If you have been looking for a new business opportunity that requires no special skills or training, or which can be done part-time and/or as a home-based business and even get your family involved in it as well, then you may have just found the right thing for yourself. The vending machine industry can definitely be a suitable option for both new and experienced entrepreneurs.

The question of how to start a vending machine business may have come to you for another reason—maybe you have thought of the perfect location, have connections and relations to vending-friendly product suppliers, or know of someone selling a vending machine.

Whatever your reason for switching into the vending machine industry or business, you are looking for a weekend side hustle, a low business startup-cost, or simply an interesting new way to expand your portfolio, this venture can become lucrative and fruitful with as little as a $2,000 investment. With the right placement, product selection, and user interface, a no-frills vending machine can consistently pull anywhere from $600 to $800 in monthly revenue.

Here’s everything you need to know about how to start a vending machine business.

Essential Things to Know Before Starting a Vending Machine Business

With just a few thousand dollars to invest, a vehicle and determination, you are completely capable of starting a vending machine business and making a lot of profit. But starting a vending machine business is not all fun and games (though you can vend fun and games in your machine).

There is a bit of preliminary financial and logistical planning involved, too. Before you start conducting research about vending machines or reading its reviews, take stock of your current finances, like how much can you afford to invest, keeping in mind that it could take a year for a machine to become profitable? If you know how much money you’re able to invest in a new business, you are better equipped to seek the right kind of small business financing.

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As for entrepreneurs starting fresh in the vending machine business, determine how you want to break into your local market by visiting retailers and public places with vending facilities. Do you target health foods or gourmet options, or looking to provide more standard snack and beverage services? Maybe you want to do something other than food altogether? Answering these questions, even if your plans change later, will help direct your location and equipment search.

Finally, set realistic expectations about profits and costs. Starting a vending machine business entails relatively low upfront capital, but operating it will require you to commit some time and energy into a stocking, servicing and collecting money from your vending machines on a regular basis.

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Guide To Starting A Vending Machine Business And Making Money From It

Vending machines are by no means a novel business idea and they are basically everywhere, after all. But, for those of you looking to start your own vending machine business, there is a lot to like about the vending industry. Consider that there are millions of machines in the U.S. alone and the vending machine industry generates over $23 billion in annual revenue. That is enough reason to explore how to start a vending machine business.

Any benefit or insight you have on vending machines is a great way to get in on this business niche. For example, if you have already identified a need for a snack machine near you, reach out to property owners you know and gauge their interest in placing vending machines at their locations.

Even without having personal connections and relations, you can still start a vending machine business and make money a huge amount of money ruining it. We will provide you some tips on how to start a vending machine business and earn pretty good revenue out of it.

Here is a guide to help you start a vending machine business and make money.

1. Consider all of your vending machine options

How To start a vending machine business

That includes options such as food and drink machines, bulk vending and specialty vending. While most people have thoughts that vending machines only come in the standard snack-and-soda variety, if you have thought about how to start a vending machine business, you likely know there are more options.

In general, there are three different categories of vending machines. So, consider all the three types when choosing the vending machine whose products would be the biggest hit with your target market.

(a) Food and Beverage Vending

According to Vending Market Watch’s 2019 annual report, food and beverage vending machines with snacks, soda, and candy make up the majority of the vending market share in the U.S., with beverages alone accounting for nearly a third of vending sales.

If you are wondering how to start a vending machine business, you cannot go wrong with this old standard. Of course, there are variations on this standard, for example, you can get a machine that offers just-drinks, just snacks, or snack-and-drink combinations. Some vending machine entrepreneurs desire to buy or purchase different types of machines for one location or place one kind of machine in multiple locations.

Whatever you decide, it is a good idea for new vending machine operators to start with a specialty, be it healthy snacks, beverages, or even fresh food, until you learn more about the industry. To make the most sales, cater your offerings and services to a particular location-driven market.

For example, you might stock your food and beverage machine at a gym with protein bars and shakes, or stock a school vending machine with juice and granola bars. You can think of soda, chips, snacks, and drinks when you think vending machine, but there is money to be made offering equally convenient healthy alternatives people want and will pay for.

(b) Bulk Vending

Starting a vending machine business with machines that stock gumballs, stickers, or rubber balls, also known as “bulk vending”, requires very little capital and low maintenance costs. These typically low-maintenance vending machines might not be glamorous, but the quarters do add up.

A refurbished vending machine could cost you less than $50 and bring in as much as $30 per month. The products you are offering have incredibly low overhead. In the right market, like a school or amusement park, this modest investment offers the potential for a reliable, passive income source.

Most bulk vending machines are mechanical devices and do not necessarily require electricity or battery power to operate, which means the cost of operation is low to nonexistent. That said, many candy and toy vending machines are older, so a used device might require minor repairs before it’s functional.

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(c) Specialty Vending

You are not just limited to food and drinks when starting a vending machine business. Large public places like arenas, airports, and malls often have always machines offering goods like tech accessories, beauty products, or other specialty items. Some of these vending machines use the same technology as standard vending equipment, and some are differentiated as Automated Retail Machines.

Some specialty vending items include

1. Hot beverages

Coffee or hot beverage vending is typically most successful in offices, but universities and conference centers are also good locations for this kind of vending machine business. Manufacturers generally produce both specialty beverage equipment and traditional machines, so you may be able to combine your purchases.

2. Retail

Essential travel items like phone chargers, headphones and neck pillows can be lucrative vending products if you are able to negotiate a contract with a local transit station or even an airport. Upscale vending machines in shopping malls and airports often contain luxury skincare products or electronics.

3. Laundry products

Individually packaged detergent, fabric softener, and dryer sheets make great vending products if you identify the right market for it, like laundromats, apartment complexes, or dormitories.

4. Tobacco

Tobacco vending is legal in many states and can be lucrative depending on the state taxes. Even cannabis (drug used for medical and recreational purposes)vending machines are also becoming available, but with a much more limited market.

Which vending machine you choose, just make sure you start out with one or two machines with a specific market focus. That way, you can gradually or slowly know about popular stock- and site-specific patterns and add new machines accordingly.

2. Find the right location for your vending machines

Think about the locations where you feel motivated and are satisfied to use a vending machine. Then work out an agreement with the proprietor. The type of vending machine you choose is crucial, but where you decide to put that machine is the most important factor in earning a profit from your vending machine business. For example, an upscale food and beverage vending machine can get to failure in a strip mall full of restaurants, but that same machine might flourish in an office park.

When it comes to starting a vending machine business, we usually think about the locations where you have personally purchased something from a vending machine, as well as the time people are most likely to purchase a beverage, snack, or another item. There is a good chance your restaurant selection was limited, you were in a hurry, or you were waiting somewhere like the airport or DMV.

A few important location ideas for your vending machine include:

  • Schools
  • Hospitals or medical centers
  • Grocery stores
  • Airports and shopping malls
  • Laundromats
  • Apartment complexes
  • Manufacturing plants

The next step is securing your location. A good salesperson might feel comfortable cold-calling a property or business owner, or soliciting them in person. This approach can work for smaller locations, especially if you are a frequent patron or already know the owner.

You can also try visiting your local Chamber of Commerce. They can give you information about major businesses in your area, which might give you some ideas for potential locations. Logically, try to place or set up your vending machine at companies with at least one hundred employees, or considerable foot traffic, like a multi-business office park.

If you already have locations in mind, reach out to proprietors, or work on getting contact information for the relevant manager. Getting ideas with prospective partners about location needs can help you get a better understanding of local demand, and inform your vending machine and product selection.

Understand State-Specific Vending Laws, Regulations and Compliance

Appy different rules to various types of vending machines and vending regulations vary by state. Just find out how your state governs vendors by contacting your local Chamber of Commerce or looking up your state’s small business regulations online prior to starting a vending machine business. Also, any vending machine you put in a public place may be subject to certain ADA compliance standards, and it is a good idea to keep accessibility in mind when considering vending machine options.

Know Commission Requirements and Prepare a Proprietor Contract

Before pocketing the profits of your vending machine, you will need to pay commission to the proprietor who provides the location and the electricity required to operate your machine. Generally, you will pay the property owner 10% to 25% of the revenue from your vending machine.

Whether or not you hope to establish an exclusive partnership with a location, draw up a contract with the proprietor stating your agreed compensation rate, contract length, and terms you have with the owner. Include provisions for breach of contract, too. It is also smart to include expectations and obligations regarding servicing and restocking your vending machines, vandalism or theft and the possibility of unprofitably. Make sure you have consulted your attorney to look over the contract before signing.

3. Find your vending machine

Vending machine sellers include manufacturers and wholesalers, secondary market retailers and online resellers. You cannot possibly start a vending machine business without first obtaining a vending machine. Luckily, these days, finding your vending machine can be as simple as an online search. To have an idea of the different vending machine offerings and price points out there, search both locally and from national suppliers. You should also consider the cost of inventory when looking at vending machine prices.

To find the vending machine of your dreams, start your search with these three types of sellers:

(i) Manufacturer of wholesale vending suppliers have the widest selection of vending machines for sale, the newest technology, and the most end-to-end services for delivery, repairs, and training. This is the most expensive option, though as equipment through vending franchises might require a minimum order of multiple machines or other fees that go toward machine servicing and entrepreneur development programs.

(ii) Secondary market sellers or specialty online retailers allow you to browse multiple brands and models of vending machines and often have helpful resources for business owners.

(iii) Consumer-to-consumer platforms like Craigslist and eBay have thousands of vending machines for sale. Save time by filtering by merchant or owner location, so you do not have to worry about major shipping costs. This may be the best option for first-time vending entrepreneurs who do not want to spend thousands on a new or refurbished machine.

As you will quickly find once you start your search, vending machines come with a range of features and capabilities, all at different price points.

Some of those special features include:

  • Snack/drink combination machines
  • Credit card and large bill functionality
  • Touch or voice accessibility
  • Remote monitoring software and low-stock alerts
  • Branded “wraps” for the front of your machine
  • Interactive screens

Try not to be too tempted by these special features, though, since they can become costly. Choose the vending machine that best fits the products you want to offer and what you can afford at the moment.

4. Stock your vending machine with inventory

Analyze and think site-specific needs when purchasing inventory for your machine. Also, do not over-order stock in the beginning. Once you have landed on a vending machine, you are well on your way to starting a vending machine business. Next, you have to stock it with inventory.

Product selection is an excellent opportunity to boost sales. Rather than choosing the stock items which are based on wider food and beverage trends, pay attention to local, site-specific needs and requirements. To stay on the safe side, do not over-order stock in the beginning and adjust your offerings based on demand.

If you are satisfied to offer combined food and beverage services in your vending machine business, then drinks will make up most of your sales with a good amount.

As the growing refreshments market expands from soda to coffee, flavored water and healthier beverages like coconut water, it is worth considering what your location can support in terms of pricier specialty foods and drinks.

Drink size and shapes will affect your range of machine choices, so if you feel strongly about selling cartons or irregularly shaped products, try to find a machine with adjustable product sizing.

5. Explore your vending machine business financing options

The best financing options include short-term loans, equipment financing, and inventory financing. Starting a vending machine business does not require nearly as much startup capital as most other small businesses do.

Many vending machine operators recommend used or refurbished machines, which you can find between $1,200 and $3,000. A new vending machine will cost you from $3,000 to $10,000, anywhere depending on its size and features. Still, a couple of thousand dollars is not exactly pocket change.

Following mentioned options will help you decide to choose a loan for starting a vending machine business 

(a) Short-Term Loan

If you are already a business owner and you have the business financial history to prove it, securing a short-term loan to finance your vending machine might be your best course of action. Like traditional term loans, short-term lenders deposit a lump sum of cash directly into your business bank account and you can repay your loan, plus interest, over a predetermined amount of time.

As you can guess based on their name, repayment terms for short-term loans are considerably shorter than their long-term counterparts, usually 18 months or fewer, and interest rates are a bit higher than longer-term loans. For those reasons, though, short-term loans are generally easier to qualify for than long-term loans.

But this is a small business loan, so short-term lenders need to review and approve your business’ financials before agreeing to extend you a loan. If possible, you will want to bring a good business revenue history and good personal creditworthiness to prove your candidacy.

(b) Equipment Financing

You do not necessarily need tons of capital on hand to start a vending machine business that makes money. But if you need a little help, you can shoot for an equipment financing loan. The terms of these loans depend on the value of your equipment, which also acts as collateral in case you default on your loan payments. Cared for properly, vending machines can last upwards of 10 years, which might help assure lenders.

In addition to your own financial information and business plan, you will need equipment quotes for the machine(s) you plan to purchase if you choose to apply for an equipment loan. Additionally, if you are required to have capital in order to purchase inventory, then you may want to consider inventory financing.

6. Make the right investments in vending machine tools

A successful operation requires you to invest in tools that will help you run your business more efficiently, as well as prioritizing customer service. With a location selected, a machine purchased and placement terms are taken care of, you are now ready to start a vending machine business. Now, it is time to focus on making the business profitable.

(i) Invest in a Vending Management System (VMS)

Depending upon the updated software of your vending machine, your vending equipment may come pre-programmed with management software, which you can use to streamline operations, record inventory and track revenue. But most standard machines make you maintain and manage your inventory manually, which might be doable if you own just a couple of vending machines.

Once you have five to ten separate vending machines, though, it is probably a good idea to invest in a vending management system to help you stay on top of your inventory remotely. VMS software allows you to remotely manage your vending machines from an internet-enabled device. Most VMS systems provide real-time inventory updates and reporting tools.

(ii) Invest Your Time

Just like starting a clothing line business, starting a vending machine business demands more than just capital investment.

You will have to invest at least some of your time and attention to your vending machine business, too. A full-size vending machine might require you to collect money weekly, which is important to keep in mind when determining how much time you can realistically spend traveling to locations. Furthermore, it takes to purchase inventory, visit locations and restock, operating a vending machine business requires you to spend time researching trends in sales, new products or locations and talking to peers.

The typical service cycle for bulk vending (think of non-perishable candy or stickers) is between four to eight weeks. So, if you cannot get away from your full-time commitments often, bulk vending might be a good way for you to break into the vending machine business without sacrificing too much of your time.

(iii) Invest in Customer Service

Even if you only have one or two vending machines, it is worthwhile to emphasis on customer service from the beginning of this business venture. To make sure your vending machine is optimized for your customers, you just need to follow a few best practices. Just like other location-based businesses, vending operators are often dependent on word-of-mouth referrals and in-person connections.

Foster relationships with business owners, look up your state’s vending association or join local networking groups for entrepreneurs. Most importantly, ensure that your vending machines are stocked and functioning on a weekly or biweekly basis. You can also consider providing an 800-number (usually toll-free) for service requests and comments, which is a great way to get useful feedback.

Starting Your Vending Machine Business And Making Money – Bottom Line

As a matter of fact, today, the vending machine business drives billions of dollars globally each year. Fortunately, you can break into this lucrative market with less than $1,000, the right market research, informed decision-making and entrepreneurial energy.

Invest incrementally as you learn about your vending machine’s demand patterns, and start generating a passive income without taking out a massive loan or going into debt.

Depending on whether or not you may continue to work another job, increasing the scope of your vending machine business gradually will allow you to take on more when you’re ready, or scale back if necessary.

No matter where you are financially at the moment, starting a vending machine business guarantees an opportunity to operate your own business, while only risking as much as you are comfortable in investing.

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