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.

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 importance, learn more about finding a good vending location.

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…

If you have trouble getting along with your boss and coworkers and your communication skills are not the best, perhaps you are thinking that owning and operating a successful vending machine route will be the solution to all of your problems. After all, your days would be spent counting and sorting merchandise, stocking machines, collecting money, and reordering merchandise, right?

No. You would also be contacting your locations regularly to ensure they are satisfied with your service, calling those in charge of potential new spots for expansion or replacement of under-performing ones, dealing with customers who have lost their money in your machines and possibly dealing with charities on sponsoring your machines.

There is much more selling involved in vending than the blue sky promoters, also known as biz-ops, reveal to their customers. One of the sales pitches used by biz-op and the vending machine companies is that there is “no selling”. But that’s completely false. There’s a lot of selling involved to get your vendors on location. And unfortunately, people don’t always find that out until after they have spent a lot of money on vending machines. The primary problem is the lack of persistence on the part of new operators who do not come from a sales background and are unused to making a sales presentation.

When I first speak to other vendors I’ve found that they are afraid to just walk up to someone and say “Are you happy with your current vending service?” Get out and give it a try. Once you start hearing “yes” you will get enthusiastic about it and start putting more energy into the business.

Actually, there is an entire spectrum of under-the-radar customer service behind any successful vending business, all of which requires a positive image and sufficient face time with location managers. And if you are one of those who has fallen for the idea that no selling’s involved since vending machines “sell” for you, then you have forgotten the most important item of all you need to sell: yourself.

Some people in the vending industry will try to tell you that all you have to do is lay back and collect money. Sorry but that just isn’t true. If you attempt to sit back and collect the money you will be collecting less and less as time goes on. This is due to simple attrition: businesses close or move, vandalism problems or the location owner simply doesn’t want your machines around anymore. Many people just stuff these machines in the back of the garage or basement. Pretty soon, you have very few machines making money and a lot less storage space in your house.

Mastering an ongoing location program will not only get those idle machines making money, but will increase your profit on the vending business in general. Commit to spending 10% to 20% of your time on your routes to gaining and securing new locations. If you do not have idle machine then now is either a great time to expand your business or reanalyze your current route and re-locate poor performing machines. Over time, with an ongoing locating program you will have more machines averaging more profit.

Learn more about how to locate vending machines.

I use the reverse approach. The location almost always asks if they have to sign some kind if contract I automatically say “No.” I explained that my service is just that, a service. I explain how I have no interest in locking them into any kind of commitment. My machines are there only so long as they like the service and it makes financial sense for me to be there (notice the seed I just planted?). As a matter of fact I tell everyone that I have a “24-hour pull-out guarantee” for the first 90-days. If either one of us is unhappy with the situation I will pull the machines out within 24-hours. Remember that the locations are usually very unsure. They’ve seen poorly maintained vending machines at other locations and don’t one on their premises. You are showing them that you respect their space and they appreciate it. And quite frankly, if they don’t want you there they just move your machine into the back room or make life difficult for you in some other way. A weird note for you here. I had one account that didn’t want me but wouldn’t tell me to my face. They’d just keep unplugging my machine (no it wasn’t a competitor – my spies told me it was the manager). I’d ask them if they’d like me to pull out and they always said, “No.” Go figure.

Read Part 2 of this subject.

Vending Rules Answer:

I would like to first confirm that your placement ratio will be able 1 in 20 the first couple times you try. Once you’ve placed a couple honor boxes you’ll not only gain confidence but you’ll also have spoken with customers and have a better idea of what “sells” them on the idea of letting in an honor box. Plus once you get a few customers word-of-mouth really begins to help. Unfortunately in the beginning you have a little bit of “the chicken and the egg” dilemma.

You are 100% correct NOT to put the boxes out for the general public, you’ll get wiped out.

How do you overcome their concerns? Its not that hard, but you have to project lots of confidence. You and I know that theft is inevitable and expected; that is why we MUST have a mark-up of 100%. Honestly if your locations had a constant loss rate of 20% or less I say you had a successful business. Obviously though I’d never tell a location that. I’d explain to them that you understand their concerns and thank them for looking out for you. Tell them that people only steal if they feel anonymous, and you have several strategies to reduce that. First, you use menus and Talker Cards so people realize you know what’s in the box and give them polite feedback. Second, you stay in contact with the employees and ask what they like and dislike in the box. People will steal from the faceless vendor but not from “Kim” – this is where doing your route with a child once or twice really helps out The more “human” you are, the less likely they’ll steal from you. Third, I’ve tested “deputizing” someone in the office. You get one person to volunteer to keep an eye on the box and they get a free candy bar for every cycle the box is “even” (anything above 95% is fine – but don’t tell them that).

Then end telling them that this is a test. You’ll return in two weeks and see how it goes. If it doesn’t go well you’ll simply pull the box. You’ll find that many locations do just fine. Especially if you (very nicer) tell employees that they got a 2nd chance, so keep an eye on each other because one week of “free candy” will cost them the box forever.

Be prepared that some locations will smile and act very nice and then empty the box out without leaving a penny – and act like nothing happened. I know it sounds crazy but it happens occasionally so don’t be upset when it happens. That’s the cost of doing business. Just know never to go back and learn to spot potential locations like that in the future.

Vending Rules Answer:

So long as they didn’t damage the machine – nothing. This is not that unusual. Often we suspect some kind of “foul play” if we find our machine moved slightly when none exists. Have you considered that maybe they needed more space or simply someone just liked it better in another spot.

My only real concern is that if they move it #1 someone could get hurt and they might try to come after me legally and #2 they could damage the machine slightly. As a quick aside, I’ve NEVER had either one happen in all my vending years.

This is why it is important to cultivate a good relationship with your locations. Sometimes I’ll mention that if they needed the machine moved I would do it; saying that I don’t want “one of them” getting hurt moving my machine. That way I know what is going on.

P.S. – Be aware though that if they move your machine more than once in a year the next move might be out the door. Make sure you talk with them to find out the problem. If they are concerned with space offer to get them a smaller machine if they can “reserve” the space for you.

If you are involved in snack / soda vending then usually, 10% of the gross income of the machine per month is acceptable and still is profitable for you. Any higher and you simply won’t make any money; the margin for snack/soda are pretty slim. Quite frankly I do not pay a single penny of commission to any of my snack/soda locations. If I pay a commission I am giving them my profit. My service is just that, a service. I keeps the employees in the building and not doing “snack runs”. Most managers/employers understand this and don’t even expect a commission. With that said locations sometimes do ask for a commission. I simply explain to them that there isn’t enough profit, if they persist then I offer to rent them the machine. They have to stock it and get to keep all the profit. One person tried that once and gave up after one month. They realized that stocking a machine is work and happily gave it back to me. It is now one of my best locations.

Now as far as Bulk Candy, Video Games, or other Amusement Games it isn’t unusual for anything from 25% – 50%. It is not uncommon for a high volume location to ask for 50% of the revenue. While it is sometimes profitable for you do this with very high volume it still makes your profit margin slim. A good alternative would be to take out your cost of product (usually about 15% – 20%) and then split the remaining profit 50/50. When you work out the numbers you are each getting about 40% of the gross income. While 40% is still a high commission; if the location has enough volume it may be well worth your efforts.

Final thoughts: If you know your numbers you can avoid the “losing deals” while still being flexible enough to design a commission payment system that will insure you secure locations and a long profitable vending business.

Everyone seems so afraid of this issue that they allow themselves to get frozen with inaction. Many vendors are so afraid to pay a commission that they forgo some VERY profitable locations. Before we begin to discuss commission I first want top stress that you must track your business and know the numbers. What is each machine’s average gross sales and profit. What are your fixed costs and what are your variable costs. Remember that equation from school? y=mx+b OK, we really don’t need to get that deep but you do need to have an understanding of how much money you make for each machine.

The next item that needs to be established before I can give you any kind of “standard percentage” is to determine what kind of vending to which you are referring. I have several locations that I pay commissions to (some as high as 50%) and they are worth every penny of it. However MANY of my locations get ZERO commission, and never will. Vending is a business, if you are able to give up a percentage of your profit to gain huge increase in volume wouldn’t that be worth it? The answer is that of course it is worth it, you just have to understand your numbers.

I will wrap this subject up next week in “Vending Commissions – Part 2“

The short answer is NO.

The long answer is yes – you. OK that wasn’t all that long. If you have any desire to run your own vending business (or any business for that matter) you need to learn how to sell, period, no exceptions! Again, regardless of the business you get into you’ll need to learn how to sell. Those that learn this skill will ALWAYS have the opportunity to make money. I suggest that anyone interested in placing their own vending machine check out my eBook on the subject. You can order it by clicking here (yes, you just witnesses a shameless plug

But even if you do not get or read my eBook remember that the key to vending machine placement is only eight simple words, “Are you happy with your current vending service?”

Don’t be afraid to let people know what you do and how you can help them. Most people don’t mind because usually they don’t have machines (but would like some) or they have service that sucks (that’s how I get most of my business).

There is no simple answer other than to find all the local businesses and start hitting the pavement. You will gets lots of “No’s” but hey “No’s” don’t cost you anything so you have nothing to lose.