job.  Deliver pizzas a few nights a week until you earn $5,000.  Then use that money to purchase new machines.  I'd highly advise you to use an alternate route rather than accrue additional debt.  Debt is dumb.

Also, be patient.

[whaletail116]

Thanks, Merc, I love the quote.

[mission vending]

I'd agree with whaletail, stop borrowing money. I did the same thing getting into the business. I was buying new equipment and had easy financing and I had a very rude awaking about 18 months in when my debt load was over 300K and monthly payments approaching 10K. I can attest that the next 4 years top pay everything off REALLY REALLY REALLY REALLY REALLY REALLY SUCKED!!!!! If at all possible just suck it up until you pay it off, refinancing will only extend your pain. Using debt to finance growth is not necessarily a bad thing, but don't let yourself get in too deep. 

Do an analysis of your business, see where the $$ is going, as a newbie to the business I would be willing to bet your prices are to low. According to industry averages your cost-of-goods should be around 50-55%.

Third party lease equipment is a good idea if you can get it. Be sure you read and understand any contract they give you, especially if you are required to buy x number of cases per month. The additional revenue without capital investment can help.

[MrEen]

Boazcat,

One more thing to consider that may help with that new location; consider pulling your lowest producing location to supply the new place.

If you're certain this new spot will be a decent account, at least it will increase the overall revenue with only a slight increase in costs.

Hope that might help,

Scott

[mxer518]

I can not say it enough on this forum, but getting in with a company to do a vending lease on machines. Many when they hear me say that think that you will never own the machines but that's far from the truth. I have several active leases that I am paying on but the thing is after the lease is up I have the option to buy the machines for 1$ or start the lease all over again. believe it or not it sometimes if good to just start the lease over because you can deduct 100% of the lease payments rather than with traditional financing where its only the interest. but either way you look at it leasing is the only way to efficiently grow your business in large scale.

[Boazcat]

This is so helpful.  I know borrowing isn't the answer, but I just needed someone to tell me that.  And all of you did...

We lost the big account because they shut down operations.  (Printing & mailing service and they lost THEIR two biggest accounts due to cutbacks...  All trickled down to me.)  I placed Pop machine on another location that had a combo and another drink portion of a combo.  That place is a warehouse with no air and it only sells crackers and nuts in the summer due to heat.

I didn't have a place for the snack and thought I would see if it would sell -- it did and for full asking price... $200 more than I paid for it on craigslist 3 months earlier. 

I'll call Coke and Pepsi and see what they can do for me.

I've bought all my stuff used from Craigslist and Ebay and have been very pleased. 

I know we need to raise the prices at some of the locations, We've just been slow to take care of that.  A thorough examination of our business seems in order...

Thanks for all the great advice!

Michael