There is no right or wrong answer to any of these questions.  You need to decide what works best for you.  You’ll probably find that your goals will change as time progresses.  If this happens then obviously your plans will need to change as well.  This is OK.  Developing a business plan, even a rudimentary one, is a great
process to go through.  It helps you to stay focused.

No matter what you decide to do if you have a plan you will be able to better handle the changes and choices that life throws at you.

Evaluate your lifestyle and personal goals for the future.  Then you should determine if vending (or any business) will compliment your life and help you achieve your goals.  If you try to make vending fit you will only make yourself more miserable.  Remember that part of financial success and breaking out of the “rat race” is to enjoy what you do.  If you enjoy your business and it fits in with your personal goals you will succeed even more rapidly.

I realize that this saying has been greatly over-used but I believe because it is true.  “LOVE your job and NEVER WORK another day of your life.”

If you have spent so long at a job you hate that you are not sure how to break the cycle I suggest you checkout 48 Days to the Work you Love by Dan Miller.

When starting out your vending business it is very tempting to take any  and all locations that you can.  Many times, and I have been there; you hit a period of time when you have more machines in your garage than you do on location.  The pressure is on and you begin to take locations that are nowhere near each other.  You end up spending all your time driving between sites.  This eats up your time and only makes your business less efficient.

A while ago I briefly wrote about assets and liabilities.  Remember that your most valuable asset is your time.  Once spent you will  NEVER get it back!  The ultimate goal is to have the locations as close together as possible.  Closer locations mean you can service more in a day.  And of course the more locations you visit in a day the more you will be able to operate overall.  Time is Money.

In the vending business, inventory can be both the product in your machine or the product you have waiting to go into your machines.  They are both of equal importance.  The most obvious task is for you to watch those expiration dates.  Sure the product often tastes just fine but look at it for the customer’s point of view.  How would you like to pay for something only to find that it is expired.  It seems like the vendor is trying to cheat you, or worse, just doesn’t care.  So, watch those expiration dates.

One of the easiest ways to manage your inventory is to make sure you are “turning over” your product on a regular basis. This means that if you buy 10 cases of soda it will last one to two months.  You don’t want to be running to the distributor every week nor do you want to fill your garage and/or basement with candy and soda. A healthy balance needs to be maintained.  I recommend about a full month’s inventory at all times.  If you have a machine don’t let product sit for more than a month either.  If no one is buying it, move it out.

Go out and find solid locations that are both high volume and easy to deal with.  With any location you will want to build a good “trust factor”.  Most vending  operators place their machines and then forget about the location, this is no good.  Talk to your location’s employees and develop a professional rapport.  Don’t try to avoid them like many vendors.  If you run snack and soda machines they will tell you exactly what they like to eat / drink.  I’ve been able to boost my sales buy
25% by just paying attention to my customer.

This tactic has also helped me to get some of my best locations due to referrals from current locations.  It is very unusual for a vending operator to give ANY customer service, much less good service.  This will make you stand apart from all your competition.

Now that you understand its inportance, learn more about finding a good vending location.

I had them in malls and bowling alleys; during the “busy” months they would gross about $300 a month.  Well, guess how many “busy” months I had; about four (if I was lucky).  The “off” months grossed about $150 (at best).  After commissions, COGs (Cost of Goods), and other misc expenses I kept about 1.5% (about $40).  To make this equation even worse I did not take into account the life of the machine.  At that rate I was going I would have to have had the machines on location for over 7 years - just to break even.

A lot can happen to a machine in 7 years: parts break, people bust into them and steal your quarters, you lose locations, etc.

The reason I tell you this story is because after about a year of owning these machine I decided I wanted more machines.  Because I could not afford another $9000 I figured I’d go on the Internet to see if maybe I should try to buy used machines.  To my amazement I could buy the exact same machines for only $300.  Not only were these machines cheaper but most of them were bought brand new, never placed on location, and just sitting to people’s garage’s.  One guy even still had them in the original packaging.  If I had taken the time to look first, instead of letting a sales pitch cloud my judgment I could have bought over 20 machines for what I spent on just one.

Now this does not mean that you have to immediately run out and start a corporation and hire an accountant or attorney.  Quite honestly you do not need the extra overhead hassle.  Hopefully you will eventually need professional services but in the beginning the rule is “keep it simple”.  I do however want you to create a  foundation.

Unfortunately because it is so easy to start a vending business people do not treat it seriously - and that gets them into trouble.  I meet people all the time who, after 4-5 years of “spinning their wheels”, try to sell their “business” (at a premium of course) because in their mind it is a business.  I always tell them the same thing when they approach me to buy their machines.  They have not developed a business they only created themselves a job.  They have nothing to sell but machines (many times NOT even on location).  And what’s worse, they have NOTHING to show for it.

Don’t let this happen to you; treat vending as you would any business venture.  If you can do that then you’ll have an asset that will be able to pay you for years and years.

Of course the question remains, “How does a child start a vending business?”  My answer is that the process is not much different than I would recommend any start the business.  It is only the outcome that I consider to be different.  The goal isn’t as much to make money but to teach them about money, business, and even the sales process.

Get a machine or two on eBay.  Buy machines for less than $100 each (hopefully much less).  If you can, help place the first machine.  Don’t buy a machine outright, “loan” them the money.  Make them pay you “payments”.  Make them keep books, calculate cost of goods, profit, loss, and ROI.  Even explain how they have to pay taxes.  This teaches them the pitfalls of excessive debt, the “work” required to run a business properly and how to deal with government regulation.

You will probably have to drive them from location to location but that is a small price to pay to help your budding entrepreneur get started.  Remember, make the process fun and not too hard for their age.  Again, the goal is for them to learn; if they earn then all the better.

Now one caveat.  I do have them sign an “Ownership Acknowledgment”.  It is a simple document that says the machines belong to me and that I can pull them out whenever I want.  To make it easy to sign I also include statements that they can kick me out whenever and that all liability for the machine is mine - which is true anyway regardless if the document is signed.  All I want is a piece a paper saying that I own the machine.  That way if the location ever tries to “steal” the machine - by claiming it is theirs I have paperwork that the police will want to see when they arrive.  I consider it my “get out of jail for free card”.  Unfortunately locations - especially ones that one have been to for a long time.  I’ve had a building manager lock up the rooms my machines were in and tried to keep me from getting them.  I had a janitor let me in the room (a side note - always be in good relations with the cleaning staff, they are your greatest allies at a location) and began to remove the machines.  The building manager - a real jerk by the way - threatened to call the cops if I didn;t return the machines.  I called his bluff.  When the cops arrived they asked me if I can prove ownership (I had my signed agreement of course - and the keys!) and they then asked the building manager.  He of course had nothing and to boot acted like a jerk.  They asked me how long it would take - i told them I’d have been done 30 minutes ago if he wasn’t blocking my way.  They allowed me to continue and threaten to “restrain” the building manager if he continued to make himself a nuisance.  It was an open and shut case.  As a quick side note I ended up spending 45 minutes in the parking lot giving vending advice to one of the officers.

Bottom-line:  Locations don’t like to sign contracts (and usually won’t) so don’t even bring it up.  Honestly I don’t even use the ownership agreements for the little candy machines ($250 value or less).  Locations agreements only tie you to a potentially bad location and start the relationship from a standpoint of obligation and mistrust.  I like starting from a much more positive standpoint of trust.

Good Luck!

P.S. - When you start getting larger you’ll start getting specific equipment for large locations (for example malls).  In that case you are buying equipment just for that location - use a contract.  That is a discussion for some future point…

I guess it was inevitable with all the fear in this economy that the vending Biz-Opp promoters would begin to come out in force.  Buying an “packaged deals” or existing route might seem to be the fastest way to get your feet wet in the vending business, but unless you use extreme caution, you could easily be taken for thousands of dollars of your hard earner money.  These scams are known in the vending industry as the “Blue Sky,” or “Biz-Ops,” and the “established routes” are actually established after they get your money.  The companies charge may times more than what the machines and routes are actually worth. To make matters worse, the locations they offer to provide are dubious at best.  It is easy to be tricked by these promoters, who are experts in twisting the truth to fit their sales pitches, particularly in the amount of money a new vending operator can expect to make.

They say they can’t guarantee you how much money you will make, so they will show you the industry statistics.  The vending promoter gives you industry averages that do not match the machines they are trying to sell you. They put up sales figures for the types of locations that newbies would never get; rather, these are locations that are gotten by full-time vending location management companies.

It is not just the uneducated they are after, however.  Biz-opp promoters attempt to trick all kinds of people, especially retirees who have finally built up a nest egg and successful professionals with cash to burn and dream of owning their own business.

The industry is filled with the failures and the success stories of those who either gave up after falling for the “Blue Sky” or turned their scams into profitable businesses with hard work.  The rule of thumb to remember if it is “too good to be true” is exactly what it says.

All of this is not to say that you cannot find a vendor out there who is ready to retire or simply change professions and wants to sell his routes.  Years of experience and dedication do not come cheap, though, and an established vending route could cost you up to three or four times its net profit.  Unless you are a good negotiator or investing a lot of cold, hard cash, you could spend three or four years paying off the existing routes you bought. 

The advantage of buying an existing route is that you do not have to wait for the revenue to grow because you are buying into an existing, money-producing business. You can concentrate, instead, on finding better wholesale prices on your merchandise, slowly stocking the machines with more profitable items and changing out older machines for newer, larger capacity ones.

Before exchanging any money and to ensure a smooth transition, you should insist that vendor you are buying from take you around to every location and introduce you to the managers. In this way, you can begin to form you own relationships with them and see if the locations are as busy or profitable as the vendor says. You can also use the time to note if there is any room for growth or additional machines at the locations for future sales pitches to the managers.