How To Start A Vending Machine Business: 5 Step Guide

How To Start A Vending Machine Business: 5 Step Guide

If you want to learn how to start a vending machine business, we have created a guide for you to start.
There are many unique and profitable ideas of being an entrepreneur and making money. One of them is to have a vending machine business, so if you want to get started in this industry, keep reading and you will find step-by-step instructions and some tips.

What is it and how do vending machines work?

A vending machine provides a convenient way for people to get the food, drinks, and products they need or want.

As people lead increasingly busy lives, they are looking for convenient ways to shop, without having to stop at a store or take a long time to make a purchase.

Well, these machines are owned and operated by a vending machine business.

Although this industry is dominated by large companies, small businesses also have space and possibilities to be profitable.

The traditional model of a vending machine includes food and drinks. However, today, you can set up a vending machine for electronics such as phone chargers and other items.

If you find the right business model, you can generate good profits.

How To Start A Vending Machine Business: 5 Step Guide

 

What vending machine licenses do you need?

As with any other business, your State and locality will determine if you need specific permits.

Likewise, the products you sell will determine whether you need other types of licenses for your vending machine business.

For example, if you choose the traditional food and beverage model in this case, your business will need health and food permits, depending on whether the food comes pre-packaged or if it needs to be heated and prepared.

Some additional legal documents that you may require are:

  • operator’s license
  • seller’s license

Check with your state’s regulatory agency to make sure you know exactly what legal documents you’ll need.

To operate a vending machine in the United States, several rules and regulations must be obeyed.

Requirements to put vending machines

In the United States, all food sold through vending machines must be approved by the FDA.

Therefore, they require prior approval before being offered for sale in a retail environment.

These foods include rice cakes, dried corn kernels, popcorn, oversize candy (greater than 1 ounce), whole fresh garlic bulbs, non-canned fruits, and vegetables. homogenized or glazed with syrups or sugar solutions.

In addition to this FDA regulation of what foods are legally allowed in vending machines in the United States, most states also have regulations that the vending machine itself must meet.

In California, for example, all cigarette vending machines are required to emit an audible tone or message advising the customer to confirm their selection before making a sale.

In addition, New York City requires a warning label on each item in a vending machine that sells cigarettes and smokeless tobacco products.

What permissions do I need to put vending machines?

There are several types of permits you may need to install vending machines, depending on your specific location.

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For example, you may need a permit from the city or municipality where you are installing the machines, and you may also need a permit from the state health department.

In most cases, it’s best to contact your local government officials or zoning department to find out exactly what permits you’ll need. They will be able to provide you with information specific to your area and what is required for vending machine installation.

How to start a vending machine business in 5 steps

The following are the basic steps to start a vending machine business.

Choose which business you will focus on

The first step is to choose the approach you will take to your vending machine business.

In other words: What are you going to sell?

You could sell food and drinks, bulk sales (such as stickers or gum), or specialty sales (such as laundry products).

It is a good idea to start with just one approach and then expand to other sectors once you have proven your business model.

Search and secure vending machine sites

The next step is to find good locations for your vending machines. Think about what you are selling and the areas where your products are most likely to sell.

Food and beverages sell well in public and private cafeterias, shopping malls, and retail centers. For its part, retail products will sell well in airports or train stations.

After you find your ideal locations, you must secure them with a contract. This is where your sales skills come into play.

You need to communicate to the venue owner why they should allow you to install your vending machines at their location. Share the benefits it will bring to both of you.

Get the vending machines

Now is the time to acquire the machines.

You can go to a manufacturer of vending machines, especially if you are looking for state-of-the-art devices or if you need multiple units.

You can also buy a second-hand vending machine in good condition. This will help you reduce costs.

supplies the machines

Then comes the inventory stage.

You must secure contracts with stores or companies that supply the products with which you will supply your machines. Of course, the higher the quality of the products you select, the better they will sell.

Your profitability will depend on how much you pay to acquire the products. Therefore, compare prices and negotiate the best contracts.

finance your business

Many small businesses fail because they don’t have enough funds for their business.

Although starting this type of business may not require as much capital as in other industries, you have to make sure you have an adequate amount to get your business off the ground.

Therefore, you must seek and secure capital for your business. At this stage, you can explore equipment financing, dip into your savings, borrow money from friends and family, or get a startup loan.

An excellent option could be a  microloan from any financial institution in your state, which will offer you multiple benefits, as well as flexibility for people starting a vending machine business.

Is a vending machine business profitable?

The quick and easy answer is that it can be very profitable.

Earnings can be as low as $50 per week or as high as $500 or more per month.

The best thing is that it is a kind of passive income. Once you set up the business, you don’t have to interact with customers, but simply restock merchandise.

You should also consider that the most profitable companies make a lot of money because they have a large number of vending machines.

See the big picture, not just one machine. The more machines, the more total profit your company adds.

In other words, $500 a month might not sound like much, because it’s just one machine. But if you have 20 machines, the revenue would be $10,000 per month!

Cost of a vending machine business

There are several costs that you need to consider in running a vending machine business.

The initial cost goes towards purchasing the machines, obtaining licenses and permits, stocking your machines with the appropriate inventory, and doing marketing.

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On the other hand, keep in mind that startup costs can range from a few thousand dollars to much, much more, depending on how many machines you start with and whether they’re new or used.

  • A used vending machine in good condition could cost you between $1,200 and $3,000
  • A new machine could cost $3,000 and even as much as $10,000.

Alternatively, instead of buying a vending machine, you can rent one.

You can keep your initial costs relatively low and then use the profits to buy more machines. .

After your business has taken off, the expenses will be related to the service and maintenance of the equipment. This can include buying new parts and doing the repair yourself or paying a third party to do it for you.

Of course, recurring costs will include restocking the machines and administrative expenses, such as rent to put your machines in certain locations.

Advantages and Disadvantages of Starting a Vending Machine Business

Advantages of a machine business

Operating a business in this industry offers many advantages.

The first is the low costs associated with starting the business. Vending machines are not only relatively inexpensive, but you can also grow your business over time as you make more profit.

You can control the growth of your company, which in turn will affect how much you must invest in terms of costs.

Apart from getting the machines up and running, the daily work is relatively minimal: it has more to do with administrative work. It is a business whose management is relatively simple.

Although the most successful business owners are smart and organized, there is no need for a skill set that is difficult to obtain.

Disadvantages

Some of the disadvantages that a vending machine business presents are as follows:

You will have to spend a lot of time on the business, often going to multiple locations a day to manage your machines. If you have a large number of vending machines in faraway locations, you will spend a lot of time moving from one machine to the next.

This job involves collecting the money, making sure the machines are well stocked and working properly, and then depositing the money in the bank.

Another disadvantage is that your machines can be the target of vandalism and theft. This is why it is essential to ensure that your machine locations are safe and secure, with possible video surveillance to protect your investment.

You could also think about acquiring insurance for vending machine operators.

business ideas for vending machines

There are many vending machine business ideas that you could leverage to generate profitability.

You can go the more traditional route and offer packaged food and beverages. Or you can also have a specialized vending machine. The latter could include:

  • Hot beverages, such as coffee or tea products.
  • You could also locate your machines in laundromats and supply laundry products, such as detergents, dryer sheets, and fabric softener.
  • You could also sell retail products like headphones, neck pillows, and phone chargers.
  • Today, with the health concerns caused by the pandemic, a mask vending machine could do the trick.
  • If you live in a rainy area, you could sell umbrellas.

There is no shortage of ideas on how you can create a successful vending machine business.

If you want more original and unique ideas, research Japanese vending machines. It could be said that this country is the creative expert in this industry.

Trade names for vending machines

Finding brand names for vending machines can seem as important as choosing what to sell.

We recommend you think of something catchy but not distracting.

For example Food and Beverage Oasis, Vendorama, or Vending Express.

You intend to make your business name catchy and explain what you sell.

Make sure you don’t over-explain what you do or try to do something overly creative. Keep in mind that while your name is essential to your overall success, in this industry it won’t affect your day-to-day sales much.

The crucial aspect is the commercial relations that you establish with the supplying companies and the places where you will locate your machines.

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Tips for success in the vending machine business

Choose the location well

After selecting the type of vending machine you want to have and the products you want to sell, one of the most important factors is its location.

Not all locations work for all types of vending machines.

You need to think about the items you are selling and where people would buy them.

For example, if you sell packaged beverages and snacks, you could sell in shopping malls, supermarkets, apartment complexes, public swimming pools, and office complexes.

Don’t forget that no matter what products you decide to sell, it’s essential that you keep your vending machine adequately stocked at all times.

Market your offer to consumers

After choosing the location, why not see if you can put up a couple of signs showing the location of your vending machine?

This will allow you to get more clients.

Keep your machines stocked at all times

You never know when you’re going to make a sale, so you need to make sure that all the products you offer are always available.

If an inventory is low or completely absent, you will miss out on sales opportunities.

establish good relationships

Lastly, make sure you promote yourself correctly at your machine locations.

The owners and people who manage your vending machine locations want to have a good experience with you. Be nice and explain to them how you will make their lives easier and possibly secure a good location for your machines.

It’s time to start a vending business!

Are you ready to start your vending machine business?

We hope that in this article you have learned about this economic activity since it can be very profitable and is a good option for entrepreneurs.

While it is possible to get started in this industry without as much capital as other businesses, you will need sufficient funds to get your business off the ground.

 

Frequent questions

Do vending machines produce good profits?

Vending machines can generate good profits. The most important factor is your location and the products you have chosen.

Which of the vending machines is more profitable?

The sale of food and beverages usually generates the highest profit. This is because they attract a massive audience and are not dependent on consumers having a lot of money.

Are vending machines a good deal?

Yes, vending machines can be a good business for someone willing to put the time and effort into building their business.

What licenses does a vending machine business need?

At a minimum, you will need local licenses to operate in your state and locality.

You may need other licenses, for example, food.

Where can I buy vending machine business?

You can always buy another local vending machine business and take over what is already built. You can find some of these businesses offered for sale on online trading exchanges or through your local Chamber of Commerce.

How does a vending machine business work?

Vending machine businesses follow a simple model, which consists of: buy the machine, stock it, and put it somewhere to attract customers. Most of the time, you will have to pay a monthly rent for the space that the machines occupy. You must return to the machine regularly to collect the money and replenish the inventory.

How much does it cost to set up a 24-hour vending store?

It can cost anywhere from a few thousand dollars to more than $100,000, depending on the size and complexity of the sales transaction. For a smaller shop with just a few machines, start-up costs can range from $3,000 to $5,000. But for a larger store, with dozens of machines and several employees, the costs could run to $100,000 or more.

In addition to the cost of the machines themselves, you’ll need to budget for things like signage, marketing materials, vending machine delivery, servicing fees, permits and licenses, and employee salaries (if you’re not going to do all the work yourself).

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