6 Tips for Starting a Vending Machine Business
In this post, we’ll review the six tips that you should follow if you’re interested in becoming a vending machine operator. Let’s begin!
How to Start a Vending Machine Business:
1. Learn About the Industry
While you won’t need to go through 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 get an idea of how much time you’ll have to put into your company, the amount of money you’ll likely need to invest, and how long you’ll have to work before seeing a return on that investment.
2. Choose the Type of Vending Machine Business You Want to Pursue
When starting a vending machine venture, you can either open a new company, or buy an existing business.
If you start from scratch, you’ll have the benefit of 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 good locations.
In comparison, if you choose to buy an existing company, you’ll save time on buying or renting machines and scouting locations. However, you’ll still need to check out those locations to see how they’re doing. You’ll also want to review the numbers to be sure that you’re buying a company that will allow you to make a profit.
3. Choose the Right Locations for your Vending Machine Business
Location is everything in the vending machine industry. Choosing the best snack machine locations will make all the difference in whether your business is successful. Look for locations that have the following qualities:
- Locations that have high traffic throughout the week: Airports, train stations, shopping malls, government buildings, event centers, and schools.
- Office buildings with at least 50 employees.
- Spaces without vending machines in place and without other food options nearby.
- Places where people frequently 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, and 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. On average, a machine will cost between €3,000 to €5,000. That number will vary based on where you purchase the machines and whether they are new or used. If you don’t have thousands of dollars to sink into this expense, you may need to save up first.
- Insurance and Taxes– Just 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– Rent and royalties might be figured into your contracts with the locations that host your machines. Those costs will vary on a monthly basis, but you should be able to determine approximately 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 all functioning properly. In addition, you should factor in repairs and replacements into your budget.
- Hiring – Many vending machine businesses operate with a small staff. Still, you might consider hiring a few customer service representatives and/or team members that will restock the machines.
5. Choose Your Products
Stocking your machines with inventory might not seem like a major task, but you should put some thought into the type of products you’re offering in each location to make the most profit. Think about the customers at each location and what they’ll be looking for.
Snack foods are the obvious choice. You can stock your machines with chips, candy, and soda, which do well in most locations.
If you want to change things up, you can get follow the trend of opening vending machines that have healthy snacks. According to Forbes, cities across the country are putting legislation into effect that will create rules like making 40 percent of vending machine products healthy options.
6. Invest in Your Vending Machine Business
Once you’ve learned about the vending machine industry and made the decision to start your business, 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 small 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
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 prior to 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 a good position to begin.
Do you have any advice for new small business owners looking to open a vending machine business? Share your tips with us in the comment section below!
Article Courtesy of Fora Financial