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Starting Your Vending Business
Is this the Right Business for You?
Before you purchase your first vending machine, you are going to need to figure out whether or not a vending machine business is something that you actually want to run. Of course you are only seeing the dollar signs now, but there is a lot that goes into running an actual business and it is going to take a great deal of work if you want to make a substantial income. This is not meant to dissuade you from purchasing a machine, but rather to give you caution. This is a large investment that you are getting ready to make and you should have all the knowledge that you can possibly gather.
Before you do anything, try taking this quiz from the Better Business Bureau. If you answer yes to most of these questions you might just be ready to start a vending business.
- Are you really eager to be your own boss?
- Are you willing to work long hours and be available at night and on weekends, if required?
- Can you meet obstacles and setbacks as a challenge without panic or discouragement?
- Are you thorough? Do you like to take care of details?
- Can you organize your time and adhere to a schedule?
- Are you well organized in money matters?
- Do you have credit at your bank?
- Do you have sufficient reserve capital beyond the contemplated investment?
If you can say Yes to most of these questions, you at least have the potential to become a good vending operator. Most of the people in the vending business today had to ask themselves questions like these before they decided to go ahead.
The National Automatic Merchandising Association reports that 18% of vending machine operators make between $1 million and $5 million annually. Woah there, hold on! You are telling me that I almost have a 1 in 5 chance to make millions! Even if you’re not in the lucky 20%, there is still a huge percentage of people that must be making a really nice amount of money, enough at least to quit your 8 to 5 job. Well, like all things in life, if it looks too good to be true, it probably is.
The first thing that you should know is that a single vending machine will never generate a huge amount of money, even if it has awesome products and is placed in great location. Most bulk vending machines (those that sell candy or small toys) will usually generate an average of $7 per month, before any other costs such as supplies and fees associated with the location. Regular vending machines can generate more revenue, but they also have a much higher initial cost.
So think about that. If you are only going to be making about $7 per month from every machine, you are going to need close to 300 machines to actually earn a livable wage and pay for all of your vending expenses! Now true, there are some machines that will generate a larger amount of revenue, but this statistic is still something to keep in mind. Before you can actually begin to earn a decent amount of money you are going to need a large number of machines in some very good locations, probably within a large area.
Another thing to keep in mind is that you may need to share your revenue with the locations where your machines are located. Finding new locations that have a high amount of foot traffic can be a difficult task and ever location will have different terms. In general, you will more than likely need to share somewhere around 20% of your profits with great locations that are going to generate the highest amount of revenue.
What if you just want some additional income? Vending machines can definitely provide that, but you are still going to need to overcome the initial investment that is required to purchase a machine, not to mention the constant upkeep costs.
One of things that is definitely in the back of your mind is the initial cost of purchasing a vending machine and the necessary products that you are going to sell. This can all be very tricky, since there are a wide variety of different vending machines and there are a huge variety of different things that you can sale – from 25 cent gumballs to a $10 pair of socks. But, here are a couple examples that can give you a good idea of how much you are going to need to spend.
If you are going to be purchasing a gumball machine, or any sort of bulk machine, you are going to need to spend around $100 for the actual machine. A bulk supply of gum or candy will then cost you $30-$60. Now, factor in the cost of shipping for all of these things and you will probably spend around $200 for your first machine. This is not a huge expense, but it will take time to recuperate the expense since most of your products will not cost more than 50 cents.
Buying a drink/snack vending machine will require a much larger upfront investment, but you can also expect greater returns. Instead of making 20-40 cents off of every sale, you more than likely will be making anywhere from 70 cents to $1.50 with a drink/snack vending machine. These machines will also see a much larger number of sells if they are placed in location with a lot of foot traffic and a need for food and drinks.
Taking into account shipping costs, a used drink/snack vending machine will probably cost you around $1500. Your supplies will also cost you upwards of $100, but you need to remember that you will be able to sell these items for more money and a higher profit. Another thing to keep in mind with your supplies is that they may have an expiration date, which can lead to losses of money if you are not careful with restocking and purchasing the right amount of items for your vending machines.
Finally, you will need to consider all of the maintenance work that you will need to perform on your vending machines. While vending machines allow for you to sell items without actually doing any of the selling in person, they still need to be restocked, cleaned, and repaired on a regular basis. Luckily, this is not a great deal of work and it can often be done anytime that you like, making it easy for you to keep your main job while you build up your vending business.
First, your machines are going to need to be restocked. With bulk machines this is not a big deal and you will only have to do it rarely, but you will need to keep tabs on all of your machines, which can be difficult if you have them in several different locations. Snack/drink vending machines will require you to restock them more often, which can be a pain at first but your life will be much easier as your business expands since you will have fewer machines in fewer locations.
Repairing your vending machines is also something that will need to be heavily considered. Not only will you need to find the parts for the machines, which can sometimes be tricky for lesser known brands, but you will also want to do the repairs yourself, at least until your business grows and you start earning a strong income. Repairing bulk machines is usually easy and they are less prone to problems, making it so you usually don’t have to worry about this task. Snack/drink machines on the other hand will more than likely cause you problems at some point during your business, especially if they are older machines. These repairs are usually minor and require a minimal time investment, but they are something that need to be considered since you might need to spend unplanned hours keeping your machines functional.