Robert Cornelius readily admits he knew practically nothing about vending when he bought a vending business with 50 customers four and a half years ago. The San Jose, Calif. native was in the middle of a divorce when he decided to leave his previous business and find a new way to make a living.
Had he known at the time how hard the vending business is, he might have looked for something else. He hates to admit that he actually believed the person who told him he only had to work one day for every $10,000 in monthly sales.
Nevertheless, Cornelius has been able to build his company, Custom Touch Vending LLC, into a profitable 2-route operation, having more than tripled the size of the original business.
Cornelius was able to leverage his prior experience as a lifelong car salesman and auto dealership owner/manager. He was also fortunate enough to find a good, seasoned industry veteran to bring him up to speed.
In the four and half years Cornelius has been in the vending business, he has proven that a committed entrepreneur can still make it in vending.
a Foundation in the auto business
Cornelius spent most of his life working in the auto business, following in his father’s and both grandfathers’ footsteps. But in his early forties, he faced some tough circumstances. He was getting a divorce, and the ownership of his business assets was in dispute.
Cornelius decided to find another way to earn a living. He remembered an uncle in Memphis, Tenn. had done very well in vending.
His auto dealership had a vending bank, so Cornelius asked the vending operator servicing the machines how he could get into the vending business.
The operator put him in touch with someone who wanted to sell an operation with 50 stops.
Unfortunately, the guidance he got early on was misleading. “I actually thought the vending business would give me more free time,” Cornelius recalled.
He paid a sum equal to a year’s worth of gross sales for the business, which included a leased 800-square-foot warehouse, one delivery vehicle, the machines, some product inventory, and an employee who handled deliveries, bookkeeping and money counting.
There was a mix of accounts: auto dealers, auto body shops, industrial accounts, high tech companies, and elementary schools. The machines mostly consisted of snack and cold drink machines. Most of the cold beverage machines were leased from bottlers.
A BAPTISM BY FIRE
Cornelius’ first move was to clean the warehouse and try to understand the books. The employee he “inherited” was only going to stay on a temporary basis.
His next move was to meet with all the locations and introduce himself.
Cornelius was confident in his interpersonal skills, but he also knew he had to learn about vending. He called other operators out of the local phone directory to see who would be willing to meet with him. He found the San Jose vending operator community very willing to help a sincere newcomer.
“Everybody I called said ‘yes,’” he said. “I was able to establish some really nice relationships with some other successful vendors in my market place right off the bat.” These relationships proved crucial to his future success.
When he visited other operators, he learned how vending warehouses are organized. He also learned the specific employee roles. “I took pages and pages of notes,” he recalled.
“It was obvious that some of these guys were more successful than others,” he said. He noticed that operators who treated their employees better were more successful.
EARLY PROFITS PROVED ELUSIVE
Cornelius was led to believe the locations would gross $30,000 per month and yield $15,300 in gross profit.
In his first week, his gross profit barely surpassed half the anticipated amount. Most of the accounts produced less than $200 a month.