The global vending machine market size is predicted to reach almost $147 billion by 2025, and North America has over a third of that global market share. The American society values convenience, and there’s nothing more convenient than grabbing something from a vending machine and going.
If you’ve been looking for extra income, then this might be the perfect way to do so. In this article, we’ll discuss how to start a vending machine business so you can determine if this is the right path for you. And if so, you’ll know exactly what to do.
Understand the Local Market
Market research is a crucial part of starting any type of business, as it helps you pinpoint what consumer demands are. This allows you to fill niches and edge out competition.
Find out the demand for vending machines in your desired location. Look at high-traffic areas such as schools, hospitals, office buildings, and shopping malls.
Naturally, there will be competition everywhere, as you’ve seen from the above stat. That’s not necessarily a bad thing though; you should analyze existing vending machine businesses in the area. You can then understand their strengths and weaknesses to identify prime opportunities.
Come Up With a Business Plan
A business plan will help keep you on track while navigating the vending machine industry.
The most important thing is to identify your target customers after defining what you want to achieve with your vending machine business. And will you buy new or used? If you don’t have enough starting capital, you can even lease machines to reduce your initial costs.
After factoring in the above, you can estimate your initial costs, ongoing expenses, and finally, your expected revenue.
Consider Your Options
Now that you’ve done some research and understand the local market, you can make a wiser choice for your vending machine options.
First, there are several types you can choose from. Here are the common ones:
- Snack machines: chips, candy, and other snacks
- Drink machines: bottled water, soda, and other beverages
- Combination machines: both snacks and drinks
- Specialty machines: electronics, personal care products, fresh food, etc.
So if you were wondering, “How much does it cost to start a vendine machine business,” the answer is, “It depends on what types of machines you have.” How much is a vending machine then?
Very simple ones like bulk machines that dispense sanitary products can cost as low as $50 to $200. The most commonly found vending machines (mechanical ones with snacks and drinks) cost around $2,000. And electronic vending machines are the most sophisticated, meaning they’ll cost $3,000 or more.
To save money, check with manufacturers and wholesale vending suppliers. There are also secondary market sellers and specialty online retailers that have many affordable options. Or if you’re operating on a smaller scale, then platforms like eBay and Craigslist are acceptable and cost-effective.
Find the Perfect Locations
As we’ve mentioned earlier, you’ll want to place your machines in high-traffic areas. In addition to the examples we listed, other places to consider include factories, corporate buildings, and airports. Your machines should be placed near one another so the route to restock and maintain them isn’t far or inconvenient.
If you want to work with local companies, then start reaching out and building a relationship. Then, negotiate terms with property owners or managers, and don’t forget to discuss commission rates alongside rental fees. In general, commission will cost between 5-25% of your revenue.
Think About Your Initial Investing
The business plan you’ve written up should include the cost of vending machines, inventory, licenses permits, and insurance. Factor in restocking, maintenance, and location fees too.
There’s a good chance you can’t self-fund completely with your personal savings. This means that you’ll have to turn to outside help, such as small business loans. You can also seek out investors, but that’ll take more work to do, although a solid business plan can be what convinces them to give you additional capital.
Take Legal and Administrative Steps
When creating your business, you’ll have to choose a legal structure. You can be a sole proprietor or have a partnership, limited liability company (LLC), or corporation. We have a guide on LLCs vs corporations, so read it if you’re trying to decide between the two.
On that note, if you’re feeling daunted by all the paperwork in starting a business, you can leave the hard work to us. We offer a business registration service where you take a few minutes to fill out details, and we’ll handle your application. We can register both LLCs and corporations, and there are numerous other services you can add at very competitive prices.
After registering your company, you’ll have to get a business license from your local government. Plus, you should check if you need specific permits to place vending machines in certain locations, especially if you’re asking, “Where can I put a vending machine?” There are state-specific rules, and you’ll need to comply with ADA compliance standards.
Purchase a good insurance policy for your business as well. Protect it from potential lawsuits and damages with liability insurance.
Stock and Maintain Your Vending Machines
You’ve determined what type of vending machines you want to run; now’s the time to stock them with popular and profitable products. If you’re selling food, then make sure you’re following any relevant state laws on stocking a percentage of healthy choices.
When starting out, don’t overbuy items. Instead, begin with a moderate inventory size, and monitor how things go. Then, adjust your buying strategy accordingly and restock your machines regularly to keep them full and functional.
During restocking rounds, ensure your machines are clean and in working order. You should have a plan for quick repairs so that if you notice anything wrong while restocking, you can have it quickly rectified and minimize downtime.
Know How to Start a Vending Machine Business
By knowing how to start a vending machine business, you can literally set up shop in practically any corner of your town. While it may not bring in anything close to what a traditional salary would, it’s still a great source of extra income, especially if you do your research and place your machines smartly.
So if you have some capital and would like to expand your revenue streams, then consider starting a vending machine business. With our assistance, it’ll be a cinch.
Sign up with Business Anywhere if you want to use our business registration service. It’s quick, easy, and cost-effective!
