Out of the Box Vending

7 Reasons Why Bulk Vending Is Appealing For the Busy Professional - Part II

2008-10-08T00:30:00-05:00

This post is a continuation of the 7 Reasons Why Bulk Vending Is Appealing For the Busy Professional

5. A BUSINESS FOR THE WHOLE FAMILY

If you have kids, there's no easier or more enjoyable business to run with your family than bulk vending. It's something that our entire family takes part in! The kids love filling machines, helping service our routes, assembling machines, etc. It's a great way for them to make some extra money, too! By having a bulk vending business, you're able to give them, through experience, the tools necessary to make it on their own if they so desire! You're giving them the knowledge to be their own boss and to become self-sufficient. Our bulk vending business is a much an educational tool as it is a business for our family.

6. TAX ADVANTAGES OF BUSINESS OWNERSHIP

I'm not a tax professional, but I've learned alot about our tax system over the years. While you and I pay tax on the money we make in our careers before we ever see it, business owners ONLY PAY TAX ON THEIR PROFITS. That means that all their expenses of doing business are deducted before they pay a bit of tax! You'll want to consult the IRS website and a tax professional to learn the specifics, but in my opinion, you can't afford not to own a business in today's world!

7. RUN IT FROM YOUR GARAGE OR ANYWHERE

We've run our business from our home since we began. In the process, we literally have no overhead for storage, etc. We intentionally run it on a shoe string because we're doing it to MAKE MONEY and not build our ego. While the "clutter," as my wife sometimes calls it, does not make for a neat and orderly garage, it's cheap and has served us all along the way.

7 Reasons Why Bulk Vending Is Appealing For the Busy Professional - Part I

2008-10-07T00:30:00-05:00

Last week I spent a few minutes discussing the predicament I found myself in several years ago and how it led me to vending. In this 2 part post I'll discuss the 7 reasons why bulk vending appealed to me and why it should appeal to others as well. The 7 reasons can be found below (we'll cover reasons 1-4 in Part I and 5-7 in Part II)

1. Limited Time Commitment

2. Limited Startup Cost

3. Limited Risk

4. Excellent Cashflow and Profitability

5. A Business for the Whole Family

6. Tax Advantages of Business Ownership

7. Run It From Your Garage or Anywhere

1. LIMITED TIME COMMITMENT

The beauty of this business is that you can put into it whatever you like. In my situation, I was already working full time so I needed to be able to fit whatever I was doing into evenings and weekends. A typical bulk machine holds enough capacity to allow for a 5-6 week service cycle which meant that I didn't have to be servicing my machines constantly. I also needed to make income passively without being there. Bulk vending allowed me to be make money continuously while working day-to-day in my professional career. It allowed for me passive income that Kiyosaki discusses in Rich Dad, Poor Dad.

2. LIMITED STARTUP COST

I literally started my business for less than $200! This money went towards the books I read to educate myself on the industry and towards my first used machines that I purchased through online auctions (I wouldn't purchase the cheap machines I got then knowing what I know now, but they provided a place to start!). Once I got a better understanding of the business, I had a couple more expenses that were necessary including:

1. Umbrella Liability Policy (approx $350 annually)
2. Business Cards (approx $40)
3. Product Cost (variable depending on what you're vending)

The beauty of the bulk business is that you can start small and use your cashflow to grow it if you're unable or unwilling to borrow along the way. I know operators that now live solely on their bulk vending income and make hundreds of thousands in the process.

3. LIMITED RISK

The only risk you really have is in your equipment. As long as you have an umbrella liability policy to cover your liablity, then equipment loss or damage is your main concern. Much of this risk can be mitigated by choosing quality locations and by developing good relationships with these locations and their employees. I, like everyone in this industry, have had locations go out of business and have lost my equipment in the process. I've also had equipment stolen from locations by other vendors or employees who worked there. These are some of the negatives of the business that I will discuss later in the week. In most cases, though, I've been able to recover my equipment and move it somewhere else! With businesses going under all around me during these troubling times, my bulk vending business keeps right on trucking by simply changing locations when necessary!

4. EXCELLENT CASH FLOW & PROFITABILITY

The bulk vending business is a constant stream of cash. There are no accounts receivable to worry about, so the business becomes very predictable over time. The product costs vary from 8-35% depending on what you're vending (gumballs, candy, toys, stickers or tattoos), so there's the potential for great profit if your are frugal and don't go overboard with non-necessary expenses and overhead. In the next several weeks I'll clue you in to the greatest and most cost-effective route vehicle that you can use to maintain high profitability levels.

Coming Tomorrow: Reasons Why Bulk Vending Is Appealing For the Busy Professional - Part II.

Vending Success Profiles - Roger Folz

2008-10-06T00:30:00-05:00

I had the opportunity to meet, Roger Folz, a titan in the bulk vending industry on one occasion. His life and success are an inspiration. He is a true rags to riches success story! Roger's successes have paved the way for all of us in the industry today. Here's a short biography, written by Randy Chilton (March 2003), on this vending icon.

Meet Roger Folz: Bulk Vendor Extraordinaire

The stories of successful operators in this industry who started with very little, usually one machine, and have built successful businesses are numerous. One story that stands above the rest that deserves special recognition is Roger Folz, founder and owner of Folz Vending, located in Oceanside, N.Y.

Roger turned 75 years old in February. His accomplishments speak for themselves. Roger started the company with one pistachio nut machine in 1949 and built it into a business empire that today employes 262 people, operates 140,000 bulk vending machines and had sales of $55 million in 2002. His client list is a literal who's who of retail businesses in the United States, including Wal-Mart, Toys R Us, Kroger, Safeway, Publix, Winn-Dixie, and many other national retail and grocery store chains. Almost all of the sales, about 95%, are generated from bulk vending machines placed throughout the United States and Canada.

I'm always fascinated by what makes one company stand above all the rest in their industry. I've just read a great business book, "Good to Great," by Jim Collins. It analyzes why the transition from a good company to a great company is difficult to accomplish and is a relative rarity in business today. It also investigates at what point companies make that transition that is, what is the flash point when everything changes, when they transition from a good company to a great company? Folz Vending, as exemplified in the book, doesn't recall a flash point where all of the sudden they were the best and largest bulk vending company in the country. Rather, it was a continual focus on being the best at every facet of their business. The vision has always been clear, and the decisions they made were consistent with that vision, time after time. Today, Folz Vending is a national leader in the bulk vending industry.

In 1955 Roger Folz made a decision that put him on the path he's on today. He sold his small independent routes and focused on national chain accounts. Another program that differentiates Folz from his bulk-vending competitors is that they produce their own display cards in the machines. Bulk suppliers offer these as part of their services, but Folz is one of the few, if not the only, company that produces their own. It gives them quality control and content control. Also key to his success is his continual commitment to maintaining the self-proclaimed "best service and merchandise in the industry." Each of these components by themselves is fairly straightforward. What is constant is that each strategic move, while basic, was fundamental in the way they run their business. His commitment to each change is unwavering. That's what has made Folz Vending the successful company it is today.

There were taxation laws that adversely effected the bulk vending industry. He made a commitment to do something about it. No one in the industry will deny that, to date, Roger has been the most effective, influential lobbyist for the bulk vending industry over the last 50 years. He was the chairman of the National Bulk Vending association's legislative committee for decades. His company undeniably benefited, and he was certainly self-serving in some of his efforts. Yet he has saved numerous bulk vendors thousands and thousands of dollars through his efforts at reducing tax burdens on the industry. He's proud to have sent every President since Eisenhower a gumball machine from Folz Vending. He's also extremely proud of his contributions to the National Bulk Vendors Association.

His largest customer, Wal-Mart director of other income, Chris Wade, has this to say about Roger:

"What I respect is that Roger never accepts the status quo in any aspect of his business. If he doesn't like the law, he works to change it. He overcomes hurdles through being innovative. He's educated an industry, and along the way he's educated me."

I asked Roger a number of questions, but one answer that struck me most is the reply to the question: "If you knew then what you know now, what would you have done differently?" He responded: "I would have bought out more of the competition." Following up with him later, he expounded that the economies of consolidation are significant. He passed on a number of potential route purchases throughout his career that in hindsight he should have pursued.

Roger also noted the importance of choosing mentors early on in your career. He considers the mentors he chose as one key to his success. He went to the association conventions, identified leaders that impressed him, and asked them what advice they would give to a new guy in the business. This advice was invaluable to him when making his early career decisions.

Sugarloaf and Folz Vending have an evolution commonality. Folz, since 1949, and Sugarloaf, since 1986, have raised the standard bar for their respective industries, and by their success, have encouraged new entrants into the industry. Both companies have prospered with new products and opened up new markets, while new competitors have entered the marketplace to compete for these successes. The competition today is intense in both industries. Both companies must continue to get better every day in order to stay ahead of the competition.

Roger Folz turned 75 years old on Feb. 17, and I'm sure that he spent the day in the office, as he does every day. Today his commitment to excellence is as strong as ever. So I say, "Happy birthday, Roger!" Anyone who takes the time to learn about your career, as with others who have accomplished so much, will benefit by seeing what one talented and determined person can accomplish when they set their mind to it.

My hat is off to your accomplishments!

Why Vending?

2008-10-02T19:11:11-05:00

BACKGROUND

I'm a serial entrepreneur. I've always kept my eyes and ears to the ground for ways to make money. In fact, the last few days driving around my neighborhood post-hurricane Ike, I've racked my brain on how to profit from all the wood from blown over trees lying along side the road. I've been involved in MLM, I've sold stuff on Ebay and Amazon, I've tried a little bit of everything. My challenge has always been that working full-time in the corporate world very rarely lends itself to entrepreneurship. Because of my family life and corporate work schedule, I've always had to run businesses that required limited time commitment, limited startup cost, and had limited risk. In recent years I've also sought businesses that created passive income after reading Robert Kiyosaki's book, Rich Dad, Poor Dad. Dictionary.com defines passive income as

Earnings an individual derives from a rental property, limited partnership, or other enterprise in which he or she is not actively involved.

SEED OF AN IDEA

Several years ago I was frustrated with the lack of success and growth I was seeing in the business I was involved in. Rumors also began to spread at work about our company being potentially bought out. Fear of the future got the old wheels-a-turning! I know I had what it took to succeed in business, but I just hadn't found the right vehicle for my situation. Around this time, I remembered a short conversation I had with a friend at church about how he had bought a few gumball machines with his young daughters. He had decided to use the machines to teach his girls about business. I began to wonder how vending worked and what kind of money I could truly make. Over the next couple of weeks, I read everything I could on the subject and then purchased my first used machines and dove in head first!

Coming Next Week. 7 Reasons Why Bulk Vending Is Appealing For the Busy Professional?