How To Start A Vending Machine Business In 2021
The idea of owning a vending machine business is nothing new. I mean these things are literally everywhere. Stadiums, bars, schools, gyms…literally everywhere.
But what does it actually take to get in on this business and how profitable could it be for you long term? After all, I’m sure you’re not after a quick buck if you’re looking to get into this biz.
Well, let’s go ahead and dive into the juicy details and breakdown exactly what it’ll take for you to get a piece of this $23 Billion annual industry.
Before we do though, just to save you some time, check out this one industry we found that stands to make you much more money without the threat of a vending machine falling on top of you!
Table of Contents
How To Start A Vending Machine Business In 5 Easy Steps
- Consider all of your vending machine options: As vending machine business owners, you have lots of options (bulk vending machines, snack machines, soda machines, specialty vending machine)
- Find the right location for your vending machines: This is where you’ll need to get clear on your target audience and who you want to sell to. You’ll also need to be able to work out deals with the property owners.
- Find your vending machine: You’ll need to get into contact with sellers, wholesalers, and manufacturers, to decide which one is right for you. Some of these electronics vending machines can be quite expensive!
- Stock your vending machine with inventory: When you own your own vending machine company, it’s important to know that it won’t make you money if it’s empty. Each machine needs to be fully stocked.
- Profit margins and startup costs: When starting your own vending machine company it is important to know what you’re going to need in capital and what your prices will need to be so you can profit.
Vending Machine Costs
The reason why this business opportunity is so popular is because of it’s relatively low startup costs. Generally speaking you’ll only need around $5,000 to get started.
You can find used vending machines from $1,200-$3,000. If you want a new vending machine…that’ll run ya anywhere from $3,000-$10,000.
After you have your vending machine you’ll need to spend some money to stock up on snack foods or hygiene products depending on your target market.
The price on all your stock depends on the products you have chosen and how many machines you have.
This could range from simply a couple hundred dollars to thousands of dollars.
Even though that all doesn’t sound like much given the money you have to start at your disposal, there’s a lot more that goes into this business to so you can get the cash flow you want.
For example, business partners can be serious headaches and even start to demand more money from you. Worse yet, it’s not uncommon for people to go around at night, tip the machine, break it open, and steal everything inside (including the money).
If you like the idea of having a protected solid cash flow each month through multiple assets that are IMPOSSIBLE to break into, check this business model instead!
In-Depth Breakdown Of Our 5 Steps To Start A Successful Vending Machine Business
One of the best ways to make sure you are successful is by getting really granular with your process. Things like doing the math on population and traffic of the area you’re looking at.
After you think you’ve found the right spot, you’ll need to start reaching out to property owners and gauging their interest in a partnership.
But even if you don’t have any connections, you can still become a part of all the other successful vending machine business owners.
Here’s how you can start with our 5 easy steps!
1. Consider your vending machine options
Even though a lot of people think you can only run this business through the traditional snack and drink style…there are a lot more options in the vending machine industry than you might be aware of.
However, to keep things simple, we’ll just touch on the 4 most popular categories of vending machines.
You’ll want to think of all four of these when it comes to choosing products for your target market.
We recommend that whatever vending machine you choose to go with that you at least choose two with a specific target market.
What this does is allow you to gather data about things like your most popular products or certain patterns regarding sales, you might even find out about micro markets!
Food And Beverage Vending
According to a 2019 annual report done by Vending Market Watch, the food and beverage machines with all the candy and soda made up for the majority of the vending machine market share in the US.
Vending Machines with drinks accounted for nearly a third of ALL sales! That being said, if you’re dead set on buying a vending machine, one with drinks might be your best bet.
Now that being said, you can change it up a little. For example, you could by a snack machine that offers both snacks and drinks that way you offer everything for anyone to make vending machine purchases.
Some vending machine entrepreneurs find that they get their best results when they pick one type of machine and just stick it in a bunch of different areas.
Whatever it is that you want to target, it’s a good idea for new vending machine operators like yourself to choose one type until you get more familiar with the vending industry.
What is bulk vending? Bulk vending is a vending machine business that sells things like gumballs, stickers, and rubber balls. A bulk vending machine needs very little capital and maintenance.
This might be your best bet for a introduction into the vending machine business. A machine like this, refurbished, might only cost you $50.
The overhead is extremely minimal on these products, and the best is that they can bring you in an extra $30 a month or so in the right market.
Talk about ROI!
The dollar figure might be a bit modest, but if you pick an area that’s popular with families with kids, than you could see a really solid passive income stream making its way to your bank account.
Most bulk vending machines are mechanical devices and don’t 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.
Worried about just being limited to a couple bouncy balls and maybe some drinks to make you passive income every month?
Don’t you worry!
There are vending machines out there that allow you to sell things like expensive tech accessories, beauty products, and more. A great locations for these would be airports and malls.
Some specialty vending machine items include:
- Hot Drinks: Hot drinks like coffee are always a knockout in areas like the office, universities, and other conference centers. The vending business thrives in these areas.
- Retail: If you’ve got some deep pockets and you’re looking to make them deeper, then selling things like phone chargers and headphones might be something you should get into. If you can set the appropriate margins, there’s no reason why you’re local airport or mall wouldn’t take you up on that offer!
- Tobacco / E-Cigs / Weed: Tobacco vending is actually legal in many states and can be quite the money maker. On top of that, JUUL vending machines are popping up as well. The Cannabis vending machine business is also exploding as well as it continues to be legalized.
If you’re looking to start a vending machine business, but just don’t have the know how yet…becoming a franchise might just be your best bet. Working under a franchisor you’ll be able to get some extra training and support about how to get the business all set up. You’ll even be able to decide just how many machines you want to invest in. All that said, you’ll still need to pony up a percentage of your profits to the franchisor.
2. How Vending Machine Business Owners Find The Right Location
Sure, the type of vending machine you pick might be important…but what’s just as important…if not more important…is the location of that vending machine.
You could be offering the best products from a business idea point of view, but you could have totally missed the mark on locations.
For example, a protein bars vending machine might be a total miss at a high school, but a total hit at the gym in town!
When starting your own vending business, make note of locations that you have visited in the past where you purchased something (food, drink, etc) and why. Odds are many other people purchased those vending machine products in that location too!
Some other location ideas for your vending machine include:
- Schools (soda / candy)
- Hospitals or medical centers (hand soap)
- Grocery stores (little toys / gumballs)
- Airports and shopping malls (cellphone chargers / travel pillows)
- Laundromats (dryer sheets / fabric softener)
- Apartment complexes (candy / soda)
- Manufacturing plants (protein bars / sport drinks)
After you have chosen your location it is time to get out there and secure your spot. If you were a salesman in a past life it’ll probably be easier for you to call them up and get it started.
But if sales isn’t really your style, then reaching out to the local Chamber of Commerce might just be your best shot. Going that route will also give you more ideas about locations and some recommendations of who to approach. They also might have information about the most popular areas in town.
But let’s be real, that’s a lot of footwork and a lot of research…Not exactly something you can start overnight.
You can certainly make money with a vending machine, but if you’re gonna put in the amount of GRUELING work to become a vending machine entrepreneur (which, trust me, isn’t easy), you might as well bring in some REAL money.
The program that helped skyrocket my online business to $40,000+ per month teaches some of the same vending machine skills, but shows you how to monetize them in a much, MUCH more profitable way.
Understand State-Specific Vending Laws, Regulations, And Compliance
Did you really think setting a vending machine business up would be as easy as just plugging it in and leaving?
Unfortunately there are actually a whole bunch of different rules in various states regarding vending machines that you have to abide by.
Before reaching out to businesses in the area you’d to work with, make sure you are able to follow all the rules and guidelines from your state.
Know Commission Requirements And Prepare A Proprietor Contract
Before you go running away all high and mighty with your profits defeating the 9-5 rat race, remember, you’ll need to pay out a commission to your partner providing the location and electricity.
A fair commission in the vending machine industry is anywhere from 10-25% of your overall revenue from the machine (machines) under the property owners supervision.
When going into business with another party, make sure you draw up a contract with the other business owner that covers compensation, contract length, and terms.
Beyond that, also make sure to include provisions in case of a breach of said contract. Be sure to also include maintenance costs and restocking expectations somewhere in the contract as well.
And always have a lawyer look over before signing.
3. Find your vending machine
Perhaps the easiest part of starting a vending machine business is the actual purchase of the machine. Seriously. You can find these things on all sorts of online marketplaces new and used.
The best thing you could do is start researching what it is you want your vending machine to offer and how much other people are paying for a similar machine.
Be sure to also factor in inventory costs when looking at the different machines.
To find the vending machine that will be your golden goose, start by looking through these three types of sellers:
- Wholesale vending machine suppliers or Manufacturers: If you want all the options, this is where you go to look. Here you’ll find machines with the latest technology and vending equipment. However, some might require you buy in bulk.
- Secondary Markets: This is where you go if you’re looking to read up on different brands and models. In other words, this is where you go to shop competitively.
- Craigslist / Ebay / Facebook: These are the platforms you go to when you’re in a hurry and looking to buy something and get it fast. In fact, this is probably the best route to go if you’re starting this vending business for the first time.
Something you’ll find out rather quickly regardless of the location you choose to buy from is that there are all sorts of vending machines with different options and features available in all price ranges.
Some of those advanced tech features include:
- Snack options / drink combination machines
- Credit cards and large bill functionality
- Touch or voice accessibility
- Remote monitoring software / inventory management system
- Interactive screens
Don’t get too caught up with all those special features though, all those add-ons to your vending machine could become costly and it’s hard to pass that on to the consumer.
Who needs features when you can offer results though?
4. Stock your vending machine with inventory
Now that you’ve chosen what vending machine you want to go with, all you have to do now is stock that bad boy up with inventory.
But, make sure you do research!
Product selection is one of the most important parts of this process. You could have a fancy pants machine, but if it’s not got stuff people want to buy, then you wont turn a profit.
It’s definitely safer to go more expensive than to go cheap.
Remember that drinks will make up a large portion of your sales if you offer a food and beverage vending machine. It will be good to know that the market is shifting from soda, to healthier drinks like coffee and flavored water. Be sure that your location will be able to provide these specialty foods and drinks to keep sales steady.
One last thing to consider when stocking your vending machine with products is that different types of vending machines can only support certain shaped products. Make sure your vending machine can fit the food and beverage products you wish to sell.
5. Profit Margins And Startup Cost
The great thing about a vending machine business is that you don’t have to front near the amount of capital that you would for other small businesses. Some small businesses can costs hundreds of thousands to start!
However, we are still aware that even a few thousand dollars isn’t really pocket change either. If you think you’ll need a loan to purchase a vending machine to get started in your business, consider the following.
If you’re a business owner already, and have the history to prove it, then picking up a short term loan to finance your vending machines might just be the best way to go.
All a short term loan is, is simply a lump sum of cash that is directly deposited into your business bank account. After the money is deposited, you’ll repay the loan back with interest over time. But remember, these are short term loans. You will typically have to pay these back, plus interest, in 18 months or less. Although they’re easier to qualify for…the interest rates are much higher as you’d expect.
Even though this is a small business loan, the lenders will still need to run through your businesses history and financials before extending you said loan. To give yourself the best shot of acceptance, bring a long revenue history and a good credit score!
Vending Equipment Financing
You don’t need tons of money to start a vending machine business that is profitable…but if you do need some help, you can try for an equipment financing loan. This type of loan will depend on the value of your equipment since it will also act as the collateral in case you default on the loan payments.
As long as you take good care of your vending machine, it can last over 10 years! That might also reassure lenders. When exploring financing options like this, it is important that you have a solid business plan in place with a course of action on how you to choose to carry that business plan out, on top of quotes on the machines you plan to purchase.
But everyone knows financing can be one hell of a headache!
Pros And Cons Of Starting A Vending Machine Business
Think about it. It’s crazy right? You can literally start a vending machine business that is profitable for just a few thousand dollars. And although that is amazing, it’s not always sun shines and rainbows. Like any new startup, it’s got its pros and cons. Let’s check em’ out!
Vending machine business advantages
- Expandable: Once you have one going, it’s easy to add another and another one. Soon enough you’ll have a booming vending machine business!
- Endless Options: There are all sorts of vending machines in the market today. Think of any kind of product, literally anything, and we’ll bet ya there’s a vending market share for it.
- Virtually no overhead costs: Thankfully, there’s almost no overhead when running a vending machine business, especially when you own the business by yourself. On top of that, vending machine businesses don’t need a formal office space or employees. Talk about no extra hands in the pie! No more payroll, benefits, or thousands in rent.
Vending machine business disadvantages
- Time commitment: When running a vending business with several different machines, it will take some time to go around and stock, service, and collect money from said machines. If you don’t like constant travel, this isn’t for you.
- Theft and vandalism: As mentioned earlier, vending machines are an easy target late at night in areas that aren’t densely populated. To make sure of its safety the best you can, try to pick an area that’s populated during all hours and well lit.
Frequently Asked Questions
1. Are vending machines profitable?
Yes, vending machines are certainly profitable. The average vending machine earns $35 a week, but if you choose the right spot and stock items frequently, you could earn over $400 a month per machine.
Is that not enough for you though?
Wanting a little more?
2. Do vending machine owners pay rent?
Yep, but not in the conventional sense. They pay rent through the form of commission to whoever owns the building. The commission they pay out is typically 5-20% of their total revenue from the machines.
3. Are vending machines taxed?
Yes, the amount of sales tax varies by state.
4. Where can you place vending machines?
You can place vending machines just about anywhere you can imagine. The most popular choices are offices, sports stadiums, malls, and schools. Before you set one up though, you’ll need to sign a contract with the property owner.
What Is Our Top Recommendation For Making Money In 2021?
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Although it’s not real estate in the traditional sense, it’s all digital.
Where the Vending Machine Business falls short is in profitability.
You can’t realistically expect to be able to make any REAL passive income when you’re only bringing in maybe $35 a week.
But what if you leverage it?
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Sound too good to be true? Of course it does! But it isn’t…in fact, business owners wish they had this skill!
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How do you get paid and how much?
Simple, after you forward the jobs off to a business owner and he makes some money off of them, you simply ask to make the deal beneficial for each other.
A fair price to charge per lead, depending on the industry is 10-20%…let’s just use the tree service industry for example and go by worst case scenario.
Let’s say you build and rank the site and only 20 jobs a month come in. The average tree service job is anywhere from $500-$2000!
That means at bare minimum you have an asset worth $1000 a month!
See why they call it digital real estate now? That’s a rent payment.
The great thing is how easy it is to scale. You don’t have to answer the phone…all you have to do is get the phone to ring.
Remember Vending Machines and all the small profit margins?
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The training program takes making money online to a whole other level. The owner of the program walks you through how to build and rank a site hand in hand, with the occasional voice over when he is sharing his screen.
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Unlike A Vending Machine Business, where you have to keep trading your time for money over and over…. You can finally get on the financially free side of life. A business will always want more leads and another job. In fact it doesn’t even matter that the job isn’t coming from their website name…they see it as it is…expanding digital real estate.
Unlike The Vending Machine Business, more people have been able to become financially free as well.
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Now, I know you probably have tons of questions… So, check this out to learn more.