Did you know that vending machines in the US alone brought in revenue of $36 billion in 2020?
Since they’re almost ubiquitous, vending machines aren’t really a groundbreaking business concept. However, if you’re trying to start your own company, the vending sector has a lot to offer.
Yet, while the premise sounds simple enough, trying to implement it can be tricky. So, keep on reading for our breakdown of starting a vending machine business, the right way.
Starting a Vending Machine Business 101: Do Your Research
If you want to be successful at beginning a company, market research and planning are essential.
A vending machine company may be started in a variety of ways, each with pros and cons. So, let’s explore them one type at a time.
Starting From Scratch
This method provides you the greatest freedom, since you may start with a small number of machines and add more as your business grows and your budget allows it.
It’s also the most time-consuming since you’ll have to track down and acquire equipment and negotiate places for its placement (unless you deal with a machine distributor who sells machines and provides locations).
Buying an Existing Vending Machine
With this choice, you’ll get instant income flow from your current company.
The owner’s reason for selling is critical, though. Essential background research involves checking the accounts and machinery, evaluating existing contracts, and investigating the current locations for any issues.
Purchasing a Franchise
Getting started in the vending machine industry couldn’t be simpler. With a franchise, you have a proven business model built on selling a certain product or line of items to the general public.
A monthly charge or a share of revenues is more common than just the initial franchise price. Your options for acquiring or renting equipment and supplies as a franchisee are often limited to those provided by the franchising organization.
You must register your company with the IRS and get all essential licenses and permissions as part of starting a for-profit enterprise. Check all federal, state, and local regulations before submitting your application.
The next stage is to draft a business plan, regardless of whatever option you choose. To ensure the viability of your company concept, you must do market research as part of your business strategy.
For example, you may determine that the market for vending machines in your region is already saturated by verifying current vending machine locations and interacting with company owners.
Locate Machines and Sign Contracts
Vending machine company success depends on location, much as in retail and real estate. Wherever there is a lot of foot traffic (malls, huge office buildings, schools/airports), you should position your machines.
The ideal site is one that doesn’t already have a vending machine nearby. It is likely that the best spots in your neighborhood have already been selected, and in certain circumstances, the present vendors will have exclusivity arrangements with the owner.
Even if you choose the ideal site, your product line must still meet your demands. Products that are well-known may fail to sell in high-traffic areas, even if the target audience is well-suited.
Outside of a health food shop, setting up a candy vending machine may not be the best idea. But, a Healthy You Vending machine would be perfect.
Dealing With Vandalism and Theft
Investigate crime data and steer clear of high-crime zones while inspecting potential sites.
Your revenues will be swiftly depleted if your property is damaged or stolen. There should be security cameras in view of the preferred sites.
The cost of installing devices and utilizing their power will have to be covered by the owners of the properties. In most cases, an agreed percentage of your gross sales is used to calculate this.
Depending on the number and size of machines, commissions typically range from 7 to 10 percent. As the owner of the machines, you are contractually bound to present the company or property owner with a statement of sales and commissions at regular periods.
It’s usually a good idea to have a lawyer analyze the deal before signing it.
Lease or Purchase Equipment
If you are starting a company from scratch, you’ll need to buy one or more pieces of equipment in order to begin going.
You must first pick what goods (food, beverage, or specialized items) and vending machines you wish to offer before you can proceed.
Snacks like gumballs, peanuts, and M&Ms are dispensed in these little containers. Costs may vary from $50 to $200, and profit margins might be as low as 0.01%.
To make a sizable profit, you’ll need a lot of machines. As an upside, they don’t need to be refilled as often and are easy to maintain and fix.
Going with Mechanical Machines
Larger than bulk machines, these dispensers are capable of dispensing many items.
In comparison to bulk machines, the profit margins are substantially better with a single unit costing about $2,000.
Bills and credit cards may be used in addition to the current touch displays on these machines. Electronic machines have a higher initial cost, but they are more dependable than mechanical machines in the long term. It will cost at least $3,000 to purchase a new basic computerized soda distributing equipment.
The cost of more advanced machines that have a bigger capacity, vend various items, and take several means of payment may quickly rise by as much as a third or more.
Vending machines are particularly vulnerable to theft and damage since they are often left unattended. Insurance is a good idea when you’re spending so much money on a computer.
Purchasing Used Equipment
Pre-owned machines are an excellent choice if you’re just getting started or want to save money on a previously used item. The downside is that you’ll have to deal with additional repairs.
New vending machines often come with a one- or two-year components guarantee when they’re first purchased. Limited warranties may be offered on previously used or refurbished equipment. You can do your own machine maintenance if you’re mechanically inclined.
But, you may need to hire a repairman if you can’t fix the problem yourself.
Best Side Hustles: The Vending Machine Company Edition
Starting a vending machine business doesn’t have to be rocket science. With the tips we’ve covered, you should have a solid foundation on which starting a company is more than feasible.
Next, you’ll want to make sure that you’re up-to-date with the latest business news, so check out our business section before you go.