How to Start a Vending Machine Business? (7-step Actionable Guide)

Jump to Pros and Cons of a Start a Vending Machine Business

Are you searching for profitable business investment opportunities that can generate passive income? If so, investing in vending machines might be the perfect venture for you. But how do you begin a vending machine empire and is it even worth starting one?
Don’t worry, we have you covered – read along to find out everything you need to start your own vending machine business from day one!

If you want to skip the hassle of starting an LLC for your vending machine business yourself, consider using professional help:

Northwest Registered Agent ($39+state fees) (best support)
ZenBusiness ($0+state fees) (best price)

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Jump to Pros and Cons of a Start a Vending Machine Business
Quick Overview of Vending Machine Industry & Why You Should Care
7 Basic Steps to Start a Vending Machine Business
Pros and Cons of a Start a Vending Machine Business
Conclusion
FAQs About Vending Machine Business

Quick Overview of Vending Machine Industry & Why You Should Care

Last year, vending machines sold an impressive $19.4 billion worth of goods – a stellar recovery from 2020 yet still short of the pre-covid heights in 2019 ($24.20 billion).
In 2021, the U.S saw a significant decline in vending machine usage, with numbers dropping from 3,504,566 to 1,971,600 since 2016.
Cold beverages reign supreme in the vending machine industry, as these machines accounted for a whopping 24.5% of its total revenue during 2021 — more than any other type!
Last year marked a huge leap in growth for healthy vending products, such as plant-based snacks – with an impressive increase of 200%!
Of all vending machine operators, the majority make under $1 million annually; 30% earn between $1M and 4.9M; 5.6% report earnings of $5 to 9.9 million dollars; while an additional 5.6% boast annual incomes over 10 million dollars!

As you can see it’s a huge industry and a great market for your new business! So if you’re still doubting if it’s worth it – it definitely is. Read on further to find out all the basic and necessary steps to start a vending machine business today!

7 Basic Steps to Start a Vending Machine Business

Are you interested in becoming a proprietor of a vending machine business? The first move should be to comprehend the applicable laws. After that, it’s time to assess possible locations, overhead costs and other crucial details like supply chain solutions.

Here is your comprehensive guide with every step laid out for success!

1. Research the laws of your current state and local area to ensure compliance

Before launching your vending machine business, be sure to thoroughly research the state and local laws in which you plan on operating. Generally speaking, a business license or permit is required – although it isn’t usually exclusive to vending machines. Additionally, there may be limitations when it comes to what products can be sold through your machines. Doing this now will save you time and hassle down the line!

When establishing a vending machine business, make sure you not only adhere to the legal regulations but also research the requirements for starting any kind of venture in your locality. These usually comprise registering with your state, picking out an enterprise name, deciding on a business address, opening up a corporate business bank account, picking out an organization framework, obtaining an EIN and much more.

2. Carefully choose a vending machine location for maximum visibility and foot traffic

After you understand the legal requirements of operating a vending machine business, it’s time to begin strategizing where you should place your equipment. To be successful with this venture, seek out areas that have high foot traffic and little competition so customers can easily access what they need from your machines.

Some of the most common and successful vending machine locations include:

Airports, train stations, bus stops
Office buildings
Retail sites (grocery stores, malls, laundromats, etc.)
Hotels and motels
High schools, Colleges and universities
Gyms, Condos and apartment buildings
Restaurants, bars, and clubs
Military bases
Apartments\Flats
Amusement parks
Hospitals

Although all of these places may have the potential to be profitable, you cannot simply place a vending machine wherever you would like. An agreement with the property owner is required for approval – which can often pose as a difficult task. In fact, according to The Hustle’s recent survey of vending machine owners, many reported that over 100 calls were placed before finding an adequate location!

After you’ve located an accommodating property owner, it’s time to negotiate a deal. Usually, they will demand a percentage of your total sales revenue; The Hustle reported that commission is typically between 10-25% of the operator’s overall profits. If the rate is agreeable with both sides, finalize the contract and place your machine in its new home!

3. Choosing the perfect product for your vending business

When making your vending machine decisions, you must think about the products that will be most welcomed by your target market. If we look at a hospital waiting room for example; after the cafeteria closes people are likely to be hungry and thirsty, so in this instance having a combination beverage and snack vending machine would suit their needs perfectly.

Alternatively if it is placed in an office space then providing coffee may be more suitable. In any case deciding what products you want to vend through the machine should always be based on who its location appeals to most.

Some of the most purchased vending machine products are :

24.5% of our total 2022 revenue was generated from packaged cold drinks.
2022’s miscellaneous products, such as electronics, accessories, toys and magazines have generated 15.5% of the annual revenue.
13.5% of last year’s revenue is generated from candy sales.
In 2022, 10% of our revenues came from wholesome plant-based snacks that promote healthy eating.
Sweets made up 9% of our total revenues in 2022.
6.5% of 2022’s revenue was generated from food sales.
Beverages such as tea, coffee, and cocoa (contributing to 3.5% of 2022’s profits)
$1.5 million in frozen products and ice cream sales during 2022

When selecting products to vend, it is essential to evaluate the product-market fit and its associated profit margins as well as restocking requirements. Moreover, don’t forget about state and local laws that may be applicable for your products; likewise consider what type of machine would best serve you in dispensing these goods.

4. Registering your business entity

Congratulations on taking the plunge and selecting a product for your vending machine business! The next step will be to register your business entity with the local government in order to obtain any necessary permits and licenses. This registration process varies from state to state, so be sure to look into what needs to be done in your local jurisdiction.

If you don’t know how to start a business or get registered for your new business! No worries, you can learn how to start an LLC here in our guide.

Additionally, if you plan on paying employees, registering your business as a legitimate corporate entity often comes with additional tax benefits. Once you’ve got the registration paperwork squared away, you’ll be ready for the next big step – getting your first machine up and running in its designated location!

And if you want to avoid lots of headaches & bureaucracy — we highly recommend hiring Northwest for just $39 + state fees to form an LLC for you.

Lastly, we encourage you to read our full reviews of top-2 services: Northwest Registered Agent and Zenbusiness to make a well-informed decision when deciding on your legal entity establishment partner.

5. Find a suitable vending machine

The most important part of you own vending machine business is the vending machine. Now that you’re familiar with the products you want to sell, it’s time to explore how exactly your vending machine will be procured. Let’s take a look into the diverse varieties of machines available on sale as well as their corresponding prices and vendors.

Types of Vending Machines

When searching for the perfect vending machine, it is essential to consider what type of products you plan on selling. For instance, if coffee is your go-to item, a hot beverage machine will be necessary. On the other hand, ice cream requires a unit that can keep it at freezing temperatures. The following types of machines are available:

Cold drink Machines
Frozen only Machines
Glass front Machines
Hot beverage machines
Refrigerated food machines
Snack Machines

Moreover, bulk vending machines exist to provide customers with a broad selection of goods – from simple gumballs and bouncy balls through to more specialized items such as office supplies, toys, medical equipment and souvenirs.

Where to Get Your Vending Machine

If you’re on the hunt for a vending machine, there are plenty of options available to you. Consider going straight to the source and purchase from leading manufacturers such as Seaga or opt for resellers like Sam’s Club or Vending.com instead. You could also take your pick from private sellers who list their items on platforms like Amazon and eBay!

When shopping for a machine, manufacturers tend to have the most support with manuals and warranties but also come at the highest cost. Conversely, private sellers offer more affordable prices yet limited help in case of any issues. Meanwhile resellers usually fall somewhere between these two extremes when it comes to price and service availability. If you can locate a refurbished vending machine model that includes coverage then this may be your best bet if you’re looking for an exceptional deal; so don’t forget to look around!

How Much Will a Vending Machine Cost?

The pricing of vending machines can range greatly, depending on what type and features you’re looking for. To buy a new machine, the costs typically begin at $4,000 with high-end models reaching even higher prices. If purchasing used equipment is more your style then expect to pay around $1,500 -$4,000; however this too varies based on age and seller.

6. Calculate the total cost of starting a vending machine business

With all the details considered, you should now have an idea of what will be the vending machine costs to launch your vending business. Things like administrative fees, taxes and commissions are just the beginning – you’ll also need to factor in inventory costs and machine purchase or rental expenses. Furthermore, remember not to forget about logistical concerns such as transporting machines and restocking supplies; plus there is maintenance and financing that needs attention too!

With all this data, you can determine how to set the right price point that will ensure a profitable business. You may also want to create a business plan and calculate your break-even analysis so you know if beginning a vending operation is worth it in terms of investment of time and resources for your particular situation. Vending machine business owners always calculate the total costs, risks and business structure before investing a few thousand dollars in the vending machine businesses.

7. Establish it and remember to keep checking-in with your machines

Are you ready to embark on your journey as a vending machine small business owner? To make this dream come true, it’s time for you to take the plunge and put all of the steps outlined above into motion. Secure your location, acquire your machine, fill it with merchandise, and set up your technology – these are the critical elements that will bring success.

With your vending machine established, you can begin collecting profits. However, to ensure that it continues running effectively and efficiently, you’ll have to create a plan for stocking goods as well as inspecting and maintaining the device regularly. Neglecting this process could lead to failure in generating income from your business.

To properly manage your vending machines and ensure maximum success, you should restock and inspect them at least once a week – depending on what is being sold and the demand level. Additionally, monitor cash flow closely to recognize any operational or product issues that may require improvement. Further, focus on which products are most popular with customers so as to optimize your inventory and better serve their needs.

Pros and Cons of a Start a Vending Machine Business

By now, you are probably wondering if a vending machine business is right for you & if you’ll be capable of doing it. To help inform your decision-making process, here’s an overview of the advantages and disadvantages associated with this type of venture.

PROS

Although you’ll have to regularly restock and maintain your vending machine(s), owning a business like this can provide an income stream that is mostly passive compared to other businesses.
By utilizing cashless payment machines, the risk of theft can be drastically decreased while also making logistics far more manageable.
This business model is easily expandable and can grow alongside your company.
Your recurring expenses remain low.
Financing vending machines can be a great way to minimize the initial outlay of capital and make ownership more accessible.
Minimize risk by starting out with only one machine before expanding your business.

CONS

The competition for prime locations is fierce.
Chances are you’ll need to give out a commission to property owners for their services.
Be aware that merchant fees are associated with credit card payments.
Investing in machines can be a hefty financial commitment initially, yet often yields substantial gains long-term.
Unfortunately, you could be a target of theft or vandalism.
To keep your equipment in optimal condition, it is essential to regularly maintain and repair them.
Maintaining the machines necessitates timely restocking and careful inspections.
With slim profit margins, it may take time to see a return on your investment.

We recommend starting your vending machines business legal entity (whether LLC or Corp) with:

Northwest Registered Agent ($39+state fees) (best support)
ZenBusiness ($0+state fees) (best price)

Conclusion

Armed with the knowledge from this guide, you are now equipped to launch a successful vending machine business. From starting an LLC, and acquiring the machines to finding perfect locations for your vending machines, you can have a fully-fledged business in no time.

Moreover, with the right maintenance, your vending machines will remain functional for years and will meet their specified revenue goals. With careful research and a well-thought-out plan of action each step of the way, you can be sure that your venture will provide positive returns on investment.
As long as you establish and stick to good practices from the start, you can achieve success quickly in this dynamic industry. Best of luck!

FAQs About Vending Machine Business

Is it hard to start a vending machine business?

When starting a vending machine business, the primary hurdles are financing and acquiring an ideal location with solid returns. Nevertheless, there are options to minimize your initial costs while still allowing enough time for ROI. Moreover, if you secure a place that suits both the product and market–you can quickly recover those expenses as well as attain profitability!

How profitable is owning a vending machine?

When strategically placed in high-traffic areas, vending machines can generate up to $400 per month! With a well thought out product selection, you could easily earn an extra $75 every month.

How much does a vending machine make in a day?

On a regular basis, vending machines generate approximately $2.50 in revenue but those that have been maximized for success can make up to $13 per day!

Can you put a vending machine anywhere?

Before setting up your vending machine in any location, it is essential that you contact the property owner to acquire permission and negotiate a deal. Setting up machines at random locations isn’t an option!

How much maintenance do vending machines require?

With proper maintenance and restocking, your vending machines will last approximately 10 years. To keep them functioning optimally, you should undertake a thorough cleaning every three months as well as weekly inspection and replenishment of stock.

How can you finance a vending machine and your inventory?

Are you considering starting a vending machine business, but are worried about the potential upfront costs? Look no further! A business or personal loan can be an effective way to lower these expenses. It may seem difficult at first to secure a business loan since you won’t have any existing credit history or revenue records yet as a new venture. Nevertheless, the Small Business Administration has various startup loans available for entrepreneurs like yourself and equipment loans can be particularly beneficial here: These usually allow you to use your purchased asset (in this particular case – the vending machine) as collateral.

Alternatively, you may opt to finance your purchase via personal loans or credit cards. For this avenue of funding, it is essential that you have acceptable personal credit for approval. Additionally, mixing your business and individual finances can be less than desirable; yet if there is no other choice available, this may be the route to take.