Would you be interested in Automated Convenience Stores?

Would you be interested in Automated Convenience Stores?

That was the question asked to me by a customer of mine who is in the Vending Machine industry for many years. His company owns more than 800 vending machines like Candies, Snacks, Sodas, Coffee, Ice Cream and French fries.

He made me a business offer to design and program a small Automated Convenience Store prototype machine intended for the captive audience living in condominiums. The machine will be located at the lobby of these condos with a prior arrangement with the condos board of directors for a 10% sales commission. Where I live there are over 200 condos in a 10 miles long straight road.

His offer to me was that I would design and program this Automated Convenience Store and he would put up the money for all the needed machine parts, hardware and software, in return to my services I would get a 20% stake in whatever comes out of this new business. (In Latin America there is not a single machine like this)

We also agreed that if for any reason he backs out of the deal I would retain 100% ownership of all the works done plus all the machine parts, hardware and software purchased so far.

Last year he and I were at the Vending Machine convention in Atlanta, GA and could not see any Automated Convenience Stores Machine on the floor. These machines are very popular in Europe and Japan. So after he made it sure that there were not patentability issues with this type of vending machines (the first vending machine was called the Automat and debut in 1902 in the US)

In response to this I decided to start working on SolidWorks CAD designs and the HMI and started designing a large vending machine similar in size to 4 soda vending machines right next to each other.

This machine will only accept Debit Cards and Credit Cards with a minimum transaction of $5.00 and will dispense a shopping bag at the end of the transaction. A cellular modem will be mounted inside the controls to send the vending, maintenance and supplies data to company’s officials.

The product pricing range from $.99 cents to $5.00 dollars and includes products like: Milk, Beans, Olive Oils, Batteries, Coffee, Sugar, Corn Flakes, Cleaning Products, pharmacy products, cooking products, Crackers, Deodorant, Antacids, Sodas, Candies, and Vinegar with a total capacity for 150 different groceries products. (No Alcohol, Cigarettes and Condoms)

A robot arm will be responsible for picking up the items and delivering to the product bin for the consumer to pick up. The estimated production price of this machine is around $35 to $45 thousand US dollars; his design goal was a 2 to 3 year return on investment


Here is the Problem:

One day he calls me and decides to pull the plug. His investment so far? Less than $20M invested out of a $50M agreed upon. My investment so far? I have finished all the CAD designs and 75% of the entire HMI plus all the research and brainstorming time put into it.

QUESTION:

I have the means to finish this entire project on my own BUT I’m an integrator with no vending machine experience whatsoever, I’m great with machines but a lousy businessman. Need you guy advice! What would you do if you were on my situation?

• Would you finish what is left and get into a business that appear to required little time and appears not to conflict with your integrators job?
• Would you discard all the work done and continue with your integrators job?
• What would you do?

My first question is why did your customer (business partner) decide to pull out?

My second question is what type of legal agreements (both verbal and non-verbal, but more importantly the non-verbal) are already in place between you?

“Why did your customer (business partner) decide to pull out?”

He mentioned problems with his other business; I did not ask for details.

“What type of legal agreements (both verbal and non-verbal, but more importantly the non-verbal) is already in place between you?

What I exposed above was a fully written agreement, he did not hesitate to comply with it and I already took ownership of all the work done and material bought so far, all safely stored in my office.

The SUNY in New York opens.

Here you can see the type of products it sells:

Given what you've said I suggest that you find someone who is good at business (maybe this same guy) and strike some kind of deal for their expertise where they get x% stake in the company and you provide the engineering and financial backing. Then get a business plan setup, create a corporation, let the corporation own all the work to date and materials that you have taken ownership of, and last have a bank loan the corporation the money needed to finish the project. If you go through this process then you are at risk of loosing your time and the materials, but the bank is at risk for the extra money, and you have two people (guy you're cutting in and bank loan officer) looking at whether or not this is a viable business.

Doing the automation is a piece of cake...

What you need to figure out is how to get, and maintain (satisfy), the suppliers.

If you can do that and still make a profit... then I think you've got something!

Be sure to consider some stocking the shelves!

In addition to that, you really should consider installing a currency-reader (and changer). Assuming, of course, that the general currency is real and valid!