How to Operate a Vending Business
The vending machine business "allows you to be your own boss, set your own hours, and schedule your day however you like," notes The Vending Machine Business. It offers a low barrier to entry, meaning that anyone with a little money and time to invest can become a vending machine operator. It's an unusually safe business, too. A U.S. Department Commerce study, according to Vending Connection, showed that while 65 percent of all new small businesses fail, fewer than 5 percent of new vending businesses fail.
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Instructions
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Identify locations. "The starting point is the location and not the [vending] machines," says Vending Secrets. The key is to find high-traffic venues that represent good opportunities, then decide what are the best products to vend in those locations.
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Approach local businesses that offer the most potential. Schools, hospitals and factories are the big three moneymakers in vending, reports Vending Secrets. Other top locations include restaurants, bowling alleys, skating rinks, shopping malls, commercial laundry services, movie theaters, high schools, colleges, markets, coffee shops, banks, automotive centers, taverns and apartment complexes, according to industry supplier Gumballs.
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Make a deal with each location. For the best long-term relationship, offer the owner or operator of the location a percentage of your sales, advises Gumballs.com. Paying a percentage of your revenue to the location provides an incentive for the location owner or operator to help you achieve success. Gumballs recommends a commission from 15 to 33 percent, depending on the size and potential profitability of the location.
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Select the right equipment. An office building with 30 employees will require different capacities and options than a building with 300 or 3,000, notes Vending Secrets. As a general rule, the larger the location, the broader the mix of equipment and vended products.
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Know what sells. The top 10 snacks, according to a report from industry trade journal Automatic Merchandiser, as noted by eDiets, are Snickers, Doritos Grab Bag, Peanut M&M's, Cheetos, Cheez-It Original, Twix, Strawberry-Frosted Pop Tarts, Rice Krispies Treats, Lay's chips and Mrs. Freshley's Jumbo Honey Bun.
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Set specific financial goals. Based on your initial analysis of foot traffic in your prospective locations and established industry operating ratios, based on types of locations, types of products and number of machines create a simple business plan that demonstrates your potential profits. The vending machine business is strictly a numbers game, says Vending Secrets. Do the math, execute the plan and make the planned amount of money.
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Start small. Based on your business plan, make sure that you can generate the revenue and profits that you planned on. Once you have established a basic business model for your area and type of products, expand. And the initial numbers you generated for costs, revenues and profit will hold steady, as long as your execution of the business is consistent. Over time, you will develop a very attractive passive income stream that generates money around the clock, even when you're not working.
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