Share This Info:  

How To Buy A Vending Business Successfully: 6 Top Tips For Buyers


How To Buy A Vending Business

Some of the Californians looking for a company to purchase are advised to buy a vending business - an enterprise that deals largely in cash, with no receivables, and is in an industry somewhat resistant to swings in the economy.

But prospective buyers have heard about problems involving the sale of vending accounts which did not produce revenue that was promised and expected.



Among the key factors to understand by anyone considering a purchase in this industry are:

Going Vending Business vs. Vending Opportunities

The source of most problems reported by buyers who didn't get what they expected involve their purchase of machines newly placed in company lunch rooms, school corridors and other locations with the hope that the collections will be sufficient to pay expenses and also produce a satisfactory profit for the machine owners. Results often prove disappointing. With no track record for generating a solid level of continuous sales, it's likely those locations won't account for enough vends to provide an acceptable return on the investments.

These opportunities are not the same as when you buy a vending business serving long-existing locations that have a history of generating income for the owner. In that case the buyer will pay the price for a going business with a good track record. The cost of this goodwill makes an existing operation more valuable and it will require a substantially higher investment than usually required for the purchase of recently placed machines, inventory and hopes that the equipment will get frequent use.

Requesting Vending Route Performance Reports

One smart tactic for a buyer interested in this business is to ask the seller to provide account records for each location. This material would not reveal the names or locations where vending machines are located. But the information would include types and number of machines in each location, the amount of collections during a specific period - every two weeks or every month are examples broken down by machine and the amount of "commission," if any, paid to the location. In other words, a prospective buyer might learn that in location A, there are four snack machines that collected $640.00 last month, eleven soda machines that produced $1,318.50, two snack machines yielding $545.00, and a candy-only vending machine with $203.00 in sales. This data gives the buyer prospect a very good picture of the business without disclosing the names or locations of the accounts.

Types Of Machines

In addition to machine types related to the kind of product they vend, there also are distinctions made as to the age of the equipment. As most vending customers are accustomed to the option of using cash or a credit/debit card to make purchases, the operator with machines still limited to cash transactions is not generating the level of sales possible. Besides, it's hard to keep an account when its employees, students or other participants in an organization are unable to benefit from the vend machines when they don't happen to have the needed cash. Cash/card equipped vending systems are in wide use and if the company for sale doesn't have that kind of equipment in the field, it may not be a good purchase candidate. Or an interested buyer should negotiate for a price that is low enough to enable him or her to afford to upgrade or replace the nearly obsolete machines with more modern equipment.

The buyer may also encounter a vending company on the market that uses Internet available machines so the owner can monitor every single purchase at every machine. Prospective buyers should know that not everyone in the industry thinks the benefits of this technology are worth the cost. Perhaps the key advantage to using state-of-the art vending equipment is that some account decision makers are so impressed and intrigued by this capability that it helps persuade them to become customers of tech-forward vending companies.

Commissions Paid To Accounts

Buyers investigating this industry might be surprised to learn that some accounts receive commissions from the vending company - usually a percentage of what is collected at the machines. This is not an unusual practice and might be worth the cost to the vendor if the account represents a source of considerable income. Smart vendors sometimes suggest that their accounts use the commissions to fund parties or other benefits for the people served by the equipment. It also is not unusual to find organizations, particularly businesses, that subsidize the vending. Their goal is to make the purchases particularly affordable, as a concession to their employees. That means the vendor sets low prices and the account pays the difference between the amounts collected and what the vendor would receive with normal product pricing.

Condition of Vehicles And Premises

The smart prospective buyer asks to see the maintenance records for the vehicles, usually vans, used to deliver machines and product. That not only allows the prospective purchaser to learn about the condition of the fleet some of the capital equipment that may be purchased in the deal but also provides a clue as to how conscientious management is about maintaining an efficient and safe operation. That also applies to the general appearance of the warehouse where the company stores equipment, parts and, of course, the consumable merchandise sold in the machines. Some buyers might be persuaded to believe a messy place of business reveals a company so busy making money there's no time to use the broom. While this may be true in some kinds of businesses, it's a bad sign for a vending company.

Vending Company Market Values

The rule of thumb for pricing companies in this industry is fifty percent of average annual gross receipts plus market value of the equipment. This is a very general rule and should be adjusted up or down, depending on the condition of the facilities and equipment, the average length of time the company has served its accounts - loyal, happy customers add to the value of the vending company, average length of employment for the workers, and terms of the deal. A substantial amount of seller financing, for example, can increase the value of the offering.

It is true that vending companies can profit during good economic times, when people have extra money for impulse purchases, as well as in less affluent conditions, when machine users believe a vended treat will take the place of a more expensive meal. Before starting to look at these companies being offered on the market, it's important to understand some of the factors to use when evaluating various offerings.

Peter Siegel, MBAAbout The Author: Peter Siegel, MBA is the Founder & Daily Administrator (ProBuy & ProSell Programs) at BizBen.com (established 1994, 8000+ California businesses for sale, 500 new & refreshed postings/posts daily). Call Peter today to discuss: Your situation regarding buying a vending route (& financing options for business purchase financing) * To sign up for Email Alerts on new vending routes coming on the market * Receive a schedule of upcoming FREE online webinars and podcasts on topics for business buyers looking to buy a California business * Get a copy of his latest eBook "Buying A California Small Business Successfully." Peter Siegel at BizBen can be reached direct at 866-270-6278.

Categories: BizBen Blog Contributor, Buying A Business, How To Buy A Business



  Helpful Resources To Assist In Selling And Buying California Businesses
Michael Floorman, Business Broker, BTI, San Francisco Bay Area

Business Team, San Jose (Campbell) located in the Pruneyard Towers at Bascom and Hamilton. Established in 1981 Business Team with over 6600 sales to date has 1000 business listings to choose from, paid Google advertising. We offer highly trained and experienced professionals.

Michael Davidson, Business Broker - Southern California

Los Angeles Business Broker providing M&A quality services for Small Business Owners. We leverage our technology and expertise to Simplify & Expedite the Business Sales Process. Matching the right buyer with the right business is how we define success.

Rick Carlson, Business Broker - Southern California

You Will Never Feel Lost In The Shuffle. Many Brokers Simply Send Out An NDA And That's The End Of Communication. All Buyers Receive A Personal Meeting With An Ace Acquisition Specialist So They Can Recommend The Perfect Business For You. Phone Rick direct at 800-985-4939.

Rob Hartman: Business Broker, SF Bay Area

Business brokerage services in the SF Bay Area. I bring skill, integrity and energy to all of my clients and our projects. I'm accustomed to working with a wide variety of clients and their businesses; large or small, simple or highly complex. Get a free consultation by phoning 650-279-3097.

Chris Seaman, Business Broker - San Diego County Area

Founded in 1994, First Choice Business Brokers has accelerated to become one of the most successful Business Sales Organizations in the world. Our team of agents have gone through extensive training to become experts in the field of business brokerage. Call Chris at 858-578-4111 for more info.

AJ Rana - Business Broker, San Francisco Bay Area

Professionals who understand the importance of world class business brokerage service and the value it can create. Specializing in assisting sellers and buyers with retail stores, restaurants, hospitality & lodging, manufacturing operations, distribution companies, e-commerce and service businesses.

William Park, Business Broker - Southern California

Highest Volume Broker in California, Simply Check our HUNDREDS of Listings! Over 25 Associates, Speaking Dozen Languages, Helping Buyers and Sellers of Small Business since 1982, Centrally Located between Los Angeles and Orange Counties, while Riverside & San Bernardino Counties are Very Accessible.

Timothy Cunha, JD - Business Broker, SF Bay Area

I am an experienced entrepreneur, attorney, & business professor. I & my EvergreenGold® team offer business owners sound advice & expertise to build business value & achieve profitable sales. Call me today for a FREE business evaluation & SWOT analysis for your business anywhere in the USA.


  Related Articles, Events, Blog Posts, Discussions, Videos, Interviews
8 Tough Questions You Most Likely Will Be Asked When Selling Your Business

When selling your small business, you'll be bombarded with questions - from the brilliant to the ridiculous. You need to be prepared. Here are some of the key questions you can expect to be asked. Tim Cunha (SF Bay Area Business Broker at 650-600-3751) reviews many of these possible questions.

Is Starting With A Higher Selling Price A Good Strategy? The Pros Debate

Is it a good idea to start with a higher sales price for your business when going to market? San Francisco Bay Area Business Broker Rob Hartman initiates this Discussion on BizBen with other Advisors And Intermediaries on BizBen discussing this basic strategy of selling a small business in CA.

Due Diligence Checklist: 10 Key Items To Investigate When Buying Businesses

Buying a California small business involves reviewing due diligence checklists so buyers can learn enough to determine whether to proceed with a deal. Here's a due diligence checklist. Peter Siegel, MBA (BizBen ProBuy Advisor & Business Purchase Financing Expert) at 866-270-6278 shares his views.

Purchase A Business With Limited Or No Cash - Financing Tips For Buyers

Purchasing a business with no money down can be difficult, but not impossible. Financing a business purchase or down payment can often be accomplished with these strategies from Peter Siegel, MBA (Business Purchase Financing Expert, ProBuy & ProSell Program Advisor with BizBen) at 866-270-6278.

An Alternative Approach To Finding And Buying An Absentee Run Small Business

As a SF Bay Area business broker (Rob Hartman), the phrase I hear often from my buyer clients is, "I am looking for an absentee run business." Since it is such a popular topic, let me offer an alternative method of business selection. There are a couple things to keep in mind as you search.

Podcast/Vlog: Business Purchase Financing Chat: SBA Loan, Non SBA Financing

Ever wonder what is involved in obtaining business purchase financing to buy a business or franchise? Peter Siegel, MBA who has over 20 years advising and obtaining all types of financing for business buyers in this video/podcast - SBA loans, Non-SBA Financing, Alternative Financing Sources.

5 Dangerous Trends Small Business Seller/Owners Should Consider When Selling

Business brokers and other Advisors on BizBen discuss key areas small business owners should think about before they sell their small to mid-sized business. Topics include: Commodization, Amazon, Big Box Stores, Rules and Regulations, and Baby Boomers. Rob Hartman, SF Bay Area Intermediary explains.

Getting An SBA Loan To Buy A Small Business: Dispelling Some Major Myths

When seeking SBA loan financing many potential business buyers have wrong information about the process of securing the best financing to buy a business. Peter Siegel, MBA (at 866-270-6278) a business purchase financing expert delves into the myths and facts regarding SBA loan financing.

See All News, Tips And Events


Business Purchase Financing SBA Loans
Tim Cunha Business Brokerage
Rob Harman Business Broker SF Bay Area
Willard Michlin Due Diligence Services
Facebook
Twitter
Linkedin
Google Plus You Tube
Vlogs and Podcasts


Auto Related
Business Services
Children Related
Communication Related
Computer, Internet Related
Construction Related
Entertainment Related
Financial Services
Health, Beauty Related
Home Improvement Related
Maintenance Related
Manufacturing Related
Media, Publishing Related
Pet Related
Photography/Video Related
Real Estate Services
Restaurant, Food Related
Retail Related
Service Related
Sports Related
Transportation Related
Travel Related
Wholesale Related

Auto Body Shops
Auto Repair Shops
Bakeries
Bars, Sports Bars
Cafe Restaurants
Car Washes
Cleaning Services
Clothing, Apparel Stores
Coffee Shops
Convenience Stores
Deli Restaurants
Discount, Dollar Stores
Dry Cleaners
eCommerce Websites
Fast Food Restaurants
Florists, Flower Shops
Full Service Restaurants
Gas Stations
Gift Shops
Gyms, Fitness Facilities
Home Health Agencies
Hotels/Motels
Ice Cream Shops
Juice, Smoothie Shops
Laundromats
Liquor Stores
Markets, Marts
Nightclubs
Pizza Restaurants
Postal, Shipping Stores
Preschools, Day Care
Print Shops
Salons, Beauty Shops
Sandwich Shops
Smog Test Only Shops
Smoke Shops
Spas, Med Spas
Sushi Restaurants
Tire Shops
Towing Services
Vending Routes
Wireless, Cellular Shops
Yogurt Shops

Alameda
Alpine
Amador
Butte
Calaveras
Colusa
Contra Costa
Del Norte
El Dorado
Fresno
Glenn
Humboldt
Imperial
Inyo
Kern
Kings
Lake
Lassen
Los Angeles
Madera
Marin
Mariposa
Mendocino
Merced
Modoc
Mono
Monterey
Napa
Nevada
Orange
Placer
Plumas
Riverside
Sacramento
San Benito
San Bernardino
San Diego
San Francisco
San Joaquin
San Luis Obis
San Mateo
Santa Barbara
Santa Clara
Santa Cruz
Shasta
Sierra
Siskiyou
Solano
Sonoma
Stanislaus
Sutter
Tehama
Trinity
Tulare
Tuolumne
Ventura
Yolo
Yuba

0 to $99,999
$100,000 to $249,999
$250,000 to $499,999
$500,000 to $999,999
$1 million to $2 million
over $2 million



BizBen - Where California Deals Get Done! 888-212-4747
7172 Regional Street #364 · Dublin, CA. 94568
BizBen · Copyright © 1994 - 2019, All Rights Reserved

               Vlogs and Podcasts  
Join Us On Social Media - Content Updated Daily
Sign Up Today - For Our FREE BizBen Weekly Email Newsletter
Includes The Best Info On Buying, Selling, Valuing, Financing California Businesses:
Articles, Blog Posts, Podcasts, Videos/Vlogs, Discussions, Q&A, Workshops, Webinars,
Resources. Watch For An Email Confirmation After Signing Up Above. Thank you.
Clost Login


Please confirm your registration by clicking the link we've sent to .

If you can't see it, please check your junk mail folder.

If you have any problems registering, or need assistance with your new BizBen User Account please phone BizBen Customer Support at 888-212-4747.



First Name:*
Last Name:*
Email Address:*
Confirm Email:*
Create Password:*
Confirm Password:*
Phone:
(   
 


You Are A:
Individual
 
Intermediary
 

Email Address:
Password:
 
Search BizBen.com

500 New & Refreshed Detailed Postings Daily
Over 2500 Resources Available On BizBen
Since 1994. Where California Deals Get Done!
Business Purchase Financing Help - Expert Tips For Faster SBA Loan Appro...
Read More News
Podcast/Vlog: Business Purchase Financing Chat: SBA Loan, Non SBA Financ...
Read More News