5 replies to this topic

[ToddMiller]

Ok, I've got a few questions for everyone. First off, how many of you carry Liability Insurance? Do you have your companies incorporated? Pay income taxes on your profits?

I ask this because I just don't see much profitability in Bulk vending.

example- Rob has in his blog that he checked one location after 30 days or so and it had $35.00 in it.

Gross- $35.00=140 vends @ .25
Product Cost @ .05/vend = $7.00
Commission @ 30% on net = $8.40
Charity Contribution @ 5% = $1.40
Income Tax + or - $10.64

=$7.56 net

This doesn't include the following:

+ Locator fees
+ equipment costs
+ fuel / vehicle costs
+ insurance
+ city vending fees
+ your time

Am I missing something here? Please tell me how this is profitable large or small scale.

Thanks for your time.

[candyman007]

Ok, I've got a few questions for everyone. First off, how many of you carry Liability Insurance? Do you have your companies incorporated? Pay income taxes on your profits?

I ask this because I just don't see much profitability in Bulk vending.

example- Rob has in his blog that he checked one location after 30 days or so and it had $35.00 in it.

Gross- $35.00=140 vends @ .25
Product Cost @ .05/vend = $7.00
Commission @ 30% on net = $8.40
Charity Contribution @ 5% = $1.40
Income Tax + or - $10.64

=$7.56 net

This doesn't include the following:

+ Locator fees
+ equipment costs
+ fuel / vehicle costs
+ insurance
+ city vending fees
+ your time

Am I missing something here? Please tell me how this is profitable large or small scale.

Thanks for your time.

I don't know, haha, thanks for making me question my entire business
Here's we go

GROSS $35
CANDY $7

So right there is a net of $28
Let's say I give $5 to charity

That's $23

That is my net. I don't have any other fees. You don't pay income tax on your first $8,000. I have no other income so, I'm not worried. There is no commission on that location. Only 2 locations out of 28 have commission. That is not much.

So we will say $23 A lot of that $23 will be deductible anyway. Machines, Gas, Locators. Really you should never pay income tax on this business during the expansion period. Still even after expansion there are a lot of deductible costs that you can come up with, car, gas, rent, maintenance, who knows what else.

Rob

That is a good point though Todd, post that on my blog.
candyman007.blogspot.com

[ToddMiller]

I understand about deductions, have 2 business myself. But, you can't run a business in the red for very long. IRS frowns on that.

I've wanted to start a bulk route for my daughters college education fund. However i can't justify the minimal or negative profit margin that I keep coming up with. Please tell me I'm missing something here.

[ToddMiller]

One thing I've noticed also is that no one mentions Liability insurance. What happens when Little Johnny chokes on a 1" gum ball and requires medical attention or worse?
If you have your business as a sole proprietor and not incorpoated guess who there comming after? YOU...

[caserri]

Bulk vending can be extremely profitable if done right. It is all a numbers game. Each machine averages a certian amount of net income each month. The operator is in direct control over his yearly income by simply controlling the number of machines he has working for him. Dont get me wrong, You are not going to get rich in bulk vending, unless your name is Folz. You will however make a decent living at it if you go full time. Its alot of hard work, just like any business. If you have the drive to succeed you will.

Your figures above seem about right however each operator runs his business differently. As operators gather experience they are better equipped to know how and where to cut costs. Your profit line is measured in quarters so every expense must be considered. Rob pays out money he really doesnt have too pay. I never pay commissions to locations, most of my locations are not secured through professional locators. I dont pay 5% to my charity. My city vending fees are only $3.00 per machine for a year.

If we use your example of $7.00 net per machine, which is quite low, well that doesnt sound like much but what if he's running 500 machines? Or 1,000? That translates into a net profit of $84,000.00 per year. Just think of the difference if you were to add just $1.00 in net profit to that number. You'd be dancing around a $100,000. To be honest, thats more than I ever made working for someone else. I dont mean to inflate anyones hopes or preach about blue skies here but if done correctly these numbers are very attainable with some smarts and hard work.

As far as liability goes, yes you have a point. smaller operators think they can not afford liability. If Johnny chokes then yes they are on the hook. I prefer to incorporate for personal protection. As you probably know incorporation will protect the business owner from liability, however the business assets will be at risk.

I know I wrote a rather lengthy post on this board quite some time back about liability and incorporation but I can't seem to find it. Maybe it was on another board. I will try to find it and repost it here.

[candyman007]

Bulk vending can be extremely profitable if done right. It is all a numbers game. Each machine averages a certian amount of net income each month. The operator is in direct control over his yearly income by simply controlling the number of machines he has working for him. Dont get me wrong, You are not going to get rich in bulk vending, unless your name is Folz. You will however make a decent living at it if you go full time. Its alot of hard work, just like any business. If you have the drive to succeed you will.

Your figures above seem about right however each operator runs his business differently. As operators gather experience they are better equipped to know how and where to cut costs. Your profit line is measured in quarters so every expense must be considered. Rob pays out money he really doesnt have too pay. I never pay commissions to locations, most of my locations are not secured through professional locators. I dont pay 5% to my charity. My city vending fees are only $3.00 per machine for a year.

If we use your example of $7.00 net per machine, which is quite low, well that doesnt sound like much but what if he's running 500 machines? Or 1,000? That translates into a net profit of $84,000.00 per year. Just think of the difference if you were to add just $1.00 in net profit to that number. You'd be dancing around a $100,000. To be honest, thats more than I ever made working for someone else. I dont mean to inflate anyones hopes or preach about blue skies here but if done correctly these numbers are very attainable with some smarts and hard work.

As far as liability goes, yes you have a point. smaller operators think they can not afford liability. If Johnny chokes then yes they are on the hook. I prefer to incorporate for personal protection. As you probably know incorporation will protect the business owner from liability, however the business assets will be at risk.

I know I wrote a rather lengthy post on this board quite some time back about liability and incorporation but I can't seem to find it. Maybe it was on another board. I will try to find it and repost it here.

I'm not paying out 30% commission to all my locations. 2/28 locations get commission. I have no personal assets to my name. No lawyer in his right mind would take the time to sue me. However, as the business expands the answer is yes, I will get liability insurance and incorporate. Incorporation is cheap and it's probably a good idea from the start, but I'm pretty frugal.

The idea in my mind is to average $20 a location. That is 80 vends a month. So..

Gross $20
Candy $4 (80 x .05)
Donations $1

Net $15

That is about how it will work out. Sure I pay a locator to get me locations right now but that is a front end cost that will be eaten up by profits very quickly. You should see the locations I'm getting! Restaurants, big apartment buildings, and so on.

Net $15 X 200 machines = $3000 a month

It was never my plan to do bulk vending forever. This is sort of an intermediate type thing for me. I want some income that I don't have to work for everyday so I can focus on other things. Sure, maybe I will grow this to 500 machines but $7500 a month isn't going to suffice me for long. This is only the beginning ; )

Rob
http://candyman007.blogspot.com