Opportunities
Established Vending Machine Service
Sold
Specifications
As one of Omaha’s most reliable vending machine service companies, this business has earned its name over the last 20 years with 175 machines placed in 90 locations. Operating with minimal manpower, a part-time driver handles 50% of the route, restocking and collecting change from soda and snack machines. Most accounts have 1 or 2 machines on site, with a small handful using 3.
Clients are a mix of all kinds, consisting of corporate offices, machine shops, schools, salons and more. While most accounts are in Omaha, there is an outlying route running every other week. A buyer should consider frequenting these stops weekly, both to increase sales and to gain new clients in those towns.
The company’s 2 vans are kept in the business’ garage, which is part of the 2,500-sq. ft. space for inventory, equipment and parts. The seller purchases inventory from Sam’s Club and from distributors. Pepsi, Dr. Pepper and Coca-Cola products are delivered to the company’s warehouse.
Growth exists in running the company as an owner/operator to maintain the current Cash Flow. A buyer choosing to run passively could hire another PT driver, add small coffee machines to services, and develop a website as part of increased marketing and advertising. This is a great business for a buyer looking to actively work in the company, or for an investor desiring side income.
Business Highlights
- Years in Business: 20
- Location and Service Area: Omaha Metro
- Number of Accounts: 90 (175 machines in the field, with some accounts using 2 or 3 machines)
- Clients: Corporate offices, schools, salons, shops and more.
- Products: Mostly soda & snacks. Juice & energy drinks. No coffee or cold foods. Machines are 60% soda / 40% snacks.
- Building: 2,500 sq. ft. – includes garage for vehicles, office and storage for inventory, machines & parts
- Reason for Selling: Ready to move on
- Employees: 1 PT Driver
- Hours: An early riser can be done by early afternoon!
- Seller Training Period: 90 days
- Growth Opportunities: Run as owner/operator to maintain current Cash Flow. Add another driver. Add small coffee machines. Develop website. More marketing & advertising.
- Current Owner’s Responsibilities: Purchasing, account & customer relationships, bookkeeping. Seller will spend 2 – 3 days/week on routes.
Financial Highlights
- List Price: $290,000
- 2017 Gross Sales: $312,508
- 2017 Cash Flow: $102,938
- Profit Margin: 33%
- Assets Included in the Purchase:
- Equipment: $49,585 – vending machines & warehouse equipment
- Vehicles: $34,403 – 2007 Chevy E2500 Cargo Van, 2008 Ford E250
- Intangible Assets: Long-standing accounts, customer relationships, good reputation.
- Inventory: $43,000
*replacement value - amounts may vary
Cash Flow Analysis
Description of Financial Statement | Tax Return | Tax Return | Tax Return | Tax Return | Notes |
2017 | 2016 | 2015 | 2014 | ||
GROSS SALES | $312,508 | $342,809 | $371,623 | $354,361 | |
Net Income Shown on Financial Statement | $43,326 | $9,779 | $3,365 | $21,338 | |
ADDBACKS | |||||
Compensation to Owner | $11,750 | $11,250 | $11,500 | $11,000 | |
11% Tax on total W2 Salaries | $1,293 | $1,238 | $1,265 | $1,210 | |
Depreciation | $8,356 | $9,380 | $9,059 | $21,868 | Non-cash item |
Interest | $12,249 | $15,872 | $13,310 | $0 | Non-onward going expense |
Amortization | $12,290 | $12,290 | $12,290 | $27,619 | Non-onward going expense |
Non-Business Telephone | $1,200 | $1,200 | $1,200 | $1,200 | Personal cell phone payments |
Meals & Entertainment | $0 | $0 | $193 | $175 | Personal expenses run through the business |
Personal Home Mortgage | $0 | $13,200 | $13,200 | $13,200 | Non-onward going |
Personal Real Estate Tax | $0 | $2,080 | $2,060 | $2,080 | Non-onward going |
Rent | $-9,000 | $-9,000 | $-9,000 | $-9,000 | Onward rent of $750/month |
Employee's Wages | $21,474 | $25,000 | $25,000 | $25,000 | Run as owner/operator |
TOTAL ADDBACKS | $59,612 | $82,510 | $80,077 | $94,352 | |
Seller's Cash Flow = Total Addbacks + Net Income | $102,938 | $92,289 | $83,442 | $115,690 | |
Profit Margin | 32.93 % | 26.92 % | 22.45 % | 32.65 % |
- 33% Profit Margin in 2017
- While the business grossed 8% more in 2015, Cash Flow increased by 10% in 2016
- Gross between $6,000 - $6,500 in cash per week
- January & July are the slowest months
Clients
- 90 accounts
- 175 machines in the field
- Most accounts have 1 or 2 machines
- A small handful have 3 machines (1 bottled soda, 1 canned soda, 1 snack)
- The largest account is just under 10% of earnings
- Multiple accounts have been open for many years
- Clients are a mix of all kinds
- Corporate offices
- Machine shops
- Schools
- Salons
- And more!
- The majority of clients are in the Omaha metro
- There is an outlying route that operates every other week
- This route could be bumped up to every week
Products
- Mostly soda and snacks
- Some juice, energy drinks and granola bars
- Soda and snacks are not regulated, so the company can purchase supplies from anywhere
- About $1,200 to $1,500 per month is purchased in canned soda inventory
- Company does not supply vending machines for coffee or cold foods
- Soda and snacks are far easier to stock, and the machines are easier to repair
- A buyer could consider small coffee machines that are easier to vend and service
- Machines are 60% soda / 40% snacks
- About 70% is provided by company purchases from Sam’s Club, local supermarkets and Vistar
- Company has a vending account to receive discounts
- 30% of soda comes from distributors – Pepsi, Dr. Pepper, Coca-Cola
- These machines are owned by the above companies, and they replace parts for free
- Inventory deliveries are made every other week to the company
- About 70% is provided by company purchases from Sam’s Club, local supermarkets and Vistar
Employees
- 1 PT driver
- Works 25 hours/week
- Handles 50% of the routes
- Has been with the company for 8 years
- Services machines in need of repair
The seller oversees operations, does purchasing, maintains accounts and customer relationships and handles bookkeeping. The seller also completes 50% of the routes, especially the ones outside of Omaha. Please note that the seller does not work a full 40-hour week, but a buyer could grow the company by putting in more hours and handling more of the routes.
Assets
- Equipment - $49,585
- Vending machines
- Warehouse equipment
- Vehicles - $34,403
- 2007 Chevy E2500 Cargo Van
- 2008 Ford E250
- Inventory - $43,000
- Wholesale: $11,000
- Snacks in field: $15,000
- Bottles in field: $13,000
- Cans in field: $4,000
Growth Opportunities
- Run as owner/operator
- To maintain the current Cash Flow, a buyer could operate as an owner/operator
- If not, Cash Flow would reduce by $25,000
- An owner/operated business would increase profit margins
- Add another driver
- A buyer looking for an investment should consider hiring another PT driver to cover more accounts
- Add small coffee machines
- Small coffee machines would be a great addition for most accounts
- Small machines are easier to service than traditional coffee machines
- Most of the population drinks coffee, and it is generally not subject to dietary restrictions that sometimes affect snack and soda sales around the new year
- Develop website
- Making the company accessible online should attract more customers
- More marketing & advertising
- The seller has not aggressively marketed the business, but a buyer looking to quickly gain more accounts could implement cold calls or online ads
Valuation Details
The Firm Business Brokerage used a Cash Flow Valuation to determine the Purchase Price of a business.
The formula used is as follows:
2017 Cash Flow x Prescribed Multiple = Fair Market Value
Cash Flow is the sum of business net income plus any owner perks and any non-onward going expenses.
A multiple is prescribed by a 20 question, 100-point parameter ranking system that is used to analyze the current business health. Each question is based on a scale from 1 to 5: 1 being low, 2 below average, 3 average, 4 above average, 5 high.
With this information, the computation is as follows:
$102,938 x 2.85 = $293,373
The Fair Market Value found above positions the business List Price at $290,000.
Funding Example
Purchase Price: $290,000
10% Buyer Down Payment: $29,000
10% Seller Financing: $29,000
80% Bank Loan: $232,000
Seller Financing 5-year term at a rate of 4.5% equals a monthly loan payment of $541.
Bank Loan 7-year term at a rate of 5.25% equals a monthly loan payment of $3,306.
After business expenses and loan payments, a buyer with a 10% down payment of $29,000 would retain a profit of $56,774, a 195% return on investment in the first year!
A lender is required to have a minimum 1.5 coverage ratio for any business loans extended. At a proposed Purchase Price of $290,000 with the terms listed above, the coverage ratio is 2.23.
Please note that the decision of whether to extend a loan on any sale belongs to the bank, and this document does not guarantee specific terms or verify that financing is available.
Print, sign and send to:
210 N 78th St. 2nd FloorOmaha, NE 68114
Or fax to:
f 402.939.0857