royalforest Posted October 5, 2010 Share Posted October 5, 2010 I am looking to purchase 2 locations producing $400.00 a week($20,000.00 a year). First location has: 2 Vendo 721 live display soda machines-6 years old 2 431 Crane National food machine-8 years old 1 167 SV Crane National-8 years old Second location has: 1 Crane National food-6 years old 1 Crane National snack-8 years old 2 Vendo can machines-10 years old Combo in his warehouse. He is asking $18,000.00. Both these locations are minutes apart and will fit nice in my route. I think the experienced here on the forum will say it is worth 50% of $20,000.00. He will not sell that low. Do you think 70% is crazy to pay for this considering if a locator found me these accounts, the going rate would be 9 machines at $400,00 a piece equals $3600.00 plus if I purchased these machines averaging $1000.00 a piece will add another $10,000.00. The total would be close to $14000.00 which equates to 70%. Thanks. Link to comment Share on other sites More sharing options...
mission vending Posted October 5, 2010 Share Posted October 5, 2010 A fair price is what a willing buyer and seller agree to. As mentioned before, 50% of gross is a rule of thumb and good starting point. Are there any contracts in place? How is the pricing of products sold? Are they crazy low or within your market norms? What about commission? Paying 70 or even 75% would not be an unreasonable amount, if the income can be verified somehow. How long has he had the accounts? I would be really be concerned about having some sort of agreement in place so you don't get booted in the first month or so. Just a few things to consider. Link to comment Share on other sites More sharing options...
royalforest Posted October 5, 2010 Author Share Posted October 5, 2010 Thanks Mission, you have been a tremendous help! This person is 75 years old. He claims he is retiring. There are no contracts in place. I guess I can talk to these owners of the businesses to see if it is solid and see if they are receptive about me taking the accounts over. I don't know what else to do so I don't get booted. As far as the income goes, I don't know how to verify other then ask him for the records. He did say he will show me them. I don't know if this helps but these accounts have to be serviced once a week, the other location twice a week.The soda is selling 60 and 65 cents, how does that matter? I think I can get it done at 70% but hoping I don't have any pitfalls. Thanks Link to comment Share on other sites More sharing options...
royalforest Posted October 5, 2010 Author Share Posted October 5, 2010 He has had these accounts for 6 years and said if I give them good service there should be no problem continuing servicing these accounts. Link to comment Share on other sites More sharing options...
royalforest Posted October 5, 2010 Author Share Posted October 5, 2010 That would be a disaster getting booted and losing $14,000.00, the number I will pay. Link to comment Share on other sites More sharing options...
mission vending Posted October 5, 2010 Share Posted October 5, 2010 He has had these accounts for 6 years and said if I give them good service there should be no problem continuing servicing these accounts. "should be no problem" and there not being a problem are two different stories. I would offer half down, half in 30 days with your route guy being introduced as his employee by him. That will give your route guy a chance to get known in there and get a good feel for what is going on. At 30 days remainder is paid (subject to income verification) and you are introduced as new owner. Link to comment Share on other sites More sharing options...
royalforest Posted October 5, 2010 Author Share Posted October 5, 2010 Thanks that makes sense! What if the income after a month does not match. How do I get the half I put down back? Link to comment Share on other sites More sharing options...
royalforest Posted October 5, 2010 Author Share Posted October 5, 2010 As you collect weekly in the 1 month trail. Who keeps the collections and who buys the products? Thanks. Link to comment Share on other sites More sharing options...
mission vending Posted October 5, 2010 Share Posted October 5, 2010 Anyway you can reach agreement is fine. In my scenario we agreed on price with half down. I was introduced as his helper and we serviced the location together for four weeks. I provided product and kept proceeds to verify income. We also took meter readings as backup. The agreement provided that if sales were 90% or better of stated revenue then the other half was to be paid. If sales did not reach the 90% threshold then the price was reduced by 50% of the shortfall. (If it was 500.00 less than 90% of stated revenue then price would be reduced by $250.00, deducted from the final payment.) In either case seller had to notify account that he had decided to sell the business to me. I was still obligated to buy the locations and equipment one way or the other but at least had the opportunity reduce the cost if sales did not reach the numbers stated. More importantly, I got a soft introduction to the account and by him being there with me also helped to transfer some of the goodwill he had created over the years to me. Link to comment Share on other sites More sharing options...
royalforest Posted October 5, 2010 Author Share Posted October 5, 2010 Thanks! Link to comment Share on other sites More sharing options...
sphincorp Posted October 6, 2010 Share Posted October 6, 2010 you have to talk to owners/managers...let them know you are taking over...trust me...umm try to trust me on this.... my experience... agree to cash dn. payment say 300-400...meet seller at stop or do ride alongs at the site get a feel for it and the numbers i guess you can take it from there.. ...its tough but if both parties are motivated you can get it done this way ...first thing i was taught..dont buy the stop........other than that i like missions ' advice and method Link to comment Share on other sites More sharing options...
royalforest Posted October 6, 2010 Author Share Posted October 6, 2010 Thanks for the info. Can't believe he was not intested in accepting 70% of gross. Link to comment Share on other sites More sharing options...
mission vending Posted October 6, 2010 Share Posted October 6, 2010 you have to talk to owners/managers...let them know you are taking over...trust me...umm try to trust me on this.... my experience... agree to cash dn. payment say 300-400...meet seller at stop or do ride alongs at the site get a feel for it and the numbers i guess you can take it from there.. ...its tough but if both parties are motivated you can get it done this way ...first thing i was taught..dont buy the stop........other than that i like missions ' advice and method Am I correct by inferring you mean buy the equipment , not the stop? If so, no argument from me. In principle that is the way to go, any amount you pay over the value of the equipment is potentially at risk. The reality is in some cases it is worth the risk, so to speak, to put additional $$ into play for a good account or a location that is a natural fit to your existing route. In this particular case I would be very concerned about the locations being serviced by a 70+ year old man. There is a very real possibility that the location isn't particularly happy with him but doesn't have the heart to toss out the old guy. That is why, in this case especially, I suggested some sort of transition to mitigate the possibility of that happening. Link to comment Share on other sites More sharing options...
mission vending Posted October 6, 2010 Share Posted October 6, 2010 Thanks for the info. Can't believe he was not intested in accepting 70% of gross. Keep in touch with him, if there are no better offers he might reconsider in a month or two. Link to comment Share on other sites More sharing options...
royalforest Posted October 6, 2010 Author Share Posted October 6, 2010 I price the 10 machines at $1000.00, which equals 10,000.00. Then $400.00 per machine to locate, equals 4000.00. Total would be $14000.00 to build. So on this particular account it would cost to locate (build)70% of the gross because the gross of his 2 locations are $20,000.00. So that is why I see 70% purchase the most I should pay. I may even have to pay a premium to 70% because It cost me money not getting any cash flow. My business is still losing $3000.00 a month and the only way to stop the bleeding is to buy a route FAST or build FAST. Not too many months left to keep taking losses. Believe me I am skeptical and will be careful. Your right to just keep in touch with him and maybe he will change his mind in the future. Or maybe I may go up to 80% because I am desperate for income Link to comment Share on other sites More sharing options...
dogcow Posted October 6, 2010 Share Posted October 6, 2010 I price the 10 machines at $1000.00, which equals 10,000.00. Then $400.00 per machine to locate, equals 4000.00. Total would be $14000.00 to build. So on this particular account it would cost to locate (build)70% of the gross because the gross of his 2 locations are $20,000.00. So that is why I see 70% purchase the most I should pay. I may even have to pay a premium to 70% because It cost me money not getting any cash flow. My business is still losing $3000.00 a month and the only way to stop the bleeding is to buy a route FAST or build FAST. Not too many months left to keep taking losses. Believe me I am skeptical and will be careful. Your right to just keep in touch with him and maybe he will change his mind in the future. Or maybe I may go up to 80% because I am desperate for income just out of morbid curiosity if you dont mind sharing what exactly did you do to be in the situation of losing $3,000 per month? would certainly serve as a cautionary tale for myself, probably others if you dont mind elaborating on that. Link to comment Share on other sites More sharing options...
royalforest Posted October 7, 2010 Author Share Posted October 7, 2010 I am not making enough income to support my expenses. My route is only half full. I have 10 open days. Once I fill those days in then I will be making money. My route was making $350 to $400 a day. What I did is extended the days to service the locations and now I have several days making close to $1000.00 a day. If I had to start the business over i would choose purchasing a route vs. building a route because you get instant income with buying the route. The problem with buying a route when you get started, is a newbie don't know how to buy a route and will most likely pay too much. Link to comment Share on other sites More sharing options...
sbishop Posted October 7, 2010 Share Posted October 7, 2010 I am still not understanding how you are losing $3k per month. When you say "not covering you expenses" do you mean just business expenses or biz and personal expenses?? Link to comment Share on other sites More sharing options...
spdydre Posted October 7, 2010 Share Posted October 7, 2010 I would pay price of equipment unless contracts/prices are in place. With my last route purchase as soon as ownership transferred the account said the wanted free coffee or they would do it themselves so I had to get rid of them. Luckily it was not a loss because they only ordered $30 a month but just imagine if it was doing $3000 a month and the account demanded lower pricing/free items etc or you are out! Link to comment Share on other sites More sharing options...
j65737 Posted October 7, 2010 Share Posted October 7, 2010 My route was making $350 to $400 a day. What I did is extended the days to service the locations and now I have several days making close to $1000.00 a day. My .2cents... I'd be in hog heaven .. You have struck my curiosity on losing 3k/mo though Link to comment Share on other sites More sharing options...
NinnJinn Posted October 7, 2010 Share Posted October 7, 2010 I MAY BE WRONG.... What I am thinking is, he wants to fill those 10 open days with locations to service so that each of those 10days he collects $300 each day. $300/day 10 days/month --------------------------- $3,000 But if my thinking is true, it isn't going to bankrupt him, it is just, he isn't making $300/day 10days out of the month. Like I said, I MAY BE WRONG! Link to comment Share on other sites More sharing options...
sphincorp Posted October 7, 2010 Share Posted October 7, 2010 yes mission, i mean buy the equip. .........royal, do not put much value on the stop..... remember you always have to be willing to walk away from a deal Link to comment Share on other sites More sharing options...
mission vending Posted October 7, 2010 Share Posted October 7, 2010 yes mission, i mean buy the equip. .........royal, do not put much value on the stop..... remember you always have to be willing to walk away from a deal Royal as he said, you need to be willing to walk away. Paying 80% of gross as you mention out of "desperation" would not be an effective use of resources. Even in your current negative cash flow situation this is not recommended. There are other deals out there to be found. Link to comment Share on other sites More sharing options...
coinvestor Posted October 7, 2010 Share Posted October 7, 2010 I price the 10 machines at $1000.00, which equals 10,000.00. Then $400.00 per machine to locate, equals 4000.00. Total would be $14000.00 to build. So on this particular account it would cost to locate (build)70% of the gross because the gross of his 2 locations are $20,000.00. So that is why I see 70% purchase the most I should pay. I may even have to pay a premium to 70% because It cost me money not getting any cash flow. My business is still losing $3000.00 a month and the only way to stop the bleeding is to buy a route FAST or build FAST. Not too many months left to keep taking losses. Believe me I am skeptical and will be careful. Your right to just keep in touch with him and maybe he will change his mind in the future. Or maybe I may go up to 80% because I am desperate for income Don't forget to add in your cost to build: Truck rentals and help: $500 Changer change: $500 Initial Stocking: $2000 Are these two stops his only locations, or is he just selling off these two stops? I have been in the position of push through or die, and its not a good place to be. It would not help you to overpay for this route, or get a good deal on a route that doesn't perform. Leave him with your card and your offer and walk. Every route I have bought I have done that and got the call 3-6 months latter. JD Link to comment Share on other sites More sharing options...
mission vending Posted October 8, 2010 Share Posted October 8, 2010 Don't forget to add in your cost to build: Truck rentals and help: $500 Changer change: $500 Initial Stocking: $2000 Are these two stops his only locations, or is he just selling off these two stops? I have been in the position of push through or die, and its not a good place to be. It would not help you to overpay for this route, or get a good deal on a route that doesn't perform. Leave him with your card and your offer and walk. Every route I have bought I have done that and got the call 3-6 months latter. JD Agreed about that push through or die part. Actually, for me at least the," not a good place to be" is quite the understatement. I can honestly say that it qualifies as the worst period of my life. Link to comment Share on other sites More sharing options...
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