It is again the threshold of a new year, and vending and office coffee service operators are again asking themselves the big question: "Where are we going to get new growth and generate more revenue and operating profits for our company?"

• Raising prices
• Increasing sales to existing accounts
• Getting better at what they already do
• Expanding into bottled water
• Expanding into office coffee service
• Expanding into food-service
• Servicing gourmet coffee stores
• Adding coffee roasting
• Acquiring other firms
• Providing full-line vending

If operators decide on any of the above, they should keep in mind most have a high start-up cost.

However, there is a relatively new market for operators. And if ever the time was right to enter that market, now is the time. The new market is small locations - accounts that employ 20 to 99 people, and in most cases, these small accounts are not being serviced with snack items. If they are being serviced, most are not being serviced well.

This market offers a lot of potential for operators looking to expand.

In the United States, there are 6 million business establishments that employ 88 million people. The companies that employ 20 to 99 people represent 10.7 percent of those 6 million establishments. That means there are more than 642,000 locations out there in the marketplace waiting for the vending industry to service them with snack items and OCS.

These smaller locations employ 29.5 percent of the nation's work force. This represents about 26 million people. If each one of these individuals purchases half a snack a day at 50 cents, they would collectively spend $13 million a day. This segment of the market is also growing at the rate of 27 percent per year and rising.

Vending operators have got to face some hard facts. The number of the large locations is decreasing. Statistics don't lie. All operators have to do is look at what's going on in the nation.

Unemployment is at its highest since the Great Depression. Some companies are moving their manufacturing facilities out of the Untied States. This is not new; it's been going on for 15 years or more.

The larger companies are laying off workers by the thousands and moving to smaller locations. Downsizing is in.

The majority of these workers will have no option for employment but to go to smaller companies or build their own small businesses. This is the current trend.

There will always be some large locations, so let's look at this segment of the market. Companies that employ 100-plus workers represent only 2 percent of the employers, or, at present, 12,390 locations across the United States. Over the last 10 years, the number of these locations has increased by only 3,000 per year.

With 9,000 vending companies in the United States, there are a lot of operators competing for a little growth.

If all things remain equal, each vending company will acquire less than one new account per year. What makes the future growth of larger accounts look even dimmer is government figures on industrial employment. Industrial employment is not expected to return to its 1980 level.

To acquire larger accounts in most cases, vending companies will be forced to give away their profits in the form of commissions - in some cases as much as 30 percent.

By operating in this fashion instead of acquiring new accounts, there is just a lot of account swapping among vending operators.

However, when operators pursue smaller accounts, they will not have to give away profits because the smaller accounts will not ask for commissions. They are just happy to receive the service.

Operators also should keep in mind that when they pursue larger locations, they meet stiff competition from the national, regional and large local vending companies.

If ever the time was right to pursue smaller locations, now is it. In the last seven years, vending machine manufacturers have put in a great deal of research into the small location market. They have designed equipment specifically for this market.

There is a wide variety of machines to meet the small account's snack, soft drink and coffee needs. All operators have to do is a little research and find out what's available.

Over the last seven years, several vending, OCS, honor shack companies and new operators have asked: What is the best way to operate and be profitable in small locations?

After working in this market for several years, these pioneers have developed various ways to service this market. The two best ways are full service and cooperative service.

The operators who used these methods have from 25 to 1,500 machines on location. One operator has been working for five years using full service and has 1,500 tabletop machines on location.

Let's take these two methods one at a time.

Full Service is the most popular way to service small locations. Operators generally build a route of 130 to 150 accounts, making 25 to 35 deliveries per day, using tabletop vending machines.

Operators usually dedicate a truck and a routeperson to this route, providing snacks only. They do not try and leverage these small snack accounts on their other full-line snack routes or coffee service trucks. They let the route stand alone.

The vending operators tried, at first, to deliver to the small accounts off their full-line trucks, but with no success. The routeperson did not get enthused collecting $25 to $40 per week, so a different routeperson was assigned to the small account with a different type of truck.

The OCS operators found that by delivering snacks in addition to all the other items they were delivering was just too much work. The efficiencies were not there. So they decided to establish strictly snack routes.

With honor snack operators, it was an easier transition. Their mode of operation was basically the same number of accounts served per day.

The only problem honor snack operators encountered was the capital investment needed. They were used to purchasing a cardboard box, not a vending machine. But once they saw the benefits of the tabletop machine, their attitude changed and they moved into the business.

The benefit the honor box operators experienced with the tabletop machine was that it stopped the 25 to 35 percent shrinkage they had been experiencing. This savings could cover the cost of the machine. The machine collected the coins whenever a sale was made. The money was there, which eliminated people taking products and paying later.

The machine made the customer honorable in an honor-type business. It increased account retention, and it gave the operator an alternative if the account did not want the honor snack program. But most of all, it gave them assets, which increased the value of the company.

The method of delivering products is handled in two ways. One way is to bulk load the delivery truck, call the account, go in and take the order, go back to the truck and pull the products.

The second method was developed due to a special design of a vending machine. The products are prepackaged in a delivery tray. The delivery person goes into the account, pulls the products out of the machine that are left over from the prior week's delivery, and reloads with the new products.

At the end of the day, the trays are sorted for code dates and reloaded for next-day delivery.

This method offers the benefits of speed, inventory control and accountability. If operators place a certain amount of products this week and pick up products next week, the money should be there. Also, on a weekly basis, operators can see what the account sold by product type.

Cooperative service vending (CVS) is where the operator delivers the product to the account and "free loans" the vending equipment to the account, meaning he does not charge for use of the equipment. In some cases, the operator leases the equipment to the account with an option to buy.

The standard CVS method is where the operator sells the product to the account. The account is responsible for loading the products into the machine, taking the loss on stale products and collecting the money. The operator pre-sells the account by phone.

Another method of CVS is utilizing UPS delivery with a monthly equipment charge. This method is the same as the standard CVS except the operator pre-sells the product by phone and UPS deliver the product.

The operator sells the product for a percentage less than the retail price. This way, if the volume is great enough, the account pays for the monthly equipment charge, and receives the service for free.

There are other factors operators should consider when they move into smaller snack locations. For instance, the delivery vehicles are different. Operators don't have to use expensive, heavy-duty trucks with lift gates. Some operators use minivans, which help reduce their start-up costs.

Operators should also use smaller tabletop vending machines. One thing operators learned is that small business locations are limited in space. It's easier for the routeperson to install a tabletop model machine compared to a floor model, but this depends on the location.

Operators have also learned that variety is a key to more sales. Vendors should look at the machines with the most selections.

When it comes to selecting products, national brand name products sell the best in small locations for the same reasons they sell best in large locations.

The machines should have change capability. Operators have found that 50 to 60 percent of the accounts need a stand to put the machine on.

Once the decision has been made to pursue small accounts, how the small accounts will be serviced and what equipment will be used, the next question is how will the operator acquire these new accounts.

Many operators have found that telemarketing works best. Operators use in-house telemarketing or outside firms.

If an in-house telemarketing method is to be used, the operator needs to get a list of businesses within their service area that employ 20 to 100 people. These lists are available from business list dealers. The list should include each company's name, address, phone number and zip code.

The operator will want to make sure that the list is identified by zip code. This way, as operators acquire new accounts, it will be easier to align the route for speed and efficiency.

If an outside telemarketing firm is used, the operator should get references about the firm to make sure it is reliable.

Once the route is in place, operators will find other opportunities with small accounts, such as soft drinks. Soft drinks are one of the first products small accounts ask for after snacks, followed by coffee, drinking water and allied products.

By adding more product lines, operators will find there is great potential in the small location market.