Jumping in head first! USI machines/ SeaBreeze

[frntrange]

Well, I've been flipping machines (some pretty good money in that!), have built or bought 3 locations, and now have an opportunity that might not get repeated for awhile.

7 locations, 6 with USI/AVANTI combos (SeaBreeze, etc), with 15 select snack and 6 select bottles/cans. 1 location with 6 select bottles/cans only.  One more combo set in garage (need to place): $17,000.00

3 more combo sets of machines ready to place: $5400.00

1 set needs repair (I have repair skills): $600.00

After all machines needing placement are in service ($400.00 location cost per combo), total gross will be about $2600.00 with cogs estimated (from current locations) at 40%. Former owners have documented numbers.

$23,000.00 with 100% financing. $1600.00 out of pocket for locating fees. Cashflow after payoff will be $18,000+ per year for 11 locations. More than $10,000 yr during payoff period.

All machines at least 1/2 off new prices, most more than 1/2 off remanufactured cost at vend.com. Searches of Craigslist, ebay and usedvending.com show asking prices (some) at or (most) above these prices (all with all cash out of pocket, no financing).

30 day warranty all machines. Most machines manufactured 2006, oldest machine is 3 years old. All parts available from vendnet.com . I can do any and all repairs and deliveries myself. All soda machines can hold cans or bottles up to 24oz. All machines multiprice. Furthest machine 15 miles from house.

I really believe in buying used, almost new equipment. Have only owned 1 new car in my life, bought for (ex)wife. Indicated ROI is above 75% to 125% depending if using cash on cash or full investment for formula. New machines would have a much lower ROI (which is why current sellers are taking a bath most likely).

What am I missing with this deal? Do you think I'm doing the right thing? I'll be risking $23,000 for an $18,500 yearly return. I usually look for at least 100% return first year, but that's with much older equipment (such as 15 year-old soda machines). I know for a fact this is what I want to do for the next 5-10 years, and have a goal of quitting the workforce when cashflow reaches $30,000-35,000 yr, so this would get me more than 1/2 way there. Ulitmate goal is at least 30 snack/soda locations, maybe more with an employee or two.

So, I'm reaching out for your experiances. Tell me what you think, and would you take this deal with the known facts?

Thanks in advance for your thoughts, this is a great group!

Steve

Mountain States Vending

[grumpy]

Well you obivously done the numbers game and didn't come up with an answer.

(the seven on location using averages and the numbers you have I figured around $18,000 and that is above the $17,000 (>1000%) that it is being sold for)

So forget the numbers and look at it in a different perspective.

1) Can you afford to lose $20,000 + (will it be an irratation for awhile or bankruptcy)

2) Do you have to buy all the machines, could you not just take the first offer

3) Are you sure this is what you want to do

4) Do you have the time to first service but more important build on this

5) Do you belive in yourself enough to make the right decision, your ability to build a business, are your goals money or ability to control your future.

I don't really care what your answers are, but you should. This is your decision based on your risk factors and skill level.

I know what my answer would be, but I'm not you.

Grumpy

Remember no matter what the decision the people on these forums are hear to help when ever they can.

[coinvestor]

What is the current sales for the located machines?

 

JD

[grumpy]

Woop's (>1000%) should be (>100%), cant' type very well or proofread 

Grumpy

[frntrange]

Well you obivously done the numbers game and didn't come up with an answer.

(the seven on location using averages and the numbers you have I figured around $18,000 and that is above the $17,000 (>1000%) that it is being sold for)

So forget the numbers and look at it in a different perspective.

1) Can you afford to lose $20,000 + (will it be an irratation for awhile or bankruptcy)

2) Do you have to buy all the machines, could you not just take the first offer

3) Are you sure this is what you want to do

4) Do you have the time to first service but more important build on this

5) Do you belive in yourself enough to make the right decision, your ability to build a business, are your goals money or ability to control your future.

I don't really care what your answers are, but you should. This is your decision based on your risk factors and skill level.

I know what my answer would be, but I'm not you.

Grumpy

Remember no matter what the decision the people on these forums are hear to help when ever they can.

Actually Grumpy, I have done the numbers and HAVE come up with an answer, what I am doing is my version of due diligence, bouncing ideas off of others, as I know that I sure don't know everything.

I think you were referring to ROI, which IS above 100% after payoff.

1. No I can't afford to lose $20,000, just need to be sure I am placing my $23,000 in the right place.

2. I could take the smaller deal, but I intend to get to 30+ locations, this is a big step there, and all financed.

3. Answered

4. I do have time to service, workforce hours will be in the evening AND I am still flipping machines, making some good money doing it.

5. I do believe in myself, but am hopefully humble enough to seek out other's experiance and opinions.

So, if it is only ok, or ok with modifications, what would make it better in your opinion?

[grumpy]

Well frntrange,

If you just want a straight out answer, with the little information that you have provided assuming you have done due dillegence.

I would have bought it already, of course with that amount of money on the table I would also have hired a lawyer to broker the deal to make sure everything is already paid for and no liens outstanding.

Grumpy

[grumpy]

Here is the reasoning,

You flip machines so you know what they are worth if you just took them and sold them.

You flip machines and know how to repair them (your own repairs are cost effective)

you know how much it cost to locate soda and snack machines.

You have looked at the money angle have most of the logistics covered, but still sit on the fence. Most new business owners, always start on the fence, but you have to take aleap of faith that you can make it work.

If I knew how easy it was to be in business 25 years ago, I would have not wasted many years as an employee when I was young and able to do anything myself.

The hardest part of your decision in my opinion is taking the first step, the fear of uncertainy, the what if game. In the end the biggest obstacle is you.

Grumpy

[frntrange]

You have looked at the money angle have most of the logistics covered, but still sit on the fence. Most new business owners, always start on the fence, but you have to take aleap of faith that you can make it work.

Thanks for your comments Grumpy.

Actually I am not on the fence at all, and the money numbers really make it a no-brainer as long as I can service the machines during hours the locations are open.

The only real question is if I am missing anything. With only 3 locations and a few months in the business, I could miss something important that would hurt later.

I am talking to all location owners to ensure that they are happy with the service and ok with the sale. I know finance pretty well (it's what my someday to be finished MBA major is).  I guess what I am saying is that I am doing my due diligence, but haven't done it for this industry yet. I was an IT and Facilities Manager for most of the last 12 years. The first time I negotiated a lease, I spent many hours researching, and talking to more experienced people, and learned that had I gone it alone, I would have made several crucial mistakes. By the time I left my last company, I was teaching these skills at the local community college.

I learn everyday, and I appreciate your input.

Thanks again,

Steve

[coinvestor]

I'll try again.........

How much are the located machines making?

Without that info (verified info) you are only buying some used machines. Verify the Income..........

 

JD

[frntrange]

I'll try again.........

How much are the located machines making?

Without that info (verified info) you are only buying some used machines. Verify the Income..........

 

JD

"total gross will be about $2600.00" (edit: monthly)

"Former owners have documented numbers."

Sorry, I didn't answer before as these were in the original post.

Bottom line is that currently located machines are grossing a verified $1850.00+ a month and net enough to cover all debt service, expenses, and some profit until other machines are placed. After all machines are placed, total grosses are estimated to be near $30,000, net will be approx $18,000 (not including debt service and expenses).

Thanks for your question JD.

Steve

[coinvestor]

Steve,

Here is what I think. I'm not being rude just my thoughts.

What you said  was "gross should be about $2600" this is bizop talk for 2nd mortgage on the house to cover debt service The actual current numbers were not in the post.

I think that your 40% COGS is not realistic. It is lower than my COGS, its lower than most vendors I have met, and its lower than the industry standard. Try running your numbers again at say 55% COGS. This may find this to be a bit high, but if this is a good deal then the numbers will still work out.

I know you work on machines, but it still takes money (repair costs). If you need a changer or validator you may instal it yourself, but it still cost $200-300.

Verify the income yourself. Go with him to a location (don't tell him your going to) ask if the machines have been in that location since he bought them. If he says yes then ask if you can hit some buttons and check the internal counters. Check the total cash counter against the age of the machine and how long he said the machines were there (divide total sale by months on location).

Verify the age of the machines against what he told you. The machines you are looking at are made by Wittern group. With Wittern machines you can tell by the serial number. If the serial is a 7 digit number the machine was not bought new, it was bought as a refurb. If the number is longer (I think 11 digits) then it was bought new. If you look at the last five digits of the serial number on a machine that was bought new the date code is the last five digits.  The first 2 (of the last five digits) are the year, so if the last five digits are 02116 then the machine was made in 2002.

If everything checks out it doesn't sound like too bad of a deal. Let us know what you decide to do.

 

Good luck

JD

 

[frntrange]

Steve,

Here is what I think. I'm not being rude just my thoughts.

What you said  was "gross should be about $2600" this is bizop talk for 2nd mortgage on the house to cover debt service The actual current numbers were not in the post.

I think that your 40% COGS is not realistic. It is lower than my COGS, its lower than most vendors I have met, and its lower than the industry standard. Try running your numbers again at say 55% COGS. This may find this to be a bit high, but if this is a good deal then the numbers will still work out.

I know you work on machines, but it still takes money (repair costs). If you need a changer or validator you may instal it yourself, but it still cost $200-300.

Verify the income yourself. Go with him to a location (don't tell him your going to) ask if the machines have been in that location since he bought them. If he says yes then ask if you can hit some buttons and check the internal counters. Check the total cash counter against the age of the machine and how long he said the machines were there (divide total sale by months on location).

Verify the age of the machines against what he told you. The machines you are looking at are made by Wittern group. With Wittern machines you can tell by the serial number. If the serial is a 7 digit number the machine was not bought new, it was bought as a refurb. If the number is longer (I think 11 digits) then it was bought new. If you look at the last five digits of the serial number on a machine that was bought new the date code is the last five digits.  The first 2 (of the last five digits) are the year, so if the last five digits are 02116 then the machine was made in 2002.

If everything checks out it doesn't sound like too bad of a deal. Let us know what you decide to do.

 

Good luck

JD

 

Jd, thanks for your comments.

[frntrange]

Verify the age of the machines against what he told you. The machines you are looking at are made by Wittern group. With Wittern machines you can tell by the serial number. If the serial is a 7 digit number the machine was not bought new, it was bought as a refurb. If the number is longer (I think 11 digits) then it was bought new. If you look at the last five digits of the serial number on a machine that was bought new the date code is the last five digits.  The first 2 (of the last five digits) are the year, so if the last five digits are 02116 then the machine was made in 2002.

 Thought I would clairfy somewhat on what JD is referring to in this quote:

This is for most Wittern machines (USI, FSI, FAWN, etc.)

I talked to my local Wittern distributer (and repair guy), as well as called and talked to a nice lady in parts and service at Wittern (http://www.vendnetusa.com).

If the serial number starts with a 11, it is new. For example, here is the serial numbers from one of the machines I bought:

1192331-06095  (dash added by me). This one starts with a 11, so it was built new. The last 5 digits DO indicate the date made, so this machine was made on the 95th day of 2006 (Julian date)  http://en.wikipedia.org/wiki/Julian_day

If the serial number starts with a 7,8 or 9, it is a refurb, so always check the serial numbers!

Thanks to JD for pointing this out.

BTW, Wittern orginal manufacturer warranties are NOT transferable. I am only getting a 30 day warranty on the machines I am buying because I am not the original purchaser. Wittern does offer warranties on their re-furb equipment, but NOT ON USED EQUIPMENT!

Steve

[ecoastvending]

Just a FYI the going rate right now for buying machines on a route is 60% of the yearly gross sale for the site. So if the machine brings in $2,000 a year is gross sales you would want to offer $1200. That includes the location and machine. You might even want to get them to throw in the inventory in the machine too.

[frntrange]

Just a FYI the going rate right now for buying machines on a route is 60% of the yearly gross sale for the site. So if the machine brings in $2,000 a year is gross sales you would want to offer $1200. That includes the location and machine. You might even want to get them to throw in the inventory in the machine too.

Which is very close to my numbers using expected gross profits. I try to only buy routes where the expected gross profit the first year will be 100% or more of my cash outlay, whether a financed or all cash purchase.

I pretty much expect the product inventory and coin in the coin mech to be included in a route purchase, but will ignore for a great deal. For example, I just purchased (financed) a USI combo set (Sea Breeze) less than 8 months old for $2000.00, no money down, very little inventory and she took most of the change from the coin mech. But getting new equipment at more than 50% off and financed with nothing down made it a deal!

Steve

[TeamS]

Steve-

You first listed this post about a month ago.  What did you decide to do?  Did you buy it?

Can't wait to hear how it goes for you.  I hope it works out.

Have a blessed day!

Mrs. Team S

 

[frntrange]

Steve-

You first listed this post about a month ago.  What did you decide to do?  Did you buy it?

Can't wait to hear how it goes for you.  I hope it works out.

Have a blessed day!

Mrs. Team S

 

Actually, I did buy, plus a couple more.

Here is what I ended up with: (all machines are the USI Sea Breeze combos, excepting one BC300 soda stand-alone machine, ranging from 18 months to 3 years in age). All gross figures below are determined by selller's numbers and 3+ weeks of ownership, to be adjusted as route ages. All equipment purchased no money down, 60 days till first payment, 48 month payout.

7 combos and locations. 1 location is grossing a little more than $500.00/mnth; 2 locations are above $250.00/mnth; 2 locations average at about $150.00/mnth; 1 location well below average-will move equipment soon; one location lost (was expected)-looking for new location.

1 stand-alone soda doing more than $275.00/mnth

2 combos without locations, will pay locator to place soon.

1 almost brand new combo on location, terrible grosses, will look for new location in next couple of months. Purchased for less than 1/2 price.

1 set trashed by vandals for $200.00. Soda machine very fixable, will have ready within a couple of weeks. Snack machine most likely recoverable with a couple of hundred dollars in parts. When finished, fully working set for about $500.00 (plus my time to repair).

So, all in all, routes are paying their cost of debt service, 3 sets in the garage needing placement (I will know for sure next week, but believe one will go on location in a large martial arts/gymnastics club), 2 barely paying keep and will move in future, and a repaired set so cheap, can use for parts or place and it's just gravy money.

Steve

[TeamS]

Sounds like it is all going to work out for you.  That is great.  I hope you can get some super locations for the other machines.

We are gearing up to purchase our first route.  We have a verbal agreement to buy that should finalize this week.

Keep us updated on how everything is going.  I am learning so much by seeing what others are doing.  Thank you for sharing.

Mrs. Team S

[mytencents]

How frequently will sellers fnance with no money down?

[T BIRD]

There was good info on this thread for me to take in.  I also notice the Seabreeze model here.

My wife and I are very interested to expand  into full line vending. (3- 5 combos maximum for now ) I think I should look at smaller locations ( 40 employes max ) to start so I dont stress out right away.

Is Avanti a decent company to deal with?  I like what I see in terms of their machines on their web site.  Are their machines good quality gang?  I would appreciate some feed back.  Thanks!

http://www.avantivendingmachines.com/