How to Start a Vending Machine Business
Starting a vending machine business is a great way to generate passive income as it requires little work other than stocking your machines with inventory and collecting the funds they produce. Best of all, a vending machine business has relatively low start-up costs and can be a great side hustle for those working a full-time job.
Keep reading to learn the steps to starting your vending machine business, top reasons to consider starting a vending machine business, tips to increase your sales, and how you can maximize profits!
Craft a Business Plan
The first step in starting your vending machine business is to create a business plan the outlines how your business will operate. You’ll need to outline things like what products to sell, where you will source them, how you will price your items, how you will keep inventory stocked, and many other questions pertaining to your operations.
Once your business plan is complete, and you decide to move forward with the business, you can move onto the next steps.
Determine Your Business Structure
There are several different types of business structures to consider depending on the size of your operations.
If you will be the sole owner of the company, it’s best to start as a sole-proprietorship. This type of business does not require much work in the eyes of the IRS. Both your business and personal income will be reported on your individual tax filings. You should keep records of your business expenses as some of them can be deducted from your taxes.
If you are partnering with another investor, you can consider a general or limited partnership. This will effectively enable multiple investors to be apart of the business.
For those who want more protection, a Limited Liability Company (LLC) could be the right decision. This waives the liability rights from the owners of the company protecting them if something occurs.
You can review all of the different types of business structures here!
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Decide What Products You Will Sell
Between beverages, snacks, and candy, there are many different options you can consider stocking your machines with. Some of the most profitable are:
- Healthy snack foods
- Energy drinks or coffees
Sourcing Vending Machine Inventory
You’ll need to find sources for your inventory. Be sure to find sources with low costs so that you can maximize your profits.
You can buy in bulk to save money but be sure that your inventory will not spoil before being sold. Some people chose to purchase their inventory from wholesale clubs like Costco or Sams club, but there are other options you can consider.
Usually, the size of your operations will determine how you source your inventory. Those with smaller operations might find a wholesale club to work for them. Those with larger operations might want an even lower cost and have it delivered to them.
Purchase Your Vending Machines
There are a few options you can consider when first starting your vending machine business. The most costly part of starting your vending machine business is the cost of the machines themselves. Depending on the model you select, you can expect to spend upwards of a few thousand dollars per machine or more.
You can also consider purchasing an established vending machine business or route. This will cost considerably more, but eliminates much of the initial work that comes with starting a vending machine business.
Lastly, you can consider starting a vending machine franchise. Opening a franchise will cost less than starting a business from scratch, but you will pay franchise fees for each sale, costing you money over the long haul.
How to Save Money Purchasing Vending Machines
The costs of vending machines can be expensive, but there are several options to lower these costs.
Purchase Used Machines
You can find used vending machines online on websites like eBay or Craigslist at a fraction of the cost of a new machine. It’s important to ensure they are functional and working before handing over any money. This is a great option for those just starting up to keep costs low.
You can also consider leasing your vending machine. This will cost you a monthly rate which will decrease your profitability but will also lessen your start-up costs.
Some vending machine leases will offer a “lease to own” solution in which after a certain amount of payments, you will fully own the machine. This is a great option for those looking to save some money upfront.
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How Much Money Can Vending Machines Make?
Vending machines can be as profitable as you make them. Selecting the right location, with the right products, to the right audience can maximize your earnings.
Machines that are not well optimized might only make a few bucks a week. But those that are well placed can easily earn $100+ per week. By owning multiple well placed vending machines you can quickly start to grow your earnings.
Where can I Place My Vending Machines?
Determining where you will place your vending machines is critical to their success. You’ll quickly learn that some spots might perform exponentially better than others. It might take a while to nail down the best locations for your machines but it’s a good idea to test them out.
You should look for locations that have a high volume of foot traffic. Locations such as malls, office buildings, and outside of other retail businesses make great candidates.
Unfortunately, you cannot drop your vending machines wherever you’d like. You’ll need to approach the owner of the location you’d like to place your vending machine and work out the terms of your agreement. They will typically charge a monthly rate or a percentage of your sales to pay for the space and electricity required to operate your machine, so be sure that you can maintain profitability after these costs are accrued before signing any contract.
How often do you have to stock vending machines?
To maximize your profitability, you’ll need to ensure that your machines are stocked with inventory. Some companies will opt to have a set schedule in which they visit each machine and restock them as appropriate. Other operating might have software that alerts them when inventory is approaching zero.
Either way, you should aim to keep your inventory in stock by doing frequent checks or purchasing software to gain insight.
Ways to Increase Vending Machine Sales
If you’ve started a vending machine business, you’ll probably want to know a few ways you can increase your revenue. Below are some of the top ways you can boost your vending machine sales.
Test Out Different Locations
The number one factor that will determine your sales is the amount of foot traffic around your machine. As mentioned above, you should try different locations to see what is working and what is not.
Not only does the location of the machine matter, but so does its’ appearance. You should ensure that your machine functions correctly and remains clean to encourage customer use.
It’s wise not to place your machines directly next to other competition, vending machines or not. If you can find a location with no other options, this is a good spot to test. Placing your machine directly next to another one could have a negative consequence on your sales.
Offer More Expensive Products
Instead of offering less expensive options, consider offering products with better margins. Items like juices, energy drinks, or quality coffees can bring a boost to your bottom line. Keep in mind that these items might have a decreased shelf life which can hurt your profitability if they frequently spoil.
Increase Your Number of Machines
If you want to increase your sales fast, purchasing another machine is most likely the best way to accomplish this. You’ll need to shell out the initial investment, but it can quickly become a positive return.
Accept Credit Cards
People are less likely to be carrying cash now more than ever. If your goal is to maximize sales, consider upgrading your technology to accept credit card payments. This will make it easier and more likely for customers to make a purchase. You’ll need to account for any credit card fees that might come with it, but it will likely be a net gain for your bottom line.
How To Grow Your Vending Machine Business
If you’ve started your vending machine business and are looking to become more profitable there are many options to consider.
Do you know which products sell the most? What times are busier than others? You should aim to analyze any data that you have to make smart business decisions. You can consider purchasing software to help collect and analyze data.
Vending Machine Software
There are many different companies that manufacture software to help you analyze your operations. You can find software that tracks inventory (eliminating wasteful trips to restock), calculates profits after commissions are paid, and optimizes your routes to maximize efficiency.
Some of the top vending machine software are:
To maximize your business's profitability, cutting costs is always one of the first considerations. Some options to cut costs are:
- Reduce the frequency of restocking
- Find less expensive locations
- Reduce administrative spending
- Reduce your inventory costs by finding new sources
Know Your Audience
A vending machine that is placed around a skate park should sell different products than one that is located near a children’s store. You should know your audience and what products they prefer. In the example above, it’s probably a good idea to stock the skate park vending machine with soda, energy drinks, and various snacks. For the machine next to the children’s store, consider coffees, fruit snacks, and other items for both parents and children.
Reasons to Start a Vending Machine Business
There are many reasons to consider starting a vending machine business. Some of the most common are:
- Start-up costs are relatively low
- Can be done in addition to a full-time job
- You can outsource some of the labor required for stocking your machines
- Relatively low risk
- Little knowledge is required to start
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Conclusion: Starting a Vending Machine Business
Staring a vending machines business provides a unique opportunity to generate passive income with a low initial investment. You might be turned off by the idea of only making a few bucks here and there, but you’ll notice that these machines can quickly be turned into profit-generating assets with little work required.
You can start your vending machine business for as little as a few thousand dollars with the opportunity to purchase more machines as your business grows. If you have extra time on the weekends or weeknights and want to make some extra money, starting a vending machine business might be perfect for you!
Have you had experience with vending machines? Comment below!
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