6 Tips for Starting a Successful Vending Machine Business
Are you interested in starting a successful business? Vending machines aren't new or revolutionary, but opening a vending machine company can be a lucrative business opportunity. Many business owners start a vending machine business as a form of passive income and their full-time jobs.
With little experience or training, anyone can get involved in this industry if they're willing to put in the time, conduct research, and make the necessary investments.
We'll review the six tips you should follow if you're interested in becoming a vending machine operator in this post.
How to Start a Vending Machine Business:
1. Learn About the Industry
Although you won't need extensive training to get into the vending machine industry, you'll need to do some homework before starting your venture. With some market research, you can make the following decisions before you start your vending machine business:
Time Commitment: Determine how much time you're willing to spend on your vending machine business. If you have a full-time job or own another company, this may affect your decision.
Startup Costs: You'll need to decide how much money you can invest in your business at the startup stage and in the long term. In some cases, you may be able to qualify for a business loan.
Return on Investment: Before you start your business, you should estimate how long it'll take before seeing a return on investment.
Once you finish conducting market research, you should draft an official business plan. By following a business plan, you'll have a clear strategy to make your business a success.
2. Select a Vending Machine
When starting a vending machine venture, you can open a new company or buy an existing business.
If you start from scratch, you'll benefit from more flexibility, so you can start small with just a few machines and grow over time. It could also mean significantly more work, though, as you'll need to build a network of suppliers and do the legwork of finding suitable locations.
If you choose to buy an existing company, you'll save time buying or renting machines and scouting locations. However, you'll still need to check out those locations to see how items are selling. You'll also want to review the numbers to ensure that you're buying a company that will allow you to make a profit.
3. Choose the Right Locations
Location is everything in the vending machine industry. Choosing the best snack machine locations will affect whether your business is successful. Look for locations that have the following qualities:
Locations with high foot traffic: Airports, train stations, shopping malls, government buildings, event centers, and schools.
Office buildings
Spaces without vending machines or other food options nearby
Places where people must wait in line or sit in a waiting area (like doctor's offices)
4. Know the Startup Costs
As with any business venture, there are costs associated with starting a vending machine business. You'll need to consider them when deciding whether opening this type of company is right for you. Here are some of the costs to consider:
Vending Machines – The obvious expense to consider is the machines themselves. A vending machine will cost between $3,000 to $5,000. That number will vary based on where you purchase machines and whether they are new or used. If you don't have ample funds to put towards this expense, you may need to save up first.
Insurance and Taxes – Like with any other business, you'll have to factor insurance and tax costs into your budget with a vending machine company. Find out about tax licenses and liability insurance policies before starting.
Ongoing Costs – The locations that host your machines may include rent and royalties in your contract. Those costs will vary every month, but you should be able to determine how much you'll have to pay on average.
Maintenance – Schedule regular visits to your sites to check on your machines and ensure they're functioning correctly. In addition, you should budget for repairs and replacements.
Hiring – Many vending machine businesses operate with a small staff. Still, you might consider hiring a few customer service representatives or team members that will restock the machines.
5. Choose Your Products
Stocking your machines with inventory might not seem like a significant task, but you should consider the type of products you're offering in each location to make the most profit. Think about the customers that will visit each business location and what they might want to purchase.
Snack foods are the obvious choice; you can stock your machines with chips, candy, and soda, which will be popular in most locations. If you want to change things up, you can follow the trend of opening vending machines with healthy snacks.
According to Forbes, cities across the country are putting legislation into effect to create rules like making 40 percent of vending machine products healthy options.
6. Invest in Your Business
Once you've learned about the vending machine industry, it's time for the real work to begin. Although it can be a great industry to be a part of, you might benefit from applying for a small business loan to cover initial costs and keep your machines stocked with fresh inventory.
In addition to vending machine business loans, here are some other financing options that you might benefit from:
Inventory Loans
Equipment Financing
SBA Loans
Merchant Cash Advances
Business Line of Credit
Business Credit Cards
Conclusion
Starting a vending machine business can be a great way to earn money, with plenty of flexibility. However, it's crucial that you consider all the factors in this post before taking the plunge. Once you understand the industry, know where you want to put your machines, and how you'll finance the operation, you'll be in an excellent position to begin.
Editor's Note: This post was updated for accuracy and comprehensiveness in April 2022
Since 2008, Fora Financial has distributed $4 billion to 55,000 businesses. Click here or call (877) 419-3568 for more information on how Fora Financial's working capital solutions can help your business thrive.
