How to Start a Vending Machine Business

How to Start a Vending Machine Business

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How To Start a Vending Machine Business

Starting a vending machine business can be very profitable. With proper planning, execution and hard work, you can enjoy great success. Below you will learn the keys to launching a successful vending machine business.

Importantly, a critical step in starting a vending machine business is to complete your business plan. To help you out, you should download Growthink’s Ultimate Vending Machine Business Plan Template here.

15 Steps To Start a Vending Machine Business

  1. Decide Which Type of Vending Machines to Manage
  2. Choose the Name for Your Vending Machine Business
  3. Develop Your Vending Machine Business Plan
  4. Choose the Legal Structure for Your Vending Machine Business
  5. Secure Startup Funding for Your Vending Machine Business (If Needed)
  6. Register Your Vending Machine Business With the IRS
  7. Open a Business Bank Account
  8. Get a Business Credit Card
  9. Get the Required Business Licenses and Permits
  10. Get Business Insurance for Your Vending Machine Business
  11. Determine Where To Buy or Lease Your Vending Machines
  12. Find Locations for Your Vending Machines
  13. Determinw How You Will Stock Your Vending Machines
  14. Purchase and Setup the Software Needed to Run Your Vending Machine Business
  15. Open for Business

1. Decide Which Type of Vending Machines To Manage

You’ll first need to choose what type or types of vending machines you want to manage.

Beverage machines, for example, vend sodas and water. Food machines may vend candy, chips, or healthy snacks like nuts and fruit bars. Combo vending machines offer a variety of goods.

Some machines are specialized, such as those that vend only coffees and teas or those that vend only frozen foods. You can also manage the types of vending machines that offer toys to kids, like those you see outside of grocery stores and department stores.

Do some research into what types of goods will be most profitable in your area and make a decision on which types of vending machines you will offer.

2. Choose the Name for Your Vending Machine Business

The next step to starting a vending machine business is to choose your business’ name.

This is a very important choice since your company name is your brand and will last for the lifetime of your business. Ideally you choose a name that is meaningful and memorable. Here are some tips for choosing a name for your vending machine business:

  1. Make sure the name is available. Check your desired name against trademark databases and your state’s list of registered business names to see if it’s available. Also check to see if a suitable domain name is available.
  2. Keep it simple. The best names are usually ones that are easy to remember, pronounce and spell.
  3. Think about marketing. Come up with a name that reflects the desired brand and/or focus of your vending machine business.

3. Develop Your Vending Machine Business Plan

One of the most important steps in starting a vending machine business is to develop your business plan. The process of creating your plan ensures that you fully understand your market and your business strategy. The plan also provides you with a roadmap to follow and if needed, to present to funding sources to raise capital for your business.

Your business plan should include the following sections:

  1. Executive Summary – this section should summarize your entire business plan so readers can quickly understand the key details of your vending machine business.
  2. Company Overview – this section tells the reader about the history of your vending machine business and what type of vending machine business you operate. For example, are you a snack and beverage vending machine company or a specialty vending machine company?
  3. Industry Analysis – here you will document key information about the vending machine industry. Conduct market research and document how big the industry is and what trends are affecting it.
  4. Customer Analysis – in this section, you will document who your ideal or target customers are and their demographics. For example, how old are they? Do they live or work in a specific area? What do they look for when making purchases from vending machines?
  5. Competitive Analysis – here you will document the key direct and indirect competitors you will face and how you will build competitive advantage.
  6. Marketing Plan – your marketing plan should address the 4Ps: Product, Price, Promotions and Place.
    • Product: Determine and document what products you will offer
    • Prices: Document the prices of your products
    • Place: Where will your business be located and how will that location help you increase sales?
    • Promotions: What promotional methods will you use to attract customers to your vending machine business? For example, you might consider vending machine wraps to draw in customers.
  7. Operations Plan – ere you will determine the key processes you will need to run your day-to-day operations. You will also determine your staffing needs. Finally, in this section of your plan, you will create a projected growth timeline showing the milestones you hope to achieve in the coming years.
  8. Management Team – this section details the background of your company’s management team.
  9. Financial Plan – finally, the financial plan answers questions including the following:
    • What startup costs will you incur?
    • How will your vending machine business make money?
    • What are your projected sales and expenses for the next five years?
    • Do you need to raise funding to launch your business?

RELATED ARTICLE: How to Write a Vending Machine Business Plan

4. Choose the Legal Structure for Your Vending Machine Business

Next you need to choose a legal structure for your vending machine business and register it and your business name with the Secretary of State in each state where you operate your business.

Below are the five most common legal structures:

1) Sole Proprietorship

A sole proprietorship is a business entity in which the owner of the vending machine business and the business are the same legal person. The owner of a sole proprietorship is responsible for all debts and obligations of the business. There are no formalities required to establish a sole proprietorship, and it is easy to set up and operate. The main advantage of a sole proprietorship is that it is simple and inexpensive to establish. The main disadvantage is that the owner is liable for all debts and obligations of the business.

2) Partnerships

A partnership is a legal structure that is popular among small businesses. It is an agreement between two or more people who want to start a vending machine business together. The partners share in the profits and losses of the business.

The advantages of a partnership are that it is easy to set up, and the partners share in the profits and losses of the business. The disadvantages of a partnership are that the partners are jointly liable for the debts of the business, and disagreements between partners can be difficult to resolve.

3) Limited Liability Company (LLC)

A limited liability company, or LLC, is a type of business entity that provides limited liability to its owners. This means that the owners of an LLC are not personally responsible for the debts and liabilities of the business. The advantages of an LLC for a vending machine business include flexibility in management, pass-through taxation (avoids double taxation as explained below), and limited personal liability. The disadvantages of an LLC include lack of availability in some states and self-employment taxes.

4) C Corporation

A C Corporation is a business entity that is separate from its owners. It has its own tax ID and can have shareholders. The main advantage of a C Corporation for a vending machine business is that it offers limited liability to its owners. This means that the owners are not personally responsible for the debts and liabilities of the business. The disadvantage is that C Corporations are subject to double taxation. This means that the corporation pays taxes on its profits, and the shareholders also pay taxes on their dividends.

5) S Corporation

An S Corporation is a type of corporation that provides its owners with limited liability protection and allows them to pass their business income through to their personal income tax returns, thus avoiding double taxation. There are several limitations on S Corporations including the number of shareholders they can have among others.

Once you register your vending machine business, your state will send you your official “Articles of Incorporation.” You will need this among other documentation when establishing your banking account (see below). We recommend that you consult an attorney in determining which legal structure is best suited for your company.

5. Secure Startup Funding for Your Vending Machine Business (If Needed)

In developing your vending machine business plan, you might have determined that you need to raise funding to launch your business.

If so, the main sources of funding for a vending machine business to consider are personal savings, family and friends, credit card financing, bank loans, crowdfunding and angel investors. Angel investors are individuals who provide capital to early-stage businesses. Angel investors typically will invest in a vending machine business that they believe has high potential for growth.

6. Register Your Vending Machine Business With the IRS

Next, you need to register your business with the Internal Revenue Service (IRS) which will result in the IRS issuing you an Employer Identification Number (EIN).

Most banks will require you to have an EIN in order to open up an account. In addition, in order to hire employees, you will need an EIN since that is how the IRS tracks your payroll tax payments.

Note that if you are a sole proprietor without employees, you generally do not need to get an EIN. Rather, you would use your social security number (instead of your EIN) as your taxpayer identification number.

7. Open a Business Bank Account

It is important to establish a bank account in your vending machine business’ name. This process is fairly simple and involves the following steps:

  1. Identify and contact the bank you want to use
  2. Gather and present the required documents (generally include your company’s Articles of Incorporation, driver’s license or passport, and proof of address)
  3. Complete the bank’s application form and provide all relevant information
  4. Meet with a banker to discuss your business needs and establish a relationship with them
If you’d like to quickly and easily complete your vending machine business plan, download Growthink’s Ultimate Vending Machine Business Plan Template and complete your business plan and financial model in hours.

8. Get a Business Credit Card

You should get a business credit card for your vending machine business to help you separate personal and business expenses.

You can either apply for a business credit card through your bank or apply for one through a credit card company.

When you’re applying for a business credit card, you’ll need to provide some information about your business. This includes the name of your business, the address of your business, and the type of business you’re running. You’ll also need to provide some information about yourself, including your name, Social Security number, and date of birth.

Once you’ve been approved for a business credit card, you’ll be able to use it to make purchases for your business. You can also use it to build your credit history which could be very important in securing loans and getting credit lines for your business in the future.

9. Get the Required Business Licenses and Permits

Every state, county and city has different business license and permit requirements.

Nearly all states, counties and/or cities have license requirements including:

  • General Business License – You can obtain a business license by registering your business with your state government. The process for doing this varies from state to state, but you can generally find the information you need on your state’s website.
  • Vending Permit – In order to get a vending permit, you will need to submit an application to your local government. Again, the process for doing this varies from state to state, but you can generally find the information you need on your state’s website.

Depending on where you want to locate your vending machines, you will have to obtain the necessary state, county and/or city licenses.

10. Get Business Insurance for Your Vending Machine Busiuness

Business insurance policies that you should consider for your vending machine business include:

  • Property Insurance – This type of insurance protects your business property, such as your vending machines. It can also help reimburse you for any damages that occur to your property.
  • Liability Insurance – This type of insurance protects your business from any lawsuits that may arise. For example, if someone gets injured while using one of your vending machines, they may sue you. Liability insurance can help protect you from these costs.
  • Product Liability Insurance – This type of insurance protects you from any lawsuits that may arise if someone gets sick or injured after consuming one of your products. It can help cover the costs associated with defending yourself in court and compensating the victim..
  • Business Interruption Insurance – This type of insurance helps cover the costs of lost income if your business is interrupted for some reason. For example, if your vending machines are damaged by a storm and can’t be used for a while, this insurance will help reimburse you for lost profits.

Find an insurance agent, tell them about your business and its needs, and they will recommend policies that fit those needs.

11. Determine Where To Lease or Buy Vending Machines

Leasing vending machines is often more expensive than buying them outright, but it does have some advantages. When you lease a machine, the company you’re leasing from is usually responsible for restocking and maintaining the machine. This can save you a lot of time and hassle.

However, if you do decide to buy your own machines, there are a few things you should keep in mind. First, make sure to buy reliable machines from a reputable vendor. Second, be sure to get machines that accept both cash and credit cards, as this will give you the widest range of customers.

Whichever method you choose, just be sure to investigate the company and different models of vending machines before you make a purchase.

12. Find Locations for Your Vending Machines

Your vending machines won’t do you much good if you don’t have high-traffic locations for them. The best locations for your machines are places where people are already congregating, such as office buildings, shopping malls, and laundromats. You’ll need to approach the business or property owners of these locations and negotiate a contract that lets you place your machines on their property.

Once you have secured a few locations, you can start installing your vending machines.

13. Determine How To Stock Your Vending Machines

You will also need to determine how you will keep your machines stocked. You can either stock them yourself or hire a company to do it for you. If you are leasing your vending machines from another company, they may already be able to restock them for you as part of your contract.

You may be able to get by stocking your own machines if you just have a few vending machines in a small area, but might want to consider hiring another company to do it for you if you have many machines scattered across a larger area. There are several companies that specialize in stocking vending machines, and they will usually take care of all the paperwork and permits for you.

14. Purchase and Setup the Software Needed to Run Your Vending Machine Business

A vending machine business needs software that can help manage inventory, sales, and customer data. This software can help track sales, monitor stock levels, and generate reports on customer buying habits. Some popular vending machine software options include VendSoft, Supply Wizards, and Parlevel.

15. Open for Business

You are now ready to open your vending machine business. If you followed the steps above, you should be in a great position to build a successful business. Below are answers to frequently asked questions that might further help you.

 

How to Start a Vending Machine Business FAQs

In its most basic form, vending machine business consists of buying or renting a vending machine(s), putting it in an easily accessible area, and stocking it with a variety of products for sale. Once the machine is set up, all you have to do is inventory management and collect money from each location regularly.

No, it's not hard to start a vending machine business. And, with the right location and product mix, it can be a very lucrative business as well. Your biggest problems to overcome when starting a new vending machine company will most likely be securing locations for your vending machines and funding the purchase of equipment and inventory. Following the steps outlined above will help you get started.

As more people are moving away from traditional workplaces and towards self-employment, it is more important than ever to have an idea of what you'd like to do for work. Of course, some people still prefer the stability of a full-time job while others search long and hard for something more flexible that provides passive income.

There is no need for any prior experience or expensive equipment in order to start a vending machine business. If you already have a product, all you need to do is place an ad online and get your first customer.

It's also important not to jump the gun before you know whether this type of business will even work out for you. Don't invest too much money into buying machines until you've had the chance to test them out and make sure that vending machines are something you want to pursue.

Vending machines are a good business to get into with no experience since you can start small, with just a few machines, and grow your business as you learn the ropes. The best thing you can do before you start is research. Look into the vending machine industry, important trends that might impact your business, and what types of products will sell in your area. You might also consider connecting with experienced individuals in the vending machine industry who can offer some insight.

Vending machines are actually very simple to get started with, you don't even need the experience to do so. So many people already own vending machines, yet never use them themselves, they will be excited to always have a mouthwatering treat available to them whenever they want it. If you decide that this business opportunity is something you would like to pursue, take a look below at some of the things involved in starting your own successful vending machine business venture.

First and foremost, vending machines are very easy to find; whether buying or renting one is best for your needs. If you choose to buy your own vending machine equipment to sell in, you can usually buy vending machines fairly easily and at a low price point. Used machines equally come in all types and sizes for whatever type of product or snacks you would like to be available, i.e., candy, healthy snacks, beverages, etc. If buying one is not an option for your current situation, another great way to get started is by renting one from the company that owns it such as Vending Solutions.

Once you have purchased or rented your vending machine(s), make sure they are level with the ground to ensure proper vending business function. Install any items required for the snack or drink to be dispensed (i.e., ice, cups, popcorn bags, etc.) and fill up all compartments with the snacks or drinks you purchased to stock your vending machine(s). Make sure you label each compartment of your vending machine(s) in order to make it easier for customers to find what they are looking for. Now that everything is in place, it's time to get started! 

To start selling your treats via vending machines, make sure you are placing vending machines where they are easily visible to potential customers. Put out flyers around town announcing the grand opening of your new business venture and advertise online on social media sites such as Facebook or Instagram.

There are a few different ways that vending machine companies can make money. 

The most common way is through product sales. When customers purchase items from vending machines, the business owner keeps a portion of the proceeds. 

Another way that some vending machine businesses make money is through advertisements. Some owners rent out advertising space on their machines to local businesses. The businesses then pay the vending machine owner a small fee each month for the ad space. 

Finally, some vending machine companies make money through commissions. When customers purchase items from the machines, the business owner receives a small commission from the product's manufacturer.

There are many types of vending machine businesses, but not all of them are equally profitable. In general, the most profitable businesses are those that offer high-value items such as snacks and drinks, or those that provide specialty products such as electronics that have a higher ticket price. To decide what type of business is right for you, consider your target market and what type of product or service they would be most interested in. Remember that the location of your vending machine will also play a large role in its profitability, regardless of what it sells.

When it comes to starting a vending machine business, the biggest initial investment you'll make is in the machines themselves. Vending machines can cost anywhere from a few hundred dollars to a few thousand dollars each, depending on the type of machine and the features it offers. You'll also need to factor in the cost of stocking the machines with products, as well as the cost of maintaining and servicing the machines over time.

The cost of starting a vending machine business is generally relatively low when compared to other types of businesses. An entry-level vending machine company can be started for as little as $2,000 in investment. Used machines can be purchased from vending machine operators for $1,200 to $3,000.

Vending machines are big business. And while the initial investment for a vending machine business can be significant, there are plenty of reasons to believe that owning your own vending machine business can be quite profitable.

Vending operators and owners can make a handsome profit each month by merely locating their machines in prime locations. For example, an ice cream vending machine owner that puts his/her machines on college campuses will be able to sell hundreds of gallons of ice cream every year and earn tens of thousands of dollars. These figures vary according to how much product is sold and how often the machines are filled/refilled with supplies. 

So how much does a vending machine business owner make? The sky is truly the limit with this fun and lucrative business. Of course, like any business, there are no guarantees. But if you're thinking about starting a vending machine business, there are a few things to keep in mind that could help you make it a success. 

The main factors that will influence your profitability are the locations of your vending machines and the products that you sell. You will also want to be sure that your vending machines are clean and in good working order to maintain customer trust.

As with any business, there are certain ongoing expenses associated with running a vending business. These can include things like the cost of keeping your machines stocked with products, regular maintenance and upkeep of your machines, and insurance costs. Of course, the actual amount you'll spend on these things will vary depending on the size and scope of your business.

The average revenue generated by vending machines depends on various factors including product type, volume sold per item, and location. The average vending machine earns $35 a week; however, vending machines in high foot traffic areas and are well-stocked can generate over $400 a month.

The vending machine market was recently valued at $18.28 billion, and within the next 5 years it is expected to reach $25.25 billion, growing at an annual rate of 6.7%. The vending industry is expected to increase by $6.97 billion over the next 10 years.

The vending machine industry is divided into three major segments: cold drinks, snacks, and other food, and non-food vending machines.

The external factors that most affect the vending machine market are similar to all other industries. The growth of the economy, population, and inflation can lead to a boom or a bust depending on how they affect supply and demand. Other factors such as taxes, government regulations, and wages also play a role in how well any business performs.

There are a number of trends affecting all aspects of the vending machine industry, including how they are used and how much revenue is made. Some of the current trends occurring in the vending machine market include:

  • convenience stores that offer consumers food options (instead of just small groceries)
  • fluctuations in how often people eat at restaurants or buy snacks or food on the go
  • the move towards healthy snacks and how it affects demand for vending machines
  • the trend of consumers wanting products at a lower price point, which leads to the use of vending machines as opposed to traditional brick and mortar stores
  • vending machines becoming more technologically advanced with touch screen interfaces, cashless features, and other options

Direct competitors in the vending machine market include other vending machine manufacturers, snack/food companies, and coffee companies. Indirect competitors of the vending machine market include supermarkets, convenience stores, etc.

The vending machine industry is primarily made up of two key customer segments: businesses and consumers.

Based on the application, it is possible to segment fast-food restaurants, shopping malls, retail stores, airlines, hotels, rail stations, schools, and business centers.

Let’s take a look at some different types of vending machine offerings.

Candy Vending Machines

Candy vending machines are a great option for any business looking to attract children, teens, or anyone that enjoys candy! Candy machines can offer single-serve options or larger, bulk candy containers. Packing your vending machine with an assortment of candies will make sure all of your customers are satisfied and will allow for a large variety of potential customers.

Snack Vending Machines

Snack vending machines are usually larger than candy machines and can be found in a wide variety of locations. Snack vending machines can offer a wide variety of non-food items such as toys, games, and even school supplies. A snack machine is great for special events or business locations since it can make your location stand out from the competition due to its unique product options. A significant portion of vending machine sales is covered by snack vending machines.

Ice Cream Vending Machines

While not always an option for every location, ice cream vending machines are a great choice if the area you plan on using your business in will allow for it. These types of vending machines can vary greatly depending upon how much storage space is available to offer an assortment of ice cream treats. Ice cream vending machines make a great choice due to their high profit margin, ease of use and they maintain temperature well.

Beverage Vending Machines

A beverage machine is great for stocking drinks, usually cold beverages like soda or juice. These soda machines often only provide single-serve options but there are many drink machines that can hold larger stock units for small or large business locations. They are a great choice because they allow customers to get their choice of beverage without having to buy an entire bottle. They also provide the customer with easy access to bottles that do not require refrigeration or can be stored at room temperature without needing ice.

 

Coffee Vending Machines

Coffee vending machines can be found in many office buildings and cafes, serving snacks along with coffee treats. Coffee vending machines come in several different types of coffee and other hot beverages including flavored varieties. These machines are great for offices or business locations that would like to offer their customers a chance to relax and enjoy themselves during break time.

Specialty Vending Machines

Specialty vending machines are a great way to offer your customers something outside the box. These machines can be stand-alone or integrate into other types of vending machines such as snacks, candy, or ice cream. Specialty vending machine models include instant photo booths, plush toys, and even gumball-style games. These types of vending machines are fun and attract a wide variety of customers.

Custom Vending Machines

Custom vending machines are usually made to fit the specifications of a business location. These types of vending machines can vary greatly in how they look, how they are loaded, their offerings, and even how many items they hold. A custom vending machine is great for any business looking to create an entirely unique experience for their customers to get the product or service they want exactly how they want it.

Bulk Vending Machines

Bulk vending machines can offer a wide variety of products and are easy to load. These types of machines usually only require the customer to pour in loose change as payment and turn a handle, just like how bulk candy is dispensed at carnivals. Bulk vending machines are great for providing customers with an assortment of options without requiring any extra effort on their end.

With all of these vending machine options available, how do you choose what’s right for your business? The best way to choose the right vending equipment is to try and imagine how they would fit into your location and how they will benefit those who might use them. Getting feedback from those around you (especially children) can help you decide how to stock your vending machine and how much space is needed.

By far the most important part of starting a vending machine business is choosing your machine locations. 

When getting started, try to use common sense and avoid any location that you think doesn't have potential, such as locations that are dark or unsafe. 

You also need to be aware of how many people pass through the location each day on average. It's very important to choose locations where the vending machine will be highly visible. For example, a vending machine located outside on a college campus is an ideal choice.

Note how many people go in and out of the location on an hourly basis. This information will give you a good idea of how many people work there and how many people visit the location each day.

The biggest mistake new vending machine owners make is underestimating how much it will cost to run their business. You need to set aside money for licensing fees, permits, and insurance in addition to payroll costs in order to ensure you're successful.

Another common mistake made by vending machine owners is failing to consider how much it will cost to fix equipment problems and how long they can go without making a sale if something goes wrong.

It's important to have a well-thought-out vending machine business plan, including how you'll generate revenue and how you will keep your vending machines running smoothly.

Vending machine owners who are new to the business often underestimate how much time goes into running it. You'll be responsible for stocking your vending machines, making repairs, and collecting money.

 

Think about the amount of vending machines you pass every day. With such a large market and so much potential for profit, it's no wonder that starting a vending machine business is an attractive proposition for many entrepreneurs.

However, as with any business, there are certain risks involved in starting a vending business. One of the biggest reasons why vending machine businesses fail is because the owners do not have a clear understanding of the costs associated with running such a business. 

For example, many people underestimate the cost of maintaining and stocking their vending machines. As a result, they are often forced to either raise prices or cut corners in other areas, which can ultimately lead to the failure of their business.

Another reason why vending machine businesses fail is that the owners do not have a solid plan for marketing their business. It is important to remember that just because you have vending machines does not mean that people will automatically start using them. You need to put in the effort to promote your business and make sure that people are aware of your machines and their locations.

Finally, many vending machine businesses fail because the owners do not take the time to build relationships with their customers. While it may be tempting to simply install your machines and then move on to the next customer, it is important to remember that your customers are the key to your success. By taking the time to get to know your customers and build relationships with them, you will be much more likely to succeed in the long run.

 

Helpful Videos & Images

The Real “Secret” To Finding Vending Machine Locations

How To Start A Vending Machine Business In Under 10 Minutes | Passive Income Ideas

Which Vending Machine Is The Best To Buy

The Increasing Need for Cashless

cashless vending machine infographic

 

Additional Resources in the Vending Machine Industry

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