The Butler Project

My accountant emailed me the other day. He needed some more information about Loose Change Vending, a business I had started a few years ago and got rid of last year. I thought I was done with Loose Change last January, but apparently I have one more tax return to file that reminds me of my huge entrepreneurial mistake . . . misstep . . . or trip and fall into a deep dark hole.

A couple of years ago I was reading Kawasaki’s Rich Dad, Poor Dad. It was one of my first entreprenurial self help reads, and he convinced me that passive income is the way to go. (Passive income being income for which you work once and are paid many times, or, ideally, for which you are paid residually forever.) To me, any money that comes in without requiring your constant presence seems like a pretty good idea.

Vending?

So, I was reading the classifieds one day and an ad listing a vending business for sale caught my eye. Eureka! Vending is a passive income– you just go and service your machines and pick up the quarters every month or so! What a great idea.

Not wanting to be rash, and a little afraid of jumping into my own business so quickly, I thought about it for a few days. I discussed the possibility of vending with my husband. I called my parents and talked to them about it. Although we were sure vending couldn’t be as easy as it sounded, none of us could think of a reason not to at least check it out.

So, I did it. I called the 800 number. A lady with a great southern drawl answered the phone at First American Vending. She connected me with Tom, vending salesman extraordinaire.

Tom was really nice. I questioned him; he educated me. Turns out it was not an established business he was selling, it was 15 brand new machines plus inventory and a guarantee that I would have my full investment returned to me within 5 months. Wow. That sounded like a good deal. That sounded like a great deal. That sounded like a deal to good to pass up.

Still, wanting to err on the side of caution, I talked to my husband some more. I talked to my parents again. I called my brothers and explained the business to them. Everybody thought it sounded great. Everybody was thinking about calling Tom themselves. Who knew you could make that much money on little 25 cent candy vending machines?

With my whole family excited and thinking of following me into the vending business, I felt some responsibility and decided to expand my circle of advice. My husband had a friend whose dad had owned vending machines in the past. He said they did alright and provided a steady income. I looked for more experienced vendors, and Mark reminded me he worked summers for a neighbor whose lifelong business was in vending. This neighbor had a big house and sent his kids to private schools, apparently vending was working for him! For further confirmation, I asked Tom if he had vending machines. I figured it would be a huge red flag if the vending machine salesman didn’t have machines. But he did. And he reported they did great. So, combine those three positive reports plus the guarantee, and I was sold.

Guarantee or Warranty?

Before I signed anything though, I questioned Tom about the guarantee a little more. Well, First American didn’t do the guarantee, that was Cornerstone Marketing, LLC in Bluffton, South Carolina. But Tom assured me everything was great and gave me the number of Cornerstone Marketing where I talked to Chris.

Chris was real nice. He explained that the deal was not a guarantee of profits, rather a warantee. Hmmm . . . I liked guarantee better.

The warranty worked like this: Cornerstone Marketing would send someone, a professional “locator” to my home town and that person would find the perfect locations for me to put my vending machines. I was required to service them regularly and send reports back to Chris at Cornerstone Marketing. If I was not making the minimum number of sales at any of my locations, then Cornerstone would send the locator back to find new places for me to put my machines and rake in my quarters.

Well, I still didn’t like the sound of warranty instead of guarantee, but I really couldn’t see any holes in their plan, and I had convinced Tom to include the cost of the locator in my package price, so I decided to go for it.

The way I saw it, the worst part about vending was finding profitable locations and getting the business to allow you to place your machine there. With that taken care of, I was free to ponder the problem of carrying all my quarters. Cornerstone was warranting 16 vends a day. That’s $1200 a month on candy and $1500 a month on my sticker/tatoo machines. So, how much does $2700 in quarters weigh? Would I need a cart? Even if I only made half of what they warrantied, $1350, how would I count all those quarters? Would my bank have a problem taking them? What would I do with all my money?

Let’s Put in on the American Express

Clearly, I was sold. I upped the credit limit on one of my credit cards, and gave Tom number. I signed and faxed the contracts in. It was exciting. I was on my way. Ha! Kawasaki had to live in his car before he made it big. Here I had pretty much a guarantee of $3000 a month, I was going far. Far, far.

Now take a minute and think about the three essentials for entrepreneurs that Mark posted about last week: money, a mentor and experience. Here I was putting myself out there for $11,000, money I didn’t have (not even in an emergency fund), for a business I had absolutely NO experience with, and the closest thing I had to a mentor was the salesperson I had met two weeks ago who was taking my money! I went far alright.

Wednesday I’ll tell you just how far I got. How many quarters I carted to the bank, and who won the lawsuit.

Image credits: Mykl Roventine and Me (yes, that’s my very own vending machine).