Starting a business may seem like a daunting prospect. But you do not have to reinvent the wheel. Vending machines have been around for ages, but they can still be a profitable investment.
With some business ventures, you will be looking at thousands of dollars in startup costs. However, in the vending industry, you can start small (with a single machine) and scale the business over time.
Whether you are a beginner or seasoned entrepreneur; whether you are looking for a side hustle or full-time gig; a vending business may be a great option. Below are some questions you may have about vending machines:
What should I stock my vending machine with?
Food and beverage products: Traditionally, you find candy bars, chips, and sodas in a vending machine. Those types of machines are still very popular. However, there are a variety of specialty vending machines in the food and beverage industry. For example, hot beverage dispensers serving gourmet coffee drinks, vending machines with fresh sushi rolls, and even machines serving freshly-made pizza.
Retail products: Vending machines can dispense anything from electronics to makeup. You may want to choose a specific niche that pairs locations and products. For example, vending laundry detergent in a laundromat, or selling travel products at a train station.
Tobacco products: In certain jurisdictions, you can buy cigarettes, vaping products, and even cannabis from vending machines. If you are willing to navigate the local tobacco laws and tax requirements, this may be a lucrative option.
How much do vending machines cost?
Machine costs vary considerably depending on size, age, and functionality. You can find basic used/refurbished machines, for as little as $1,000-$3,000. Conversely, you can spend over $10,000 on new machines with high-tech features such as touch screens, credit card functions, and remote monitoring software.
Start by looking on online platforms such as Craigslist and eBay to see if you can find a used machine from someone in your area.
Next, find some secondary online retailers or vending suppliers that carry a range of products and brands. For example, Vending.com.
Another option is to purchase a machine directly from a manufacturer such as AMS or SandenVendo. Buying from the manufacturer may mean you get more features, warranties, and delivery options, but it is often the most expensive route. You need to consider your budget and find the best machine for your needs.
In addition to the cost of the machine, you will need to think about:
- Taxes: You will need to pay sales tax on the revenue your machine generates. Tax rates vary by location.
- Rent: You will need to pay rent or commission to the owner of the property you place your machine on. Vending machine owners can pay anywhere from 5% to 25% of their sales to the landlord.
- Stock: The machine may be a one-time purchase, but you need to keep restocking it with products. These costs will vary depending on the items you choose to sell.
- Maintenance: You should have some money set aside in case your machine needs to be repaired. If you hire someone to restock your machine, those employee wages would be additional maintenance costs.
Where should I put my vending machine?
Location is key in the vending industry. You need to find areas with significant foot traffic, and the type of customers you are trying to attract. You may want to pick a niche, for example, vending protein bars and shakes at gyms. However, for general vending machines you should consider:
- Hospitals and medical clinics
- Schools and college campuses
- Shopping malls
- Airports, train stations, and bus depots
- Hotels
- Offices complexes
- Grocery store
- Laundromats
- Apartment buildings
- Manufacturing plants and industrial parks
- Car dealerships
- Entertainment venues
Another factor to consider when picking a location is crime. Theft and vandalism can really eat into your profits, so try to find a spot that is relatively safe.
Once you find a good location, you must familiarize yourself with the small business/vending regulations in that jurisdiction. Next, you will need to negotiate with the proprietor of your location and agree on a compensation rate, contract length, and other terms.
Is owning a vending machine business a big time commitment?
You will need to check, restock, and collect money from each of your machines on a regular basis. At a minimum, you should plan for weekly visits. It can be a big time commitment purchasing inventory, traveling to and from locations, and restocking the machines.
Often, vendors put a phone number on the machine for service requests. You should expect to spend some time dealing with customer service issues.
For your venture to succeed, you should also spend time analyzing sales trends, researching new products and locations, and promoting your business.
To minimize the time spent, you may want to invest in a vending management system (VMS). Management software can provide you with real-time inventory updates, track your revenue, and help you manage your business remotely.
Once your business is running smoothly, you can always scale up and hire staff to help you with the day-to-day operations.
We think vending machines are a great small business idea. It is an easy industry to get into and it is a highly scalable business. You may start with a few machines making you a couple of hundred dollars a month, and end up with hundreds of machines making you millions! Please let us know in the comments if you have any other small business ideas.
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