February 9th, 2006
- Program Changes
- Business Development
- Program Highlights for Fiscal Year 2005
- Upcoming Prospects
The Montana Business Enterprise Program experienced a number of significant changes during the past year that will materially impact both its current operations and future growth prospects. The purpose of this progress report is to bring you up to date on these changes and to also discuss business development opportunities, spotlight a number of milestones accomplished during the year, and briefly describe what we see as significant future growth prospects.
MBEP initiated a major modification to its operations model during the past fiscal year and also experienced higher vendor turnover than has been normal heretofore.
- Operations Model. The MBEP operations model was modified so that vendors now function as franchise owners and managers with greater personal responsibility for the success or failure of their individual businesses, while MBEI continues to provide oversight and technical support. This step was taken in an attempt to stimulate a greater sense of ownership on the part of the vendors and to create a greater incentive for more efficient financial management. This change took effect on July 1, 2005.
- Vendor Turnover. The program experienced more vendor turnover than was the case in past years. Two vendors in Billings and one in Missoula left the program, while a new vendor was added in Missoula. At the end of the fiscal year, licensed blind vendors were operating routes and/or facilities in the Missoula, Kalispell and Helena areas. The Billings route was mothballed in July but will become active again in May when a new vendor commences operations.
MBEP succeeded in taking two major steps that will substantially improve business opportunities available to its vendors. These included:
- Malmstrom Air Force Base. A legal impediment to blind vendors operating vending facilities at Malmstrom Air Force Base in Great Falls was removed when the 2005 Montana legislature deleted a clause in the original state Blind Vendors Act that exempted "federal military reservations" from the blind vendors program. This statutory change creates a tremendous opportunity for MBEP vendors to operate facilities on the largest federal property in the state. MBEP is currently working with Malmstrom officials to obtain a permit that would enable blind vendors to begin operating vending facilities on the base.
- United State Postal Service Permit. MBEP scored a major coup recently when after 18 months of negotiations, the Postal Service issued a permit that allows MBEP and its blind vendors to begin taking over vending operations on Post Office facilities throughout Montana. The permit is unique in that for those facilities in areas without licensed blind vendors, MBEP can manage the vending services on the properties by contracting with private vendors. This will allow MBEP and its vendors to realize additional income in the form of commission payments from the selected private vendors. The impact of this development will be both major and immediate: over 100 vending machines are operated at various USPS facilities in Montana, many of which operate around the clock. With the largest concentrations being in Billings, Missoula and Helena, blind vendors in those communities will experience a major boost to their businesses.
MBEP's most recent fiscal year ended on September 30, 2005, and a number of highlights from the year merit attention.
- During the fiscal year blind vendors directly operated 183 vending machines on 47 sites, as compared with 132 machines on 42 sites in FY 2004, increases of 39 percent and 12 percent, respectively.
- During FY 2005, the MBEP vendors generated $301,568 in total vending sales, an increase of 63 percent over fiscal year 2004.
- The number of state vending sites administered by MBEP increased from 68 to 71 during the year, and the number of vending machines on these sites was 284, roughly the same number as the previous year. Any state sites that are operated by non-blind vendors are subject to a monthly lease charge negotiated by the private vendor and MBEI. Income received from this source totaled $22,171 in FY 2004, an increase of almost 36 percent over the previous fiscal year.
- Four new applicants received initial vendor training in FY 2005, the same number as fiscal year 2004, while two new vendors were placed on routes. Four licensed vendors are currently awaiting placement on routes.
Looking forward, several opportunities should arise in FY 2006, including:
- We expect to experience a smooth transition onto a number of new Post Office sites, especially in Billings, Helena, and Missoula. Vending operations in these areas alone should together generate approximately $7,000 per month in additional vending income.
- We expect to make significant progress in securing vending opportunities at Malmstrom AFB, both in food services and vending machine operations.
- We expect to receive a permit from the federal General Services Administration for the operation of a snack bar and vending machines at the Federal Building in Bozeman.
- We are exploring the possibility of placing interested vendors in a few snack bar operations on state properties in the Helena area. We have discovered through our experience in the Missoula Federal Building that snack bars can generate very good profit margins for blind vendors.
If you have any questions or comments about the business enterprise program, please don't hesitate to contact us. We'd be happy to discuss them with you. Thank you for your interest.