A vending machine business is very lucrative, no doubt there. This is mostly due to the fact that it takes less capital and time to nurture. Starting a vending machine business opens up many doors of opportunities, though it demands extra care and attention to excel.
Consumers are continuously getting busier, as a result, they factor convenience, and time-saving options into what they buy online or offline. With this, the vending machine business has rapidly evolved and its growth appears to be unstoppable.
Key Takeaway: In 2020, the vending business was valued at over $21 billion and has been billed to cross $31 billion at the end of 2027. Likewise in the U.S., vending businesses grew at the rate of 8.9 percent in 2022, leaving most aspiring business owners with the thirst to hop into the vending industry.
Have you been considering the vending business as an investment? Are you seeking to learn more about the opportunities and the nitty-gritty of starting a vending business?
In this blog, we will uncover the gray areas of starting a vending business. We will also look at what you need to ensure a successful implementation of your vending business.
Why you Should Start a Vending Business
Business owners go into different business ventures for different reasons. If you are looking to start a vending business, these are some possible driving forces that should inspire you.
- Stressless Administration: Beyond the times that you are busy with securing vendor negotiation and getting your wholesale licenses, running a vending business is quite seamless. Your routine as a vending machine business owner is to maintain the machines as the demand arises, accept payments online or from the safe of the machines, and record keeping. It is no news that the simplicity of running a vending business is one of its undeniable attributes.
- Steady-paced Growth: Defining the rate of expansion of your vending business and your growth opportunities solely depends on you. If you intend to toe the fast paced lane, all you need to do is increase your inventory. In all, you are always in control when you start a vending business.
- Low Running Cost: Like popcorn equipment, cheese making accessories, and spice packaging equipment, most of the equipment that is used in the vending industry are assets. The only thing you need to do is to maintain the vending machine regularly. Besides these, there is really no colossal spending that can suddenly drain your earnings.
- Flexibility: You are at a great liberty to choose when to restock your vending machine. Also, you are free to collect your payments from the vending machine according to your schedule.
How to Start Your Vending Business
Now you know the simplicity, flexibility and freedom that starting a vending business offers. So, let's get to it!
Here are the simple steps to getting your vending machine business started.
- Decide on What to Sell
To brighten the chances of your vending machine business surviving and booming, it is important to know the products that sell fast. You’ll need to do a comprehensive survey and assessment of consumer demands so that you can know the kind of vending machine to buy.
Some goods may be location specific. For instance, goods like pens, beach supplies, and hair products will sell better near schools. So it is important to do your due diligence so that you won’t end up wasting your capital.
- Finding Wholesale Distributors
The major problems that you can face are strategic sourcing and finding dependable wholesale food distributors for any products of your choice. If you plan to sell snack food, you need to get a wholesale snack supplier that will be sure to meet your demands.
Also, when picking your wholesale business supplier, you have to ascertain the quality of the products. If not well monitored, you may end up risking your reputation, hence the longevity of your business may be truncated.
- Purchase your Vending Machine
After making a choice of what to sell and a wholesale vendor, selecting the machine that will work for you is the next point of call. During the procurement process, listed below are the features you have to look out for:
- Ability to accept card payments (credit or debit cards)
- Soft and interactive touch or voice-instructed screens
- Combination of food and drink dispensing
- Softwares for remotely monitoring stock and sales
- LED lights in the machine to further capture and fascinate the sight of customers
When making your choice of vending machine, you have to also consider where you are buying from. You may consider some online outlets, manufacturers, and wholesale distribution companies. Note that, getting a new one may be expensive, it is advised that you opt for used ones.
- Choose a Suitable Location
Similar to other brick and mortar stores, your location will have a direct effect on returns. In making your choice, you have to be sure that there is enough human traffic. Higher volume of traffic further assures better sales.
Also, don’t forget that your choice of goods must match your chosen location. Choose high demand products to sell.
Locations that are usually high performing with respect to sales include:
- Apartment complexes
- Nursing homes
- Grocery stores
- Bus and train stations
- Office complexes
Ensure that you follow required procedures and protocols when placing your vending machines in specific locations. You must also bear the safety of your vending machines and goods.
- Pick and Register a Business Name
Branding is another important element that must be carefully executed. Here, you’ll select a business name that distincts you from other competitors.
Ensure that you do your name search so that you don’t have name clashes with other brands. After this, you’ll proceed to register your business so that your brand can be in the right standings with the government.
It is important you register your business in order to stall any taxation or compliance problems that may arise.
- Register your Vending Machine Business
LLCs and corporations must register with the State in order to launch a vending machine enterprise. Generally, sole proprietorships and partnerships are not required to file formation documents.
There are state-specific business registration expenses. The majority of State government websites provide access to detailed information and online forms. To avoid delays, documentation for business formation must be completed accurately
- Select Your Payment Solution Provider
- Negotiate and Sign Contracts
Businesses and property owners will likely expect you to compensate them for allowing you to install vending machines on their property and for the electricity consumed by the machines. Typically, compensation consists of a commission proportional to the machine's aggregate sales. It is essential to include commission rates, terms, and conditions in a contract.
An acceptable commission rate differs with respect to property owners, location and types of goods to be sold. Some authorities in the vending industry say 7 percent is the norm, while others say 25 percent is acceptable.
In the end, a commission rate should satisfy the party supplying your location while allowing you to maintain a satisfactory profit margin. So, do your calculations before signing any agreement.
Included in the majority of vending machine agreements are the following:
- The parties entering the contract
- The duration of the contract
- The types of supplied machines and products
- The position of the machine(s).
- Parties' responsibilities regarding machine damage, maintenance, and service
- Notification of equipment failure
- Exclusiveness clause (if applicable)
- Authorization to add, remove, and replace machines
A clause for terminating the contract in the event of a breach of contract or if the location proves unprofitable. This is merely an example of what a vending machine contract may contain.
As with any legal document, it is advisable to have an attorney draft or at least review the contract to ensure that it is fair and meets your requirements.
- Get your Vending Business Insured
There are quite a number of risks peculiar to vending machine business. Losses range through equipment injuries, spoilt food, theft and vandalism.
With this, it is germane that you insure your brand. Your choice of eCommerce business insurance plan can be from either of the following:
- General liability insurance
- Commercial auto insurance
- Workers’ compensation insurance.
Seek legal consultation and professional advice when making a choice.
Frequently Asked Questions About How to Start a Vending Machine Business
How much does a vending machine make in a month?
An average vending machine makes a revenue between $75 and $320. With respect to location and inventory management, some may generate lower or higher.
How long can a vending machine last?
A vending machine can last between 12 years and 25 years if well maintained.
What kind of vending machine makes the highest revenue
The bulk vending machines make the largest profit margin. Bulk vending machines are low-tech gumball dispensers and candies. And are mainly found on playgrounds, parks and restaurant businesses.