Wednesday, April 2, 2008

Tales of A Gum Lord: Part 1

About a year ago, Jobina and I bought a small business. I had been looking for a source of passive income and had about a $1500 of my own personal money to spend. One business that you can actually buy for such a small amount of money is a candy vending route. So I started looking for one on usedwinnipeg.com and other classified sites. Soon I found one that looked promising: 24 Excel gum machines (on location). The problem was the asking price: $6500. I emailed back and forth with the person and realized that they were asking way too much money for it. Since it was only bringing in $500 every two months in profit I thought a more likely price would be $3000 as then I could pay it off in a year (of course I would have to borrow money from our savings - with Jobina's permission - to do this). The people were moving so I waited until just before they left and made the offer, less then half of what they were asking! I was quite nervous about doing this as I hoped they wouldn't scream at me or anything. Instead they countered - for an extra $1000 they'd give us an extra 11 brand new in the box machines. This seemed like a great deal and after more discussion with Jobina we accepted: $4000 for the route, the extra machines, and over $3000 worth of gum.

After I bought the machines I realized something, these things were difficult to install. They were wall mounted on not many businesses want you to put holes in their walls. So instead of installing the new machines, I decided to sell them. Our cost on those was about $73 but since they retail for around $700 (it's a huge rip off to buy vending machines new - more on that in part 2) I thought I could sell them for around $250 a piece. Two months later they were all sold at a nice profit!

We serviced the machines every two months (which was a very interesting experience!) and although the machines did OK, we never did get what the past owners said we would. At this rate it would take us at least a year and a half to pay it all back (not including our sales of the new machines) and I wasn't sure how long our gum would be good for. So after about 8 months we decided to sell. We sold the route two months ago for a lot less then we paid for it but in the end (after all of our expenses) we made about $2000 in net profit. Of course if we hadn't got those extra machines I would still be paying it off, but I think we got lucky with that. Anyway, that's my tale of being a Gum Lord, in part 2 I will tell you what I learned from this little entrepreneurial experience.

May Light increase!

2 comments:

Michele said...

I'm so happy for you for making a profit on that! You're the only person I know that has had a gum business, so I have nothing to compare to. Good job though!

Jay Boaz said...

I always like calling you the "Gum Baron", especially since I could never leave your house without you offering me some gum for the road!

Jay