Starting a vending machine business can be a great way to generate passive income. Vending machines provide convenience for customers while requiring minimal effort to operate. In this article, I’ll provide a step-by-step guide on how to start your own successful vending machine business.
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What is a Vending Machine Business?
A vending machine business operates by placing automated machines at different locations that sell snacks, drinks, and other items. Customers can purchase products on-demand by inserting money into the machine. It provides continuous earning potential with low overhead.
The machines earn you income with minimal effort required on your part. After the initial setup, it’s mostly passive aside from occasional restocking and maintenance.
The benefits of running a vending machine business include:
- Low startup costs – You can buy used machines for as little as $200 each.
- Own your own schedule – Spend just a few hours per week to service locations.
- Minimal labor – Let the machines do the selling for you!
- Cash-based – No need to mess with credit card processing.
- Passive, continuous income – Earn money even while you sleep!
And there’s plenty of opportunities for newcomers like you to stake your claim.
Choosing Your Vending Machine Niche
There are vending machines that sell just about anything, but beginners should stick to more traditional options:
- Snack/beverage machines – The most common type placed in offices and schools. Vend sodas, chips, candy, coffee, and more.
- Office convenience machines – Sell essentials like hand sanitizer, face masks, phone chargers, and computer cables in office settings.
- Gumball/toy vending – Capsule toys and novelty items appeal to kids. Perfect for pediatrics offices and family restaurants.
I recommend starting with snacks and beverages since it has the widest customer appeal. Consider your location as you select a niche. A machine selling phone chargers or Advil would make sense in an office, but maybe not a bowling alley.
Finding the Funding to Get Started
Like any business, starting a vending operation requires some upfront capital. Your main startup costs will include:
- Vending machines – $200 to $2,000+ depending on new or used.
- Initial product inventory – $300 per machine recommended.
- Location commissions – 10-30% of sales.
- Liability insurance – $300 annually.
- Transportation – Gas, mileage, and vehicle maintenance.
Don’t let the startup costs intimidate you. There are plenty of ways to fund your new vending venture:
- Use personal savings if you have some cash to invest in your business. Just be prepared to go several months before becoming profitable.
- Take out a small business loan. The average SBA loan size is around $20k, more than enough to get started.
- Find an investor who provides startup capital in exchange for an ownership stake. Make sure you check your state’s securities laws first.
Or follow my approach – start small and scale up. I bought used machines for $800 each and financed them over 12 months with the supplier. This minimized my upfront investment.
Within a year, profits from those first machines helped me purchase more and expand my business.
Choosing Reliable Vending Machines
Once you have funding secured, it’s time to actually purchase vending machines! Here are some of my top tips for choosing the right equipment:
- Buy commercial grade – Don’t skimp here – machines will take a lot of wear and tear. Opt for metal construction over plastic parts whenever possible.
- Consider used/refurbished – You can save 40% or more buying quality used machines vs. new models. Just inspect carefully prior to purchasing.
- Accept modern payments – Make sure your machines take credit cards and mobile payments in addition to cash. This greatly improves sales.
- Check dimensions – Pick machines that will fit the locations you have in mind. Measure doorways and space allotments ahead of time.
- Select popular brands – Go with reliable names like Crane, USI, Seaga, Royal Vendors, and APi Vending. These companies stand behind their products.
I purchased used APi snack machines for $800 each to start. Three years later, they’re still going strong after some minor repairs.
How to Land Your Ideal Locations
In the vending machine business, location is everything. Here are some of the best locations for your machines:
- Office break rooms
- Manufacturing facilities
- Car dealership waiting areas
- Hospital and medical center lobbies
- Airports and train stations
- Community college campuses
- High-traffic public parks
Approach the manager or owner of these locations with your pitch. Offer to place a machine for free in exchange for a commission – say 70% of sales goes to them, 30% to you.
Emphasize how you handle all maintenance and restocking. Provide references from other locations you service. Start with a 6-month renewable contract so they can opt out if they aren’t satisfied.
If you get pushback, consider offering a larger commission split, or even trial your machine at no-risk for 1-2 months. Prove your excellent service, then negotiate from there.
Keeping Your Machines Stocked and Humming
To keep your vending machines operating smoothly for the long-term:
- Restock based on consumption – Use sales velocity at each machine to determine how frequently to refill each product.
- Rotate older inventory first – Always refill using older stock before newer product. First in, first out.
- Clean machines every visit – Wipe down the glass, empty waste bins, and remove debris that could jam the machine.
- Service during off-hours – Refill machines when fewer people are around, like early morning or late nights.
- Respond to issues ASAP – If a machine goes down, get onsite to troubleshoot within 24 hours. Have a repair company you can call for help fixing technical issues.
I refill each machine every 7-10 days on average. I always make sure popular sellers like chips and candy bars are fully stocked. Signs that indicate “sold out” or empty slots frustrate customers and lose sales.
Managing Finances and Expenses
To maximize profits, you need to carefully track your vending machine finances:
- Use accounting software like QuickBooks to log all sales, inventory expenses, commissions, and income for taxes.
- Process credit card payments through a merchant like Square or PayPal if you accept cards.
- Make regular deposits to avoid keeping much cash on hand. I deposit weekly after collecting from my machines.
- Set a profit target per machine and monitor performance.
- Reinvest a percentage of profits into purchasing additional machines to scale up over time.
In the early days, be lean. Buy used machines, use your existing vehicle for transportation, and limit inventory variety to better selling products. Luxuries like branded trucks, newer machines, and custom wraps can come later.
Focus on profitability first with the business fundamentals in place.
Promoting Your Vending Machine Business
To attract customers and encourage sales:
- Create professional, branded labels with your business name/logo and contact info to place on each machine.
- Offer monthly promotions like “Buy 2 Get 1 Free” or “10% Off with Coupon”.
- Advertise at new locations you are pitching with flyers by the machine.
- Engage customers on social media with polls, contests and product teasers.
- Send locations regular reports of their sales and commissions so they remain happy.
Getting those first few machines placed provides invaluable experience. As you prove your excellent service and gain a customer following, expanding into additional locations and vending niches becomes much easier.
Go For It!
Hopefully this guide gave you a clear overview of how to start your own vending machine business from the ground up. The passive income potential is huge, and startup costs are reasonable.
While it takes work to get your first machines running smoothly, over time, you can outsource stocking and maintenance tasks to employees. That leaves you free to focus on acquiring new locations and growing your profits.
And comment below if you have any other questions. I’m always happy to provide free advice to new vending entrepreneurs. I’ll see you out there stocking machines!