Wednesday, February 27, 2008

THE GUMBALL KING!!

What I’m slowly learning is that the key to financial happiness is in your expenses to income ratio. How much money coming in to your house has to exceed how much money you are spending or plan to spend by so much that you don’t need to worry about it. How can NBA stars buy a $300,000 car. Because they make that in 2 weeks; your average person drives around 6 months of salary. Their income is so much so, they don’t have to worry.

To accomplish a good ratio you need to do two things, Increase your income and decrease your spending. I am living as low budget as I can stand right now, so I need to continue to increase my empire.

The newest move is:

GUMBALL MACHINES.

That’s right. I passed up the solar powered flash lights and the open toe snow shoes to buy some Gumball MACHINES!!

I am now the proud Papa of 5 gumball machines. Not just any machines but Altoid Machines.




As you all know by now, everyone is trying to get out of Michigan, so Craigslist is a cornucopia of people trying to drop businesses and run. I check everyday for opportunities that people can’t support due to poor cash flow, health, relocation etc. This was a relocation opportunity. Two young entrepreneurs such as myself owned 5 of these Altoid machines. They were both moving from Michigan and wanted to unload them at the price of $1000.00 for all. $200 a piece. The going rate is anywhere from $750 to $65 so I thought $200 was a fair price.

The good part; they were already in locations. That means no knocking on businesses asking if they would host the machines. It’s already been done. 4 out of the 5 locations don’t’ even get money and one gets 10% of the money that rolls in.

HOW PROFITABLE CAN THIS BE?


Good question. I ran some numbers and have been colleting some real data.
Here is the breakdown. Amazon.com sells 25 lbs of the gum for 319.00 including shipping and handling. That equates to approximately 7975 pieces or .04 per piece of gum.

You get 2 for a quarter, or sell them for 12.5 cents. That’s like a 300% mark up.

Each machines holds 3300 pieces of gum but they should be filled only ¾ of the way for ease in the turning mechanism which leaves 2475 pieces per machine. Let’s say I fill the machines up when there is 1/3 left meaning there is 1237 pieces of gum sold or $154.62 in the machine.

There is 2 pieces of gum for every quarter or 618 quarters every fill up.

It’s definitely not going to be quick money.

To get 618 patrons during business hours (6 days a week 12 hours per day) will take 8 weeks before refill is needed if I get 1 patron per hour.

To plan on worse case scenario use 1 sell every 2 hours which would mean $154.62 every 16 weeks per machine (5 machines) $773.00 or $193.275 a month. I will have an ROI (return on investment) of approximately 10 months.

Relax, I’m not going to quit my job or retire from gumballs but $193. bucks per month is a nice chunk of change.

Let’s see if the calculations hold true….and I will try not to chew up my profit.

-MJL



3 comments:

Anonymous said...

Gumball machines? Very interesting. Please keep us posted.

Anonymous said...

Is the $193 / month gross or profit?

-Paul

The Michael Jordan Lifestyle said...

Good question Paul,
That's actually Gross, so my profit will be $131.43 every month. My return on Investment assumption will still be correct because the machines were purchased filled with gum.

-MJL