New to vending - seeking advice and guidance.

[Snackmore]

You mention concentrating on good service do you not think we all do that as a matter of course? Its a business and we want to succeed and you can only do this by offering good service. I had a call the other night at 10:05pm to say a machine had jammed. I was on site by 10:30 to sort it out because not only do I want them to think I care but I also do not want to lose sales

[Eustace]

But payment of commission must drastically cut your margins. You say you are running a business. I don't doubt it, but doesn't the fact that 20% of your revenue goes to the site-owner affect the way you provide your service? Money can only go so far.

[KASE]

I personally think the profit margins are good. Your cut is larger than their cut, and higher or equal to the product price. ( eg 40% product, 40% you, 20% site owner). I think it is worth looking at, Eustace, to see if you can get no or low commission sites as even one or two of those on your books will help, but I think if you are questionning the profit margins that maybe this isnt right for you? There are many other products you can sell online that give profit margins of 70 - 80% for less work than vending towers. There are easier businesses than vending towers ! But for some, this is the ideal business to be in or get into. If you are trying to increase profits even by 1% to help then good luck and I am sure people will give you tips about buying wisely and getting stock at the best prices and in bulk. This all helps in the long run. But I dont think you can re write the vending business model people have been working to for years.

[Eustace]

Oh God no, I'm not trying to re-write the business model or teach Grandma how to suck eggs. I suppose the problem is I have a naturally critical mind and I tend to want to understand how a business works at a deeper level than most. I can see, and I accept, there are benefits in paying commissions. I suppose all I'm saying here is that the assumption that you must pay commission might be wrong, even if in practice you do usually end up having to pay commission. I'll try some site-finding myself and I'll keep my cards close to my chest.

[KASE]

I totally understand Eustace. I had an issue with the one size fits all approach. A pub/club is different to a professional organisation which is different to a government organisation which is different to a playcentre.....

I think you will be able to trial and error and indeed find some sites who accept no commission and then go on to replicate this in similar sites. I do agree that these sites may not be the best performing though and it may be beneficial to pay a site 20 - 25% commission and have a tower perform well, than have a no commission site and have a tower perform poorly.

But as you say, it is all trial and error and its got to be worth investigating.

[valiant016]

Lots of interesting points and well done, for raising the topic of commission!

I have two sites that take no commission, one is an office (not a great site) and the other is hotel where the owner just said he was not interested in any money!

I also have about 20 H4H sites. About 6 of these are great, 10 are okay and the other 4 are poor! So charity sites (as mentioned) can be good!

The rest of my sites take the standard 20%.
Except for one big site that takes 30%, not happy doing that but it is worth it!

Last point, if you are confident on making a go of vending then DO NOT not, repeat DO NOT, sign any franchise agreement, it's your business, so keep it that way!

[Rossi fan]

exception)[/quote]

I disagree with you Daz. Many of my H4H sites are excellent. I agree, site type is key however.

Paul[/quote]
I knew you'd say that Paul. Which is why I said with exceptions.
I was really meaning the lower percentage unknown charity commissions.
Lately there are a lot of pubs doing Help 4 Heroes events, so you can get good sites this way, but as Brian says you need to be in a position where you can switch to commission if needs be. Which means you need to not be contracted to only pay a charity.[/quote]

Hi Daz,

I agree. In the climate we are in, you need to be flexible and I would be happy to switch to a normal commission to site if I thought for one moment, I would lose the site, or the site asked. Raising money for charity is good, but at the end of the day my business comes first.

Thanks,

Paul

[Rossi fan]

stop trying to complicate thing my friend..

you will be wasting alot of time and energy finding sites that dont mind not getting anything out of the vending...they will ask you who will clear all the empty pots capsuals ect..

i do alot of site finding and i can tell you here and now that no good site will just let you pout machines in for nothing..welcome aboard..keep things simple,offer a good service and a decent reason for them to say yes to you...if i were calling on a customer and i found out you were not paying them anything i would be in there like a flash...it business i am afraid mate..


good luck with it though..

Dave

Eustace,

I agree will all that Dave has said. you need sites that will sell lots of product and they will want comission. Any business relationship is a two way street. Dont try and re-invent the vending wheel- go with proven methods, get up and running and then if you want to try something a bit wackey, do it alongside your profitable business.

Thanks,

Paul

[PGBrew]

Hi Eustace,

Dave's given you some good advice.....use it. I've read you initial post and if I applied them to my business I'd be down to 40-50 sited machines, which is no use to me as I run a full time business.

My advice would be:

Remove the straight jacket of strict conditions (be open minded), be independent, buy existing businesses (when you're out canvassing and you see an existing machine/tower, give the owner a call, he may want to sell. Diversification is key. Nuts/sweets, Pringles, Toys washroom etc. Pay commission between 0 -30% (80% of mine are 20%). Get yourself a good van & be prepared to travel.

All the best.

Pete

[Eustace]

Hi Eustace,

Dave's given you some good advice.....use it. I've read you initial post and if I applied them to my business I'd be down to 40-50 sited machines, which is no use to me as I run a full time business.

But is the extra profit you earn through the 40-50 additional machines worth the additional work they cause you?

My feeling is that this business is about three elements:-

- maximising the profit at each site;
- using leverage to multiple profits across sites;
- minimising costs.

Those three elements needs to be balanced carefully. I suspect that a lot of people in this business would realise they are actually losing money if they sat down and crunched the numbers. Personally, I think 20% is a huge dent on your revenue when you take account of maintenance/servicing, visits, travel expenses/fuel, vehicle insurance, vehicle maintenance, business insurance, marketing, re-investment in machines and other equipment, sundries, not to mention your own salary/drawings.

I was running some numbers on a franchise the other day, and I figured out that with 100 tower machines, I'd probably be turning-over about £20k. by Year Two, at the most. Of that, 70% would come out of the business in overhead. What was left over - about £4-5k. - would be for salary/drawings and re-investment. Actually, that's pretty optimistic.