How to handle payment for vending equipment is a personal
choice, but there are some guidelines. Most supply
companies in the vending industry are legitimate,
respectable entities, but the vending industry (like any
other) has a contingent of unscrupulous suppliers.
A supplier of vending equipment wants to be paid. His
business is not a finance company and, like all businesses,
lives on cash flow. He's in business to develop successful
vending operators who will buy more vending equipment from
the company in the future, and he should be a source of
knowledge. A successful vending machine supply company sees
hundreds of vending operators, knows their systems and how
they work. That vending supplier knows what works and what
doesn't, and has probably seen every scheme that's out
there. At the time he sells that vending machine to you,
he has expenses associated with that piece of vending
equipment. He has to have paid either the manufacturer
(new) or the secondary party (used) for the piece. He has
to have a place to refurbish that vending equipment, as
well as storage space for it - both of which are line items
in his budget.
You can purchase used vending equipment in several ways. If
you buy in "as is" condition, what you see is what you get,
and the machine might - or might not - work. This type of
purchase is not for most vendors. "As is, working"
condition means a vending machine might look old, or even
unsightly, but functions properly. It has been refurbished,
usually to specifications that make the vending machine
look and function like new, and will often come with a
limited warranty.
Of course, the cost of the vending equipment varies with
the level of refurbishment. Both snack and soda vending
machines are highly complex pieces of equipment that can
cost hundreds of dollars to repair, requiring specific
knowledge and specialized tools to make a piece
location-ready. Learn about vending equipment - read and
study, go to successful competitors' locations and see what
vending equipment they place.
A word of caution: Proper placement of equipment is
critical to success. Vending equipment can be costly and
the impulse to purchase new equipment for every location
can lead to business failure. Be sure to evaluate your
potential vending account carefully; estimate the number of
people who will be in front of the machine daily, estimate
sales, calculate your gross profit, and relate it to the
cost of the vending equipment.
Let's do a quick analysis. Your barber/beauty shop wants a
soda machine and, through conversation, they know you are
in the vending industry. They tell you there are hundreds
of people who walk in every day, and that you would make a
fortune if you placed a soda machine in the shop. (Of
course, this is what every prospect says.) The shop has 3
employees working 7 days a week, and, when you are there,
the shop is full and has a waiting list. You are excited
about the business you just generated, and commit to the
location.
You purchase a new soda machine for $3500 because you don't
want any maintenance or problems. You finance the machine
with a finance company specializing in vending equipment,
then fill the machine with $250 worth of soda. One week
later, you arrive to service the soda machine; you pull the
money, and find your sales are less than $20. The shop
owner tells you that his customers are starting to get used
to the soda machine being there and that your sales are
surely going to go up. You come back the next week and find
less than $10. Oh, they had a slow week. Each week you hear
another excuse.
Your first payment slip arrives for the soda machine from
the finance company, for $100. In the four weeks the
machine has been placed, you have not generated $100 in
sales, let alone profit (since you still have to pay for
your product). While this might sound far-fetched, I can
assure you I receive calls every day from people in this
very predicament.
The vending industry is a proven business, with proven
techniques, formulas and systems. Don't make the mistake of
thinking that all of the rules apply to everyone else, but
not to you - at least not in this case. Don't believe that
you can't lose.
With this lesson about equipment placement in mind, let's
return to the initial question: Should you pay for
equipment with a wire transfer? In today's world, identity
theft is becoming the largest white collar crime. How well
do you know this supplier? Have you checked them out with
other vending machine operators? Have you looked online for
any negative reports? If you turned up some evidence of
dissatisfaction, how many complaints do they have, and how
serious are they? (Keep in mind that not all customers are
easily satisfied). Explore, look for the fatal flaw. Is
this their first venture into selling vending equipment? Do
they have a facility? Are they real? Do not act on impulse.
I would suggest not using wire transfer. Most legitimate
suppliers or, for that matter, vending machine operators,
can accept money in a variety of ways: credit card, Pay
Pal, check, money order. Use a source of funding that has
recourse if the terms of the transaction are not met. Use a
source that does not allow for further attacks against your
finances. Drafting, by wire, requires that you divulge
personal information that can lead to abuse. Protect
yourself and your business.
----------------------------------------------------
Joe Nichols is the second-generation owner of A & M Vending
Machine Sales, a family owned and operated business, for
over 40 years. We ship vending machines all around the
world, http://www.amequipmentsales.com
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