Starting a Vending Machine Business

 

What do retail stores, cinemas, factories, airports, schools, movie theaters, hospitals, arcades, supermarkets, restaurants, office buildings, recreation centers and more have in common?  All of them are perfect locations for vending machines. If you want a retail operation that you can run at just about any location, 24 hours a day without having to be there yourself, vending could be the business for you.

 

Annual sales for the vending industry are estimated to be between $19 and $29 billion. And vending is no longer confined to drinks and snacks any more.  These days you can sell everything from a massage to Internet access, popcorn, perfume, golf-club cleaning, shoes and a whole lot more.

 

If you are apprehensive about giving up your full-time job to embark on an entrepreneurial venture, vending gives you the opportunity to do just that.  You can start small, on a part-time basis, while retaining your full-time employment by investing in one or a few machines at first, placing them in nearby outlets, and then maintaining them in the evenings and on weekends.  

Before you invest, research the vending industry.  Visit sources like SmallBizBooks.com  for detailed guides to starting a vending business.  Read media such as Vending Times, the main magazine for the industry.  Check out the possibility of meeting existing vending business owners in non-competing locations.  It always pays to talk to someone who's already doing it.

 

Prepare a simple business plan suited to the scale on which you are starting, setting out your goals as your business develops.  Map out the total cost of your investment, the working capital required, cash flow forecasts, your market position, and your strategy for growing your business by adding new locations in the future, if applicable.

 

Scout locations before you buy.  Think about where you’ll find people who’ll want your goods, then visit the site at different times over several weeks to get a feel for traffic flow and customer demographics.

 

Don’t forget to factor in location costs into your initial investment estimate. Some locations will allow your machines on-site without charge because of the convenience to their employees, but many hosts will require rent or a small percentage of your sales as compensation.

 

The amount of time you will need to visit each machine can range from once a day to once a month (depending on the type of machines you invest in). Working out of your home will help keep costs to a minimum.  As your customer base increases, you can invest in more machines and grow your enterprise as large as you like.

 

The following are some keys to success in the vending business:

  • The main key to success in vending is the same as in all retail - location, location, location.  Find the right location and your machine will be profitable for many years.  High-traffic areas, of course, are crucial.  Also, if you have multiple machines, pay attention to the spacing.  If your locations are spread too far apart, you'll waste time and traveling expenses servicing them.  If your locations are too close to one another, you run the risk of not optimizing each machine’s profit potential.
  • Choose your vending machines and the merchandise with great care. Find out what types of vending machines are available and the reputations of their suppliers or manufacturers.  If the machines are not manufactured to a high standard you will pay the price in maintenance time and costs. There will also be a price paid in non-monetary ways such as having to soothe dissatisfied hosts (retailers, offices, etc.).
  • Consider if you have, or can attain, the mechanical ability to fix machines without help or to understand instructions given over the phone by the supplying company.  Look into getting a few fix-it tools like screwdrivers and pliers to keep in your car or van to take with you on your rounds for quick repairs.  Also, ask franchisors whether they offer mechanical support. 
  • Keep your administrative requirements to a minimum to make the most profit possible. This is made easier with a dedicated business setup located in your home.  You will also need access to transportation to visit your locations.

 

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