There are many reasons to start a vending machine business. It is a good opportunity for anyone looking to enter the business world and put their money to work. However, the goals of this business will vary from person to person, but that’s the point! You can approach business any way you like, as long as that way will work. In this article, I will discuss the ins and outs of starting a vending machine business.
1. Why Would I Start a Vending Machine Business?
There are many reasons why, or why not, to start a vending machine business. First off, is the low amount of capital needed to start. You need some sort of capital to get started, but you don’t need a large source of money. You should have about $800 saved, which is rather easy if you have a consistent job paying at least minimum wage.
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Second, is the low amount of time invested. Once the machine is set up in a good location, all you really have to do is keep it stocked. That’s a 10 minute run to the store, then head to the location, and stock it back up. It doesn’t take long at all. Now, as you build bigger and bigger, it may take more and more time, especially if you don’t have any vending management software. It doesn’t need to take more time though! Keep reading to find out how.
Third, is simply about you. Does a vending business sound like something you could get into? It will definitely give you ample time to do other things, in-fact, you could turn a vending business into passive income if you get it large enough. You need to compare the business to other ideas and see if it fits your lifestyle. Vending businesses are great for people that need a side gig. If you want a full-time job, I would find another job to pay the bills until your vending business really takes off and you can begin reinvesting profits. We’ll discuss this as well.
2. Where do I begin?
The first thing you need to do is find a location. The location is the MOST important part of owning vending machines. A bad location doesn’t bring in much profit, where as a good location can bring in hundreds – even thousands of dollars a month! You can make your money back on a vending machine the first month! Locations to look for include:
- High Schools
- College Campuses
- Shopping Plaza’s
- Apartment Complexes
- Office Buildings
- Mechanic Shops
1. The reason I say high schools instead of school in general is because many high school students have jobs, and they are much more likely to buy on impulse versus others in the area. Since they have jobs, they see income rolling in, and when they get thirsty, oftentimes they might head to the vending machine in the hallway to get a drink. When I was in high school, every time lunch rolled around, there was a line at the two vending machines in the cafeteria, and people were always dropping their money in it. Try and find a spot in a high school where there isn’t another vending machine, and talk to the principal about putting a vending machine there. If needed, give the school some of the profit. It will be worth it, because a high school is an amazing place to put a vending machine.
2. College campuses are also great for vending machines, because there is a consistent movement of students throughout the day, five days a week, if not longer. You can either put the machine in an academic building, or by the dorm rooms. An academic building will provide access to more students, but the dorm rooms will keep the regulars on the hook. Either way, you are getting a great source of consistent buyers every weekday.
3. Shopping Plaza’s are great places for a vending machine, if there isn’t already one there. Leave yours by a store entrance, and try to negotiate a good price to leave your machine there. If you leave it near the entrance, then customers walking in and out will consistently buy drinks before they hit the road.
4. Apartment complexes are good spots for vending machines for the same reason that dorm rooms are. If someone needs a drink, they just head over to the vending machine and get a nice, cold drink. These can be great spots for vending machines because there will always be people there, and they have access to a drink at all times of the day.
5. Hotels are great locations, because people in hotels typically don’t have access to as much as someone that lives in an apartment or dorm room. They may only have a small supply of drinks in a mini-refridgerator, and this will lead to a lot of sales for your vending machine.
6. Office Buildings are good locations for a vending machine. I’m sure you watch TV shows where office workers almost always have a drink in their hand! That’s because they stay in the same room for almost the entire day, and the idea of a nice, cold, refreshing beverage lingers out in the hallway. Vending machines are very popular here, and are a good choice for your vending machine.
7. Mechanic shops are also good for vending machines. They typically have less foot traffic than the other options, but people will typically have to wait for hours before their vehicle is fixed, and the vending machine is likely the only option available.
Now, you need to prepare for negotiation. There isn’t much to it, just make sure that the owner offers a reasonable commission for you to pay. Now, many experienced vending business owners will offer a higher commission in order to get an amazing location, which is a smart plan. The goal is to be in the busiest areas possible. Try and aim for a 10-20% commission on average, maybe a little higher depending on location.
If you’re just starting out, I recommend against buying a new machine. You can buy a used one that may need some cleanig up, or a minor part, or nothing at all! Instead of paying $3000 for a vending machine, you can pay $500, $600, or $700 for a nice machine. I recommend OfferUp, Craigslist, or other trustworthy websites like that. Make sure you inspect the machine very closely. There have been many good reports from these websites referring to vending machine purchases.
Next, you will need to stock up on sodas or snacks. I recommend either a Sam’s Club or a Costco membership, because you can buy things for bulk at a discount. Plan to spend about $100 every time you stock up, depending on the area you live at.
How a Vending Machine Business can Create A Lot of Income
When you start, you might only make a few hundred dollars a month. That’s alright, I’d be surprised if you made more. But you can turn that into tens of thousands a month with no extra money reinvested. Let me explain how.
Let’s say you go online, and buy a high-quality used vending machine for $1000. You find a nice hotel to place the machine, and then you stock it with a variety of sodas. You can buy a 36pk of soda from Sam’s Club for $10.50, and a vending machine holds 300 sodas. That means that each soda costs $0.29, and you can sell them easily for $1.50 a pop. Let’s lay it out:
- Vending Machine – $1000
- Restock – $88
- Vending Price per Soda – $1.50
- Sodas in Stock – 300
So your total investment would be $1088. Now you have a location, and you place the machine, fully stocked and ready to go. Your sodas should sell quickly if it is in a good location, which means you come home with $450 in revenue. Subtracting the price to restock, and a typical 15% commission, you will bring home about $295. We’ll assume all of the vending contents will be bought in a months time. Normally, you will restock more than once a month, but there will still be leftover items. It is important to make the machine appear full.
Save that $295 for four months, and you are ready to buy a second machine. You would have gathered $1180, and could easily get one- or two good vending machines. Assuming you find a good location for this machine as well, you will bring home another $295 every month. So now, instead of bringing home $295, you will bring home $590. Now, instead of it taking four months before you can buy another vending machine, it only takes two. Six months into your business, or two months after purchasing your second machine, you can buy a third machine. Now, instead of making $590 a month, you will make $885 a month, assuming this machine’s contents can be sold in a month as well, which is more than feasible.
At this point, you can buy a vending machine the next month. Then you reach the point where you can buy two, three, four, five, and even more in the same month! You can repeat this compounding process with any industry or business, but vending makes it particularly easy because of the low up-front cost.
Turning the Profit into Passive Income
This step is rather simple. Find someone you trust that is interested in a part-time gig, and get them to run the route for you. Allow them to manage stocking the machines, and you’ll manage the paperwork. There isn’t much paperwork at all in this business though, besides tracking the revenue, profit, and expenses.
This essentially turns the business into passive income!
All in all, a vending machine business is a great business to get into as a side hustle, until you build it up enough to where it can either
A. Become a full-time job
B. Become passive income
Once you make your decision, you will certainly earn a good amount of money if you manage your money well and reinvest it into good machines.