A vending machine business is a company that operates vending machines, dispensing anything from healthy snacks to electronics. The operator’s job is to ensure these machines are well stocked and in good working order, and collect the money from the machine.
While it seems like a simple business to operate, there are different considerations such as choosing the right location, finding the best types of products to sell, and ensuring you have the right licenses to operate vending machines in your area.
How to start a vending machine business
Choose a business structure
Choosing a business structure is important so that you can operate your vending machine business legally and obtain certain legal protections. Depending on the structure, you may be able to claim certain business expenses and separate personal and business assets in the event of a lawsuit.
Your state’s official website will have resources on what type of business structure is best for your needs, and the types of paperwork you will need to fill out to form your organization. You can also consult a reputable Certified Public Accountant, or CPA.
Apply for necessary licenses and permits
Your state or county may require you to obtain certain licenses and permits to operate vending machines in your area. There may also be additional paperwork required, depending on the type of product you intend on selling, so check with the applicable local authority to see what you need.
Research vending machine options and pick what to sell
There are several types of products you can sell in vending machines, including:
- Food and beverage options.
- Bulk vending, like stickers, gumballs or small toys.
- Specialty items like made to order coffees, electronics, tobacco, skincare, and travel products.
- Franchises (you'll essentially become a franchisee).
Each of these options have their perks and downsides, so do your research to examine factors that would make any of these options more or less attractive to you. For example, if you’re new to business and want a choice that may not require as much upfront capital, bulk vending or food vending machines may be for you. Whatever you choose, it may be a good idea to pick a specific focus with one or several machines, and grow as you learn more about the business.
Find the right location
Picking the right location for your vending machines can make or break your business. An electronics vending machine may make sense at an airport or upscale shopping area, but probably not at a doctor's office. If you want to pick locations where people may be in a hurry or have a lack of food options, a snack vending machine may be a smart bet.
Other factors to consider include whether you’ll be servicing the machines yourself and the types of businesses where you may want your vending machines. If you intend on repairing and restocking them yourself, locations farther apart could require more time (and transportation costs) to maintain. As for businesses, you’ll probably need to start making connections to secure permission to put your vending machines in your desired location.
Once you’ve found locations and sought permission to place your vending machines there, you will likely need to put the agreement down in writing. The contract should include any fees or commissions you will need to pay to the location owner.
Select the machine
The machine you’ll ultimately need should be based on factors such as your budget and the types of products you want to sell: For example, a machine that sells cold drinks will be different from ones that sell merchandise. There are also new and used vending machines and either option has its own benefits and drawbacks. Customers may also appreciate multiple payment options (like mobile, credit card, and cash payments).
Stock your vending machine
Finding a supplier and developing a good working relationship with them helps to ensure you’re able to find products at a reasonable price and receive inventory when you need it. When stocking your machine, pay attention to any state or regional trends that could give you insights into the types of products local customers would want. As you learn what customers like, you can adjust your orders based on demand.
Explore financing options
Unless you have a lot of startup capital, you will most likely need to secure business loans to get your operations up and running. Some choices include equipment financing and short-term loans. These may be unsecured or secured loans, using your vending machines as collateral. Shopping around and comparing loans will help you find a loan that’s the best fit for your business.
Review and improve your operations
As you get your business up and running, you may find that there are some hiccups along the way. Take it as a learning opportunity to see what’s working and what you can improve. Checking in regularly allows you to see if there’s any room for growth, or different processes you can adopt to increase profitability.
Vending machine business pros and cons
Starting a vending machine business typically requires less capital compared to other business types. However, it is not without its downsides.
Pros
- Low startup costs: In many cases, you’ll only need several thousand dollars to start, which tends to be much lower than other types of businesses.
- Simple to scale: You can start with a few vending machines and purchase more as you grow your business.
- Low overhead costs: Vending machine businesses don’t need to hire a lot of employees or rent an office. Aside from machines, inventory, and contracts with the location owner, there may be little to no other costs.
- Variety of business options: There are many different types of products you can sell through vending machines.
Cons
- Susceptible to theft: Unfortunately, because vending machines may not be monitored, they can easily fall prey to theft. You may be able to prevent this by having machines in locations that are considered safer, but there are no guarantees.
- Time commitment: You will need to take time to restock, maintain, repair, and collect money from your vending machines.
How much does a vending machine cost?
Vending machines cost, on average, several hundred to several thousand dollars each, not including inventory costs. Your cost will depend on factors including the size of the machine and the type of features available, like refrigeration or a card reader. Some vending machine sellers may offer their own financing options to make it more affordable. Don’t forget, there are also ongoing costs such as repairs and maintenance.
Should you start a vending machine business?
Those who are looking for a business that has little overhead and low startup costs may find that a vending machine company is a great fit. You will, however, need to spend time negotiating with the different businesses and locations where you want to put your vending machines, as well as restocking inventory. If you’re someone who would rather work with employees or create a business that doesn’t rely on physical goods, you may be better off looking at other options.
Frequently asked questions (FAQs)
How profitable is owning a vending machine?
Vending machines can be extremely profitable, though it depends on various factors such as your machines’ location, the inventory you’re selling, and whether the machine is more susceptible to theft.
What type of vending machines make the most money?
Bulk vending machines, like ones that sell gumballs and stickers, tend to have the highest profit potential. Vending machines that sell food and drinks also tend to make the most money.
Where’s the best place to put a vending machine?
The best place to put a vending machine is one where there is a lot of foot traffic. The more people passing by your machine, the more likely it is you'll get customers. Some of these locations can include airports, offices, and schools.
This story was written by NJ Personal Finance, a partner of NJ.com. The information presented here is created independently from the NJ.com editorial staff, and purchases made through links in this article may result in NJ.com earning a commission.
