Entrepreneur Uses High-Tech Tools to Transform a Low-Tech Industry

Paresh Patel started his vending business with one pop machine to help pay for his college education.

Fifteen years later, Portland, Ore.-based Courtesy Vending LLC is a growing $3 million business with 20 employees and more than 1,100 machines in the Portland area. Patel says the company, which grew 10 percent last year, has the potential to someday be a $100 million business.

That's ambitious, but the entrepreneurial Patel--Oregon's Small Business Administration Small Business Person of the Year in 2005--may have the chops to do it.

Patel's business acumen has secured him loans from Wells Fargo and the SBA over the years, including a $1.4 million funding package to build a warehouse in northeast Portland.

Gordon Rodewald, business relationship manager at Wells Fargo, praises Patel's inventory- and cash-monitoring system, "which allows him to make money in an industry where other operators struggle to make money. He's very thoughtful and organized."

Patel, company president, honed his business acumen while earning an MBA and Ph.D. in organizational management and e-business.

He built his company out of necessity to pay for all that education, but never intended to make a career in vending.

Realizing Courtesy had more potential than he originally thought, Patel ramped up operations after completing his MBA at the University of Washington. He moved back to Portland, leased a warehouse and bought a small vending route.

Eventually, he purchased a larger, struggling competitor and moved to another warehouse, thanks to a $216,000 SBA 7(a) equipment loan. With a 7(a) loan, the SBA guarantees a portion to lessen the risk for the lender. Patel's variable rate loan was for 8.5 years.

That's when business took off, growing 600 percent from 1999 to 2001.

Yet as the company grew, Patel's control lessened. Drivers picked up the money and regulated machines' inventory.

"That's when I decided I had to do things to keep growing," Patel said.

In 2001, he invested $60,000 in handheld computers for his drivers to track sales and product. The data proved revealing: Drivers were putting what they liked in machines, with little variation.

Patel started varying products, which led to an uptick in sales. Courtesy Vending earns revenue strictly through machine sales; customers supply only space and power.