WATERLOO -- When Ryan Madison started his business, Arquel Vending, four years ago, he just knew the business would flourish.

Black-owned businesses would flock to him as clients, to support one of their own, he figured. Other businesses would follow suit, preferring to have a local vendor's vending machines in their workplaces. Within three years, his business would grow from his first, single bulk machine to 100,000 bulk and snack machines. He would move the business from the basement of his home to its own physical location, and hire employees.

"And after the vending machines, I was going to buy a game room, because there's not really anything for the kids to do," Madison said. "And then I was going to open a restaurant, and then I was going to buy a building …."

That was the plan. The reality was different.

He hasn't been able to add a new client in eight months. The business has about 100 vending machines, many of which are kept in the basement of his home, where he still runs the business from. The business is making enough money to support itself, but that's all. Madison has started working a second shift job at Ferguson Enterprises, and has started contemplating closing down his vending business.

"I've got a family to support," Madison said. "I hate to start talking about that, but maybe I'm going to be working for somebody for the rest of my life.

"I've come to the realization, maybe I'm just dreaming."

If he does, in fact, sell his machines and close up his business, Madison will be taking a path not unfamiliar to entrepreneurs. According to the University of Northern Iowa's Regional Business Center in Waterloo, 56 percent of small businesses fail within the first four years.

When start-up businesses fail, it's for any number of reasons, said Mike Hahn, senior program manager with the Regional Business Center. Citing a recent study published by US Bank, Hahn cited the most common reasons for failure:

-- Not having a well-developed business plan.

-- Overly optimistic about sales and money needed.

-- Entrepreneurs don't recognize or acknowledge their weaknesses, and don't seek help in those areas.

-- Inexperience.

-- Poor at handling or understanding cash flow.

-- Starting out with too little money.

-- Improperly pricing product or service.

-- Poorly marketing the business.

-- Not understanding or ignoring the competition.

-- Focusing or relying too much on one customer.

-- Hiring the wrong people.

-- Micromanaging, or not being able to successfully delegate tasks to employees.

Not all of these reasons have been a factor in Madison's decision to consider ending his business. He prepared a business plan when he was taking marketing and business classes at Kirkwood Community College in Cedar Rapids. While he might not have had a team of advisors, he relied on a business-owner friend for advice and occasional business leads, and called the Regional Business Center for advice often enough that they were "practically on speed dial."

Madison has advertised his business in the newspaper and local special publications. He has cold-called businesses looking for customers and followed up. He has marketed the fact that his is a minority-owned business -- "add color to your business" is printed on his business cards -- and that his is a locally-owned business -- "Waterloo born and raised" is printed on a flier he produced.

He even offers businesses where he places machines 10 percent of their take, to lease the space they take up.

He does all the work himself -- marketing, stocking the machines and fixing them -- to keep his overhead down. He took collision repair classes at Hawkeye Community College, which has come in handy when fixing the machines.

But Madison not only put too much reliance on getting the lion's share of area black-owned businesses as customers, he overestimated the willingness of other business owners to do business with him. Some were content to keep their current vendor, he said. Others, he alleged, wouldn't do business with a black man.

Madison's most profitable machine rakes in $100 a month, while his least profitable one brings in $6. Each machine can cost between $200 and $300 new, although many he has bought used from other people who entered, then left, the vending machine business.

Hahn said entrepreneurs should not be discouraged when a business fails to succeed.

"No, they should take it as a lesson for moving on," Hahn said. "As we tell folks, always have an exit strategy … and if things don't work out, don't get yourself in the dumps. Look for other opportunities.

"Sometimes I've seen people walk away from it, learn from it and go on to be very successful entrepreneurs."

If he pulls the plug on Arquel Vending, Madison said it won't be his last attempt at starting a business. "Like I said, I got business plans on file, of different ideas I have."

But by no means is Madison committed to pulling that plug. He's still hopeful things might turn around, and he would happily keep nurturing Arquel Vending if new clients came along.

"I really didn't want to sell it. It's really hard for me to even grasp that I'm going to sell it."

But new clients have to come along if he is going to keep the business going.

"When does it grow?" Madison asked. "When do you say, 'OK Ryan, enough dreaming?'"

Contact Jeff Wilford at (319) 291-1423 or jeff.wilford@wcfcourier.com.