Tag Archives: vending machine placement

Vending Sales Networking

Vending Sales Networking

Vending Sales Networking is a company that already sells a service or product  to  a  potential customers to a potential account that you might want?    Uniform Companies, Office Supply Companies . Office Coffee Services, Staffing Companies, and janitorial companies.  If you just sit down and think about it I can name a few more such as landscaping companies, the Chamber of commerce and how about architectural  firms?.  When staffing companies are providing more employees, it may mean you need to service that account more frequently or if you don’t have that account with more employees might be worth pursuing. .Give all your network buddies  leads as well and it will be a win win situation.  Vending Sales Networking is a lot easier than beating the bushes by yourself.    Vending Sales networking is that extra set of eyes that might see a new customer just coming to town or just moving in.  Remember the first company that talks to the potential customer usually gets the business.

EPISODE TRANSCRIPT :

Tom: I’m Tom with the Vending Business Show here with Larry Towner who is a vending business consultant. He’s been actually run his own operation in the vending business for quite a while, a couple of decades and recently sold his vending business in 2012. So we’re happy to have him on the show today. Thanks for being here, Larry.

Larry Towner: Oh, I appreciate it, Tom.

Tom: Today we’re talking about Vending Sales Networking and  how the vending business works. A lot of times, people that are new to the vending business think they have to buy a vending machine first. But, what’s the most important thing to start with, Larry?

Larry Towner: Well, Tom, I always like to say that the first thing that’s most important in any business venture that you undertake is to do a little bit of planning, number one   . The second thing is before you go and buy equipment, how about have a place to put it? When I say that, what I mean is go out and do some sales and actually get an account first. This is where Vending Sales Networking is important.

Tom: Yeah. So, yeah, let’s say, what are some of the good places to find or to locate … What are some of the better places?

Larry Towner: Well, there’s all kinds of places. I mean, you see vending machines out there in the world, you see them everywhere from on street corners into businesses, retail shops. Some vending machines are becoming retail shops. This is kind of where we have to get into a little bit of the planning thing like we were just talking about. You can go into a planning situation, you kind of decide what do you think is going to be best for the for the business and to help you make money. Perhaps the reason you’re actually watching this video is just to find out that kind of information. So we’re here, you and I, we have these discussions on a fairly regular basis to discuss some of these things.

Larry Towner: So when we get into that planning thing, you should sort of develop an idea of what you want to do and then you decide what businesses or what the vending types of locations are going to do to do your best. That’s kind of a roundabout way around your question there, Tom. But in effect it’s the same thing. I can answer what the best locations are for me, but that’s not necessarily what the best locations are for you as one of our potential viewers.

Tom: Well, that’s a good point, Larry. So let’s just say if you were starting a vending business today, where would you … How would you go about finding locations? What would you go for?

Larry Towner: Well look, what would I go for? I’d be looking for areas where there’s growth in business and to that, while that sounds broad, it’s where you’re looking for. There’s less competition and growing businesses and things like that. In business cycle, they come in and out. They go through various different stages of growth. Right now we’re in a somewhat depressed real estate market or at least the construction industry and real estate is off a little bit, but it’s going to, it’s starting to make its motions back. So some of the things that I would be particularly looking for would be into accounts that might supply the construction industry and things like that, in the current, this is 2013 under the current environment. So those might be some things that I would be looking at. A lot of it’s going to depend on what are your particular ideas. Do you want to be in schools? Well, school vending is going to be there for quite some time as long as there’s school. So really depends on what your particular goals and objectives are.

Tom: Okay. Now let’s say you land a placement, you get a deal with the business or organization that wants your vending machines. What’s next?

Larry Towner: Well, you get this business, now you need to actually go out and it sounds like you need to go buy the equipment. Of course there’s probably a thousand choices on equipment. One thing that people need to understand in vending is is that you have to keep your expenses low. So if you’re new to vending, my suggestion is you go for refurbished equipment and you go to a quality supplier, someone that’s been doing refurbished equipment for quite some time. My particular choice is A&M Equipment Sales, which is probably where you’re looking at this video from.

Tom: Okay. So after you’ve gotten your equipment, then what?

Larry Towner: Well, then it actually comes time to actually install the equipment, that be a simple or difficult job just depending on the location. Usually, there are several people in a [inaudible 00:04:55] area or actually anywhere that can actually move equipment for you. I would suggest if you’re starting that you have someone that knows what they’re doing, move equipment, vending machines are heavy. There’s a lot of real tricks and moving vending machines that if you’ve been doing it for unfortunately 30 years, like I have, you know all of the tips and tricks to actually getting them through doors, how to do it without taking them apart and so forth and so on, but I suggest you just hire somebody to do it. There’s plenty of qualified people in any given market that’ll move things for you. You move it in, you’re going to set it up. At that point, it doesn’t walk into that account completely filled and completely working and completely priced out. Now, again, depending on where you purchased 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, so.

Tom: Right. So yeah, I guess, supplying your whatever products fit that particular business, you’ll have to find out what those are and find a way to learn what works in that particular machine, right?

Larry Towner: Well, one of the great things about that, Tom, is I think we’re going to do another video on that in a future installment, aren’t we?

Tom: Yeah, absolutely. We will get to that one.

Larry Towner: So say that so that you all come back and take a look, but we’ve got all kinds of tips and tricks that are going to come on to teach you what products you should be considering when you go and put them into a machine because a lot of it, it’s its own topic, but there’s lots of variety and lots of choices. So we’ll do that in another one.

Tom: Okay, great. Tell us a little more about what you do, Larry, and then we’ll sign off.

Larry Towner: Well, we do vending consulting for particularly for startups and also, but for people that are looking to maximize their operations, get the most money out of their operation that they have now and try to help them, give them some consulting services. We’re available at servicegroupinternational@gmail.com, if you care to contact us, that’s all one word. Servicegroupinternational@gmail.com.

Tom: You’ve been watching Vending Sales Networking at the Vending Business Show, a publication of A&M Equipment Sales.

For great vending machines for smaller accounts go to Dixie Narco 501E and Automatic Products 111

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How The Vending Business Works

How the Vending Business Works with An interview with Larry Towner, vending business consultant

How the Vending Business Works is well first thing that’s most important in any business venture is do a little planning. The second thing is before you go out and buy equipment, how about have a place to put it – go get an account first.

What are some of the better accounts for vending today?

I would look for businesses that are growing. Businesses that supply the construction industry in the current economic environment, but it depends on what you want to do – your goals.

When you land an account, what’s next?

Now it’s time to go buy the equipment and to keep expenses low I would go for refurbished equipment from a quality supplier.

After you buy your equipment, then what?

Have someone who knows what they are doing move your equipment because there are lots of tricks in moving vending machines through doors, etc. Then you’ll need to setup the equipment.

In a future video we’ll be covering what products to include in your vending machines that really sell.

EPISODE TRANSCRIPTS:

Tom: I’m Tom with the Vending Business Show here with Larry Towner who is a vending business consultant. He’s been actually run his own operation in the vending business for quite a while, a couple of decades and recently sold his vending business in 2012. So we’re happy to have him on the show today. Thanks for being here, Larry.

Larry Towner: Oh, I appreciate it, Tom.

Tom: Today we’re talking about how the vending business works. A lot of times, people that are new to the vending business think they have to buy a vending machine first. But, what’s the most important thing to start with,On How the Vending Business Works Larry?

Larry Towner: Well, Tom, I always like to say that the first thing that’s most important in any business venture that you undertake is to do a little bit of planning, number one. The second thing is before you go and buy equipment, how about have a place to put it? When I say that, what I mean is go out and do some sales and actually get an account first.

Tom: Yeah. So, yeah, let’s say, what are some of the good places to find or to locate … What are some of the better places?

Larry Towner: Well, there’s all kinds of places. I mean, you see vending machines out there in the world, you see them everywhere from on street corners into businesses, retail shops. Some vending machines are becoming retail shops. This is kind of where we have to get into a little bit of the planning thing like we were just talking about. You can go into a planning situation, you kind of decide what do you think is going to be best for the for the business and to help you make money. Perhaps the reason you’re actually watching this video is just to find out that kind of information. So we’re here, you and I, we have these discussions on a fairly regular basis to discuss some of these things.

Larry Towner: So when we get into that planning thing, you should sort of develop an idea of what you want to do and then you decide what businesses or what the vending types of locations are going to do to do your best. That’s kind of a roundabout way around your question there, Tom. But in effect it’s the same thing. I can answer what the best locations are for me, but that’s not necessarily what the best locations are for you as one of our potential viewers.

Tom: Well, that’s a good point, Larry. So let’s just say if you were starting a vending business today, where would you … How would you go about finding locations? What would you go for?

Larry Towner: Well look, what would I go for? I’d be looking for areas where there’s growth in business and to that, while that sounds broad, it’s where you’re looking for. There’s less competition and growing businesses and things like that. In business cycle, they come in and out. They go through various different stages of growth. Right now we’re in a somewhat depressed real estate market or at least the construction industry and real estate is off a little bit, but it’s going to, it’s starting to make its motions back. So some of the things that I would be particularly looking for would be into accounts that might supply the construction industry and things like that, in the current, this is 2013 under the current environment. So those might be some things that I would be looking at. A lot of it’s going to depend on what are your particular ideas. Do you want to be in schools? Well, school vending is going to be there for quite some time as long as there’s school. So really depends on what your particular goals and objectives are.

Tom: Okay. Now let’s say you land a placement, you get a deal with the business or organization that wants your vending machines. What’s next?

Larry Towner: Well, you get this business, now you need to actually go out and it sounds like you need to go buy the equipment. Of course there’s probably a thousand choices on equipment. One thing that people need to understand in vending is is that you have to keep your expenses low. So if you’re new to vending, my suggestion is you go for refurbished equipment and you go to a quality supplier, someone that’s been doing refurbished equipment for quite some time. My particular choice is A&M Equipment Sales, which is probably where you’re looking at this video from.

Tom: Okay. So after you’ve gotten your equipment, then what?

Larry Towner: Well, then it actually comes time to actually install the equipment, that be a simple or difficult job just depending on the location. Usually, there are several people in a [inaudible 00:04:55] area or actually anywhere that can actually move equipment for you. I would suggest if you’re starting that you have someone that knows what they’re doing, move equipment, vending machines are heavy. There’s a lot of real tricks and moving vending machines that if you’ve been doing it for unfortunately 30 years, like I have, you know all of the tips and tricks to actually getting them through doors, how to do it without taking them apart and so forth and so on, but I suggest you just hire somebody to do it. There’s plenty of qualified people in any given market that’ll move things for you. You move it in, you’re going to set it up. At that point, it doesn’t walk into that account completely filled and completely working and completely priced out. Now, again, depending on where you purchased 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, so.

Tom: Right. So yeah, I guess, supplying your whatever products fit that particular business, you’ll have to find out what those are and find a way to learn what works in that particular machine, right?

Larry Towner: Well, one of the great things about that, Tom, is I think we’re going to do another video on that in a future installment, aren’t we?

Tom: Yeah, absolutely. We will get to that one.

Larry Towner: So say that so that you all come back and take a look, but we’ve got all kinds of tips and tricks that are going to come on to teach you what products you should be considering when you go and put them into a machine because a lot of it, it’s its own topic, but there’s lots of variety and lots of choices. So we’ll do that in another one.

Tom: Okay, great. Tell us a little more about what you do, Larry, and then we’ll sign off.

Larry Towner: Well, we do vending consulting for particularly for startups and also, but for people that are looking to maximize their operations, get the most money out of their operation that they have now and try to help them, give them some consulting services. We’re available at servicegroupinternational@gmail.com, if you care to contact us, that’s all one word. Servicegroupinternational@gmail.com.

Tom: You’ve been watching the Vending Business Show, a publication of A&M Equipment Sales.

Check out our remanufactured Dixie Narco 501E Drink Machine

Finding Good Vending Machine Locations

Finding Good Vending Machine Locations ?   Perhaps a better question is what areas might you be most effective in by account demographic and account type?

The work force has shrunk and a lot of industries have down sized. How do you get the tactics to get accounts that remain profitable for you in smaller type accounts?

  • 50-100 person range with the right demographics
  • Be cognizant of your geography to limit drive time between accounts
  • What’s your service interval that makes the account profitable?

Examples of good small accounts:

  • Small logistics warehouses with lots of truck drivers coming and going
  • Knock on all doors in an industrial park for opportunities – get in one facility and you might get into all in the industrial park

What about saving money on the equipment?
Return on investment is important but consider operating costs and turn.

Episode Transcript:

Tom Shivers: Hi, I’m Tom with The Vending Business Show. And I’m here with Larry Towner, who is a vending business consultant and been in the vending industry for closer to three decades. He’s sold the majority share of his vending business in 2012. So thanks for being here, Larry.

Larry Towner,: You’re welcome, Tom. It’s always a pleasure.

Tom Shivers: Yeah. I noticed an interesting question in a vending group. Basically went like this: Finding Good Vending Machine Locations right now? And it was a good question because there’s a lot of people, a lot of vending operators who are struggling to find those. So I thought maybe you could help us figure that one out.

Larry Towner,: Well yeah. It’s a multi-tasking approach. Finding Good Vending Machine Locations. It comprises marketing and sales. Vending is largely a sales effort. So you want to focus in on your sales skills. Basically if you knock on enough doors, you’re going to get accounts. I think what this gentleman’s looking for is what areas might you be most effective in. And so, and meaning by account demographic and account types.

Larry Towner,: There’s a bunch of different ways to go about Finding Good Vending Machine Locations. Traditional vending has always wanted the 150 plus population of account peoples. Meaning that they have at least 150 employees there all of the time for, again, for traditional vending companies. And traditionally, that works for the models that they use for their traditional vending operations where you need larger facilities.

Larry Towner,: But Tom, what’s been happening to the workforce and the workplaces in America?

Tom Shivers: Yeah. Things have shrunk. You know, more people working from home. Things like that.

Larry Towner,: Yeah. So what we’re seeing is we’re seeing workplaces out there, particularly vending always was kind of a smokestack industry. It was done with a lot of industry and a lot of manufacturing and things like that. And a lot of those industries have gone away. And particularly, not so much gone away, but they’ve downsized. Like everything has downsized.

Larry Towner,: And so the number of facilities that have large numbers of people has been steadily declining. So how are we Finding Good Vending Machine Locations I guess the thing is, is how do you, there’s a couple ways to look at it, but how do you get the tactics to get new accounts that remain profitable for you in smaller type accounts?

Larry Towner,: There’s always been a huge market in the 50 to 100 person account range. And if the demographics are right in those accounts, they can be highly profitable. And I say demographics, and that’s age, sex, ethnicity, who actually is working in your account? Are they good vending purchasers?

Larry Towner,: And lots of times on those types of accounts, you’ll get a good mix. You’ll get white collar plus blue collar. Vending is largely a blue collar event. You’re looking for blue collar workers.

Larry Towner,: Examples of these types of accounts. If you, first off, let’s set the stage. If you’re gonna go after smaller accounts, you need to be very cognizant of your geography. And you might ask what do I mean when I say geography. You’re gonna want to limit the amount of drive time you have between your accounts.

Larry Towner,: The other thing in small account vending that you need to be thinking about constantly is what’s your service interval? How long between my stops makes it profitable for these accounts? And that issue sometimes has to be done by trial and error.

Larry Towner,: But in general, you can draw some, there’s some numbers and some equations we can use that’ll give you an idea of what your service interval’s gonna be as per the number of people that are in your account.

Larry Towner,: So between geography and scheduling, those are the two things that’ll keep you profitable in small account vending. You’ve got to have accounts that are close together. Because you don’t want to spend time behind the wheel, you want to spend time in front of the machines, filling machines and dealing with your customers.

Larry Towner,: So those two issues are biggies, but after that, the industries that are smaller that are increasing are things like small logistics warehouses where they have a lot of truck drivers that come in and out. And they might have 20 to 50 employees that work there. They might have another 20 to 50 truck drivers that are dropping product off and getting it ready for their distribution. Or they have 20 truck drivers that are out on locations.

Larry Towner,: We had a bunch of these actually in retail stores. There were some retail furniture stores that gosh, you look at the furniture store and you say, “Boy that’s not much of a vending account.” And if you looked at the number of people that actually worked in the retail side of it, it wasn’t much of a vending account.

Larry Towner,: But they also had about 12 trucks on the road every morning with three guys on each truck. So what happened was is you didn’t really realize that unless you were out doing your sales prospecting at 6:00 in the morning like I often did. Where I’d be driving through industrial parks or I’d be driving around and I’d see all these trucks parked there.

Larry Towner,: Well if I saw all these trucks parked there, I would stop in just to see what was up with all those trucks. So that’s one of the tactics that I used. But that is the kind of accounts that are out there. They’re somewhat plentiful. And they’re generally very close together.

Larry Towner,: I had a habit of when I would go out and I would go selling, I would knock on every single door in an industrial park. I would go door to door. Do what I call walking and talking. And I would hand out business cards. And I would just be looking for any opportunity.

Larry Towner,: And sometimes you would get into one facility in a small industrial park, and by the end of the year, you end up with ’em all. Because they’re having terrible service, and then they start to see your trucks and then employees talk to employees. And the next thing you know, you’re getting an opportunity to service a different company. And you end up with a really nice little piece of business where you go spend one day every two weeks in that industrial park and you walk away with decent profit.

Larry Towner,: The converse of that is you’ve got one on this side of town and one on that side of town and you spend all your time driving back and forth and you don’t make any money doing anything.

Larry Towner,: So a couple of quick tactics there on how to go out after small account. Traditionally what they call small account vending.

Tom Shivers: One other question.

Larry Towner,: What other questions, Tom?

Tom Shivers: About that. There’s sometimes. So like this one fellow responded to this question with he’d located 20 Sega Office Deli Two’s on small locations. And I guess he was saving money on the machine. What is your take on that?

Larry Towner,: Well it’s like anything. It’s all relative. If you’re looking for return on investment, which is a financial concept, but you have this amount of equipment that you’re gonna put into a location. And you’re gonna spend whatever it is you spend on that equipment. And you expect to get a return on your investment. Meaning if you put 1,000 dollars out there in the field as a tool, it needs to be generating whatever it is you deemed to be profitable every single day so that you get a return on investment. If you get a machine for free and it works. Key phrase being that it works. And you can place it, your initial investment is zero so your return on investment is unlimited.

Larry Towner,: Now that’s hard to get. You know, you won’t get ones that are free. But then you also have your operating costs, meaning for every piece of product that you end up throwing, you lose your profitability if you have to throw product away. So you have to look at it more as, it’s not just placement, it’s also turn. Turn is sometimes more important than actual placement. How many times you roll your inventory over in a year determines your actual profitability in the end. And also determines your profitability on that particular set of machines.

Tom Shivers: Okay. Yeah. So.

Larry Towner,: Did that make sense? Did you understand what I said there?

Tom Shivers: Yeah. I think so. And the equipment is, sometimes can be a hazard if you don’t get the right stuff up front.

Larry Towner,: Correct.

Tom Shivers: So tell us a little more about what you –

Larry Towner,: And it can cost you the wrong equipment placement. Well I’m in the consulting business. What I do is I take questions like these and I help people solve these types of problems. How do you go about getting new accounts? How do you maintain the accounts that you have? How do you stay profitable? How do you deal with other issues? These are all things that I work on. I’m available at servicegroupinternational.com. Just drop us an email.

Tom Shivers: Thanks, Larry. And you’ve been watching Finding Good Vending Machine Locations  on The Vending Business Show, a publication of A & M Equipment Sales.

You can Look at a great snack machine the Automatic Products 113 Snack Machine

10 Curious Places To Find A Vending Machine

Vending machines have come a long way since the first one was invented in ancient Egypt, when a mathematician invented a device that dispensed holy water in return for a bronze coin.  Here are 10 Curious Places To Find A Vending Machine

First Up on our 10 Curious Places To Find A Vending Machine Is  Vending at the bottom of a ski slope. Reminds us of our  AMS 39 “Outsider 

 

 

Vending machine (1)
Japan is the kingdom of vending machines  At slightly over 5 million nationwide, vending machines are everywhere in Japan.They are on nearly every block in Tokyo and dotted across even the most spartan landscapes in the country’s vast rural expanse 
vending machines stand in a line.

 

The person who thought of the vending machine is a genius for 2 simple reasons: you don’t need to hire personnel to man a vending machine like you would a store, and this keeps things in stock and available for the masses, 24/7. While most of the vending machines you are used to would dispense coffee, soft drinks, packaged food and snacks, these days we can find a lot more variety being offered. Milk 24/7 – Vend-A-Moo

Vend-A-Moo

 

Another corner in Japan to get your vending done

Vending Machines in Kyoto

 

Possibly the most remote vending machine in Iceland

” Inside the hut is a vending machine and a guestbook to leave comments about this hidden tourist attraction.”

The Greatest Vending Machine in the World!

 

Hikers at the Mid-Hike vending machines

Mid-Hike Vending Machine?

 

Green tea anyone?

vending

 

Sometimes you just gotta have a Pepsi

Vending Machines?

 

Behind bars

Vending Machines Behind Bars

While you’re thinking about it, if you’d like a good deal on a vending machine we’ve got that too.

Vending Accounts – Post Sale

AN INTERVIEW WITH LARRY TOWNER, VENDING CONSULTANT.


An interview with Larry Towner, vending consultant.

Larry is a veteran vending operator who has had success in all areas of the vending business. Listen in as he answers another good question.

“Ok, so somebody says yes, I want your vending machines in my office, then what do I do?”

With vending accounts This can make or break a lot of vending companies.

B2B sales involves an agreement, be careful what you agree to do.

A good rule of thumb is to under promise and over deliver.

Give yourself enough time to arrange the move.

Have everything ready to go ahead of time.


EPISODE TRANSCRIPT:


A VENDING ACCOUNTS CONVERSATION

Tom: All right. Well, do we have time for another question here?

Larry: Sure we do.

Tom: Okay. Well, yeah. Let’s see, somebody says, “Yes,” and they want … They’re saying, “Okay. I’m ready to get started with your machines.” Then what do you do?

Larry: Yeah. This is a great question because this can make or break a lot of companies. If you go out and you have to be real careful in your presentation as to what exactly you’re agreeing to, I guess I want to say.

Larry: This is a business to business sale in general. It’s a business to business sale. You’re going to be placing your business inside of somebody else’s business. That can get a little … I don’t want to say touchy, but people want the right things put into their business. They have a preconceived notion of exactly what’s going to happen and how things are going to go. You have to be very careful with what you say when you actually do the sales presentation and what you’re agreeing to in your vending account.

Larry: As somebody says, “Yes,” so here’s the thing. This is one of my rules. I was taught this in selling many, many, many years go. That’s under promise and over deliver. That’s one of the first things.

Larry: So whenever I’m talking to a customer and the customer says to me a question like, “Hey, that sounds great. We’d love to get started right away. When can you move the machines in?” I always counter back and say … I usually ask questions with a question. It’s an old sales technique. But I say, “When do you want them?” And they say, “Well …” That’s the first question. That’s the first question. It’s like when do want them because if they have somebody in there, they’ve got to make arrangements to get them out of there and things like that. All of this takes a little bit of time.

Larry: The second thing is, “Do you have your equipment ready? Is it ready to go?” If it’s not ready to go, how much time is it going to take you to get your equipment ready to go and your inventory and all the things that you need?

Larry: As you know, these vending machines don’t fill themselves and walk into the vending account. You have to have a means to move them. If you don’t happen to have the equipment that it takes to move vending machines, you’re going to have contact one of your local suppliers who will probably have several choices of machine movers for you to contact so that he can move equipment into the account because it’s not easy. Soda machines weigh 600 pounds and getting one through a door can be a very interesting experience. I’ve done it many, many, many, many times. I did move most of my own equipment.

Larry: One of the first things is give yourself enough time to get done what you need to get done. That is arrange for the move. Make sure if you’re trying to schedule somebody else’s move time, be really, really careful of when they can get in. We always told people because we never moved machines in the rain. We say, “We can do it at such and such a date provided it doesn’t rain.” We always gave ourselves an out because if we did have inclement weather, rain or snow actually, too. But anytime that you’re moving big piece of equipment, you got a safety factor you have to worry about. Anyway, that’s just a little bit of an aside. But I always gave myself enough time.

Larry: Then what I would do is I would go in and say … I would have the equipment ready to go and hopefully I would have it ready to go much … Probably a week before they actually needed it. At that time I would call the customer and I would just say, “Hi, Mr. So-and-So. This is Larry from, my company’s name.” And I’d say, “We’ve got your equipment ready. When you’re ready for us, we’ll be there.”

Larry: Sometimes what you’ll find is you say, “The guy came in yesterday and picked up the equipment.” So he is now without vending and your equipment’s ready. You go and you move it in. Now you bring your equipment in a week before you were supposed to and because the customer actually has the need for it at that time, you’re already starting off a long way towards getting very positive referrals because you delivered before you said you would.

Larry: If you think about that, Tom, when you do business with somebody you like to get a little more out … If you make a deal and you’re satisfied with the deal, but they bring you a little more, doesn’t that mean something to you?

Tom: Yeah. I had the expectation of getting what they said, but then they gave me something additional? That’s always cool. You got to love that.

Larry: Yeah and what that does is, is that builds the confidence in you as a businessman from your company standpoint into their company. He says, “This guy’s all right.” Even if you start off on that foot. Now, you come in a week late, then what happens?

Tom: That is like, “Uh-oh.” I’ve lost my time. I’ve got to reschedule things. Stuff like that.

Larry: Exactly. Exactly. That’s where when somebody says, “Yes,” it’s critical that you absolutely make sure that you’re i’s are crossed and t’s are dotted. I mean, your t’s are crossed and your i’s are dotted. I went backwards there.

Larry: But just you want to make sure that you can deliver at least on time. Now, in a worst-case scenario, say, who knows? Something happens and you can’t get the equipment. You’ve planned for the equipment to be there two weeks from today. In your mind you say, “No problem. I’ll have it there for a week from today,” but something goes wrong. You don’t get it there until that week. At least you’re still on time.

Larry: That’s why you want to as we say, promise, extend out how long you can do it, but deliver it early. Promise … Make your promises small, but deliver big as it were. If you do that, you’re on the right foot.

Larry: One of the other good tricks in the vending business is to at the time that somebody says, “Yes,” you say, “Hey,” and you make up a form. It’s really just a real simple form. You take your inventory list or what you think you’re going to sell there. Just make up a list and say, “Hey, can you pass this around? We want to make sure that people get what they want.” You put your product list on there. Your Lay’s potato chips and Hershey’s candy, Snicker’s candy bars and M&M yellows and things like that. You write all that down. They just make check marks by it. “Yeah, we want this. Yeah, we want this. Yeah, we want this.” That’s a really good tip. That starts you out on the right foot. These are all marketing concepts, by the way. This is marketing. This is not sales. This is actually vending machine marketing.

Tom: There at the bottom, do you put a little blank line for add your own or something?

Larry: Absolutely. You are always open to take suggestions. Doesn’t mean they’re going to get it. But you’re always open to take suggestions because they might have one item there that you’ve never thought of that you buy and you find out it sells really well there. You take it off to another location. You find out it sells there. All of a sudden you’ve got a sleeper unit that generates you extra sales that you might not have known about. We’ll get into some of that. That’s a lot more of what I call machine marketing.

Larry: Marketing at the machine level because you can market at the machine level meaning your product selections and things like that is a different type of marketing. That’s how you generate the most profits out of your machine.

Larry: Just from the general account sales standpoint, you put that stuff out and it helps to build your credibility. It also gives them what they want. Giving people what they want is how you make sales. You don’t walk in and dictate to them because they’re going to say, “Right. See yeah.”

Tom: Yeah. Good stuff thanks for sharing, Larry. Tell us a little about your consulting business.

Larry: Well, like I say, some of the tips and tricks that you’re seeing here are a lot of what we offer in our consulting business. We specialize in making vending companies very efficient from a sales and marketing standpoint and how to generate maximum profits both operationally and via the various different marketing means. That’s what we do.

Larry: We are available at ServiceGroupInternational@earthlink.net. If you have any questions and we are working on a website that will be up pretty soon. At least we hope.

Tom: All right. And you’ve been listening to the Vending Business Show. A publication of A&M Equipment Sales.

Vending Business Sales Methods

Vending Business Sales Methods  An interview with Larry Towner, vending consultant.

Vending Business sales Methods  Larry is a veteran vending operator who has had great success in all areas of the business.

Listen in as he answers a question from someone just getting started in the vending business:

“I am starting my snack/soda combo vending business. I have machines with 19 snack and 5 can drink selections. I must have faxed 500 businesses so far in the Arizona area and I can’t get one location. I need someone to help me find businesses in my area that need vending machines that I can service for free for them.”

  • Using only one method of marketing is not a good idea.
  • Larry describes his method of marketing.

EPISODE TRANSCRIPTS:

 

Vending Business sales Methods  Tom Shivers: I’m Tom Shivers with the Vending Business Show here with Larry Towner who has been in the vending business for a number of years and has even sold the majority share of his vending business a few years ago. He’s a consultant now and thanks for being here, Larry.

Larry Towner: Thanks, Tom. It’s a pleasure.

Tom Shivers: Yeah. Well, I wanted to kind of review what we went over last time real briefly. We were talking about getting new accounts or Vending Machine Sales Methods  . You mentioned a couple of good tips there, like a plan to land new accounts first of all. Then we talked a little about referrals and you said, “Hey, you need to know the key people in your accounts, those middle managers.” Then you went on and talked a little bit about focusing in on a specific area of geographic area for your operations and how that can influence friendly competitors and sharing leads with them. Thanks for that … for those tips. I also came across a really interesting question from a fellow who’s kind of struggling at a follow-up, how do you get new accounts question. Let me tell you what he’s asking here. He says, “I’m starting my snack soda combo vending business. I have machines with 19 snack and five can drink selections. I must’ve faxed 500 businesses so far in the Arizona area and I can’t get one location. I need someone to help me find businesses in my area that need vending machines that I can service for free for them.” He’s kind of … You see what he’s asking for there, Larry?

Larry Towner: I have an idea of what he’s asking for. Yes, I do. It sounds like this is … We had mentioned in a previous show just a little bit about not purchasing equipment until you have accounts. This is kind of an example, it sounds like to me, of a guy who’s gone out and bought a bunch of equipment, hasn’t really done any market research before buying the equipment and now has a whole bunch of machines sitting in his garage that he can’t get out onto location.

Larry Towner: One of the first things I noticed just in this question is that he talks about really only one way of generating business and that is he’s often faxing things. Now, Tom, I wanted to ask you a question. You run a business and I assume you have a fax machine, ’cause most of us do-

Tom Shivers: Sure.

Larry Towner: What do you do with those unsolicited faxes that come into you?

Tom Shivers: Well, I immediately grab them up, read them, and call the number on the fax.

Larry Towner: Is that on the way to the garbage can or after? Right. What I hear when I see this is I see somebody that it kinda sounds like this fellow’s been off to one of these ball … we call them ballroom or blue sky promotions where he’s gone in and they’ve told him, “All you have to do is fax off these things and they’ll be beating a path to your door. If you send 500 out, you’ll be guaranteed to get some results.” Well, the … While the faxing of things does work, it’s not probably really the most effective method for selling and or marketing. It is a one-sided thing.

Larry Towner: First off, actually generally costs businesses money. When you cost someone money, they really aren’t too responsive to your offer. It’s kind of like in today’s world, faxing really … blind faxing is almost unheard of. I would never blind fax myself. I might do blind emails where I’m sending it off, but emails don’t cost anybody any money. If they have interest in it, they might respond to it.

Larry Towner: Eventually if he sent enough faxes, he would get a response. I don’t know that the numbers would be, but 500 is really, really not that many to send out. I know when they used to do direct mail, if you mailed something to somebody, you were gonna look at a one to two percent response if everything was right. That means, if the offer that you had was perfect to the market and it was a perfect statement and everything was written and it was on the right paper and it was this and it was that.

Larry Towner: There’s hundreds and hundreds of items that go into doing direct marketing like that. If everything was right, you’d get a one to two percent. Which means, on 500 responses, if you got two percent you would get one. That’s really all you’re looking for at that. On faxing, it’s gonna be even less than one percent. Tom, you do a lot with internet. If you send out 50 thousand emails on internet, what kinda response rate do you get?

Tom Shivers: Well, if I’ve taken the time to really understand my audience on that list and try to answer the questions I know that they’re asking, then I might get a 20% open rate. That’s an optimistic number, actually, on email open rate. An open rate is just that, it’s just an open rate. It’s not a conversion rate-

Larry Towner: Right.

Tom Shivers: Which is much more effective. If you’re getting … Say you get 20% open rate, then you might get a five percent click rate off of those that open-

Larry Towner: At of that, if you’re soliciting, you’d be lucky to get one. Would that be right?

Tom Shivers: Yeah.

Larry Towner: You’d be really lucky to get one customer out of that. That’s the kind of things that we … that when we talk about that, a lot of it’s just statistics. When we study sales and marketing, sales is strictly a numbers game. If you’re gonna do sales, it is completely you just have to hit more doors. Now, the … As they say, one of the things in the sales game is is that what’s the easiest thing to get rid of? It’s a piece of mail or a fax or an email. That’s the easiest thing to get rid of. Those go right in the trash. The second easiest thing to get rid of is a phone call. You say, “Goodbye,” and you hang up and that gets rid of it.

Larry Towner: Getting rid of bodies, we’ve found, has been a little bit more difficult, meaning it’s been said that trying to get rid of a body is rather difficult. When you’re standing face-to-face with somebody, you tend to get a little better response than you do if you don’t. When we go about doing sales and marketing, you really have to go out and you actually have to knock doors. You have to go and you have to go talk to people.

Larry Towner: Some of my tricks on doing that are that you just ask everybody you know, “Hey, do you have vending machines?” It’s really that simple. Almost everybody has a vending machine where they work. “Well, are you happy with who you have now? Is there anything that could be made better?” You target in on those things and you ask anybody. It really doesn’t matter. I always just ask people that I meet walking into the business. “Hey, do you have vending machines?” “Yes, we do.” “Are you happy with it?” “No, the guy never puts in what we want,” or, “The damn things never work,” or whatever, any number of answers.

Larry Towner: Every once in a while you get, “No, we’re really happy with them. They do a really good job.” and blah, blah, blah. Then, what you’re doing is a bit of marketing research, really. You’re finding out who your competitors are and what they do and how they do it and do they do it well. When you go in with that kind of information, and you can pick that information up from anybody that you talk to that works at a business or is related to that business at all. It can be the janitor can give you that information. They’ll tell you the people that use the vending machines, if they’re dissatisfied with their service provider or their company that comes in and does their vending. You’ll find out about it pretty rapidly. You’ll also find out if they do a good job pretty rapidly. They’ll usually, even if they do a good job, they’ll still listen to you for a little bit unless it’s the owner’s brother in law or something like that and then pretty much you’re out the door.

Larry Towner: You’ve gotta go out face-to-face. You can do all the faxing and all the emails you want, but if you’re not out knocking the door, too, every day, you’re really not gonna win. That’s not a lot of fun and you’re gonna face a lot of rejection. We always say my conversion rates when I go out and do sales calls is about one in ten. I know that when Larry Towner goes out and he knocks 10 doors, he usually gets one account. That’s something, now, I’m a little more experienced than most people so an average person, if you go knock 20 doors, the chances are you’re gonna get an opportunity to get one account. These statistics just come from years and years and years of selling. An inexperienced person is gonna have a conversion rate of about one in twenty.

Larry Towner: Now, does that mean that you go out, you knock that … here you go. You knock on the first door. You get to 19 and you say, “Wow. I’m gonna knock this next one. It’s gonna happen.” No. It never happens that way. What happens is is you’ll go out and you’ll make 50 sales calls and your last three you’ll get the accounts. It always seems to be that way, or the last … or, it’ll work conversely the opposite way. You’ll go knock the first door, you’ll get an account, or the second door, one of your very first ones. Then you won’t get two until the very end. You have to stay at it.

Larry Towner: This is amortized. This is looked at over big periods of time. If you make 100 sales calls in a week, you’re pretty much gonna get about 10 accounts. When I say that, that’s of all sizes. It’s not being specific. If you’re going after big accounts, it can take you years to get big accounts, years and years and years it can take you. You have to be after them every three months or so, and that’s when you get into real professional selling if you’re going after a thousand person plan or something like that. You’re gonna have to be extremely professional. I’m just talking about the average business out there, with anywhere to 50 … 20 to 100 employees. You pretty much can knock the doors and they’ll at least give you an opportunity to make a vending account.

Tom Shivers: Okay. No. This fellow obviously is just getting started in the-

Larry Towner: Right.

Tom Shivers: Vending business and you definitely addressed a lot of the questions that he is freaking about right now. In a previous show, and it was how to get started in the vending business. It’s a previous show that we did. I would have him go check that out and anyone else who wants to understand more about the concept of sell before you buy, which you went into real well there. You’ve been listening to Vending Business  Sales Methods  at the Vending Business Show, a publication of A&M Equipment Sales.For more sales blogs  Vending Sales Secrets

Placing Vending Machines

Placing vending Machines  An interview with Larry Towner, vending business consultant.

Placing Vending Machines  Larry reveals numerous tips for identifying a good vending account. Listen in as Larry describes:

  • Identify what type of accounts you want to be in
  • The sales plan to land new accounts
  • Referrals are the life-blood of your business, so know and take care of the key people in each of your accounts
  • Minimize windshield time by focusing on a specific geographic area for your operations
  • Just because you have a location doesn’t mean you should have a vending machine there
  • It’s a numbers game that is focused on ROI, otherwise you lose
  • Call on friendly competitors to share leads in the areas where you do not focus

EPISODE TRANSCRIPT:

 

Placing Vending Machines  Tom Shivers: I’m Tom Shivers with the Vending Business Show, here with Larry Towner who has been is the vending business for many years. Before we get going to far I just wanna point people over to the blog where you can see more podcast and the Vending Business Show, it’s amequipmentsales.com/blog.

Tom Shivers: Larry has been in the vending business for many years and he sold the majority share of his vending business a few years ago, today he provides consulting. And last time, well be fore we get going there, Larry thanks for being here.

Larry Towner: I appreciate it Tom.

Tom Shivers: We talked about the vending business, whether it’s a reliable venture or not and got into a few questions like what’s the history of the vending industry and you’re pointing out it’s a numbers game and we also got into the question of how would you know you’ve got a good location for a vending machine and you gave a lot of good tips on identifying a good vending account. What are some other good tips for finding a good vending account or a good location?

Larry Towner   Placing Vending Machines  : Well good vending accounts are, I wanna like, any business. It’s really more or less a sales and marketing effort. In the vending business you have two different areas that you do sales and marketing. One is the end consumer which is the person that actually purchases the product that you actually get your income from.

Larry Towner: But before that you have to actually do what’s called place the machines and in the process of placing the machines you have to create a marketing plan, we’ve already talked about doing a business plan. But there’s a marketing plan that goes along with that and that is what type of accounts do you wanna be in. And when I say that is, pick up an account that you have an idea of what it is that you wanna be. Do you wanna be in the amusement park because, do you wanna be in the apartment business, do you wanna be in the commercial business where you’re in people’s offices or their plants, do you wanna be doing street vending? There’s a very large number of types of accounts that you can get.

Larry Towner: So the first thing you do is you kinda decided where you wanna be and what you think you’ll be successful at. And then you go out and you start a sales process on getting these accounts. And a sales process is as simple a walking into an establishment or walking into your potential prospect of where you wanna place your machines and basically asking a few questions.

Larry Towner: I’m big in my sales processes to ask a lot of questions about what they have now and are they happy with it and how is their pricing. And I do things like I look at their machines, I wanna see what they have and sort of products they’re running and things like that. So that’s the beginnings of an actual sales process and we’ll talk about sales and marketing through this whole series of blogs or podcasts, I guess, that we’re gonna do because sale and marketing is the crux of all business really at this point.

Larry Towner: And you have to learn, if you’re not comfortable selling, you have to learn how to sell a little bit. Now that doesn’t mean that you go out and you become a professional salesman, what it means is if you just get comfortable with some of the basic sales steps that it take to get business.

Larry Towner: One of the big things I would say is consistency. And one tip that I tell a lot of people that aren’t sales people in general, is look, you don’t have to go talk to 25, 30 people in a day. A true professional salesman needs to talk, in the neighborhood, needs to talk in person to 10 people and he needs to talk on the phone anywhere from 50 to a 100. So you don’t need to do that necessarily. You might do that in your initial stages of your business, but I always say once you get yourself up and running and you’ve got yourself a few accounts, if you can do as little as stopping and seeing one or two people when you’re starting in a day, and as you get busier and busier it’s more like one or two people in a week and sometimes even one or two people in a month.

Larry Towner: At the end of my run in my vending business I would spend about three whole days a year selling, that’s all I needed to get me enough business to replace whatever I had lost or what had gone out of business or what had just needed replacing in a year. So at the end of my full-time vending career, I guess I wanna say, I’d sell three days a year, which is pretty nice actually.

Tom Shivers: Yeah, that sounds very convenient and I assume if you’re doing a good job you may have some residual from referrals.

Larry Towner: Referrals become a huge portion of marketing effort. What happens is, a lot of what happens is, is you’ll get key people in your accounts and the key people are, they’re just your end consumers and as long as you take care of them, you’re there and you’re talking to somebody in the break room and they ask you for something and you take care of them and you get them the product that they want or I give them a refund because they one that was bad or whatever, any of the number of things that encompass taking care of your customers and they remember you.

Larry Towner: Well they switch jobs, and they go from ABC company to XYZ company, and they get in there and the vendor that’s there isn’t doing as great a job, and they remember you or they call somebody in their former company to get your phone number, and you’ll get a huge amount of business that as long as you take care of your customers. And so it’s that, it’s also that business owners talk. Gee, I’ve got this vending guy, he’s just not doing it. Well geez, my guy does a good job, same thing, here’s his number.

Larry Towner: Really I also got more business from my end users. They would go from place to place and they would drag me in with them. Especially mid level managers, in general, the people that you deal with a lot, they’ll take you with them. Even end users, we do a lot of stuff with truck drivers and truck drivers are job jumpers and we would end up with going from this trucking company to that trucking company, to this one to that one and it all would be one or two people and they’d just be moving around and taking us with them and then we’d go in and give great service and we wouldn’t lose anything. So referrals do play. They’re really the life blood of your business.

Tom Shimmers: Yeah. It sounds like as long as you’re providing great service and you’re getting along with the mangers there, you’re gonna get referred by other … You’re gonna get referred out.

Larry Towner: Yeah, if you’re doing it right you will get referred out. There really is no doubt about it and it’s not all that difficult to do really well, we’ll go into that on a another show sometime, just some tips and tricks on the actually operate in a vending account pre say, what od you do when you actually show up, actually what do you do when you get there.

Larry Towner: We spent, I don’t know, 20 years figuring it out and basically we took all of the tips that we had learned from every vendor we had ever come in contact with which is a very large number of vendors and some from other countries and other states as well. So we tried to come up with a system that works really well and then we also list on the national [inaudible 00:07:37], but we’ll talk about that ina future show, that’s a whole show in and of itself.

Tom Shimmers: Okay. Well yeah, getting back to the good location for a vending machine, I know you were going over some of the things to avoid and the things you oughta be looking for that gives you a good indication. I imagine you have to say no a certain amount of times to stores or places or locations who really wanna a vending machine there but just aren’t a good fit.

Larry Towner: Yeah. It happens relatively often. There’s a large number of factors that go into choosing a vending company. Much of it goes back to your initial planning. We set ourselves up in kind, I’m gonna say geographical areas, we didn’t wanna operate outside of a specific radius from our main base of operation because for driving reasons, windshield time is unproductive time. And so our job really … Your most productive time is when you’re actually there filling machines, taking care of customers and selling product basically which is what filling machines is actually all about.

Larry Towner: So we always worked in a geographical basis. And probably our biggest reason for turning down businesses, we’ll get referrals from places that are outside of where we deem our area of operation. If it’s a single account that’s way across town and unless it’s extremely large it just doesn’t pay to go do a small account or even a medium size account if you have to spend 45 or 50 minutes in the vehicle because the other side of it is that you will have service calls and so it’s 45 minutes out and 45 minutes back just to unjam a coin or unjam a dollar bill.

Larry Towner: So that would be the biggest reason why we say no. The other ting that does come in is everybody thinks that just because they have a location that they can get a vending machine. And this is kinda something that a lot of the … Well a lot of vendors have done it to themselves. We’ve done it to ourselves in the vending business. Not everybody can justify having vending in their locations. And it has been, in the past, very much the case that if you got a phone call, somebody would take the account.

Larry Towner: Fortunately, I guess, in this tough economy, that is starting to be less and less and in fact even Coca Cola and Pepsi won’t place machines everywhere like they used to anymore. And when the big boys won’t do it it means that the small guys should be paying attention and should be understanding why not to do it.

Larry Towner: And basically it comes down to return on investment or gross sales or however you wanna look at it, you can’t just, if you have two people, you can’t place a machine there or if you have five people that won’t eat, you can’t place a machine there. You just won’t do enough business to justify your costs. It’s really not a magic formula, it’s just a numbers game and that’s what people don’t do. They go oh yeah, I put it in, I drive by there every day. Well you drive by there every day but if you go there every six weeks or every two months and you pull a 100 dollars out you’re really not paying to even have it there. You’re actually paying to have it there by the time you count your maintenance on it and your wear and tear on the equipment.

Larry Towner: So those are some of the things that you kinda have to avoid or reasons why you would turn down an account. Basically it’s not big enough, it’s outside your geographic area.

Larry Towner: Back on obtaining accounts. One of the things that I did is I had a lot, I called them friendly competitors. And what they are is they would be people that were in the vending company because I was primarily a small account vendor, had some mediums, and had a couple of big accounts, but primarily small account vendor, and what I got to do is I got to know some of the vendors that were around town that worked the other areas that I didn’t work because Atlanta is a rather large city and I basically broke it up into about four or five quadrants and I got to know a few guys that if I got an account, I was up on the north side, if I got an account call on the south side, I’d call up my buddy down there on the south side and say hey, I’ve got a lead for ya and it’s here, and I’d give them the description and who to talk to and all that sorta thing.

Larry Towner: And then they make the call [inaudible 00:12:03] but what ends what happening is if you do that with somebody and it’s somebody that you can trust, he will start sending you leads as well for the calls that he gets on the north side or however your city is laid out or however your area of operations are laid out. But that worked really well. It’s kinda like a referral, it’s basically a referral, but it’s another way to generate leads and plus you get to learn a little bit of the system if you get talking to somebody, how do they do business?

Larry Towner: And you learn what works for them, what doesn’t work for them. And then you’ll also find, in my case anyway, I always kinda had a thing that I knew the guys that I chose did business the way that I did business and so I very rarely, we rarely traded accounts, very very rarely did I ever take one of his or he takes one of mine.

Larry Towner: Usually if that were the case the customer was the determining factor not the other company. And I say that because a lot of people say you’re talking to competitors, that’s crazy, they’re gonna steal your accounts. And I’m like well, no not really because it’s out of the area of operation, they don’t wanna drive far. We would occasionally trade accounts right on the fringes but usually that was driven by the customer, not by the other company. Meaning, because they would be on our fringe of operation, our service level wasn’t quite where it could have been just because of the distance involved. So anyway.

Tom Shimmers: All right. Well Larry thanks for sharing. Tell us a little bit about your consulting business.

Larry Towner: Well we do consulting.

Larry Towner: We basically, if someone’s interested in getting in the vending business, I like to work with new vendors and what I like to do is make sure that they understand what they are getting into. We try to be pretty reasonably priced.

Larry Towner: We can do everything from operational to sales and marketing to product development, business plans, the whole thing. We can take you from start to finish, give you some ideas of what kind of equipment you need or what kind of equipment works and what’s cost effective, what’s not cost effective. We’re trying to help everybody make money is really what we do. And try to be as efficient as possible.

Larry Towner: You need to be really efficient in vending to be really profitable. And so it’s very helpful to have somebody that kinda knows the ropes and can give you the tricks and that’s what we do.

Tom Shimmers: And people can reach you at, what’s that email address?

Larry Towner: Servicegroupinternational@earthlink.net, one word.

Tom Shivers: Okay, great. And you’ve been listening toPlacing Vending Machines at  the Vending Business Show, a publication of A&M Equipment Sales.  More Vending Blogs  New To The Vending Business?

Vending Machine Placement Opportunities


AN INTERVIEW WITH LARRY TOWNER, VENDING CONSULTANT.


Larry is a veteran vending operator who has had great success. Listen in as he answers a few questions:

ABOUT VENDING MACHINE PLACEMENT

Larry discusses vending machine placement with tom shivers and answers questions about the following categories:

  • The history of the vending industry
  • The business hasn’t changed that much since it began in the 50’s
  • It is a numbers game

How would you know you’ve got a good location for a vending machine?

  • Tips for identifying a good vending account

Larry can be reached at servicegroupinternational@earthlink.net.


EPISODE TRANSCRIPT:


Tom shivers: I’m Tom Shivers with the Vending Business Show here with Larry Towner who’s been in the vending business for many years and sold the majority share of his vending business a few years ago. He mostly provides consulting now, and in the last show, Larry talked about how to start a vending business. So, thanks for being here, Larry.

Larry Towner: Thanks, Tom. It’s a pleasure.

Tom shivers: Yes, some of the things you went over last time, just briefly, were writing down a business plan, defining your goals, getting an understanding of the numbers, the profit, how much you want to make per machine so you can get to your goal, and you talked a little bit about a part-time scenario. You went over a few sales and things like doing sales calls and getting an account first. Any other tips you want to talk about?

Larry Towner: Well, that’s a good place to start. I think that most of those tips that we gave in the previous shows, really, are great places to start, and I really think we don’t have too much to add to that at this point.

Tom shivers: Another thing we were gonna talk about was is vending a reliable business venture.

Larry Towner: To answer those questions … Well, finish your question there, Tom, for me, and we’ll see where we go with it.

Tom shivers: I mean, is it something that is sustainable? Is it something that is worth the time and effort, and if it is a fit for you, how would you know? What are some things from a veteran vending business operator that would tell us that?

Larry Towner: All right, well, that’s a great place to start. Let’s just take a history lesson on the vending business, and that will give us an idea of how reliable … Basically, we’ll start off with is the market stable. To give you an idea, vending started in the 30s, really, is when it started. It was very rudimentary at that time, and it really exploded in the 50s and into the 60s. And it was in the 60s that there was tremendous growth in the vending industry, and that was when a lot of companies realized … Actually, it had to do with equipment and things like that, but the vending machine industry matured in the 60s, and then it has been growing slowly ever since then.
But to get into the market stability, there always seems to be a market for good, quality vending services out there in the world. They wax and wane a little bit with economic tide. Currently, we’re in a little bit of a downturn, and that’s just a normal economic situation. It’s not a business that’s easily replaced. If you were, oh I don’t know, a computer software engineer, and you worked in some obscure language that I don’t even know, but Basic or something, you’re job has basically been outsourced or it’s gone at this point. It’s been replaced by something that’s newer and better.
The vending industry has been pretty stable for quite a number of years. So, from market stability, there always seems to be a market for vending type services in snack or refreshment services. Some of the products have changed a little bit, but in general, we’re still selling the same basic products today that were sold in the 50s and 60s. Some products have come, and some products have gone and product dimensions have changed. Packaging has changed, but the business itself has not changed all that much. So, the business itself, the market is quite stable.
As far as reliable, it also tends to be a pretty … From a cash flow standpoint, if you go into a commercial type account, which means you’re in someone else’s business providing vending services, the cash flow is actually pretty stable and it’s pretty heavy ability to forecast it with a high degree, because it’s not gonna change all that much week to week, month to month. You’ll have your seasonal variations, meaning in the springtime or in the summertime, you’ll tend to sell more drinks than you do snacks. In the wintertime, you tend to sell more snacks than you do drinks. And then around Christmas, you don’t sell anything pretty much. December always is the worst month for most vending companies, unless you have a large amount of retail where you’re in retail operations where they have large Christmas staffs.
Besides that, the business itself is quite stable on a cash flow basis and as far as products sold. If you do a lot of street vending or vending out in the public-type places, it’s dependent upon the number of people that come in or are in and exposed to your machine. And one thing, too, about the vending industry, it is a numbers game. The more people that are in front of your machines, the more product you will sell, so your object should be to get pretty high volume type accounts if you can.
To answer that question, it is a reliable business. It’s been around for a long time, and it really hasn’t changed all that much throughout the years, and it does quite well.

Tom shivers: What are some of the numbers like you just mentioned there? How would you know that you’ve got a good vending machine placement location? Let’s say how would you know you’ve got a good location for a vending machine?

Larry Towner: Well, the basic benchmark for looking at a vending machine placement there’s some demographics that play. We always broke demographics down into white collar verus blue collar was the first demographic we always looked at. So, we’re looking at a white collar account does about a quarter of what a blue collar account does. Of course, there’s not too many blue collar accounts left in the United States anymore. We’ve outsourced most of our manufacturing off to China, but you still have a lot of blue collar accounts in the construction industry and automotive and things like that, say automotive repair shops and things like that.
That particular customer is largely male. They generally are quite a bit younger. They’re in their younger … Well, they’re under 35 in general, and those are really strong vending type accounts. On the opposite spectrum, older women are not really great vending prospects. So, when you walk into a facility, or you’re looking a facility to put a machine in, if you’re looking at a commercial account, you walk around take a look at who really works there on the commercial side. And if you’re in a street-type location, just sit where you’re thinking about putting a machine and look at the type of people that walk by you.
Children, and I say children, kids anywhere from the age of five up to about 13 or 14 are really strong vending people as long as they come with their parents. You really don’t want young people and teenagers a lot alone, because they tend to vandalize things a lot, so it’s one of things, but if they’re with their parents, that’s good.
But that’s the beginning point of how you determine what determines a good vending account. The other thing is just pure numbers. If you walk into a location and they have 20 people or they have 50 people or they have 200 people, it’s all relative to the basic numbers. So, you want more is usually better, but if you walk into, and it’s a white collar account, say it’s a, I don’t know, a sales office or something like that, and there are a large number of white collar men, you say 100. Well, a good blue collar, say automotive shop with 25 people will do just as much business as that 100 person sales organization where people are in coats and ties. And these are general numbers. It doesn’t always pan out that way, but in general, it’s been my experience and a lot of other people’s experiences as well. This is the kind of thing that you might see.
One other thing that I always took into consideration, I did a lot of vending, I would say, in the outer regions of the metro Atlanta area. So, we were far out. When I looked at accounts, sometimes really tiny, small accounts like, say 25 people or so, could actually surprise you with how much business they did, because in some of these locations, the closest restaurant or the closest convenience store could be two, three, four miles away. In that sense, they had no easy access to any other refreshment source, so they couldn’t just jump in the car and run down the street. Conversely, a place that has a convenience store or a grocery store or whatever that sits right next door, and people can walk to it on their break, that is indirect competition, and they will make that trip. You’d be absolutely shocked.
So, we were really surprised that at some of our locations, because they were out and away from other things, they did very large numbers per capita. We always marked our numbers by the number of people, and they did $4.00 a week per person or $6.00 a week per person or whatever. We always marked it per capita, and when we looked at some of our accounts, because there was nothing around them, they did very large numbers compared to a lot of the other places, because they basically had no choice.
So, those are all considerations that you take into account when you look at a vending account, and those are the things that will tell you whether it’s a good account or not. A lot of when you set a vending account, too, and this is why we say go out and get an account first, is that many of these places don’t necessarily require the latest equipment. So, you can go in with a good piece of refurbished equipment, which is gonna save you several thousand dollars. And since you’re really looking at turning profits, sometimes it depends on your location as to the type of equipment you can put in, and that plays into the operational side along with the financial side.
Sometimes, my philosophy was I tried to put the biggest machines I could into a location, and I did that so that I could reduce my service interval, meaning if I only had to go to an account once a month, it was easier from a service standpoint provided they would turn the product, meaning the sales would [inaudible 00:10:43]. We’ll talk about things like that in another show, but I always try to put the biggest pieces of equipment in there as possible and run long-date type products, and that way I had to visit it less, which really lowered my cost. Because your service cost in newer accounts is very, very high. So, a lot of these things play into looking at what a good thing an account is.
Also, one of the questions that I always ask when I go on a sales call is who is your current vendor, or try to get a sense of how many vendors have they had in the past X number of years, and it just depends. There are accounts out there that flip vending companies every year or every two years, and these are generally, they’re either on a bid-type basis or they’re highly problematic type accounts. Because if they’re looking for a new vendor all the time, why are you gonna be vastly superior to what they already have. They have a cultural mindset of swapping people out all the time, and that can be problematic. In our opinion, or in my opinion, a good vending account is one where you move equipment and it’s there for quite a while. You’re not busy moving equipment all the time. That’s a hidden expense. [inaudible 00:11:52].
That gives you a real general, I mean I can go on for hours on this stuff, but that’s just a general overview of if you’re gonna go in and look, you want to look for large numbers of people. You want to generally look for people who are a little younger, generally blue collar is gonna be better than white collar although not always, but those are the situations. Another demographic thing is is the ethnic groups can be very good. Hispanics do quite well in vending as where Asians do not. So, if you have a large Asian population, in general, vending isn’t gonna be the greatest thing in the world. If you have a large Hispanic population, it can be quite good provided you provide the right product for them, and they’ll tell you.

Tom shivers: Okay, great. Well, I think we’ll wrap that up for now, and next time we’ll talk about what do vending machines cost, and later, we’ll probably get back to the vending location issues that you started touching on there. I know there’s a lot more to finding a good vending location.

Larry Towner: Yeah, there’s whole strategies in types of locations, and also amount of windshield time between stops, and do you go in and do you saturate an area, or do you look for a certain size, and there’s all kinds of strategies for the types of vending accounts, and that actually, well, we’ll tie that up in another show.

Tom shivers: Okay, well, thanks so much, and do you want to mention your consulting business?

Larry Towner: Sure, my company’s name is Service Group International. We’ve done vending and food service consulting, basically, for about 15 years. We can take a lot of start-ups. We like to make sure people understand what they’re getting involved in if they get into the vending businesses. It’s not a business where you’re gonna make millions of millions of dollars with very little effort and things like that. We can be reached at servicegroupinternational@earthlink.net. It’s all one word, and we’d love to talk to you. It’s servicegroupinternational@earthlink.net, and of course, my name’s Larry Towner.

Tom shivers: And you’ve been listening to the Vending Business Show, a publication of A&M Equipment Sales.

How to Get Started In the Vending Business


How to Get Started in the Vending Business  AN INTERVIEW WITH LARRY TOWNER


 

Larry Towner

Vending Guru

How to  Get Started in the Vending Business In this episode of the Vending Business Show, we interview Larry Towner, a successful vending operator, and vending business consultant. He shares valuable tips to getting started in the vending business such as organizing and planning tips, proper networking and setting realistic goals.

 


Episode Transcript:


Tom shivers: How to get started in the vending business  I’m Tom Shivers with the Vending Business Show, here with Larry Towner, who has been in the vending business for many years and a few years ago sold the majority share of his vending business. Today, he mostly provides consulting. In the last show, Larry talked about how to start a vending business, and we’ll pick back up where we left off. So, Larry, thanks for being here.

Larry Towner: Oh. It’s a pleasure, Tom.

Tom shivers: Last time, you explained that sometimes people get in the vending business, but don’t realize what they’re getting themselves into, like what kind of person does well in the vending business. Then you shared some information resources to help people get off to a good start. What other tips do you have on how to get started in the vending business?

Larry Towner: Well, one thing, Tom, that I always try to stress to people is that the vending business is just that. It is a business. If you’re looking to get into a business, you need to have a sense of organization and/or planning. I tell everybody to be very careful when you get into the vending business to make sure that you write a business plan of some sort. Now, it can be as simple as sitting down with a pad of paper and just writing out some of the concerns and some of the things.

Larry Towner: We try to keep people to be aware if they go to some of these seminars that they see in the newspapers and things like that, to be very careful of those things. These guys are professionals at selling equipment and things that are not really of professional grade. So, they make it sound very exciting and very dynamic, and they give you an idea of the kinds of money that you can make, but what they don’t do is they don’t tell you the whole story. I tell people to really sit down and really think this through. Put pen to paper. Write yourself a business plan.

Larry Towner: Now, you don’t have to write a business plan that’s designed for going to the bank and getting financing. You might need to do that, but that’s a separate issue. It all depends on what your goals are, but have an idea of what you’re trying to achieve, number one. What’s your goal? Are you looking to become self-employed? Are you looking for additional income? Are you looking for a part-time business or a retirement business? What are your goals within those kinds of things? That’s where you start.

Larry Towner: Then you try to cater the vending business into those aspects of what you’re looking for. Don’t forget things like … What people are most common is what they present in a lot of these shows and things like that is they say, “Gosh. You’re buying this for a quarter, and you’re selling it of 50 cents, and you’re making 100% profit. How can you go wrong when you make that much money?”, and this, and that.

Larry Towner: Well, at the end of the day, what they don’t tell you is that you have to sell four items to make $1. You have to pay for your equipment and all your expenses out of that $1 that you make in profit, and you had to sell four items. When you think about it, on the average person’s paycheck, if you had to make your paycheck, how many items would you have to sell? People don’t even do that basic math, and when they think about it, they go, “Wow. I have to sell 4,000 items,” or, “I have to sell 10,000 items,” or whatever it is that the particular person is looking for.

Larry Towner: Out of that money too, what they always forget is that they have to have a vehicle. They have to pay for fuel. They have to pay for insurance. They have to pay for the machines. They have to pay for repairs. They have to pay for all the things that a business has to pay for just to be in business, which includes telephones. There’s hundreds and hundreds of books on writing business plans, but you need to sit down and really think about it. You can just say, “Wow. I’ll run this out of my garage, and it’ll just be clean and easy.” It can be that simple, but it can also not be that simple.

Larry Towner: So, it starts with a good understanding of the numbers, and how much profit you think you’re gonna make, and how much can you make per account and per machine, which brings up a few different issues that get into the planning. Some of the things in discussion with some people wanting to get into the business, I said, “Well, what kind of potential accounts do you think you have?” They would give me an idea of what they have, and they say, “Well, I can’t lose. I’m gonna buy a new machine and put it in there.” I’ll tell them flat out, “It’s gonna take you 10 years to pay for your equipment. Have you even thought about that?” They go, “No. I haven’t,” and they have opted out.

Larry Towner: That’s one of the biggest keys to success is to sit down and actually do a business plan of some sort. Write out what you want and how you think you’re gonna get there. Then walk backwards through all the steps and all of the things that it might take you to do to get to that number, and just give yourself some kind of a reality check. If you jump into this thing, you can obligate yourself for thousands of dollars and end up having very little income coming out of it. That’s one of my biggest things when I tell people, “If you’re gonna get into the business, it’s a business. Do a business plan.”

Tom shivers: Mm-hmm (affirmative). You’ve been in this, so what is a realistic goal for someone or maybe a couple of them?

Larry Towner: Well, again, it just kind of depends on what you’re looking for. The way I started in the business, and this has an amount of relevance, is I actually went to work for a guy in the vending business, and I worked for him in the vending business. He basically taught me the vending business. We went over it, and I got to see what it takes to be in the vending business, what accounts are, what products that sell, and things like that. So, that’s where you get into … When you get into your goals, it’s like where do you want to be?

Larry Towner: If you want to be fully self-employed, my suggestion is that you go work for somebody first, understand the business, and then back yourself into the business. If your goal is a part-time income, like say you want to work a retirement income or you’re perhaps a woman that has children at home, and you think you can run this on a part-time basis and things like that, those things are attainable. It’s just a matter of getting down to the actual numbers and your time.

Larry Towner: You have to really be able to allocate your time out to figure out when you can actually get this work done, because it is quite a bit of work. I mean, it requires you being there. You have to go and fill machines, and you have to be available for repair on call, and things like this, or you have to be able to work with your customers to make all those things work out. Again, it’s difficult. You just have to be able to do that kind of thing.

Tom shivers: Let’s just say, for instance, I’ve got four soda machines in pretty high trafficked areas not far from where I live. I want to do it on a part-time basis. Can you give me some suggestions as to how much time and resource that that would involve?

Larry Towner: Yeah. If you’re talking a good, high volume location, a drink machine can hold, depending on whether you’re doing bottles or cans, a drink machine can hold in the neighborhood of about 300 bottles or maybe 600 cans total. You’re never gonna run that machine completely out, so if you’re running say cans, and you’re running at 75 cents, and you get a big machine that holds 600 cans, you know, you want to refill it at about a 200 can point, so you’d be hitting in the neighborhood of about say 400 times 75 cents is about $400 in gross sales.

Larry Towner: Out of that, you’re gonna pay for half of … Basically, about half of your money goes to pay for product, which gives you $150. If you’re doing that once a week or twice a week, you’re in the neighborhood of you’re gonna do a single net profit of about 100 … If you do it twice a week, you’re gonna do $300 a week. That’s a pretty high volume location, to be honest. That’s a very high volume location for somebody doing just drink machines, without a snack machine associated with it or a food machine, things like that.

Larry Towner: What you’ll find too is when you get out there, that in the marketplace you might have this concept that you want to do one thing, like say just drink machines, but the reality is it’s tough to get the really high volume locations in just one avenue for it. But that would give you $300 in single net profit in a week, and then you’re expenses to do that. It would take you two days during the week to do that, and it’s gonna take you approximately … [inaudible 00:08:40] It’s gonna take you probably an hour, maybe an hour and a half to actually service those machine, to fill them up. That gives you kind of an idea of what you’re gonna have.

Larry Towner: Then you have support time, what it’s gonna take you to actually get the product and load that into your truck, get it out to the locations. You’re gonna have to have a warehouse if you’re gonna do that kind of volume and things like that, or you’re gonna spend a lot of time running to local Walmarts or Sam’s Clubs, or Costco, or BJ’s, or whatever. So, to do that you’re probably gonna have five or six hours per machine to do that, in total time.

Tom shivers: Per week. I imagine if it’s in a high volume area that the turnover rate might dictate the best times to refill the machines? Does that come into play?

Larry Towner: Yeah. The timing is always an issue, as far as when you … You know, you want to be there in what I consider to be an off time, a time when there aren’t people there wanting product all the time. If it’s in a commercial location, that’s usually not on the hours, like you’re gonna be mid-hour, and not at break time. In a commercial location, in a street vending location, you’re gonna wanna be there at night or something like that. So, all that does play. We call those account dynamics essentially.

Larry Towner: What’s the best time to service it? Is the facility open at those times? Do you have what I call extended hours? Extended hours to me are any time that’s before 7:00 in the morning or after 5:00 in the afternoon, because that really opens up a huge ability to do work at times when otherwise it’s off time. You’re guaranteed to get into most locations between 7:00 and 5:00. The question is can you get in after the hours or before the hours to get you the extra time that you need? There’s a whole concept of dynamics in an account and how you manage your accounts and all of that. That’s a whole topic for a whole show we can do in the future.

Tom shivers; Any there tips for people getting started in this business, before we-

Larry Towner: Probably one of the biggest tips that I can give also, along with a very strong business plan, is to actually go out and do a few sales calls, and go try and find an account. A lot of vendors try to get into the business backwards. I say backwards in that they go out and they buy a bunch of equipment, and then they go out and try to place it. My philosophy always has been that you actually do that in reverse. You go out and get the account and then place the equipment, because the account will dictate the equipment that you buy.

Larry Towner: If you go into a, oh, I don’t know, a very large manufacturing facility that has many hundreds of employees, you need a different set of equipment than if you go into an office situation that has 50 employees, or you’re in a street vending situation where you’re outside. That requires a different piece of equipment than something that you’re putting inside. You want to be able to go ut and make a few sales calls.

Larry Towner: The other thing that’ll help you, if you make some sales calls and you actually obtain the business, or you get an idea, if you go out and do a survey more or less, if you go out and talk to … you have a target market in mind that you worked on when you did your business plan. You say you want to service, it doesn’t matter, say commercial, industrial accounts. You go out, and you look at what your competition is doing out there. You’ll see what kind of pricing they have, what kind of equipment they have. If you talk to people, you’ll find out what kind of service level they get from them as well. A lot of it falls in under the planning stages.

Larry Towner: The other thing that you can find out too is if you go out, and you call on a certain number of accounts, and you find a common thread in what your competition is doing, and then you have to figure out a way to either get around what your competition is doing and offer more, so that they will actually change vendors, or you find a particular vendor that doesn’t do a good job, and you know all the points to hit, so you can go replace him when you run into him, and you walk into an account, and you say, “Oh. It’s X, Y, Z company.” I ask lots of questions in a sales [inaudible 00:12:55]. I say, “Hey. Are you having this problem with X, Y, Z company?” If you know that company, you’ll know that they are indeed having that problem. You say, “Wow.” You can sell them right out of the place.

Larry Towner: That’s something I say to people. You’ve got to be able to go in and sell a little bit. If you sell beforehand, really you’ll know everything that you need to know beforehand. If you come in and you go … Just for example, say you buy brand new equipment. You’ve invested $5,000 for a snack and soda machine or $6,000 for a snack and soda machine, just depending on what you buy. You need to generate X amount of dollars out of that equipment, or you’re gonna be in the hole. If you don’t do that, you’re gonna be in trouble, because you can’t place that everywhere. You can’t go out and put that into a smaller account. You’ll just have too much money invested into that equipment to actually turn and make a profit at it.

Tom shivers: Yeah. That makes a lot of sense. I know that’s kind of an entrepreneur quality that would say, “Hey. I want to sell some of this stuff before I decide I’m in the business.”

Larry Towner: Right. I tell people to do that in the vending business consistently. If they don’t, they can really get themselves into financial hot water. I get phone calls even today on a regular basis, where people say, “I’ve got a warehouse full of such and such equipment and things like that, and I can’t place it, and I can’t sell it. What would you buy it for?” Unfortunately, you end up insulting them, because you can’t really give them anything for it. That’s kind of a situation that you do run into.

Tom shivers: All right, Larry. Well, thanks for sharing. Tell us a little bit about your business, your consulting business.

Larry Towner: Well, the consulting business is basically we help new vendors and experienced vendors really optimize their companies or get a good idea of exactly what they’re doing. One of my goals with new vendors in particular, and this is gonna sound funny, but I try to talk them out of the business. It’s not in a bad way. I just want to make sure they understand what they’re getting into before they make that jump, because if we can save them some heartache I guess is what it is … I mean, I’ve actually seen marriages come apart because of the vending business and because it’s never what they expected.

Larry Towner: So, we try to just make sure people understand completely what they get into. That’s what we do. Then on an established business we can come in and we can just look at how you run your operations and make sure that you’re running it at an efficient and profitable mode. We’re always amazed we can learn things every day doing this, but that’s what we do.

Tom shivers: What’s a good way for someone to contact you?

Larry Towner: Generally over email. It’s servicegroupinternational@earthlink.net.

Tom shivers: All right. Service Group International all spelled out?

Larry Towner: All spelled out.

Tom shivers: Okay. @earthlink.net?

Larry Towner: Earthlink.net.

Tom shivers: All right. Super. Next time, we’ll be talking about the question, is vending a reliable business venture? You’ve been listening to How to get started in the vending business at the Vending Business Show, a publication of A&M Equipment Sales.

Other links to important Vending Business tips Vending Machine License: Is It Something You Need?

Vending Locators

Vending Locators Paying for locations in the vending machine business falls under three categories:

  1. Placement fees
  2. Commissions
  3. Locating services

Vending Locators Snack and soda vending requires a marketing and sales effort for account placement. The difference between marketing and sales is that marketing determines who your customer is, how much they are expected to buy, how they will get the product, and all other aspects of your business that induce customers to purchase your products.

Sales is the act of getting the business: closing the deal, getting the money. The sales function is applied primarily to account placement, and the sales process uses the marketing function to make an offer to a potential account.

Let me illustrate the difference. Marketing for the vending machine business includes decisions about what type of vending machines to place (new, refurbished, as-is), what type of products to offer (snacks, sodas, food, brand name, off brand, etc.), what trucks to use, how to handle maintenance, who answers the telephone and what they say, if the machines accept $5 bills or credit/debit cards, how the route and sales people dress, and so on. Marketing includes every aspect of delivering product to the end user.

On the other hand, sales is the individual act of getting another person to say yes to your vending machine services. Salespeople use marketing tools. When approaching a potential account, a salesperson might include a product list, an operational procedure (if you have technical problems, we will dispatch a repair tech within 4 hours), a route schedule or other marketing tools. These tools do not generate business by themselves –they require a person to make the customer aware of them. Salespeople ask for business.

You can handle account sales internally, meaning you (or someone on your team) makes sales calls, or you can hire a freelance sales company, also called a “locator.”

Vending machine locators have several organizational types:

  • Telemarketing – Obtain leads over the telephone
  • Internet – Obtain leads using e-mail techniques
  • Straight sales – Generate accounts then resell them to vending operators
  • Consulting – Customize the sales function to meet your specific needs or requirements

Telemarketing and Internet locators generally pre-qualify leads and sometimes set sales appointments for you. You make the sales call and close the business. They offer levels of service related to the amount of information you want and charge accordingly. Pricing ranges from less than a dollar to several hundred dollars per lead.

Straight sales type locators have business that you are required to operate. Pricing is a function of account sales, averaging about one month of gross sales.

Consulting locators offer a more customized approach to vending machine sales. Consultants often have owned vending machine businesses, and can provide marketing assistance along with sales. Pricing is a function of both sales volume and time billed.

This is how a single scenario might look with each type of organization:

  1. A telemarketer would provide you an appointment with a hairdresser looking for a drink machine.
  2. A straight sales locator has an account across town in a factory that he/she expects to do $1,000 per month. This locator usually gets paid a commission of the gross sale for landing you a new account.
  3. A consulting locator meets with you to discuss your specific needs and goals, then works to help you land that type of business (in a certain geography, account size, account type, with equipment that’s new, refurbished, or as-is, etc.).

Commissions and placement fees are a marketing expense, like brochures or other printed pieces you leave with prospects and customers. Some vending machine accounts require commissions and placement fees. Both of these fees are a type of rent and are considered an expense for accounting purposes. Placement fees are a one-time fee for setting or obtaining business and the account usually has a pre-set amount budgeted. Commissions are an on-going expense, usually a percentage of sales.

I recommend against paying placement fees to vending machine accounts. If you have to pay to place your equipment, the customer doesn’t value you and won’t hesitate to replace you when the next vendor comes along with a better offer.

Commissions are a regular part of the vending machine industry, but not all accounts require them. Keep in mind that commissions result in higher pricing for the end-user customer. In the end, commissions can turn a previously profitable account unprofitable for just that reason. Many accounts prefer lower pricing and a better level of service. A commission program requires extra effort, since most accounts want sales reports and statistics. Although this might seem simple enough, it means you (or someone on your team) need to develop, format and produce these reports – on a regular basis. It is an expense category, and makes you no extra profit.

Avoid commission programs, especially in low volume accounts. Do not fall into the trap of paying commission for power bills or space requirements. Commissions programs, like placement fees, also can lead to lost accounts when competitors offer higher commissions. Considering these factors, commission rates generally run from 1 to 10% of gross sales, with rates as high as 50%.

Customers asking for commissions and placement fees are just another reason why you absolutely have to know your costs inside and out and have an airtight business plan. They can make all the difference between profit  and loss.  Check references on vending locators   More Videos on the Vending Business Show  Finding Profitable Vending Locations