What You Need to Know About Starting a Vending Machine Business

Do you have some money to invest but aren’t sure what type of business to start?

Many people are trying to make money quickly or have passive income while working a 9–5 job in this challenging economic climate. The vending machine business has long attracted new entrepreneurs.

A report published by Global Watch predicts that the vending machine operators’ global market will grow from $38 billion in 2022 to just over $42 billion in 2023, a compound annual growth rate of 11.5%. Recently, innovative ideas have allowed for the creation of novel vending machines. 

You can join the vending machine business: we have all the information you need to get started!

The Benefits of the Vending Machine Business

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There are no training requirements for the vending machine business as they are not limited by hours of operation. As a startup, the vending machine business can generate passive profits; you do not need to open an office or a website. Your state may require you to register your business and purchase insurance, usually costing a few hundred dollars.

Once you achieve a good investment, you can purchase additional machines and install them anywhere in the world.

Choose Your Business Structure

There are several factors to consider in the vending machine world, but the most important is your business structure. This is not professional financial advice. Speak with your financial advisor about your unique situation.

Limited Liability Company (LLC)

Often, an LLC is the best business structure for a vending machine business. Aside from being flexible, informal, and scalable, it offers legal and tax protection for the owner, employees, and partners. In the case of a civil lawsuit, it also protects personal finances and property. Most vending machine businesses are either LLCs or sole proprietorships. 

Sole Proprietorship

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A sole proprietorship is easy and cheap to set up. Owners of sole proprietorships can easily withdraw all profits into their accounts without any trouble. As a result, this structure is attractive, but there are also some negative aspects. The business is an adjunct to you when you are solely responsible for it. All legal and financial responsibilities fall directly on you, not the company. Therefore, you will need to pay for any business losses out of your own pocket.

Vending machine businesses may need to file legal documents such as a business license, vendor agreement, service agreement, liability waiver, lease agreement, privacy policy, and employment agreement.

Vending Machine Business: A 6-Step Guide

1. Choose a Strategic Location

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Locate your vending machine in a high-traffic area. Foot traffic, visibility, and customer demographics should be considered.

2. Select Your Products Carefully

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Choose the products you will stock in your vending machine. Target your products to the tastes and needs of your target audience, and be sure to choose popular and profitable products.

3. Handle Legal and Financial Foundations

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Make sure you have the proper state license to operate a vending machine. Start by laying out your business strategy and attracting investors with a detailed business plan. To keep your personal and business finances separate, open a business account.

4. Purchase and Set Up Your Vending Machine

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Research and invest in a vending machine that fits your budget and needs. Once acquired, place it in your chosen location.

5. Stock and Maintain Your Machine

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Maintain a regular supply of desired products in your vending machine. Perform routine maintenance and repairs to ensure it operates smoothly.

6. Promote and Review Your Business

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Advertise your vending machine to increase visibility and sales. Regularly review and optimize your operations for maximum efficiency and profitability.

Do Vending Machine Owners Make Good Money?

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One of the most frequently asked questions is: “How much do vending machines make (for real)?” The plain and simple answer is $300 to $600 per month per vending machine. Your profitability will vary depending on where your machine is located and what kind of goods you sell. A significant point to highlight is that most operators make margins of 86% on items. 

Vending machine profits are primarily determined by three factors, according to Allied Vending:

Amount of items sold each day, the profit per sale you make, and your monthly expenses.

The best way to calculate them is the following: 

Net Profit = (Items Sold Per Day x Profit Per Item Sold x Days Per Month) – Expenses per month

You Have Many Options When It Comes to Vending Machines

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Many people believe vending machines come in the standard snack-and-soda variety, but there are more options than that. Overall, there are three categories of vending machines: food and beverage, bulk vending, and specialty vending.

Choose one or two vending machines with a specific market focus, and gradually add new machines as you learn about popular stock- and site-specific patterns.

1. Food and Beverage Vending

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Most vending markets in the United States are related to food and beverages since many malls, gas stations, and work establishments have vending machines with soda, snacks, and candies. These machines can be profitable, but they require regular maintenance and monitoring to ensure they remain fully stocked. Additionally, they may require special permits or licenses to operate in specific locations.

2. Bulk Vending

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Bulk vending involves selling gumballs, stickers, or rubber balls for a very low capital investment and maintenance cost. It may be possible for you to earn $30 per month with a refurbished vending machine that costs less than $50. Your products will have an incredibly low overhead. Placing them in a school or amusement park offers the potential for a source of steady passive income.

3. Specialty Vending

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The vending machine business is not limited to food and drinks. It is common to find machines selling tech accessories, beauty products, or other specialty items at arenas, airports, and malls. Automated retail machines are different from standard vending machines since they use a different technology. 

Specialty items available at vending machines include:

Retail

You can sell essential travel items such as phone chargers, headphones, and neck pillows as vending products with local transit authorities if you can negotiate a contract with them. Luxury skincare products or electronic devices can be sold in upscale vending machines in malls and airports.

Hot Beverages

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Vending machines for hot beverages are most popular in offices; however, universities and conference centers are good locations for this type of business as well. In many cases, manufacturers produce both traditional and specialty beverage equipment, so you may be able to purchase both at the same time.

Laundry Products

Detergent, fabric softener, and dryer sheets are great vending products for laundromats, apartment complexes, or dormitories.

Franchising Options

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Buying a franchise may be the best option if you don’t want to build your vending machine business from scratch. Franchisees will work within a proven framework and receive extra training and support to set up their vending businesses.

You also have the option to choose how many machines you want to invest in. Franchisors, however, require franchisees to pay a portion of their profits to them.

Vending Machines and Technology Solutions

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Vending machine operators are increasingly focusing on innovation as a trend shaping the market. In order to boost sales, enhance convenience, and gather valuable customer insights, companies are embracing cutting-edge technology like cashless payment systems, IoT, and AI.

Over 2,000 Coca-Cola vending machines in Australia and New Zealand now accept Bitcoin as payment. To develop smart vending machines that require minimal human interaction, Coca-Cola is experimenting with AI and big data, according to Vending Market Watch’s 2023 annual report.

Locate Your Vending Machine

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Explore vending machines online. To compare types, technologies, and prices, check both local and national suppliers. When calculating the overall expenses, don’t forget to include inventory costs.

Manufacturers or Wholesale Vending Suppliers

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These companies sell a wide range of vending machines and provide comprehensive services such as delivery, repairs, and training. Buying multiple machines or paying additional fees for service and training programs is usually the most expensive option.

Secondary Market Sellers or Specialty Online Retailers

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These platforms offer business owners access to a variety of brands and models.

Consumer-to-Consumer Platforms

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Perfect for those just starting, consumer-to-consumer platforms, such as eBay and Etsy, list thousands of vending machines. To save on shipping, you can filter your search by location.

Figuring Out How To Pay For Your Vending Machine Business

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The costs for starting a vending machine business are much lower than many other businesses. A few thousand dollars, however, isn’t exactly trivial. There are two different options you can consider if you want a vending machine loan:

Short-Term Loan

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Do you run a business already? Do you have the financial records to prove it? You might want to consider a short-term loan. The process is pretty straightforward: lenders loan you money, which you repay over time (with interest).

Usually, these loans last no more than 18 months and have higher interest rates. The good news is that they’re generally easier to get than long-term loans. Before giving you the green light, lenders will examine your business finances and credit history.

Equipment Financing

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You may be able to get financing for your vending machine business if you do not have a lot of cash on hand. You get a loan based on the value of your vending machine, which doubles as security. Thankfully, vending machines can last a long time (up to 10 years or more).

Your financial details and business plan will be required when you apply for this loan, along with equipment quotes for vending machines you want to purchase. Additionally, inventory financing is an option if you need cash to stock your vending machines.

Are Vending Machines Taxed?

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The answer is yes, vending machines are subject to sales tax. In addition to property taxes and income taxes, vending machines may be subject to additional taxes. Before purchasing a vending machine, make sure you research the tax implications in your state.

Key Takeaways

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Before starting a vending machine business, it is important to do your research and understand the tax implications in your state. This business can provide you with a passive income if you are planning to start a small business. As it grows, it can expand to other locations. Additionally, a variety of options are available, as well as different kinds of vending machines.

Initially, you might not become Bill Gates or Steve Jobs, but in the long run, every potential business is an investment in your future! 

This article was originally produced and syndicated by Financially Well Off.

Author: Christopher Alarcon

Title: Journalist

Expertise: personal finance, side hustles, time management

Bio:

Christopher Alarcon is a journalist with a deep passion for personal finance. He has contributed to major online publications, including MSN, Wealth of Geeks, and Business Insider.