This article explores the strategy of entering the cash business of vending by buying pre-existing routes to increase your return on investment by lowering startup costs. You will be shown how to use other people's time to your financial advantage and be shown what to look for when buying a profitable route.
If you have ever considered bulk vending as an extra income stream? Surprisingly, right now may be a great time to enter the playing field. At first thought, high gas prices might tend to scare you away, but with hardship often comes opportunity. It is true that gas prices are affecting the profit margins in bulk vending. For some operators, it's the last straw. They are quitting and even abandoning some machines by leaving them in the field! Again, with hardship often comes opportunity.
Two major costs of setting up a vending route are the cost of the machines and the cost of placing them in the field. A vending operator ready to quit will often sell a route for a hardy discount. Often you can pick up a route for 25-50% of its value. This brings your startup costs way down and allows you to recoup your initial investment much faster.
When considering the purchase of an existing route understand most times the figures are overstated. Often there will be no hard facts supporting the valuation of the route according to the contractor. The route may not have been serviced for months with some of the machines missing because of thefts or businesses closing. You have to be careful and not overpay and allow a cushion of protection. The most likely scenario will be to find a route where some machines will be on location making money and a significant percentage will be in storage.
You also need to be certain the machines are close enough to you that your fuel and vehicle costs are low enough to maintain an acceptable profit margin. In my opinion, you should at least aim for 50% after servicing costs, charity or commissions, and product. You'll probably be fine at this level.
Other things to considering when buying an existing route are the age and condition of machines, the type of machines (metal or plastic), verifying the location of machines at the businesses, method of payment, the bill of sale or contract, etc. Take time and write down everything you'll need to know about how to run the route, history of the route, number of times per year to service, and charity information if applicable. You will also want to verify somehow there is no lien against the machines (check with your attorney for proper guidance in this aspect).
You may consider having the operator go around to the businesses with you and open the machines to judge the value of the accounts. If you cannot examine the entire route, consider making a down payment on the route and paying the remainder in thirty days. Understandably, many owners will not want to reveal their locations for competitive reasons in case you do not follow through with the purchase. Above all, think through the deal. Don't be afraid to ask pointed questions. If you don't get truthful answers, walk away from the deal. You can always check back later and see if the operator is more desperate. If you are successful in acquiring the route, your ROI (return on investment) will likely be much higher than if you bought the equal number of machines and placed them yourselves.
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