Welcome to the complete guide to the vending machine business.
- How The Vending Machine Business Work
- How to Make Money In Vending
- Strategies to Find Profitable Vending Locations
- How to Service A New Vending Account – Part 1
- How to Service A New Vending Account – Part 2
- How to Service A New Vending Account – Handling The Money
- How to Service A New Vending Account – Drink Machines
- How to Service A New Vending Account – Get Organized
- The Vending Business Cycle – Part 1
- The Vending Business Cycle – Part 2
1. How The Vending Machine Business Works
In this ebook, we discuss how the vending machine business works. A lot of times people who are new to the vending business think they have to buy a vending machine first.
But that’s not necessarily true. What is the most important thing to start with?
The first thing that’s most important in any business venture that you undertake is to do a little bit of planning. And the second thing is, before you go and buy equipment, how about have a place to put it. And when we say that, what we mean is go out and make some sales and get an account first.
So, where are good places to put a vending machine?
There are all kinds of places where you see vending machines out here in the world. You see them everywhere, from on street corners and private businesses to retail shops. Some vending machines are even becoming retail-based shops.
This is where we have to get into a little bit of the planning like mentioned before. You could go into a planning situation where you decide what do you, think about what is going to be best for the business, and it helps you make money. Perhaps the reason you’re actually reading this ebook is to find out what options are available.
So when you get into planning, you should develop an idea of what you want to do, and then you decide what businesses or what types of vending locations you want to be successful. What might be an excellent location for one vendor may not necessarily be an excellent location for another.
So let’s say if you were starting a vending business today, how would you go about finding locations? We’d recommend looking for areas where there’s growth in business, and while that sounds broad, there’s less competition, growing businesses and things like that.
A lot of it’s going to depend on what are your particular ideas. Do you want to be in schools? School vending is going to be around for quite some time, as long as their school. So really depends on what your particular goals and objectives are.
So let’s say you land a placement. You get a deal with a business or organization that want your vending machines. What’s next?
Well, you get this business, now you need to go out, and you need to go buy the equipment. And of course, there’s probably a thousand choices on equipment. One thing that people need to understand in vending is that you have to keep your expenses low. So if you’re new to vending, we suggest you go for refurbished equipment, and you go to a quality supplier, someone that’s been doing refurbished equipment for quite some time.
We’d love you to check out our refurbished vending machines.
So now that you have your equipment, what’s the next step?
Now that you have your equipment, it’s time to install the equipment. This can be a simple or difficult job depending on the location. Usually, there are several people in a given area or anywhere that can move equipment for you. I would suggest if you’re starting, that you have someone that knows what they’re doing move your equipment. Vending machines are heavy. There’s a lot of real tricks and moving vending machines. If you’ve been doing it for as long as we have, you eventually learn all of the tips and tricks to getting them through doors, how to do it without taking them apart and so forth and so on. But I suggest you hire somebody to do it. There’s plenty of qualified people in a given market that will move things for you.
You move it, and you’re going to set it up. At that point, you know it doesn’t walk into that account completely filled and completely working and completely priced out. Now again, depending on where you purchase your equipment from, some of those issues might be done for you, but you will eventually have to learn how to do those things anyway.
2. How to Make Money in the Vending Business.
Now I know sometimes people getting started in a business or in particular, a vending business have some misconceptions about what it means to be in business.
The most common thing heard about business, in general, is that if you’re in business, you’re making money. That’s the number one comment we hear. And then, of course, you hear it a lot in the vending business because after all, everybody knows how much your product cost. You can buy it for a quarter and sell it for fifty cents and of course you’re making millions on that – just millions.
So the question is, what kind of things are vending professionals who are successful in the vending business doing that most of the new vendors are not aware of?
They plan, and they set goals. And one of the things, if you’re contemplating getting in the vending business, you want to do is set some goals.
We were joking earlier about money, but you could possibly make millions of dollars in the vending business if you wanted to. It’s just a question of successful planning and successful goal setting. In regards to goal setting and planning, if you’re going to do well, you have to see your self in the business, you have to feel yourself in the business.
So here is a shortlist of questions you will need to answer to set meaningful goals as a new vending operator.
- How many new accounts do I plan on getting this year?
- What kind of accounts are they going to be?
- How am I going to service them?
- What are they going to look like?
And whatever your answers are, you’re going to have to be very specific.
Here is an example:
“I want to have four new accounts this year. I want these accounts to have 50 to 100 people in them. I want the populations of those accounts to be let’s say 50 percent Hispanic and the rest is a mix. I want it largely in a blue-collar operation. I want to have a single snack, and a single soda machine there and I want these accounts to generate X amount of dollars per year. I plan on servicing these accounts once or twice a week depending on the volume of business that I’m going to do.”
It’s this kind of detailed planning that helps you understand exactly what you’re going to do because the rest of your business can be determined by those parameters that we just set out. It’s all about planning again. It’s about getting your ducks in a row and implementing that plan.
And so, again you know we just touched on the fact that vending people work hard. Typical vending day, you’re going to be up early in the morning. You’re going to do one of two things. You are going to be up early in the morning or work late at night. I always got up early in the morning. Early in the morning to us is 4:30 am. We would have trucks loaded and be on the road by 6:00 am. Be at our first stop at around 6:30 am. We’re going to work from 6:30 am until whenever. We generally sat in accounts during traffic times. Again, a bit of planning. We didn’t want to have our guys driving around in traffic looking at a windshield when they could be looking at the glass of a machine filling it.
So that was part of the plan where the team would be out, and they would work until about 3:30 pm to 4:00 pm, sometimes 5:00 pm. After which, they turn in their money. They had to restock their trucks to a certain degree. They restock in the morning as well, and they’re ready to go for the day. And sometimes you know, on a good day, we’d be done by 7:00 pm.
As an owner/manager, that’s hard work when you do it five to seven days a week. But, you have to have that planned out. That’s goal-setting. That’s how you get yourself going.
3. Strategies to Find Profitable Vending Locations
Let’s do a little role-playing. You’re new to the vending business, and you’ve got one vending account, and you want more. How do you get more vending accounts? This is a question we get asked an awful lot, so we’re going to ask you a couple of questions first.
So, Your current account, is it close to where you drive all the time? Is it something you know when you go there? How many times do you go there a week? Answer these questions first.
“Well, the account is kinda far, I go there probably four times a week. Also, it’s full of people mainly during the evening hours.”
So you’re there servicing the account usually during the day because you don’t want to be there when people are there.
OK. So, you know this account like the back of your hand, and you now want another account under your belt. Thus, the big question is, do you want another account like that or do you want something that’s close by. These are the questions you need to ask yourself, and a lot of it depends on do you want to spend your time close or do you want to drive the distance to get bigger accounts.
For example, let’s go over the scenario that you want to stay close. First off let’s understand that this is called selling, right? Now, nobody likes to sell but everybody needs to know how to sell, and selling in the vending industry is not as difficult as people want to think. Selling in the vending industry is actually pretty easy, particularly if you have just one satisfied customer. Which obviously, if you have the one account, you’re maintaining it, you’ve got a satisfied customer.
So it goes this way. The first thing you should do is very basic prospecting. Get into the vehicle or walk. It doesn’t really matter. But you can drive around and see what’s around the neighborhood. What’s within a mile of you. Depending on if you are in an urban or rural area, you may have to expand your search radius to search for potential candidates. As you drive around looking for vending accounts, you want a place with 20 employees in there all the time or at least 20 people there during an eight-hour work shift. For us, that’s a very bare minimum number that’s worked for other vendors for years. How do you determine if there are 20 people? Well, you can tell an awful lot by the size of the building, the size of the parking lot, the number of cars in the parking lot is actually an excellent way to get to figure out how many people are actually in the facility. So you go, and you find there’s a place that’s got 50 cars in the parking lot. All right. That’s somebody that I think I’m going to go in and talk to. Now, what do you have to do? Well, you got to get to the decision-maker somehow and convince them that you’ve got an excellent thing for his business.
How do you go about doing that? The tendency at least in our sales experience in all the years we’ve been selling is you tend to go in the front door and talk to the secretary. What’s the secretary’s job? To keep you out. So for the smart vendor, you have to go around to the back. Go to the loading dock or something like that and try to find some buddy that works there. But don’t bother them because you don’t want to bother them. But you go in, and you find somebody that works there and ask him a couple of questions. The first question is, do you have vending? And you might laugh at that, but you’d be surprised.
The next question is if you do have vending, I run a vending business, are you guys happy with who you have? Now that guy back there, he’s got no skin in the game. He’s going to tell you the way it is. “Well, you know this or that or whatever.” He’s going to tell you everything you need to know nine out of ten times. At least that’s been my experience. He’s gonna tell you “Yeah. They do an excellent job. You know it’s this X Y Z company, and the guy’s always here, and the machines work…” He’s going to tell you everything that you need to know about how it’s going as a general rule because people will talk about it, particularly if he uses it a lot.
So notice we haven’t talked about making phone calls to get this information. Well, you can go and do telemarketing if you want. You can make your phone calls and solicit the information. It’s just that if you’re going to go on what we call a geographic base, which means you want to be within a certain radius around your existing accounts, you’re almost better off to do it by driving.
Here is a success tip for vending professionals. Try to make a sales call a day. Make one sales call a day, and that means stop in somewhere on your route. Stop into one of the businesses you don’t have as an account. You drive by hundreds of accounts every single day. You drive by probably ten accounts going to the grocery store every day. You just don’t realize their potential accounts. This is a kind of market research. When you get in, and you talk to an employee, you’ll find out what they know, are they happy, what did they like. And you want to listen to what they have to say because essentially they’re the ones that pay your paychecks.
Now at the same time, we’ve walked in and talked to an employee, and the guy says “Oh my God! I’m so glad you’re here. You know this guy it’s terrible, and the food’s old, and it’s moldy.” We’ve gotten dragged into a president’s office one day by the dock manager, and he said you need to talk to this guy. Well, we closed that account that day. So while it sounds cumbersome, it works. It really does work.
You can do the same thing for prospecting. You can do it at your local church or with people you know. You ask everybody you know, a) do you have anybody and b) are you happy with them? There are a million ways the prospect we can talk for hours on this topic.
But like we mentioned, if you’re going to do a geographically and you’re planning, you want to do it around the center. If you want to do the other way where you want to do a size comparison, then you get on the Internet. You get on the phone. You do your research. You say you know I want to find places with 200 employees. The number of places with two hundred employees is a much more limited thing. You can do the same techniques but it just takes a little bit more time, and you’re going to have to identify those prospects before you go in. Sometimes it’s easy; sometimes it’s not.
4. How to Service A New Vending Account – Part 1
What to do when you’ve got an account.
So, you’ve just landed a new account, and it’s at a gym, that you are also a member. What what do you do now?
Well let’s take a step back and let’s think some things, Now you’ve got your machines in there already, and you’ve chosen your product. In fact, your products are already in the machine. So from here on out we’re looking at you actually having to service the account.
So, we like to call this part of planning because you have to think about what you’re doing. The first thing is you have an idea of how much you think you’re going to sell of any given product. But if you have a new account and you don’t have a lot of experience, you have to be prepared for when you go in. Eventually, accounts get to where you’ll know what they’re going to sell because you’ve been there so much and the clientele doesn’t change much.
But when you go in new and when you have no experience, there’s a bunch of things you have to think about. The first thing is how much extra product do you actually take. Do you take 50 bags of chips in? Do you take in 50 candy bars or pastries? What do you expect to take in there? Just as a tip, we would go in and do a little recon beforehand. We would walk into an account and see what’s sold a couple of days before we were getting ready to service it so that we knew what to bring because it’s different account to account.
But, since you are new, this is your first account, and you’ve never run a vending route, here is a question. How do you get the product into the account? Well, you have a lot of choices. The obvious choice is the hand truck. When it comes to going out and buying hand trucks and/or ways to move your equipment. There’s platform dollies; there’s hand trucks, there’s a pallet jacks and things like that. There are all kinds of things that you’ll see to move product around, but probably the most common is the hand truck.
We do know several vendors that have run very successfully with platform dollies which is a four-wheel dolly with a fold-down handle that you could fold up and they stack their product up on that. But you’re going to need something to move product, particularly if you’re moving drinks. Drinks are very heavy. And if you have to move eight to ten cases of drinks, while you can do it by hand meaning you can take two cases of drinks at a time and walk them in there. Oh! By the way. Speaking of your gym membership, you’ll be dropping that because you’ll get very fit very rapidly if you choose that option.
But even if you don’t, you still have to move all that product in there, and if your accounts are good accountants, you’re going to need to move a pretty good volume of material. So think about how you’re going to get things from your vehicle into the account. And we could go on about vehicles as well, but we’re going to stick to a single account right now and just say that somebody is working out of a car, pickup truck or a small van. You’ll be fine running one account out of a small vehicle.
So moving forward here’s a concern right away. When do you think you would want to be in the gym servicing that account? What time of day would be the best? Well, there’s a couple of questions. First off, in the case of your gym, the very first thing you have to think about is when are they open. So, in your gym’s case, the hours are 6:00 a.m. till 1:00 p.m. But the thing is, there are a lot of people there at the very early hours in the morning. And then most people are there in the evening.
So you would probably think the best time to service the account is in the afternoons or the late morning to early afternoons. Do you think that’s the best time? We say yes because there are fewer people at those times. Vending is a lot about efficiency. It’s about getting in, getting your machines filled and getting out. And we don’t mean that negatively. It’s just your time is money. We will go into more tricks and tips like that later in this book, but there is a lot of great ways to load a machine, so that is super-efficient. You can do more stops in a day.
So you’ve got your time’s narrowed down that you’re going to go in there in the mid-morning to mid-afternoon because that’s the time when there are the least busy. In a more traditional business type, the times that you want to be there are in the non-break hours. If you go into a manufacturing plant, they generally have predetermined breaks on a specific hour of the days, and those are the times you try to stay out of the break room because that’s the times when everybody’s coming into the break room. So you’ve got to think about those kinds of things first. You’ve got to think about how you get your product from point A to point B.
5. How to Service A New Vending Account – Part 2
What you do after you land an account.
How do you get the product into the machine and how can you be efficient in that area.
Now it’s time to talk about loading your machines. You always want to make sure your entire team is working at maximum efficiency. Because after all, your time is your money and the more that your team can get done and the more stops they could make, the more money they can make. Now I don’t know too many people in the vending business that does not make money. So efficiency becomes key in filling up your vending machines.
When we set ourselves up for the vending business, we set ourselves up with a system. When we originally started, we used to do a pick list at every stop. We used to walk into the account, go through every machine and go through the levels of inventory that we had predetermined. We would restock to those levels and then we would write down what else we needed on a piece of paper. Walk back out to the truck, pull those products and come back in and fill the machines.
Towards the end of my business we started carrying a pre-filled kit into the accounts. So we had bits and pieces. We had enough product to fill up a whole machine if it was empty. We carried those in bins and all of those bins came in at once. Your choice of doing this is your choice. You can do it one way or the other it doesn’t matter. The premise is exactly the same. When we would load our bins, they were loaded in the same order as our machines so that all the chips that were on the top row were in one box. Same thing on all the rows of your snack machines, that’s how we loaded our boxes.
If you go and you do a pick list, you go back out to the truck and pick the things, you pick them in order and you do that for a reason. When you get to the front of the machine the last thing that you want to do is start going from tray to tray, meaning you don’t want to pull the top tray out, put one product up there then have to go three trays down and then go back and second tray. You see where I’m going with this? You want to go to the top trade. You want to fill every slot on that top tray that you need to fill. That takes organization. You got to think about it a little bit beforehand so you get yourself in an organized system.
Either you do a pick list or you do it in boxes. When we went to the end, we started doing it by boxes because we just restock the boxes at the end of every stop actually. So we walk in and we add the things for the top shelf that we needed. We pull the top shelf down, bing, bing, bing. Shelf goes in, box goes down, next box comes up. Bing, bing, bing. Same thing on a pick list. If you do a pick list, you go in and you write down I need five of these, five of that, five of this. You put them into the box that you’re going to draw out of, five of these, five of this, five or that, and then they come out exactly the reversed order.
Critical information if you want to be successful in the vending business. You can go back and forth or you can do it the way I describe. Doing it the first way, you’re going to spend five times as much time servicing an account as you will if you put it into an organizational system. That’s just one of the success tips.
6. New Vending Account – Handling The Money
Now it’s time to talk about how to handle the money and a few other essential things.
We had filled up all of the snack machines up. We had gone tray by tray, and we have everything handled most efficiently. So now the question is What do you do next.
Well, you’ve got a couple of concerns one. Let’s go to the big one. Everybody likes to handle the money. But there are some concerns of course when you’re dealing with money, and it is not what you think. It’s not all that great. In the vending business, security becomes a pretty big issue. And one of the significant security issues is when you handle your money. Because the minute that money comes out of that machine it becomes vulnerable to being stolen. It can get stolen out of the machine too. But generally, if you’re keeping your machines locked, you know they’re going to have to break into that machine. But we can tell you from personal experience if you take the money out and you put it in a bag, or you happen to take the dollar bills out, set them down behind you because you’re going to get a bag to put them in, guess what happens? You set them down, and somebody walks by and poof they’re gone. We say it because it’s happened or somebody distracts you, and somebody else grabs the money. You think it doesn’t happen, but it happens all the time if you’re not careful.
So when we talk about handling the money, we want to talk about a couple of issues. One is you need some kind of a bag to put your money in. Generally, we’ve invested in some nice heavy-duty canvas bags that you can buy through the various, different banking outlets. Your bank people can hook you up with that kind of information. You want some decent money bags, something that can handle quite a bit of coin and quite a number of bills. So that’s the first thing you need to acquire.
When you get done stocking your machines, we always did money last. You either do it first or last; it’s your choice. We always did it last because we took it to the truck and the truck left the scene. So, they would have to run the truck down to steal the money from us, not break into the truck to steal the money. With that said, it’s your choice. You can do it however you want, but that’s just the tip that we use. When you get ready to handle that money, you want that bag ready and open. We trained all our people to do this. We used the door of the machine as a barrier and a block. We would never handle money without having the door usually up against our shoulder, and the side. We would kind of wedge ourselves between the door and the machine and have our body blocking how much money I was handling because they don’t really know that. “They,” meaning the bad guys or the people in the account. First off let’s step back. You don’t want the people in the account to know how much money you’re taking out of that account. You just don’t. You want to give the impression that you’re not taking very much money out of that account because that just makes it easier for you to be in the vending business.
We always did coin first. We would pull that coin box out and pour that money into the bag. At that point, we would open the bill validator and slide the money out and into the bag it goes, in one big sweep. Put it in and close the bag up. You think I’m paranoid but trust me, it only takes getting stolen from one time, just once, and you’ll learn your lesson. You want to be quick in getting that money and at that point put it into one of my boxes and bury it underneath the chips. Do not set it out on top of anything. Do not set it out where somebody can snatch and grab it, and it’s gone right. If you really want to be sneaky and you’re picking up money from multiple machines, put your money into multiple boxes just so long that you don’t forget where you put the money.
Those are simple security measures that allow you to handle the money in one of the safest ways possible. And then as you leave the building, you keep your head on a swivel. And again it depends on the account. You know there are lots of accounts where you’re completely safe but if you’re in a kind of public location, keep your head on a swivel. Because you don’t know who’s going to come around and all they want is the money most of the time. By the way, if you ever do get confronted by somebody, give them the money. Save your life. Let it go it’s not worth it.
But these are just little tips. Bad guys won’t come after you if you’re looking around. Little tip big payoff the big payoff.
7. New Vending Account – Drink Machines
We just talked about how to handle the money. And now what’s next?
We talked about a snack machine, and we talked about handling the money on a snack machine, but we hadn’t talked about how to service a drink machine. So, let’s do a real quick section on the drink machine just as an addendum to the snack machine. They’re very similar except you have a lot less choice in the number of products and you have a different set of concerns.
The first thing is you know you’re going to need some drinks. You can do them separately, or you can do the snack machine and drink machine together. Let’s assume you’re going to do it separately just because. But if you’re going to do them separately, you’ve made a pick list of what drinks you’ll need because you’ve got your snack machine. You then open your drink machine. You look, and you need a case of Coke, a case of Pepsi, a case of Mountain Dew and a case of Diet Coke. You run out to the truck, and you get them. This is where you really need that hand truck. You need a hand truck or some kind of way to move that product in.
By the way, you may be asking, what is a pick list? A pick list is a piece of cardboard or 3×5 card, and you go through your inventory, and you list exactly what products you want to put into your machine. So in a drink machine case, it’s best to work from left to right. So we would look over to the far left and say that was usually Diet Coke. We’d go we need a Diet Coke, we don’t need any of the grape. Don’t need any of the tea. We need a Dr. Pepper, a Pepsi, a Mountain Dew, and a regular Sprite. So, we’d have those things listed down. Whatever the quantity was. You could do the same thing with the snack machine. You write down what you need. That’s a pick list. What am I going to the truck to pick up? That’s where the term comes from.
So we go out to the truck with our pick list. Important note to remember. However you write your list, you’re going to load them backward. So you always load them in order, backward. Do that with the snack machine, and it’s more important with the drinks that you know where each item goes. Put them on your hand truck or your flatbed. You’re going to need a way to carry them because carrying 10 cases of drinks back and forth will kill your time.
We did a study, and we spent on average walking during a day, we walk six to seven miles per day. Our longest walk from a truck to a machine was about two hundred yards, and our closest one was literally to pull the truck up to the machines. But on our average day about six or seven miles. If you can limit the amount of walking that you do, you’ll be a lot better off. So that’s just a quick tip that we have for doing your vending route.
So, you roll in with your product, and then you start filling, and you’ll develop a rhythm for what we call flippin’ drinks. You’ll learn how they go in and whether they’re bottles or cans. You’ll get into a real rhythm for how to load those machines up and how to make things happen smoothly.
So that’s what you’ll get into. Load mode. Again, from right to left or left or right. Always do it the same. Do all of the motions that you make to be exactly the same whenever you’re loading your machines. Handling the money other drink machines, again, it’s the same as you do with the snack machine. You want to close out that door. You want to fill that bag up. You want to get the money out of the validator. You want to keep it out of sight as soon as possible. Same thing. Put it into a box or something to take it out of that building and head on your way.
Make sure you remember where you put it. We’ll get into trucks and security issues and things that happen on your truck or your vehicle in a future article.
8. New Vending Account – Get Organized
What to do when you land a new account in your vending operation: Part 3.
So, we talked about how to handle snack and drink machines and how to stock them. And so now, what’s next?
Let’s talk about the combination deal. This is what you do before you go to service an account and what you do after your service an account. We’re going to talk about how you handle your products, getting them in and out of your vehicles and in and out of your truck. Let’s start with efficiency. You know the only thing we have is our time and we want to be super-efficient. So here is a multiple-choice question. You’re at your warehouse, or you’re at Sam’s Club, and you’re buying products for your accounts, and you go to put them in your vehicle. How do you put them in? Do you:
- Just throw them in Helter Skelter
- Open up the packages and throw them all in Helter Skelter
- Put them in in some kind of an organized fashion
Well, here’s the deal right. The way that you would do that is, and we mention this because you want to be organized, organization is everything. The answer is C.
When you purchase your products, or you go to your warehouse, if you have a warehouse, you want to have your vehicle organized in such a way that you know where your products are. How you choose to do that is your business, but you need to have some sort of a system that organizes your products in a way that you understand so that you can quickly access those products. We worked on a plan-a-gram, but we’ll get into that later. Basically, all our machines were the same, but we used to load our truck just like we loaded our machines, so everything was done by shelf and not so much by column but definitely by shelf. So all the shelves were the same so that when we went to pick a product out of our truck or put the product into our truck, it doesn’t matter it’s one and the same, they went to specific locations. So the top shelf items went in the top shelf, the middle shelf items went in the middle, and the bottom shelf items went in the bottom.
It’s easy to get confused, so if you have them all in the same way, It’s straightforward. The truck looks like the machines. Do you think that works? Yes. It helps cut down on time spent filling the machines. Whether you’re coming out of Sam’s Club or your warehouse, we’re able to get in and out quickly. This is critical because you’re not going to realize how much time you waste if you just walk out, and throw the full boxes out into the truck with no organization. You’re digging and you’re moving, and you’re doing this, and you’re doing that, and you’re wasting valuable time.
Now, why not option B, the one where you open the box and throw everything into the truck. When you go into the account, and you come out of the account, what do you have? You have a lot of open boxes with partial product in it. Why? Because you don’t put the whole box out there all the time. Especially if you have a pick list, we discussed a pick list earlier in the ebook. If you take 48 Snickers candy bars in the box, you’re not going to put 48 into the machine. The chances are unless that’s absolutely their favorite item, you’re not going to do that. So if you throw the half-full box into the truck when you get done, that box is going to break open, and you’re going to have Snicker bars all over your truck, or you’re going to have bags of potato chips all over your truck. Again, Been there, done that. Don’t want to do it again. It’s a terrible waste of time having to pick product up off the floor of your vehicle. So have an organizational system for your vehicle. It’s your choice. There are lots of ways to set your vehicles up. Just know where everything is.
9. The Vending Business Cycle – Part 1
Finally, it’s time to talk about vending business cycles and the average vending business. We treat this as an annual strategy.
One of the things that we deal with when we’re dealing with a business cycle is human nature and what people’s cycles are throughout the year. I always start with spring because spring is the time of renewal. It’s when it’s exciting. It’s a great great time because it’s right after a cold winter.
People tend to cycle. They go through yearly and monthly cycles. There’s a lot of things that affect how people do business and what they purchase — things like life events, job changes, and even the weather. The weather has a huge amount to do with the vending business whether you believe it or not. But we’ll go into some of those specifics. Overall, there are two different primary business cycles in the vending business. There is the account sales portion of the vending business which is when you are going to achieve accounts, and then there’s the retail sales portion or the actual direct sale of the product and service.
As we address these cycles, we’ll discuss the retail side first, and then we’ll talk a little bit about the account sales side. So let’s start with spring. Springtime is generally the time of growth and renewal. It’s when your business starts to pick up. You start seeing more sales than you did in the wintertime. I’ll get to winter towards the end of this section, but you begin to see things picking up, and it picks up in the vending business. And to be clear, these cycles work pretty much the same whether you’re in the north or south.
Springtime is the time to sell products. In the springtime, we tend to have an increase in product sales mainly because of the weather. It’s cold in the morning. It’s warm in the afternoon. That lends a significant amount of credence to selling snacks in the morning and selling cold drinks in the afternoon. And then of course coffee. If you sell coffee, coffee sells always. Usually, when it’s cold but good coffee drinkers drink coffee all the time, so we’ll leave that one out. But that’s what springtime does for you, so spring is time to sell.
For people, their money’s loosening up a little bit, and they’re looking forward to warmer weather, and it tends to give them a very positive attitude. Which in turn helps with your sales. It’s going to help people feel better about themselves, and that will lend to your sales on a retail basis.
Now on the account sales side, springtime is kind of a tough time to sell. You need to be doing your calls in the spring. But the calls that you do in the spring are going to be geared to a little later on in the year. One thing I always mentioned about sales calls in the spring is, spring is the time when you start to see some problems with machines. Particularly the refrigeration side of the business because as the machines are coming out of winter, the machines aren’t cycling on and off a lot.
And so what happens is when the weather starts to warm up a little bit, the refrigeration units begin to kick on and off, and that’s usually the time that you’ll start seeing some problems. Refrigeration equipment, mainly drink machines start to have failures in the springtime particularly as there are significant changes in humidity. That allows you to go in and sell from an account standpoint because the existing vendor isn’t out there making his service calls and isn’t aware that the springtime is going to create service problems.
He’s going to have a bunch of service calls saying the drinks are hot, this and that. Anytime you have service calls it’s an excellent time to go off selling accounts.
Summertime. We’ll go into summertime, retail sales in the summertime. Your whole product line shifts from snacks over to drinks because it’s 80 to 100 degrees out. People aren’t really hungry. They want cold drinks, and you’d even be surprised. They’re going to drink more and more as is the temperature increases. They’ll drink more of the non-carbonated kind of drinks. They’re going to drink sports drinks, water, things like that — non-carbonated stuff. Nobody wants a lot of sugar when it’s really hot.
There are always exceptions to these rules. But as a general rule, this is what you’re going to see from a practical standpoint.
Summertime accounts sales are really tough, and this goes for the retail side too. People take a lot of vacations in the summertime so what you see is your workforce gets deluded a little bit. If you’re in a traditional vending account or you’re based within somebodies business, a lot of people are on vacation means your numbers are down, so your sales fall a little bit.
Getting to account managers in the summertime is difficult. They’re on vacation. Their mind isn’t really on vending per se, it’s more on production and get their business up and running than it is on changing out the vending company. Again, if they have service calls, it’s a perfect time to sell. If they have any issues or have recurring, in particular, it’s an excellent time to go sell. So you’ve got to make your calls, but your chances of success are less so than they are at other times of the year.
10. The Vending Business Cycle – Part 2
We’ve been discussing vending business cycles, and in part one, we covered spring and summer. So, what’s next.
Well, you know what comes after summertime, fall time right. We’re going to continue this conversation with the fall time on the vending business cycles and here’s one thing about fall time. I’m specifically talking about after Labor Day or more or less in September. It’s essentially full time encompasses after Labor Day until about Thanksgiving. Also, we’re talking about two different things. We’re talking about retail selling, and we’re talking about account selling which is two kinds of different sales aspects of the vending business. If you’re into account generation, there are different concerns than there are on the retail side. So we’ve been discussing the retail side first. Fall time is a very very strong time like the spring to sell product. You get a significant shift in weather. What you have are cold mornings and warm afternoons, and that lends to retail sales very strongly. Why? Because you can sell candy and food in the morning and you sell drinks in the afternoon. So, fall is the time of the year in our experience where a vendor can see the most significant sales volume come in during the fall although spring, summer, and fall are pretty level all the way across. In the spring and fall, you had a perfect mix of products. Summertime is largely drinks. And then in the spring and fall time, it’s back to snacks and soda.
One crucial tip to keep in mind is the changing weather. You have to change your product mix when it goes from cold weather to warm weather. You need to move into non-chocolate items that don’t mold quite as much and don’t melt. You also need to be asking your accounts do they turn the air conditioning off during the nighttime or over the weekends because a couple of days in a hot room can ruin the inventory in your machines or make them unsaleable. Chocolate has a bad habit of turning white. It gets crumbly and white, and it’s unsaleable at that point. This can easily turn to service calls or service complaints. This can also open the door for other vendors to come in and make sales calls because all of your stuff in your machine is old and out of date. It doesn’t matter whether it’s one item or all of them, they’re going to say it’s all of it in most cases. With that said, in the fall time, it’s a better time to sell than it is in the spring and the summer. As you may know, managers and people that are decision makers are in these accounts. They are out of their heavy production season. They’ve got everything’s running smoothly; at least they hope anyway. Everything’s kind of smoothed out. So it’s now an excellent time to start making your sales calls if you’re ready for account generation. That’s the best time because in the winter time is when the decisions are actually made. The best time to go selling in the vending account business is right before New Year’s because New Year’s is a natural point of delineation, a guy’s got to do.
And when you show up, or you’ve been there a couple of times over the year, and he’s looking at his “To Do” list, he’s got you saying “Hey! I need to call x y z.” They’ve been calling on me for a couple of months, and I want to see what they have to offer. So December, in particular, is a strong time to be selling accounts because New Year’s is a demarcation point. Even into January and as late as January 30 is a great time because it’s that new year’s resolution time. They want a new vending company. Retail sales on the other hand, generally after Thanksgiving, falls off to about half of what you’ll do the rest of the year mainly because there’s a tremendous amount of outside competition that comes in. You’re looking at snacks, sodas, punches, cakes, cookies, and turkeys on many tables in the break rooms. There’s all this outside food that’s coming in.
Along with that, money starts to get tight for most of our consumers. They are looking at Christmas. They have huge amounts of money that they’re going to spend on Christmas and throughout the holidays. They know what’s coming up. And conversely, with that come January. They start getting their credit card, and those sales fall off. They remain sluggish through January. They begin to come back in February. “February ugly” as we like to call it. But during this whole time, weather can play an issue too because if people get taken out on a weather day, they’re not at their place of business to purchase from your vending machines, so sales tend to be a little sluggish on the retail side in this time frame. So you’re not quite so busy doing your route. Go and make some sales calls.
This pretty much wraps up the business cycle, and the Getting Started in the Vending Business ebook. We hope you enjoyed it and found the information informative enough to consider taking the next step and getting started in the vending business.
Want to Start Your Own Vending Machine Business?
We at A&M Vending Machine Sales have helped thousands of entrepreneurs successfully get into the vending machine business.
We ship vending machines all around the world. We can offer trailer load (30 machines) discounts. Because of our large volume, our shipping rates are reasonable and you are welcome to call us for a free freight quote at 1-800-713-6217.
Get Started Today!