4 Things to Know about Starting a Vending Machine Business

Start a Vending Machine Business

Even with the pandemic, many factors make owning a vending machine an attractive business venture.

The startup costs are relatively low coming in at around $2,000. The work is flexible and doesn’t require much day-to-day involvement, which accommodates other mommy routines. The risk is comparatively low and there is growth potential.

While the startup costs are low and the income is often passive, owning vending machines still come with risk. If one vending machine cost around $2000 start up you should have at least $4000 just in case there are unforeseen cost.

There is the cost of the machine, the cost of inventory, personnel to keep it stocked, maintenance and more.

The more perishable the product and the busier the area, the more of your time the machine will take.

If the machine location has a big break room and a lot of employees, you would have to be there once a day to fill your machines up because that’s how busy they are. Other machines like toys, candy, and hair products don’t require as much restocking.

Finding a Vending Machine Niche

One of the first steps in starting a vending machine business is finding your niche and deciding what to sell. That takes a bit of research and knowing who your customer is.

If you buy the wrong product, it won’t move, and you won’t make any money and you certainly don’t want to throw (product) away. This will cause a long delay on the return of investment, which is a little discouraging.

Supply chain issues are causing problems getting the right product and keeping it in stock. Make sure you are factoring this in when you are deciding who you vendor is. You also want to make sure you have a backup just in case one goes down.

Vending machine businesses are scalable, meaning it’s possible to start small and expand. You don’t have to wait for payments because customers pay when they purchase an item.

Location

To put yourself in the best position to be profitable means finding the right location.

Either a machine needs to be in places where there is a lot of foot traffic or where people might not be able to get away to grab something they need or want.

Pre-pandemic, high quality places meant schools and universities, malls, and office parks. Sales at those locations plummeted, but things are returning back to normal which gives you the upper hand when deciding placement.

Think about where people need to wait. While waiting, they may get hungry or thirsty. Also think about niche locations such as hair salons, salons, dental offices, and Veterinary offices.

Location can be about trial and error. There’s not much harm in moving a poorly performing vending machine to another location.

When looking for locations, be prepared to approach the owner or landlord with a business plan for the machine.

Also be prepared to:

Pay a percentage of sales or other fees for having your machine in their location.

Pay for the electricity the machine uses.

Ensure the security of the machine. There is money inside a machine as well as inventory. Theft and vandalism are always possible.

Research state and local laws and regulations.

Pay sales tax on the revenue the machine generates.

Purchase the Vending Machine

Then you will need an actual vending machine. There are several types, and prices vary depending on what is in the machine, whether the products need refrigeration or heating, and the interactivity. Buying directly from a manufacturer or supplier is one option, as is purchasing on a secondary market. Some companies also rent machines. Anytime you buy a second hand vending machine make sure you have a plan to maintenance it just in case it breaks.

Machines range from about $1,500 for a used or refurbished machine to several thousands for a new, high-end machine with many technical features.

Some machines have:

Remote monitoring software: This helps keep track of how the machine is working and notifies the operator if something is wrong.

Low stock alerts: Notify the operator when items need replacing.

Vending management systems (VMS): Tracks sales and other data to help owners make better business decisions.

Running the Business

While owning vending machines does not require any special skills, it is a business.

You will need inventory and someone to keep the machine stocked and maintained. This may require a van or truck. Perishables need to be stocked more often than other items. Learning some basic maintenance skills could keep you from having to hire someone if there is a problem with the machine. Different types of machines have different capabilities. Some take only cash while others will process credit or debit cards. Some models have touch screens or voice capabilities. Make sure that you have your phone number on the machine, and that the store location knows your phone number. If somebody didn’t get what they wanted, make sure the store can give them a refund and you pay the refund back to that store. Then get out there as soon as you can to fix the machine so that you can continue to make money.

Automatic merchandising isn’t for everyone but owning and operating a vending machine can be a good business. Being able to retrieve the money you make and restock your machines easily is the key.

All in all, this is a good way to make additional income to feed whatever your actual business will be. Remember that passive income is here to give you breathing room to think and build. This is not a get rich quick scheme but maybe it’s the additional $500 a month you need for advertising to scale your business.

Watch this video on Marcus Gram, he can tell you a lot more about the vending machine business.