The ads are alluring: “Make $500 an Hour in the Vending Business!” “Earn Money While You Sleep in a Vending Machine Business!” But they sound way too good to be true. Can vending machines really be a viable way to earn cash?
The National Automatic Merchandising Association reports that 18 percent of vending-machine operators make between $1 million and $5 million a year. But proceed with caution: The Better Business Bureau warns of scams, and a search of “vending machines” on the Federal Trade Commission’s website unearths dozens of fines and lawsuits.
Here are a half dozen tips for getting into the vending-machine business safely and profitably.
1. Why People Start A Vending Machine Business
Many people want to own their own business but do not have a lot of money to invest in startup costs, which is possibly your situation.
In such cases, vending machines makes a great choice because you do not need a lot of money to invest upfront, which makes it possible for many people to own their own business.
A vending machines business can give you the freedom you have always wanted to own your own business and work for yourself, but it takes dedication and it is not as easy as some of the commercials or ads would have you believe. As with any startup business, it takes dedication and planning to make a vending machines business successful.
2. The True Income Reality Of Starting A Vending Machine Business
Most people have heard the claims that a vending machines business will earn you $100 per hour, you start doing the math and think, “Jackpot!” However, in reality, this is not possible and most people in the vending machine business will quickly tell you that these figures are way off.
First, starting a vending machine business typically means you buy one machine and strategically place it in a high-traffic area.
- To start a vending machine business with success, you have to speak to the owner of the business you are targeting and work out some kind of deal for them.
- Otherwise, they will not let you place you vending machine on their premises out of the goodness of their heart.
3. How Much You Can Expect To Make When You Start A Vending Machine Business
On average, many entrepreneurs who start a vending machine business report that one vending machine in a prime location may bring in $50 to $100 per month.
- In theory, if you have 100 vending machines – all in prime locations – you may be able to hit around $1000 per day, but that may not be everyday.
- This is because maintaining 100 machines is a lot of work, usually much more than one person can do, which means you will need to hire someone to help you maintain and stock them.
4. How Much It Typically Costs To Start A Vending Machine Business
The average cost of one vending machine is $1000 to $2500, which means that two would cost you as much as $5000.
The key to making a lot of money starting a vending machine business is to continue to buy more machines and make sure they are in the best locations with lots of traffic.
Be especially careful for people that want to sell you several vending machines all at once, after all, their goal is to sell you the machines, they don’t care if you sink or swim after you have purchased them and are in debt with the bank.
5. How Long It Takes For The First Machine To Produce Income
Producing income in any vending machines business depends on many factors such as
- Your location, how much traffic your location gets,
- Whether your vending machine is place in a location where people actually notice it, and
- Whether or not your product offering actually appeals to the people who come into contact with your vending machine.
But for the purposes of this example, let’s say you were able to put a vending machine in the hospitals cafeteria, which by the way, is a great location.
- You decide to put in a cappuccino machine, which makes sense since people are always looking for something a little tastier than just a regular cup of coffee.
- If the product is good, fully stocked, and inviting, your machine may begin to earn income in the first month.
- Of course, you have to realize the money you initially invested, if you are not counting any profits until your machine is paid off, you may not realize income for six months.
The Traffic Your Vending Machine Gets And If It Is Fully Stocked And Working Correctly Directly Affects Your Income Potential
Therefore, if you have prime location with tons of traffic, it is easy to make $200 per day with one soft drink machine, but this is not the norm for most.
Keep in mind that the prime locations are tough to come by and you have to offer the owner something in return, such as a cut of the profit instead of paying rent for the space.
6. How Many Machines To Start Off With When You Start Your Vending Machine Business
The worst thing you can do when you are just getting started in the vending machines business is run out and buy 200 machines.
Why? Because you have zero experience on location and now have indebted yourself with all these machines that may or may not make you any money.
Therefore, be cautious when you start your vending machines business and buy one or two, get prime location and work hard to keep these running smoothly.
Remember – Start Small
Once you begin to see a profit, then you can expand and buy more machines.
Starting a vending machine business is exciting, but start small, that way you do not find yourself in debt and you can test the waters to see if you like the industry.
7. Starting A Vending Machines Business And Why You Shouldn’t Be Lured Into Becoming An Overnight Millionaire – The Bottom-Line
There are so many factors that influence whether or not your vending machines business will actually be a success. The key is to avoid the traps that so many new vending machine business owners fall into.
Do you research and follow the recommendations of the vending machine veterans in the industry.
The advice we got from vending machine business owners is simple – find a prime location, build solid business relationships, maintain a realistic expectation, start small, and go out of your way to ensure that your vending machines are giving customers and business owners something they really want.
Here’s To Your Vending Machines Success!
1. Decide on the vending machine type
Many vending machines are filled with a selection of drinks and snack foods. Others focus more narrowly on a particular category, such as ice cream, popcorn, cigarettes, videos (think Redbox), or personal hygiene. Some machines dispense individual units; others offer items in bulk, such as hard candy and gumballs.
2. Get the proper licenses
In some states you’ll need a seller’s permit to operate vending machines, and many states require you to charge sales tax on the items in the machines. The tax varies by state, as does the minimum price that launches the requirement to collect the tax. Be sure to check with your local licensing office to find about the requirements in your area.
3. Buy the machines
Decide whether you want to buy new or used machines. Prices can vary wildly: A new machine often runs a few thousand dollars, while used ones go for a few hundred or less on Craigslist, eBay, or Amazon. Keep in mind that all machines eventually break down, so you’ll need to either hire someone to repair them or learn to do so yourself. (Tip: You can buy parts from a manufacturer such as Vendors Exchange International.)
4. Buy or lease a truck
Depending on how large your operation is, you’ll need a van — or, perhaps, a specialized beverage truck — to carry products from machine to machine. A used truck starts at about $5,500 at places like Specialty Trux, or you can lease a basic truck for about $500 a month.
5. Find a supplier
You can buy products in bulk at a local big-box store or go online. Check out sites like Candymachines.com for bulk candy, or SmartVending for a full line of supplies. Markups will vary, depending on the product. Bulk items, such as candy and gumballs can be marked up 200 to 300 percent, while single items can typically be marked up between 60 and 100 percent. Of course, the more products you buy, the better price you’ll get, so you may have to settle for lower markups when just starting out in order to be competitive, and then increase them as you add machines.
6. Secure a location or two
Where you place your vending machines will determine how successful you are. Check out each site before you approach its owner. Look for a place that gets a lot of foot traffic, such as an airport, a parking lot, a shopping mall, a large office building, or a busy waiting room. Once you select a location, approach the owner and work out a deal. Some vending machine operators offer the owner a small percentage of their profits; others donate a portion of sales to charity. NAMA, in its publication Vending 101, suggests that you sign a written contract whenever you place a machine.
7. Service your machines
Once your machines are placed, it will be up to you to keep them clean, well-stocked, and in working order. You may be able to do this by visiting once a week, but if the machine is popular, you may need to turn up more often.
Of course, all of this isn’t quite as easy as earning money while you sleep. But with careful planning, hard work, and a little luck, you can run a successful vending-machine business.