The Vending Business

Well, it was the end of another era for us. Yesterday, I sold my vending business, started just 17 months ago. But what a ride it was!

Back in March 2005, when it seemed Winnie would never get her passport, I decided it was time to attempt another home business venture. I try these things every several years, whenever I get disgusted with my paid job and start dreaming of an early retirement.

Actually, I’m always dreaming of an early retirement. But I try a home business whenever I think see a way to work it without quitting my paying job first. This time it was the vending business.

In this case, my regular job (Northrop Grumman Ship Systems, formerly known as Ingalls) had put us on a 4 day/week, 10 hour work day starting in November 2004. So now I had Friday’s off, and the chance for a second job/home business.

In February 2005, I received an invitation from a company called “Natural Choice Distributors” to attend a FREE seminar on running a home based business. Since the invite stated “This is not an MLM or Time-Share” I decided it was worth a risk.

The seminar turned out to be a pitch for a home based vending business using “Antares” brand compact vending machines. A nice pitch, interesting concept, and the folks running it were low-key soft sales types, rather different than the normal seminar where a person is expected to make a life-altering decision before leaving the room.

I signed up for follow-up information and subsequently received a follow-up appointment. This was another low-key sales pitch explaining the program, anticipated expense and revenue, and a screening to see if I was “good enough” for the program. I received approval for buying into the program a few days later, send in my initial buy for three Antares compact vending machines, and I was IN BUSINESS!  All on borrowed money.

Then reality set in. Once I ordered my machines, I needed to gain a home-based business permit from Gautier City Hall. I figured with the general incompetence of this group, maybe two weeks hassle. Turned out the incompetence of City Hall greatly exceeded my expectations, and gaining my permits took almost three months and six trips to City Hall.

If I hadn’t known better, I would have thought I was the first person in the history of Gautier to request a business permit.

Meanwhile, Antares was doing their part to get me setup by sending out direct mailings looking for vending locations. I received what appeared to be three good locations, moved my machines out, and waited for the cash to start flowing in.

One location was great; a local Southern Baptist Church with a lot of family and youth programs. great sales here. The second was a local newspaper office. Not so good sales. The third was a small used car dealer. No sales, and the staff seemed to think shaking and kicking my very expensive machine was great sport. Seven weeks after putting it in, I pulled it and moved it to a plumbing office.  Another poor location but at least they didn’t kick my machine.

Sales were off to a slow start and I wasn’t getting the money I needed to make the financing payments. Then I had the chance to buy six used Antares machines from a man who spotted one at the used car dealer. We negotiated a great price (compared to buying new) and I jumped. My though was to get these out and increase revenue without a significant increase in borrowed money.

I gained three more locations by the end of August. Winnie finally arrived in mid-July and after a short in-house honeymoon she was out helping me work the route on Fridays. Sales were picking up, I was learning the business, and gained a commitment for a seventh location on Friday August 26.

On Monday, August 29, 2006, hurricane Katrina wiped out most of the Mississippi Gulf Coast.

It took almost two weeks before I was even able to assess my route and see what was left. Two machines were completely gone along with the buildings they were in. One machine was water damaged and vandalized but I recovered it. Two more were undamaged but in buildings where the owners were moving out, so I had to move the machines. All four machines still in storage in our garage were water damaged.

The remaining machine was undamaged in a school, but the school would not reopen until mid-October. In mid-November the church location partially reopened and requested a machine back. I gained a referral to another school and placed a machine there in mid-December.

It took until the late spring before we were finished enough with our home rebuilding for me to repair the machines in storage. I replaced components cannibalized from one ruined machine, and purchased parts from from E-Bay and Antares. I was able to get four machines rebuilt and working again.

In early March I had some luck. A boarder staying with us and working at a casino construction site in Biloxi gave me a referral, and I was able to place two machines at the site. The newspaper office finished rebuilding in June and I located a machine there. in late June I received another school referral and placed my seventh working machine in late July.

So one year after Katrina I was essentially back to where I was just prior; seven machines out at six locations.

Business had finally become good. The casino location was bringing in as much revenue as all the other locations combined. I was finally earning the money the long ago sales seminar claimed was possible in vending. But now another issue developed.

I saw that that I could be changing jobs in the near future, putting me back to a normal five day work schedule. At this point we were making at least one shopping trip each week to the Gulfport Sam’s Club for supplies (35 miles each way). Winnie had a full-time job waitressing so I was spending my Friday’s working the route, with at least one additional evening trip to Biloxi as it had developed into a twice-weekly servicing. Going back to a five day work schedule would leave me no time to work the route.

So Winnie and I decided it was time to sell.

I did some newspaper advertising and talked to some people I knew who might be interested. One person, a neighbor who did vending as his full-time occupation, was interested. So I developed my business appraisal. I priced out my equipment at high street price (to give room for negotiating) and added three months of sales revenue for equity on the locations. The neighbor reviewed my papers, toured my locations and inspected the equipment.

I was selling from a weak position and my neighbor knew it. After a sometimes intense negotiation he paid me less than half what I had appraised my business at.

So yesterday, August 12, I was officially out of the vending business after 17 months. During those months I built a route from nothing to six locations, lost them all, rebuilt the route back up to six more locations, turned a profitable cash flow, then sold for about 20 cents on every dollar of my initial investment.

I’m left feeling angry at the neighbor for what I consider an unfair price. It’s not proper, but I sincerely hope he ends up getting much less out of my route than he expected. I also hope my former customers will continue to get good vending service from someone, especially the customers who stuck with me through the storm. And I also feel somewhat relieved, not having the pressure of managing the business again.

Now, I’m still on a four day work schedule and intend to enjoy the three-day weekends while they last.

Fishing, anyone?