by Abco | Mar 30, 2012 | Vending Business Show
Vending Efficiency Delivering Product An interview with Larry Towner, vending consultant![Larry-headshot](https://www.amequipmentsales.com/wp-content/uploads/2011/11/Larry-headshot-150x150.jpg)
In this podcast, Larry discusses: Vending Efficiency Delivering Product
- Plan your route schedule in advance
- Park out of the way and avoid being off the curb if possible: marketing, security, safety
- Inventory of each machine in one box
- famous saying: “Vending is a business of minutes”
- Do a pick list
- Limit trips from truck to machine
- Items to keep in your pocket
- Drive in a line to limit windshield time
- Plan well for a smooth and efficient route
EPISODE TRANSCRIPT:
Tom Shivers: I’m Tom Shivers with the Vending Business Show here with Larry Towner who is a vending business consultant. Larry sold the majority share of his vending business a few years ago. Thanks for coming back, Larry.
Larry Towner: Good to be back, Tom.
Tom Shivers: Our topic Vending Efficiency Delivering Product The last time we talked, you had a lot of interesting things to say about efficiency and specifically you’re talking … told us a lot about loading the truck effectively so that you can have a smooth flow of your … of the products from the truck right into the machine. What are we gonna cover today?
Larry Towner: Well, I think today, Tom, what we’ll talk about is now that we’ve got the truck loaded and we’ve got it ordered in a way that makes sense, basically the way you have your machines laid out, let’s talk about getting out to the machines and getting out to the accounts.
Tom Shivers: Okay.
Larry Towner: Like I say, you’ve got your truck loaded. You’re ready and you’re rearing to go. Generally, just as a course of action, I usually started my day the night before. What I would do is … Well, actually, I started a week before, but I would have my route schedule printed out on a weekly calendar program. I used a office shelf calendar program that you can get at any store, but that allows you to do repeating schedules where you can do things weeks and weeks and weeks in advance. The keys here are is when you’re scheduling your time, you do it the night before so you have an idea. One thing that a lot of people don’t do, they don’t plan around traffic. Tom, you live here in metro Atlanta like I do. Is traffic a factor here?
Tom Shivers: Just a little bit.
Larry Towner: A little bit, yeah. We, in the vending business, don’t get paid to sit in front of the windshield of the truck. We get paid to sit in front of the glass of the machine and actually fill that machine up. One of the things that I always did, and just depending on the days, I would go and look on … look at my schedule and say, “Where do I need to be during the traffic time?” [inaudible 00:02:19] and I always used both traffic times, both morning and afternoon. I would be making sure that I had a series of stops that were all very, very close together during those traffic times.
Larry Towner: Generally vending people start very early in the morning. They start 4:00 AM, 5:00 AM, 6:00 AM in the morning. By the time the main traffic time rolls around, you are pretty much … you should be in a stop if you’re doing everything right. Of course, here in metro Atlanta as you know, you can get stuck in traffic anytime of the day, anytime of the night. It’s just how it goes being a major city. Anyway, you start the night before you go and you lay out your route and where you wanna go and when you think you wanna be there. You give yourself an approximate amount of time as far as your sales and your dollar [inaudible 00:03:01] per your accounts. That’s the first place where you start.
Larry Towner: When you get into the accounts, there’s a couple of techniques … Or, you’re heading into the accounts. You pull up into the driveway. There’s a few things that I used as a rule of thumb. One is I’m very marketing oriented and also … but also safety and security conscious, too. I would be very careful. I usually parked on the loading docks and I wanted to make sure that we were out of the way. We didn’t wanna be an eyesore to anyone and we didn’t wanna have to work off a curb if we could help it. You end up working off a curb a lot, but you try not to work off the curbs where you’re out in the plain view of everyone, at least that’s my opinion. I always liked to kind of stay back and out of the way.
Larry Towner: Then again, I don’t like to be in dark corners either for security purposes where there somebody might come and accost you because the minute they know you’re in the vending business, they know you’ve got cash and you become an easy target. Try to stay like, if you’re working at night, well-lit areas and things like that. You get out of your truck. Now, there’s several different ways to do it in the vending business. One way … The way that I currently do it is I have boxes inside the truck. Inside each box I carry a whole inventory of a machine, rolls into the account with me. I have a set … preset level of inventory that’s in each box and it’s arranged just the same way as the machines are. I start top shelf down and work my way down through the machine using my boxes.
Larry Towner: You think this is kinda silly, but the amount of time that you spend walking back and forth between your truck and your … the machines can add up to considerable time. In past shows, we talked about how the vending business is a business of minutes. It’s all about how many minutes. If you can cut five to ten minutes out of each stop, you can add one to two stops per day, which is giving you an extra impact on your bottom line of your business.
Larry Towner: We roll in to our stops with basically a full amount of snack on the thing and then we do a pick list on the drinks. You can roll in and do a pick list on your accounts if you want. I do that on some of the more difficult locations that I have. If I have to go up some stairs and I don’t have an elevator access or something like that, I might go in and make a pick list. A pick list just is you go into the machine and you pick out the particular items you need as per the shelf and you write them down in a card you brought. You pull them out. You put them into a box and you just carry one box in instead of carrying in nine boxes, which is what I currently take in with me every time.
Larry Towner: If I have a good, easy access, I roll the whole thing in. I make one trip into the machine. I don’t have to make multiple trips in and out in and out and in and out. Generally we try … Right now we limit our trips in and out to two. We can’t carry the whole amount of product with drinks and snacks in our hand truck all at once. We usually do too much volume to do that. That’s should be your goal that you have that much volume. Do you get an idea of what I’m talking about, Tom?
Tom Shivers: Yeah. It sounds like you wanna cut off those minutes and find a way to get things in and out quickly.
Larry Towner: Right. Right. That’s really the key. You also, when you make your lists, make sure you can read your lists so that you know. When you come out to get your drinks, don’t guess. Make sure you know exactly what you need. Again, to make one extra trip back out to the truck takes anywhere from two to five minutes just depending on the stop, but two to five minutes adds up at the end of the day. That’s what we do. We also walk in with our money bags.
Larry Towner: We walk in … I keep in my pocket, you’re gonna think this is funny, but I keep in my pocket, I carry two pens, a small screwdriver, a magic marker, and I also carry a three by five pack … I don’t use three by five cards, but they’re the three by five spiral ring notebooks is what I use now. I used to use three by five cards. They got a little pricey. I keep those in my pocket. I always have something to write with. I always have something to do a small minor repair and or open a box, which is what that little screwdriver is for. If I need to mark on something, I always have a marker. Don’t think it means that much, wait til you forget and you have to run out to the truck to get a small screwdriver to tighten something up or to cut something.
Tom Shivers: How ’bout a stopwatch?
Larry Towner: We’ve … We’re not UPS yet. If you’ve ever talked to … When you get out there, talk to a UPS driver. They’ll tell you, they’re measured by the minute with a watch, too. It is something that if you wanna do it, actually, we used to do a little bit. We tried. We’d time ourself and see how long it’d take us to get in and out. We would strive to do better and better on a daily basis.
Larry Towner: The key, again, it starts at night though. You wanna make sure you have all the prior … It starts the day before. You want all that product on the truck and you wanna make sure you have enough. You wanna make sure you get your boxes full and get your route scheduled because it’s the same issue if you’re driving … you don’t wanna drive back and forth and back and forth. You wanna drive in a line. We generally work our route lines … or routes in circles, where you start at one place, you go out, you loop around, and you end up back at home. We try to limit the amount of windshield time between stops because, again, we don’t get paid to drive. We get paid to fill.
Larry Towner: That’s really, really critical. All it takes is good planning. I think in a previous show we had talked about scheduling as far as your … how …what’s your interval between stops are as far as weeks go or months or days. It just depends on the size of the account. Again, you have to integrate all this information together so that you’re nice and smooth and efficient. Theoretically, on a great day, you’re gonna spend 80% of your time filling machines and 20% of your time driving, if you’ve really got everything clicking and doing really well. That’s where you’ll be.
Larry Towner: That’s some of the tips is basically use a pre fold type system. If you get farther on and you have better resources, there’s all kinds of technological things that stream real time data back into your handhelds or into your iPhones and stuff like that. For most guys starting out, you can’t afford that technology. It’s very, very expensive. It works great for very, very large companies, but for small guys it’s just a little pricey.
Tom Shivers: Good stuff, Larry. Thanks for the tips. Tell us a little about your business and what you do.
Larry Towner: Well, we do vending consulting. We specialize primarily in startup type operations and helping guys get out there and get efficient so that they can start to make some money in this business because, believe it or not, just because you buy it for a quarter and sell it for 50 cents, you can’t necessarily make money on that. We help people get efficient so that they can start earning money faster.
Tom Shivers: How can people contact you?
Larry Towner: Best way to get ahold of us is send us an email. It’s [email protected].
Tom Shivers: You’ve been listening to Vending Efficiency Delivering Product at the Vending Business Show, a publication of A&M Equipment Sales. More Blogs of the Vending Business Show Vending Efficiency Operating Procedures
by Abco | Oct 21, 2011 | Vending Business Show
Vending Business Tips
An interview with, Larry towner
On This week Podcast larry gives us Vending Business Tips
![Larry-headshot](https://www.amequipmentsales.com/wp-content/uploads/2011/11/Larry-headshot-150x150.jpg)
EPISODE TRANSCRIPT:
Tom Shivers: I’m Tom Shivers with the Vending Business Show, here with Larry Towner, who sold the majority share of his 15-year-old vending business a few years ago. He now mostly provides consulting. Today, we’re going to talk about how to start a vending business.
Tom Shivers: Larry, thanks for being here.
Larry Towner: Thanks, Tom. It’s a pleasure.
Tom Shivers: You know, sometimes, people who are in the market for something have good questions, but don’t realize there are questions they should be asking, but aren’t. Do you find that to come up? Do you find that to be true?
Larry Towner: I do find that to be true, Tom. What we have a lot of is, in the vending vending business tips is, you have people that see a person that’s in the vending business, or works for a vending operator, and they look at the business, and they say, “Boy, that’s great,” and they look and they see all this money that they get taken out of the machines, and they just say, “Man, that’s the business for me.”
Larry Towner: Then they go, and they’re reading through the paper somewhere, the newspaper, or they see an opportunity on the internet, or they see an opportunity in a business opportunity magazine, or something saying that the vending business is one of the great businesses to be in. So they inquire in that, and they go to a hotel ballroom, and they get essentially pitched to what we call a “blue sky promotion,” that just says, “Oh, it’s great, and you can make all this money, and you’re … It’s a hundred percent margin, and you’re buy it for a quarter and sell it for 50 cents. You can’t lose,” and things like that.
Larry Towner: And one of the things that I’d like to talk to people about when they’re starting a vending business, is to do really a good business plan, or at least sit down and run a few numbers through the business, a business plan type. Figure out if you were to purchase equipment, how much product do you actually have to sell at what rate, meaning how much profit do you make, before you actually go and buy equipment, because a lot of people don’t realize that, at the end of the day, if you buy something for a quarter and you sell it for 50 cents, you still only make a quarter, and it takes four quarters to make a dollar, and if you’re making $500 a week, you have to sell four items to make a dollar, times 500, or 2000 items a week, just to make what we would call your “single net profit.” Meaning, after you pay for your goods, just to make that much.
Larry Towner: Now, that doesn’t include paying for your machines, or paying for your insurance, or paying for any of the number of things that it takes to actually run a business, and … because you’re not just gonna go out there and set these machines, and all this money’s gonna come to you, and you’re gonna end up with it all. It doesn’t really work that way. And that’s one of the big mistakes that I see people make continuously, and when I draw their attention to this, they kind of go, “Well, I never really thought about that. I never really thought about this. I never really thought about that.” And that’s one of the big questions that, or things that people have to do when they start a vending business.
Larry Towner: Also, in these “blue sky promotions,” is what we call a “blue sky promotion,” they tend to sell very small combination machines, and these machines have anywhere from nine to 12, maybe 18 selections on them, and they only run six or eight or maybe ten selections deep. And the funny thing is, is that with that piece of equipment, you can never make money, because you [inaudible 00:03:22] generate enough profit out of that machine to even justify your stop. So, and when I say stop, I mean your service stop, going to the machines to refill them. The machine would have to be completely empty before you could even approach making the stop. And again, this just goes back to planning. If you understand this beforehand, you can look at it down the road and understand that what they’re selling you is really things that are not appropriate.
Larry Towner: I still get phone calls from people wanting to sell me this equipment that they bought in a hotel ballroom, and they paid $400 a machine, and I say, “Well, they’re worth about 20 bucks.” [crosstalk 00:03:57]
Tom Shivers: Wow. Well … What, what –
Larry Towner: [crosstalk 00:03:59] first thing I see.
Tom Shivers: Uh-huh. Well, what kind of person tends to do well in the vending business?
Larry Towner: Well, that’s another great question. It’s one of the first questions that I ask about, about vending. They look at it, and they say … it seems like it’s a trend in people’s minds, “Man, that looks like easy money. That just looks so easy. All you do is fill those vending machines and take the money out.” And what they don’t realize is what’s on the back end of running a vending company.
Larry Towner: What they see is really the … about the shortest period of time that you have in the vending business, and when we address this issue, to address your question, “What kind kind of person does well?” the first thing that we like to say is, “Do you like to work?” Because if you don’t like to work, you’re really not gonna do well in the vending business.
Larry Towner: We … We’ve done a long analysis on vending companies and things like that, and the average driver starts at, you know, and if he works for a big company, starts at four or five in the morning, and he finishes on average, about five or six at night. He works about a 12 hour day. Of that 12 hour day, he spends approximately three … two to three hours loading his truck out of the warehouse. That’s where, of course, it all starts, and at four o’clock in the morning, he’s taking all of the product that he … that the warehouse manager has brought into the warehouse, he’s putting what he needs on the truck, even with a computer-generated list, it still takes a long time. He moves that … all that product up into the truck, stacks it, puts it into his route order, and things like that. That’s the first step.
Larry Towner: The second step is, he goes out and he sits in traffic for a while. He gets to the stop. He has to then unload all the things that he needs, drags it into the place, spends 15, 20, 30, maybe an hour, filling the machine. Then he picks up the money, and then he leaves and he goes to his next stop, and what he does is he does this over, and over, and over, every single day, for … usually eight to ten hours, doing those kinds of activities, and it takes a real work ethic, and you need to be fast and efficient. So, the kind of personality it takes is, it takes a person that likes to work.
Larry Towner: When I started in the vending business, the fellow that taught me the vending business was actually a Harvard Law graduate, and he was in the vending business for most of his professional career. Coming out of Harvard Law, he chose not to practice law, he [inaudible 00:06:16] as a business thing.
Larry Towner: But he always … We always started at about ten o’clock in the morning, but we worked until midnight. So, he just kind of reversed the clock. He did it for reasons, we were working in the greater Boston area, and he … He knew the traffic patterns better than the traffic patterns new it, so we were counter-traffic all the time, which was tremendously advantageous to us for doing that.
Larry Towner: But you can figure, if you’re gonna be in the vending business, if you work … If you don’t work an eight hour day, that’s a very rare day. So the first thing is, work hard. The second thing is, you need to be very focused on efficiency and being very efficient with your time. Your motions need to be choreographed. You need to be very detail-oriented, because you’re gonna need to understand what … You have to do a forecast when you go to purchase product. You need to have a forecast when you go to get in the truck that day. You just don’t jump in the truck and go to the stop. You need to say, “I’m going to this stop, that stop, this stop, that stop,” and, “What product do I actually need for this stop and that stop?” Because each location will have a different set of selections of products that they prefer, and so, in that sense, you need to be very detail-oriented.
Tom Shivers: Mm-hmm (affirmative)-
Larry Towner: The other thing that’s very helpful when you’re starting a vending business, is to have your eye on the numbers. You don’t have to have an accounting background, but at the end of the week, you need to sit down with … in some quiet time, and really put your numbers into an accounting program that work. I personally use QuickBooks. It works … It always worked well for me. But any kind of accounting software [inaudible 00:07:47] software. It really doesn’t matter.
Larry Towner: But really understand what your costs are. Understand what your expenses are. Understand how much money are you actually making, because if you don’t do that, you’ll get yourself into financial trouble very, very rapidly, and it’s extremely hard to dig out of it once you … once you get wrapped into it. So a little basis in accounting is very, very helpful in the vending business.
Larry Towner: Another thing that’s … that people overlook, too, is that those machines just don’t walk themselves into the doors out there. They, they … You have to be … have a bit of sales ability to go out and actually sell out into these accounts. So … And you don’t have to be a salesperson, per se. You just have to have some sales ability, and you need to be able to ask the right questions, and things like that, to generate business. You will be … It helps to have some sales background, but again, it’s not necessary, but you have to understand how to sell and what your competitors do and things like that. So sales ability is important.
Larry Towner: The … One other thing that’s really important is you have to have either access to somebody that can do repairs for you, or you have to be able to do repairs yourself. One or the other, because you’re gonna have problems that come up with your equipment. It is inevitable. You will have … There’s various different degrees of problems that come up in the vending business. Some of it is easily solved. Some of it is not so easily solved.
Larry Towner: But you have to have somebody that’s somewhat technical, and you have to understand how the vending business works. And one of the biggest things that happens in the repair side is, you’ll have a changer or validator, which is the parts that the money will not function properly. And you need to be able to troubleshoot those real quick, and figure out, “Is it something I can fix with it on the machine? Or do I just swap this equipment out?” And we always carried on our trucks, we always had extra validators and extra changers on the truck. If you have a problem, the worst thing you can do is leave a machine that doesn’t take money, and that’s also one of the simplest repairs, because it’s turn the machine off, just take the piece of equipment off, put a new piece of equipment on, turn it on, give it a couple of tests, and you’re ready to go. So, you have to have somebody that’s somewhat technical, that can do some repairs, either have availability to it, or have that ability yourself.
Larry Towner: And then the other thing is, is just … You have to have good business sense, and … You don’t have to have great business sense, but you just have to have good business sense. You have to understand when you’re talking to a customer, and it doesn’t matter who you’re talking to. You could be talking to the President of the company, and you’d never know it, in many cases, because they come to the vending machines, and you don’t know who they are, and I’ve seen many, many, many a route man, and many, many a business owner absolutely lose accounts because they just don’t have good manners, for lack of a better word. They’re rude to the customer, and they’re talking to the wrong person. They don’t realize who they’re talking to, and they’re out the door.
Larry Towner: So, those are some of the things that you need. You need a good, strong work ethic. You need to have a bit of sales ability. You need to have a bit of mechanical ability. You need to have good business sense, and you have to have just a little bit of accounting ability. And all of those things, you can hire out, but you really need to understand them on a kind of a base-level. You have to have a basic understanding of all of those aspects of the vending business.
Tom Shivers: Yeah. That sounds like a … a team, actually.
Larry Towner: Well, it’s a team, but all of those aspects are not impossible for one person to do. I know, in my case, I did all of that. I was … I had a background in repair, and I had a background in sales, so it was real simple for me to do the sales and the repair part. The business sense comes out of the sales for me, so treating customers properly always was real simple for me, ’cause I always figure, if you take care of your people, they’ll take care of you, and then … The accounting, it took me a while to really understand the accounting. I have to be honest. It probably took me two or three years before I fully understood what I was really looking at. That’s something you can kind of work your way into, but at the same time, you do what to have it … You want to have somebody that can help you understand it, if you accountant or whomever, can explain it to you, it’s very, very helpful, so.
Tom Shivers: Mm-hmm (affirmative)-
Tom Shivers: Yeah, it’s real good.
Tom Shivers: In addition to the Vending Business Show, right here, what are some good information resources to help people get off to a good start?
Larry Towner: Probably one of the best support places that you can go to to get good information would be your local equipment distributor, and you want to find a reputable equipment distributor. Now, we’re here … I’m here outside of Atlanta, Georgia, and I use A & M Equipment exclusively, and Joe Nichols at A & M is a wonderful guy, and he’s been involved with the vending business for … well, really, his whole life, more than 40 years, and his ability to give you the information that you need, and all of these questions that I can answer for you, he can answer just as well. He has a refurb shop, and does things like … sells machines out to people.
Larry Towner: But he sees the industry on a much broader base, and he understands what works and what doesn’t work, and he can tell you without a doubt, whether or not … even to the account sizes. If you go in and say, “I’m looking at an account that has 75 people. It’s largely a white collar account. It’s this and that.” He can give you a pretty good synopsis on what that account’s gonna do.
Larry Towner: So, that’s one source, is to have a good equipment distributor, and he … A good equipment distributor will help you in many, many, many ways. They can help you with the repair side. They can help you with the sales side, to a certain degree. They can give you an analysis ability that you will have from experience, because they see all the vendors in town. They understand.
Larry Towner: And the other people that I’ll refer to are the same way. You see … They see it at a much larger base. They look at 100 different people. They know what works. They know what doesn’t work. It’s kind of that kind of thing. So, you’ve equipment issuers.
Larry Towner: Same thing would go with a good product supplier. If you go to, not so much like a warehouse club, because they don’t really know anything about it, but you go to an actual vend distributor, somebody that distributes out to all the various different vending companies in your particular area. They know what works, and what doesn’t work.
Larry Towner: They can also give you help on doing your marketing in the account, meaning … Each machine needs to be set up in a certain way, and so you … they will tell you what products really sell and what products don’t sell. They can usually give you an idea of what products sell to what particular demographic, and when we say that, we say … If you have an office full of women, for example, that’s a totally different set of products than if you have a … concrete facility where you’ve got 25 truck drivers. It’s just that it’s night and day. What sells in that concrete plant won’t sell in that office. So, a good product distributor that can help you with some of those information is a great place to find. And these guys are all local.
Larry Towner: There’s also the national organizations, and usually, there’s a state organization. There’s the National Automatic Merchandiser’s Association, or NAMA, and they can give you the numbers and the concepts on the whole industry as a whole in the United States. They have a tremendous resource base. They can tell you what works, what doesn’t work. They give you … They actually have formulas for what a proper numbers should look like in your vending business, as far as from your accounting standpoint. They have all kinds of information on equipment, and things like that. They do tend to promote who advertises with them, so you kind of have to be somewhat careful with that, but that’s gonna be typical of all of them.
Larry Towner: In an association, there’s also like state associations. In Georgia, there’s the Georgia Automatic Merchandiser’s Association, which is a local state organization, with the same basic concepts of the National Automatic Merchandiser’s Association, but it’s a little more specific to the state. If you have any kind of legal issues within the state, and things like that, they can help you out with that. And not that there’s a lot of legal issues, but mostly it has to do with paying your taxes, and this and that, and that kind of thing. They can help you out with that.
Larry Towner: So, you’ve got national organizations, state organizations, good local distributors for both product and/or for equipment, and then the other resource is actually go find some of your competitors, and now … Don’t go for your direct competitors. Don’t pick the guy whose town you’re trying to work in, or somebody whose accounts you’re calling on, but in general, if you go out and you find …
Larry Towner: My opinion was, I looked at somebody that was across town from me, and in Atlanta, that’s about an hour away. So, an hour away, we have very little cross. It was very, very rare that we would run into each other, and I would get tremendous information on what’s selling, what’s not selling, who’s looking for accounts, this and that. They would send me leads, because they would get a call on an account that was way out of their operational area, and they knew I was in that area, and they would say, “Hey, this guy’s looking for an account. Give him a call.” And so … and then also, tips on working a particular area, even down to things like traffic.
Larry Towner: I mean, you can get all kinds of things from what we … what I call a “friendly competitor,” and you kind of have to have a code with the friendly competitor. Basically, if you’ve got somebody that’s doing a good job … My whole philosophy is, if you’ve got somebody that’s doing a really good job on a vending account, leave them along, ’cause there’s plenty of people that don’t do a good job, so you can take accounts from them. You don’t need to take accounts from good vendors that are doing a good job, and offering things out at the right price and things like that.
Larry Towner: So, that gives you a pretty good resource base to work with, just at a cursory start, and that would be, go to a good equipment distributor, a good product distributor, go to the national organizations, the state organizations, and see if you can rustle up a friendly competitor, or maybe a couple of friendly competitors. I personally have about four or five people up in strategic points all around the greater Atlanta area that I talk to on a fairly regular basis. So, that’s a place to start.
Tom Shivers: Alright, great. Well, thanks for sharing, Larry. Tell us about your business and what you do.
Larry Towner: Well, what we do is we still … We’re still have a few vending accounts out there. We work mostly on the very, very far north side of Atlanta, but what I also do is, I do spend a good portion of my time consulting with people that want to get into the business. I’m extremely reasonably priced. I really don’t even charge for an initial consultation. If somebody wants to get in and really go into a deep analysis, and really wants to make a thing, we charge very modest rates for that kind of thing, and we can also steer them the proper way on equipment and all kinds of information like that. Give them the kind of the thing that makes them a good deal.
Larry Towner: Basically, my goals are, if I don’t make someone money, then I’m not gonna charge them anything for it, anyway. So, that’s basically what we do.
Tom Shivers: Well, you’ve been listening to the Vending Business Show, a publication of A & M Equipment Sales.
by Abco | Dec 14, 2010 | Start A Vending Machine Business
Starting a Vending Machine Route is an exciting way to start a small business and grow it to substantial income and financial independence.
Starting a Vending Machine Route First, remember that a vending machine route is a business. Like all businesses, success is not guaranteed. Before you embark down the path as a successful vending machine operator, you need to carefully consider what this business will look like and how you’ll run it.
Start by setting goals. Successful vending machine operators have a predetermined goal in mind when they start every year, month and day. Success is a plan, and plans start with goals. Goals start with vision.
Striking a vision
What is your vision? Do you want to be rich? Earn extra income? Dominate the local vending market, the national vending market, the world vending market? Do you see yourself working part-time or full-time? Mentally create your perfect day. A word of caution: If you think that vending is an “easy” business – you just fill the machines, count your money, and presto, you’re a millionaire – think again. The vending machine route business is a great way to work hard and be well compensated, but with no hard work, there’s no compensation.
Planning your business, setting goals
Once you have created your goals, start planning your business. What segment of the business do you want to attack? Are you going to be a soda machine supplier only; snack machine/soda machine only; full service, snack machine, soda machine, cold foods machine, coffee machine, commissary, or a unique products vender (CDs, bait, t-shirts, gifts, etc.). Each of these market segments – and there are more out there – requires planning. What equipment do you need, what type of route vehicle, how much money should you budget, which vending product suppliers will you choose (where will you get your product), how do you get your vending machines placed into locations, what financial software do you need, if any, and on and on.
Have I given you anything to think about yet? My goal is to prevent you from jumping into the business because you heard in a hotel ballroom that the streets are paved in nickels, dimes, quarters and dollar bills. The fact that you are doing research means you are on better path than the average potential millionaire.
Research is the great risk reducer in any forum. Doing this basic research means you are on your way, but there is much more to do.
In formulating your plans for a vending business, you also need to perform a basic market research analysis. This sounds complicated, but it really isn’t. Study all the vending machines that you see:
- Who operates the machine/s?
- Machine’s location
- Pricing
- Brand of vending machine
- How clean is the machine?
- Does it work properly?
- Is it filled? If so, is it filled with anything you would purchase?
- Are people using the machines? With what frequency?
These are some of the questions that will help you formulate plans. They will help you determine what kind of vending machine equipment you need to purchase, what kind of vending machine locations you need to secure, who your competition is, and what kind of pricing you need. This research will help you determine your unique vending machine business feature, what sets you apart from your competitors.
Analyze your prospects
The next research to do is a customer analysis, and it can be done in conjunction with your initial research. Stop in to a location you think you would like to have and speak with anyone who uses the vending machines. What do they like – and what don’t they like – about their current vending machine operator? Most importantly, listen to the responses and ask follow-up questions. Get critical details: how often does he/she come, do they take requests, are they quick to respond to problems? Let them talk, and they will tell you everything you need to know to do business successfully with that site. Write down all of the responses. Can you do better?
When doing this type of research, be prepared with a sales presentation. I have done this, only to discover that I was speaking with the owner of the business. He was fed up with the vending machine operator they’d been using, and I generated a new customer on the spot.
Another word of caution: Don’t commit to a vending machine account unless you can provide better service than the current operator. Most managers/owners know other managers/owners, and one of your goals should be to generate word-of-mouth advertising. If you take on more than you can handle, or you don’t provide service at the level you committed to, you will generate bad word-of-mouth. That can quickly lead to your having a storage area full of vending machines. Do more than expected, give away a free sample every so often, stop in to talk with the manager, make sure everything is all right, handle refunds promptly, change up your product selection regularly, fulfill requests. These are the techniques employed by successful vending machine operators.
Another key to success in the vending machine route business is to have good accounting practices. Know, to the penny, where your money comes from and where it goes. Understand that many variables can affect your profitability – everything from cost shifts in your product/s to fuel prices. It’s critical to set up a proper accounting system early, one that allows you to grow. You don’t want to waste the time (and expense) of switching accounting systems at some point in the future. Talk with a good CPA and ask for suggestions on a system. There are several off the shelf software products and it’s important to select the one that best suits you and your business.
Careful planning and research are the keys to a successful vending business. Be sure starting a vending machine route with all the benefits. Some other important blogs Take Over A Vending Route Or Start Your Own?