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Reasonable return time on money???


Tpev20

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I guess the question I am asking is how long did it take for you to pay off your machines? I have the opportunity to set up some machines in a buisness. It is a warehouse/trucking company of about 100 employees (plus over the road trucker traffic), spread over 4 locations. I am looking to get 4 soda machines, and 2 snack machines. That puts one soda machine in each location, and 2 snack machines in the higher traffic locations. Two of the locations have fewer than 15 employees each in them, so dont wanna invest in the snack machines there. How much should I be looking at spending on machines? How long should I expect for them to pay off? Is 1 yr an realistic goal?, I don't expect to get rich, but I am just looking for some decent $$$ every month, get the machines paid for, and then go from there, possibly expend to more locations. I had some machines set up, and could be delivered next week if I pull the trigger. Guess I woke up this morning feeling a little nervous about getting into the vending business, and visions of losing my investment in my head.

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On the smaller locations, are they just office folks?  Are they terminals with truckers in and out each day?  Trucking locations always do pretty well but the fact you have to set up 4 locations might get a little expensive.  I always wanted my machines to earn enough in 8 months to pay for themselves.  But these are just expectations.  Once they are paid for the rest is just profit back to you. 

In your case this is the best way to get into vending, location first, equipment second.

Good luck.

Blue Moose

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smaller locations are a couple of office people (shipping/receiving clerks) couple forklift drivers, and then the trucker traffic.

Is spending 5k on machines too much? Can I expect to profit enough in this type of location, to have the machines paid for in a yr?

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Vending is a funny business, since I find myself involved in so many different types of the vending business at large I can share some good information. Some of the vending that I am currently involved in has an amortization for about 60 months where other types of vending can be less then 3 months in almost all cases. In your situation unless you can get an installation agreement signed that will lock this location up with you for no less than 36 months I would want to amortize it less than 12 months. With getting the right equipment at the right price and right condition this should be really no issue. One also alternative would be to get some more information on 3rd party vending in your area to possibly get the drink machine free. Some places will be very harsh with minimum orders and other will not be, in my case my area is very easy going with giving out machines with very little minimum orders.

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When you talk about the amortization lengths, I have a question. Lets say you spend $5k on machines, and figure it will take 2 yrs to pay off. So thats just over $208 in profit you need to pay for the machines in 2 yrs. So if you make $208 every month, do you consider that break even and consider it successful? Or do you look for a higher return, to truely have a profit over those two yrs? Hopefully that makes sense hahaha  :)

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A lot of that depends, Like I was saying with contracts have a huge effect in the equation because you know the account will still be around once it is paid for and then you will keep all the profit. A good example of your question is a newer route that I picked up is 100% contracts that have time lengths of nearly 20 years. So on this business I will not make a nickle for 5 years if I keep it as it is, based on the average net income after commissions paid according to the lease terms. But because the accounts are guaranteed for such a length of time I am not worried about not making money for the first 5 years, that in reality will not happen as I plan to merchandise them better than the previous person and price increases have already been approved at nearly all locations. Once your business gets big enough you will not be as concerned with making money money on the short term as long as the business is carrying good equity. Just starting out its good to not expect to make much money for a decent amount of time, that's when finding killer deals on equipment becomes more and more important.

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Just starting out its good to not expect to make much money for a decent amount of time, that's when finding killer deals on equipment becomes more and more important.

Yeah, I have the locations locked up for long time, so thats a plus. I have everything all ready to go, machines picked out, etc. Just started getting this anxious feeling that I was making a mistake getting into this business. But I think that has to be pretty normal for anybody looking to invest in something. I of couse want to get the best deals on machines I can, so I think that is why I am nervous about making the purchase. I have this feeling as soon as I buy the machines, then a week later I will see the same thing for $200 cheaper. But again i think that just goes along with the pressures of setting up a business. I thank you for your advice, from you sig, you def must now what your talking about, and at sometime took that leap to get started.

Thanks again

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One thing that I have seen many new people to the vending business get bitten on is the issue of stale product. They kind of dip their toe in the water with a couple of machines and then three months later are eating a lot of junk food at home because all the chips have gone past their expiration dates. With sodas it's not so much of an issue, but with snacks and only two machines the stales could potentially eat up all of your profit.

So be prepared to lose some profits on the back side. When shopping at the warehouse clubs for product pay very close attention to expiration dates. They have no problem letting you walk out the door with a case of chips that will expire in 3 days. Dig into the bottom or back to find the best dates so you will have the most amount of time possible to sell your product.

Good Luck with you new locations.

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One thing that I have seen many new people to the vending business get bitten on is the issue of stale product. They kind of dip their toe in the water with a couple of machines and then three months later are eating a lot of junk food at home because all the chips have gone past their expiration dates. With sodas it's not so much of an issue, but with snacks and only two machines the stales could potentially eat up all of your profit.

So be prepared to lose some profits on the back side. When shopping at the warehouse clubs for product pay very close attention to expiration dates. They have no problem letting you walk out the door with a case of chips that will expire in 3 days. Dig into the bottom or back to find the best dates so you will have the most amount of time possible to sell your product.

Good Luck with you new locations.

I could not agree more, that is HUGE when you only have a few machines, once you get to be big enough you will have some locations that will move certain things in record time and what that will allow you to do is rotate the stock of something that is going to date out at one location to another that will eat through it well before the date. I like to call these locations "cleaner" locations as they are good for moving anything that will date out at another location so that you do not loose you shirt. Also keep in mind at the store when purchasing the product look for things that have a very good shelf life, there is a bunch of stuff out that will surprise you how short or how long that period of time is.

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What types of snach machines do you guys suggest?  Right now I am looking at a couple of snack machines, either 2 National 147's or 2 Automatic Prod 113's...any experiance with either of these machines? The 113's would cost me $280 more per machine.

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What kind of problems can I expect to run into with these machines? Are they expensive to fix, or pretty basic stuff? Are there certain parts I should keep on hand just in case? With the small number of machines I plan to start with, having one down for a couple days while I wait for a part would really suck.

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