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How To Start A Vending Machine Business: The Complete Guide

Posted by VendTech Media - October 14, 2019
How to Start a Vending Machine Business

If you’ve been thinking about starting a business but you don’t have specific industry expertise or training, if you aren’t quite ready to give up your day job, or you’re looking for a home-based business, consider vending. 

 

A vending machine business is a great way to enter into the world of the entrepreneur without quitting your job or emptying your life savings. It’s also a great way to get the whole family involved in a business because it’s easy to learn, great for teenagers and can be worked on at any time of the day or night.  

Vending Fast Facts 

You may be asking yourself, “why would I start a vending machine business?” The fact is, the industry is booming and constantly expanding:

 

      • There are nearly 5 million vending machines in the US.
      • Vending machines take in over $7 billion a year in sales.
      • The snack vending niche alone generates $64 million a year in profit.
      • It is a cash-based business (though now, credit cards and e-wallets can be used). There’s no waiting around to get paid. 

 

Stop and think of all the places you’ve seen vending machines. As technology advances, companies are finding new ways to deliver products people want in one of the fastest and most convenient ways possible. Vending is a booming business and the opportunities for entrepreneurs are practically endless. 

Benefits of Vending Machine Businesses

There are many benefits to starting a vending machine business and it’s easy to start seeing those benefits relatively quickly.

 

Unlike brick-and-mortar businesses, overhead is much lower so it typically does not take nearly as long to break even and start turning a profit.

 

And with new technology that allows customers to pay for vending machine items with credit cards, debit cards, and electronic wallets, the vending business shows no signs of slowing down. 

 

Some of the many benefits of a vending machine business include:

      • Cash Flow: There’s no credit or customer invoicing involved in vending machines. Customers put money in the machine or swipe their card, and you instantly collect your fees. There are no bad checks to worry about, no late payments and vending machines in the right locations can collect money 24/7.
      • Low Overhead Costs: The barrier to entry into the vending machine business is relatively low and there are few overhead costs. When you’re starting out, you can manage your route yourself which means no payroll, benefits or call-offs. Basing the business out of your home to start also eliminates the cost of renting an office space. 
      • Flexibility: If you’re not sure about diving into vending full-time, you can keep your current job and work your vending route on the side until you’re earning enough to flip to full time. However, if you do want to dive right in, that is also an option. Your vending business is what you make of it. It can be a nine-to-five business, an evening and weekend business, a retirement business, a business for stay-at-home-parents – the only limitations are those you set for yourself. 
      • Easy to Scale: Once you start earning a smooth, steady and predictable income (and profit) from your initial machines, it’s easy to scale up. With a proven track record, it’s easier to convince new customers to take you on, adding new machines isn’t that expensive and you can grow as slowly or as quickly as you can handle. 

 

Whether you’re a seasoned business owner or you are taking your first foray into entrepreneurship, vending is an exciting opportunity to explore. 

Knowing Your Vending Options

Today, you can sell nearly anything out of a vending machine – including cars. Here are some of the common options for vending: 

Bulk Vending  

Think the sticker and gumball machines you used to love as a kid. These machines usually dispense an item for a quarter – which won’t get you rich overnight.

 

However, bulk machines are very low-maintenance and typically don’t require electricity, the products inside the machines are inexpensive to purchase, and in the right market bulk vending machines can be a decent source of passive income. 

Custom Vending (Non-Food)

Vending machines have come a long way from the gumball and soda machines of the past. In addition to food, you can also purchase specialty, non-food items in vending machines.

 

For example:

      • Laundry products in laundromats and shared laundry rooms
      • Apple vending machines that sell iPhones and accessories
      • Sephora vending machines that sell beauty products
      • Best Buy vending machines in airports that sell Beats headphones and other electronics
      • Uniqlo vends down jackets out of machines in airports around the world
      • Vending machines that sell sunglasses and hats at amusement parks and outdoor events
      • Guitar strings (Spotted in Portland, Oregon)
      • Bicycle parts in large cities
      • Legos
      • Socks (popular in bowling alleys and hotels)
      • Books
      • And literally hundreds of other items

Specialty Vending (Food and Bev)

And of course, traditional food and beverage vending is always n option, though choices are nearly limitless. 

 

      • Cold beverages: Water, juice, soda, etc. 
      • Hot beverages: Coffee, tea, hot water, etc. 
      • Alcoholic beverages: These tend to be more popular in Europe where laws are somewhat less strict regarding alcohol consumption. 
      • Traditional snacks: Chips, pretzels, candy bars, etc. 
      • Healthy snacks: Trade in your chips and candy for trail mix, granola, dried fruit, etc. 
      • Full meals: Vending machines now offer full meal options, including healthy meals. 
      • Ice cream: Self-serve yourself some soft serve at amusement parks, outdoor events, etc. 
      • And more – you can buy nearly any kind of food – including live crabs in Singapore – from a vending machine.

 

When you’re just starting out in the vending machine business, you can’t go wrong with food and beverages. According to Vending Market Watch’s 2019 annual report, food and beverage vending make up the majority of vending market share in the US. 

 

Because there are so many options for food and beverage vending, it’s often wise to start out with a single specialty and learn as much as you can about the business that way. Focusing on a single niche like healthy snacks ensures you are targeting your efforts and not taking on too much, too quickly. 

Selecting Your Vending Options 

Choosing the right products for your vending machine business is crucial for your success. But with so many options, how do you select the products that will be the most successful?

 

There are several factors to consider: 

 

      • Affordability: Products that are too expensive simply will not sell. You need to choose products that you can purchase at a good rate and resell for a profit without gouging your customers. You can save money and increase your margins by buying directly from the manufacturer.
      • Product recognition: Vending machines aren’t the best places to try out items no one has ever heard of before. You want to choose a product line that is recognizable to people and offers products customers will feel comfortable purchasing. 
      • Nutritional Value: American consumers are much more cognizant of the nutritional value of their food than ever before. They don’t want a lot of high-fat, high-calorie, sugar-packed and overly processed foods. Healthy alternatives to chips and candy are a great choice for modern vending businesses. 
      • Taste: If a customer doesn’t like the way a product tastes, they won’t be back for more. If your vending machines are in office complexes, residential complexes, or locations where the same people pass by every day, you want them to make repeat purchases. Try to sample products before you decide what to sell. 

 

At the end of the day, you have to be comfortable with the products you are selling. Choose the vending options that make the most sense for your budget and that you can feel proud of. 

Acquiring a Vending Machine License

Vending machines are typically required to have a license to operate in their state and/or municipality. When planning on starting a vending machine business, it is important to read and understand those requirements. 

 

You’ll typically need to visit your municipality to secure an operator’s license. If you are required to collect and pay sales tax, you may also need a seller’s permit. Perishable items may also be subject to health and food permits, as well.

 

The cost of a business license and other permits varies according to your location and can range from as low as ten dollars and as high as several hundred dollars. Some states require that food vendors take and pass a food preparation and handling course before being granted a license.

 

Navigating the ins and outs of business licenses can be a challenge. It helps to work with an expert vending company that can help you understand the rules, regulations, and restrictions and will help you ensure compliance. 

Other Legal Requirements for Vending Machine Businesses

As with any business, vending machine operators are subject to federal, state and local laws. There are specific regulations regarding food. The FDA has published detailed information on starting a food business that is an excellent starting point for entrepreneurs.  

 

Most businesses are required to collect sales tax on the goods or services they provide, as well. Noncompliance can lead to significant fines. Make sure to research sales tax requirements in your state so you can properly price your items to cover taxes, report sales tax appropriately and pay sales tax on time. 

Finding the Right Vending Machine Location

Location, location, location. That’s the mantra of any new business and it holds true for a vending machine business, as well. The locations you choose for your machines can make or break your profit margins. There are never any guarantees, but strategic choices will stack the deck in your favor. 

 

      • Look for areas with high foot traffic like malls, entertainment complexes, residential complexes, – anywhere large numbers of people gather or pass by on a regular basis.
      • Office complexes or office parks, large manufacturing plants, schools, and colleges. 
      • Locations with few or no food options like parks, jails, hotels/motels, gas stations without attached convenience stores, roadside rest stops and service businesses. 
      • Places that require a significant wait time for customers like repair shops, hospitals, medical centers, salons, bus and train stations, airports, etc. 

 

When evaluating potential locations, always consider the target customer in addition to the location. Different products work well in different environments. 

 

Don’t get discouraged if you find places that already have vending machines installed. Competition can be great – especially if you’re filling a niche that is not covered by the current vending selection. By placing an attractive, well-stocked vending machine next to an older, outdated machine or a machine with a completely different product line, you can stand out and attract business. 

 

Here are some signs that you could beat your existing competitors on the location:

 

      • Poorly maintained machines 
      • Old or unattractive machines 
      • Machines with a poor selection 
      • Vending Machines with a very different selection from yours 
      • Machines that only accept cash 

 

When it comes to vending machine businesses, the sky is the limit. There are opportunities everywhere to either break into new locations or to compete at existing locations. Don’t limit yourself and be open to trying out new things and making new connections. You never know when you’ll find a profitable location.

Where to Purchase Your Vending Machine

Aside from product location and selection, the actual machines are the most important part of starting a vending machine business.

 

A simple Google search will generate an overwhelming number of options for vending machines, all at different price points, different purchase and finance options, different sized suppliers, etc. 

 

To avoid overwhelm, you’ll want to start your search strategically:

 

      • Companies that offer cutting-edge machines: Outdated vending machines will not be successful. You want to choose a company that has a wide selection of machines, makes use of the most advanced vending technology and offers support for service and repairs. 
      • Companies with products people want: Remember, American attitudes are shifting. Parents aren’t as quick to snag a candy bar for their kids at the mall as they were a few years ago. People of all ages want healthier options, so choose a company that understands the shifting tides of consumer tastes. 
      • Companies that offer online management systems: If you’re trying to cover inventory, cash flow, and other critical issues using old-fashioned methods, you’ll be doing yourself and your business a disservice. Choose a company that offers cloud-based software that helps you manage your business at-a-glance via desktop and mobile applications. 
      • Companies that offer location assistance: Scouting and landing locations is the most difficult part of starting a vending machine business. It pays to work with a company that can provide you with leads, appointment-setting support, and other location services to get your business off the ground. 
      • Companies that offer training:  Some companies will sell you a machine, give you a number to call for product orders and send you on your way. If you’re new to the business, you need every advantage available to you to start your business off on the right foot. Look for companies that offer extensive training on the machines, products, the vending business and more. 
      • Machines that can be customized: Over time you’ll be changing your product selection. Not all drink containers or food containers are sized/shaped the same. If you can’t adjust your shelving in a machine, you won’t have the flexibility to add in new products.

Stocking Your Vending Machine

Once you’ve chosen a company to work with, you will need to think about inventory. We’ve talked about the importance of appealing to broad, national consumer tastes. However, that’s just the beginning. You can maximize sales by thinking about the types of products that would do well at specific sites. 

 

In the early days, try not to overstock items. It will take you a little while to get a feel for top sellers and understand what works and what doesn’t at specific locations. If you chose a vending company that offers extensive support services, they can typically provide you with some initial data to start out with so that you’re making smart choices.

Financing Options for Vending Machines

The startup capital required for a vending machine business is relatively low compared to other entrepreneurial ventures, but it still requires capital.

 

The total costs will depend on the type of vending business you wish to start, the company you choose to work with, the types of machines you want to use and other factors. 

 

There are several financing options for starting your vending machine business that include: 

 

      • An unsecured loan: This is a relatively simple process. Apply, receive funds, invest in your business. 
      • Short-term business loan: If you are already a business owner with good credit, a short-term loan can be a great way to access capital. 
      • SBA loan: If you’re a new business owner, the Small Business Administration offers special financing options.
      • Secured loan: This is where you offer the lending institution some guarantee in the form of collateral to secure funding.
      • Home Equity Line of Credit (HELOC): You can leverage the equity on your home and take out a home equity line of credit. You only pay interest on the amount you end up using. 
      • 401(k) Rollover: Some vending companies offer special IRS-approved programs where you can access funds in your 401(k) without early withdrawal penalties or income taxes. 

 

The financing option you choose will depend on your unique circumstances. Whenever possible, work with a financing expert to help you make the best decisions for yourself, your family and your future business. 

Vending Machine Franchise Opportunities

You could try to start a vending business from scratch or purchase an existing route, but those are often uphill battles. Starting out with no connections can be difficult and you never know how well an existing route has been serviced over the years. 

 

With these options, you’d be responsible for your own training and education, scouting locations, generating your own leads, developing your own sales process and more. Without experience in the vending machine industry, it could take you years to gain a foothold. 

 

A franchise opportunity or vending business opportunity can be a great way to give yourself an edge in your new venture. In these situations, you partner with an established company with a proven process, brand and business model and a dedicated sales and support team to help you launch and grow your business. 

 

In most cases, equipment, training, and support are also provided for you throughout the startup phase of your business and in the case of a franchise model, support will be provided throughout the life of your vending business. 

 

A franchise also brings with it a community of fellow operators. You’ll have access to training, conferences and meetups, online communities and more where you can gather with other business owners across the country to share tips, advice, insights and best practices. 

 

In exchange, you do have to pay a significant buy-in and ongoing fees to the franchise. 

 

The final option is a business opportunity. It provides all of the benefits of a franchise, without the heavy fee structure.

 

Buy-in is typically more than what you’d pay to start your own business from scratch, but you receive the same high-level assistance and support of the franchise without back-end fees that eat into your profits. 

Ready to Start Your Own Vending Machine Business?

Now that you know the ins and outs of starting your own vending machine business, are you ready to take the leap? Then partner with Naturals2Go, one of the top healthy vending machine companies in the nation. 

 

Voted a Best Business Opportunity of the Year for the last seven years, Naturals2Go provides real business opportunities without franchise restrictions or fees.

 

Our system will help you get up and running with equipment, machines, qualified leads and appointments, training, support and more. Our system has helped thousands of independent operators create thriving vending businesses at their own pace. 

 

With Naturals2Go, you set your own goals and then decide how you will achieve them. You can work full-time, part-time, where you want and how you want. We are here to train you and provide ongoing support as you grow your business. 

 

Our team acts as mentors, not high-pressure franchise administrator who set impossible goals and make impossible demands of your time and money.

 

Naturals2Go:

      • Teaches you how to be successful
      • Helps you secure financing if you need it
      • Doesn’t require a specific business model or control practices
      • Has no restrictions on location or area
      • Doesn’t require any employees and has low overhead
      • Allows for semi-passive income
      • Doesn’t require royalties or fees for your business
      • Provides you with autonomous options for your business
      • Allows the operator total independent practices for their company

 

If you’re ready to get started, we’re ready to talk to you. Contact Naturals2Go today to see how you could benefit from starting your own vending machine business.

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