How To Start a Vending Machine Business
Are you considering starting your own vending machine business? by far one of the largest queries I get asked and see on vending machine groups involves people wanting to start their own vending machine business. I hope to answer a lot of the questions you may have with this article.
From the outside a vending machine business may seem like easy money, with “passive income” being a common goal and catchphrase amongst budding entrepreneurs, you may have seen your vendor spending 20 minutes loading a machine and taking the cash and thought to yourself “that looks easy”, I’m not going to sugar coat it for you, money doesn’t come easily, however, a vending machine business, whilst still a business, can be an interesting and rewarding way to make a living.
How Much Does a Vending Machine Business Earn?
An average vending machine on a 50 person site will turn over $8000 – $12000aud gross with a 50% profit margin on the sale of goods.
There are businesses out there who are in the business of selling you a turnkey vending machine business who will claim the above figure, this is correct, but what they fail to mention is your other costs to run your business such as –
Repayments (if any).
Fuel and vehicle expenses.
Equipment such as trolleys/boxes.
Extra utilities such as phone, internet, electricity.
Advertising.
Maintenance.
Taxes.
The list goes on, it will depend on how you manage your expenses as to how much you will take home.
How Much Does a Vending Machine Cost?
A brand new Chinese machine will cost about $6000, then you will need to add payment systems, about $1800, then your cash float and product, about $700, plus transport $500. All up siting a machine will cost about $9000. The Chinese made machines such as TCN and XY are proving to be quite good and reliable at the moment.
People can be asking $5-6000 for a good second hand unit with payment systems and will usually sell fast.
Is a Vending Machine Business a Good Side Hustle?
I would highly recommend anyone to start their vending journey as a business on the side. Apart from earning some extra cash on the side there can be some tax benefits, if the business is not for you there will be people lining up to buy your sited machine from you and you won’t have lost anything from the experience.
So long as you can fill your customers machine without interrupting your day job schedule then there’s no reason not to start a vending machine business as a side hustle before taking the leap into a full time business.
Where To Start
There are three main entry points into your own vending machine business each with their ups and downs.
Start From Scratch – this involves you purchasing your own machines and finding your own sites. This is the most difficult way to start a vending business, the single biggest difficulty every vendor has is finding sites. The best way to start this way would be to price up a machine (with payment systems) from a local supplier and check availability. Find your site before buying your machine.
There are many websites out there explaining to you how to choose a site, You need to understand that that perfect site likely already has a machine, they’re likely happy with their current provider and they are also sick of sales people trying to place a vending machine on their premises.
The vending machine business is quite a crowded market with more and more people trying to get into it everyday sites can be in short supply.
Purchase a Turnkey Business – there are company’s who sell sited machines as their business, information regarding if this is a good or a bad idea can be mixed, many of the vending groups are moderated by the people who run these businesses so you’ll only read good things written by trolls, I have read some horror stories from people who have invested a lot of money into these businesses so it’s up to you to do your own due diligence, however, If they can deliver what they claim then it’s a fair deal.
One question you need to ask yourself when considering the turnkey option is this, lets say you pay your $120k for a $100k turnover 10 machine business package, what happens when they find a 500 person site needing 2 machines and turning over $100k, do you think you’ll get that site or do you think they’ll keep it for themselves?
Buy an Existing Site or Run – given my time again this would be my preferred option unfortunately decent performing runs or sites rarely come available on the market and when they do they ask a high price. Modern payment systems can give you a good report on how a business is doing it can tell you sales and whether the business is growing in sales or not.
The downside is often the vending machines and equipment in the business can be well used, if you were planning to sell your business and retire you probably wouldn’t be spending money on updating your equipment before sale either.
At WA Vending we also looking to sell sites we would be unable to take either due to lack of machines in stock or being outside of our area of operations.
Other things you may need are – food business permit, business bank account, account with your preferred VPOS provider and accounts with your product suppliers.
Is Running a Vending Machine Business Easy?
Many people want to enter the vending machine business thinking that it’s a passive or an easy income, this is not the reality, if you’re looking for easy money then vending is not for you.
Although not a back breaking grueling job a successful vendor spends considerable time on their various tasks, I would estimate that the actual time spent stacking the machines might only equate to 15% of the working week, considerable time is spent picking/packing, driving, maintaining, sourcing, stocktaking, purchasing, admin and various other tasks, a lot goes into the business behind the scenes.
The Good
The vending machine business has fairly flexible working hours and the work is enjoyable.
It’s an easy business to sell if you plan on doing something else.
It makes for an excellent side hustle.
The Bad
The cost of entry can be high, a lot of money needs to be invested before you can make a reasonable living wage.
The vending machine business is a flooded market, often full of people wanting easy money and giving the rest of us a bad name.
There can be a high level of maintenance on machines and vehicles.
Vending machine sites can be difficult to obtain.
The Ugly
You will receive customer complaints about the vending machine “stealing their money” this is often not the case, but the customer is always right even if you can prove them wrong.
When someone is having a bad day it’s usually the fault of the vending machine.
Vending machines can make good punching bags.
Sometimes people will tip your machine to dislodge product, some people see vending machines as fair game not as shoplifting.
Many varied and interesting objects can fit in your coin slot.
In Summary
Many of the basic principals of starting your own business in any field also apply in the vending machine industry.
Vending isn’t an easy or passive income. But can be rewarding work. There are upsides and downsides.
Finding sites can be a challenge, it takes a lot of time to accumulate sites but it can be done.
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