In today’s video, I’m going to cover some tips on starting a profitable vending machine
business.
I’m Priyanka Prakash, small business expert and senior staff writer at Fundera.
Owning a vending machine is the ultimate side hustle.
There are over five million vending machines in the U.S. , and a well-placed machine can
generate over $500/month in extra income.
There are also some challenges to owning a vending machine, so it helps to have some
strategies in place before you start this type of business.
Let’s get started with tip number one.
Tip #1: Pick your business model carefully.
There are three main ways to acquire a vending machine:
* Purchase the vending machine on your own * Buy an existing vending machine business
* Enroll in a vending machine franchise
Each option has pros and cons.
Option one, purchasing a vending machine on your own, gives you the most flexibility,
but also requires the most legwork because you also have to source your own locations.
Sometimes, however, machine distributors will sell you a machine and have a list of open
locations to choose from.
Buying an existing vending machine business can reduce the upfront investment of time,
but you should do research and make sure that you’re purchasing a machine with solid income
potential.
Lastly, buying a vending machine from franchisors like Healthy You Vending and Coffee Business
reduces decision making, like which snacks to stock your machines with.
But, you also get less independence from this type of vending machine business.
Tip #2: Buy the right type of vending machine
If you go wit h the first option, which is to buy your own vending machine, you’ll
need to figure out what size and type of machine you need.
There are three main types of vending machines, each designed for different types of products:
* Bulk machines ($50 to $200) - These are small machines that dispense M&Ms, Skittles,
Mike & Ike's, or even little stickers or toys.
Usually, customers put in a quarter in exchange for a handful of candy.
These don’t generate much profit for the owner.
* Mechanical machines ($2,000 to $3,000) - These are the typical vending machines that most
people think of.
They dispense candy bars, soda bottles, chip packets, and other larger snack and beverage
items, usually in exchange for a $1 or more.
Mechanical generate more profit for the owner.
* Electronic machines ($3,000 to $5,000) - These machines have modern touch screens and accept
both cash and credit cards.
However, they are also the most expensive to buy.
You can buy new vending machines directly from machine distributors, or buy used machines
from Amazon, eBay, or Craiglists.
If you buy used, make sure you thoroughly investigate the machine’s condition and
age, and any existing warranties, because vending machine repairs can eat into your
profits.
Tip #3: Location is key.
You’ve probably seen vending machines in several areas, including gyms, airports, malls,
and other public places.
If you buy an existing vending machine business or buy into a franchise, then the location
isn’t up to you.
But if you purchase a machine of your own, you’ll have to do some location scouting.
You can contact property owners and ask to speak to their staff members that handle business
and vendor partnerships.
Most property owners will require a 10% to 20% commission from your gross sales, to account
for your usage of their space and electricity.
When choosing a location, make sure there’s a good match between your vending machine
products and the types of customers that frequent those locations.
For example, placing a vending machine full of junk food and candy right next to a gym
probably isn’t a good choice.
Keep in mind that vending machines come with a wide range of products, not just food.
It’s not uncommon to see vending machines in airports that are stuffed with baby products
or apparel, for example.
Baby Vend is a baby supply vending machine in Anchorage International Airport with plans
to expand nationwide.
Tip #4: Choose the right products.
The products that you stock your vending machine with will play the biggest role in your success.
As we mentioned earlier, different products play well to different customers and in different
locations.
* Candy and toy machines are a good choice in amusement parks, malls, and places frequented
by families.
* Healthy food choices, like nuts and granola bars, are a good choice for schools and gyms.
* Sodas, Red Bull, and other caffeinated beverage items are a good choice for universities.
* Personal items, like toothpaste and over-the-counter medications, are a good choice for airports
and public restrooms.
* Standard snack and beverage items, like chips and soda, tend to do well in business
offices, shopping centers, and other environments.
We recommend shopping for product stock at Costco and other wholesalers to get the best
deal.
Tip #5: Keep your machines well stocked and well maintained.
You definitely don’t want to have a situation where customers can’t buy their favorite
products from your vending machine because you were out of stock.
Several companies, such as VendSoft, offer inventory tracking for vending machines.
You can also use such tools to see which products are selling the best and generate the most
profits for you.
Maintenance is a big part of owning a vending machine business.
Machines can break down, customers can lose their money, and unfortunately, vending machines
can also be vandalized or stolen.
You should schedule regular trips to check that all your machines are in good working
order.
Make sure your machines display the correct email address and phone number for customers
to report problems.
And hire a reputable repair company to help you quickly make repairs when needed, so you’re
not out of profit for long.
You should also develop a good rapport with the property owner where your vending machines
are located.
They can clue you into recurring problems and positive and negative feedback from customers.
Lastly, we suggest installing security cameras near your vending machines to prevent vandalism
and theft.
Those are five tips for starting a successful vending machine business.
The average vending machine generates $76 in weekly revenue for the owner, but a well-placed
machine can earn much more, even hundreds per week.
For more information on starting any type of small business, go to fundera.com.
You can also visit youtube.com/funderaloans, and subscribe to our channel for more videos.
Thanks for watching!