Preferred locations should be highly visible, patrolled, and in view of security cameras. You will have to compensate business or property owners for installing machines on their premises and using their electricity. This is typically done as a negotiated percentage of your gross sales. As the owner of the machines, you will be obligated by contract to provide a statement of sales and commissions to the business or property owner at regular intervals.
Your contract should also specify:. As always, it is wise to have the contract drawn up or reviewed by a lawyer. If you are not franchising or purchasing an existing business, you will need to acquire one or more machines to get started. Before doing so, you will need to decide on what products you intend to sell food, beverage, or specialty items and what type of vending machines you want.
You would need quite a few machines to generate substantial revenue. On the plus side, the machines do not require refilling as often and are simple to service and repair. These are larger than bulk machines and can dispense multiple products. These utilize modern touch screens and can accept other forms of payment such as bills and credit cards. Electronic machines have the highest upfront cost but are more reliable than mechanical machines.
More sophisticated machines that have a larger capacity, vend different products, and accept multiple forms of payment can easily double or triple the cost. Unfortunately, since machines usually go unwatched, the vending machine industry is quite susceptible to vandalism and theft.
If you invest a lot of money in buying a machine, you may want to get it insured. If you're looking to start small, or simply save money on a discounted product, used machines are the way to go. There are many sources to scout:. New vending machines typically come with at least a one- or two-year parts warranty. Used or remanufactured equipment may come with a more limited warranty. If you are mechanically inclined, you can learn how to repair the machines yourself. Otherwise, you may need to contract the services of a repair technician.
Talk to the business or property owners about what products they want. In some cases, the type of products will be part of the contract. You should also think about the area and target market. Some products sell well in most public areas, whereas others are more dependent upon location:.
Legislation in your jurisdiction may mandate healthy options. There are plenty of options available, including:. Maximize your vending machine business profits by paying the lowest possible per-unit price on the items you purchase for your machines. Search out wholesale food and drink suppliers, such as Costco, and compare the prices.
Negotiate bulk discounts if possible. As with any enterprise, success in the vending machine business means providing good customer service. For a vending machine operator, this means:. Providing top-notch customer service is one of the best ways to increase sales and improve your business reputation, which is essential if you hope to expand your business by soliciting new locations for equipment.
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 need capital to purchase inventory, you may want to consider inventory financing. Invest in a vending management system VMS.
Depending on the technology in your 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 require you to manually manage your inventory, which might be doable if you own just a couple of vending machines.
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. Invest in customer service. To make sure your vending machine is optimized for your customers, you just need to follow a few best practices.
Like many location-based businesses, vending operators are often dependent on word-of-mouth referrals and in-person connections. Most importantly, ensure that your vending machines are stocked and functioning on a weekly or biweekly basis. You can also consider providing an number for service requests and comments, which is a great way to get useful feedback.
Invest your time. 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.
In addition to the time 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 non-perishable candy or stickers—is between four to eight weeks. Like any new venture, there are advantages and disadvantages to consider. Easy to scale: Scaling your vending machine business is incredibly easy. You can start off with a few vending machines, and as you become more successful, expand locations.
Variety of choices: These days, there are all types of vending machines. Vending machines now serve healthy foods, gourmet options, and sometimes options completely unrelated to food. Little to no overhead costs: There are little to no overhead costs of running a vending machine business, especially if you're running the business on your own.
Since vending machine businesses don't require many employees or office space, you don't have to worry about making payroll, benefits, or spending thousands on rent. Time commitment: Operating a vending machine business will require you to commit some time and energy into stocking, servicing, and collecting money from your machines on a regular basis.
Theft and vandalism: Vending machines are an easy target when it comes to theft and vandalism. Ensure that your machine locations are located in secure and safe areas to avoid a loss in profits. Yes, vending machines can be profitable. Yes, vending machine owners pay rent or commission to the owner of the building. Yes, vending machines are charged sales tax on the revenue they generate. The amount of sales tax varies depending on your state. You can place vending machines in most commercial spaces such as offices, retail shops, bowling alleys, and more.
But you'll need to sign a contract with the property owner first. The vending machine business drives billions of dollars globally each year. This article originally appeared on JustBusiness, a subsidiary of NerdWallet.
See how to get your business started quickly. How to start a vending machine business in 6 steps. QuickBooks Online. Shop Now. Vending machine costs. How to start a vending machine business: A step-by-step guide. Consider your vending machine options. Get more smart money moves — straight to your inbox. Sign up. Find the right location for your vending machine. Hospitals or medical centers. Grocery stores. Airports and shopping malls. Apartment complexes.
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