How to Start a Vending Machine Business or Route
topic by sideshow20 - 04-06-2011, 10:57 AM
Owning and Operating a Vending Machine Business – The Basics
You’re here because you are thinking about starting a vending machine business. Great decision according to forbes.com, which states that operating a vending route is one of the easiest businesses to start. And, from the time you set up your first vending machine, your vending route can potentially make lots of cash!
Since 1993, Gumballs.com has helped hundreds of vending route operators start and maintain their vending business and we’re ready to help you get started, too! Before diving in, it’s important to think through some of the basics that will eventually become the foundation of your vending business. Read on for some more tips from Gumballs.com!
Location, Location, Location
Identifying and securing the right locations for your vending machines is KEY to building a successful vending business.
* Choose locations that will generate the highest amount of profit. Obviously, high traffic locations will likely generate the most sales for your vending machines.
* If you have difficulty finding available locations for your vending machines, seek out new venue opportunities while carrying on with other daily activities. Are there places with foot traffic that could use vending machines?
* Network with the contacts you have including business owners or managers, family and friends, groups or organizations you are affiliated with, charities, etc.
* Popular locations include malls, car dealerships/repair shops, banks, schools (particularly if you can vend healthier items), hospitals, large corporations or manufacturing facilities (break rooms), hotel lobbies, restaurants, etc.
* Found a promising location for a vending machine? Approach a manager of the location to ask to place a vending machine. Be prepared to offer a commission and create a written document that outlines your agreement with the location.
* Gumballs.com Tip! Offer the location manager a percentage of earnings from the vending machine versus a flat fee. Since you do not know how much money your machine will generate until it is operational. You want to avoid having to give all your earnings to the location manager should your machine not perform.
Before setting up your vending machines, determine your cost of business and analyze the location to determine the profit potential. Some things to consider:
* Try to get an idea of the amount of potential customers that might purchase an item from the vending machine. If your vending machine is in a public location, observe the foot traffic over the course of an hour or two. If your vending machine is placed in break room, know the number of employees that will have access to the machine.
* Determine your cost of business by adding together all of the overhead costs, which can include the cost of the vending equipment, the cost of the vending supplies, transportation (vehicle and fuel) costs, etc. How much will you need to price your vending items to turn a profit? Remember that your vending machines are a one-time cost and that the vending machines will need some time to be up and running before recognizing a profit.
* Numbers will fluctuate depending on if you purchase cases of gumballs, bulk candy or toy capsules, etc. in bulk where you might get a discounted rate OR if you decide to sell a product that costs more. The beauty of a vending business is that you can tweak it along the way to see what works and what doesn’t, while maximizing your profits.
Target Your Customers
Once you identify and are awarded a location, place machines and product that appeals to the customer.
* Vending machines that dispense temporary tattoos, stickers or toy capsules filled with items that are currently “hot” with kids and teens are great for locations that attract a young crowd. Gumballs.com offers the latest vending supplies targeted toward the younger population including, bouncy balls, 1” and 2” toy capsules, tattoos, stickers, gumballs, bulk candy and more.
* If the location attracts older individuals, a soda and snack machine (just be sure you have access to an electrical outlet) is a great choice, or stock your vending machines with chiclet gum, mints or nuts.
* If placing your vending machine in a break room, ask your business contact what type of snacks and soft drinks the employees would like.
* Before setting up any vending machines, be sure that you have adequate space for your machine as well access to an electrical outlet (if needed).
* Remember that as the owner of your vending machines, you are responsible for keeping them filled and working properly.
Gumballs.com Tip! If your machines do not have bill acceptors, be sure that potential customers have a convenient way to get change. Gumballs.com offers a huge selection of the highest quality change machines!
Once you’ve been awarded a few locations and determined the type of vending machines you’ll start with, it’s time to purchase the machines and get them up and running! If you are new to the vending business, you may want to start with smaller machines that require a minimal upfront investment, such as gumball machines or candy machines. The maintenance on these machines is minimal provided they are checked on a regular basis. Plus, they do not require any electrical hook-up.
Gumball and candy machines may be small, but they offer great profit margins. Here’s a basic breakdown:
* Purchase one gumball machine with a stand and a case of 850 a.ssorted one-inch gumballs for a total first-time investment of around $162.00 ($118.00 for a basic gumball vending machine with a stand and one case of Dubble Bubble 1” a.ssorted gumballs, $44.00 shipping).
* a.ssuming your gumball machine is equipped with a $0.25 coin mechanism, you will make $212.50 once all 850 gumballs are sold. Your initial profit is $50.50, or 31% for each gumball machine you own. If you equip your gumball machine with a $0.50 coin mechanism, you will make $425.00 once all the gumballs are sold, which increases your profit $263.00 or 162%.
* As you continue, the profit margin will grow because now you only need product to fill the vending machines. If you purchase another case of 850 a.ssorted one-inch gumballs (starting at $44.00 at Gumballs.com, including shipping) and place them in gumball machines with $0.25 coin mechanisms, your profit once all 850 gumballs are sold increases to $168.50, or almost 400% for each gumball machine you own!
The above are just a few pointers to help get you started. Visit Gumballs.com for all your vending machine and vending supply needs. Gumballs.com offers the most competitive prices on vending machines and vending supplies including gumballs, bulk candy, toy capsules, bouncy balls, stickers, temporary tattoos, mints and chocolate-covered espresso beans.
Here are some additional steps and tips to starting your own vending business:
* Find a reputable supplier of commercial quality vending machines (like gumballs.com!).
* Find locations in your area that you think would be good locations for vending machines, preferably locations with a lot of foot-traffic. The more people that come through the location, the better.
* Approach the store/location owner, let them know you operate a vending machine business in the area, and propose to set up one of your vending machines in their store. Explain to them that, as part of your vending business service, you will completely service the vending machine and take full responsibility for it. Let them know that the vending machine takes up less than two square feet of floor space, does not need any electricity, and will provide their customers with a great service. Best of all, they will earn a percentage of the gross sales (anywhere from 15% to 33%- its up to you).
* Set up your vending machine and start making money! Once you set up the first vending machine, find another location and start the entire process over again.
Frequently asked questions regarding the vending machine business:
How much will my vending machine business make?
If we could accurately predict how much money your vending machine business will earn, we would no longer be in this business--we would be on Wall Street. What we do know is that the success of your vending business will be dependent upon three factors: location, location, and location. The busier the location, the better your vending machine business will do. It’s that simple.
Do I have to offer the store owner a percentage of my vending sales?
This depends on the approach that you take. If you approach the owner as a vending machine business owner strictly interested in expanding your vending route, then it would be proper to offer them a percentage of the sales. Do not forget that offering a percentage is an incentive for the owner to allow you the space in their business. We recommend offering anywhere from 15% to 33%, depending on the location. Another approach that you could take is through charity. There are many charitable organizations that will supply you with stickers to put on your vending machines in exchange for a nominal monthly fee, usually $1 per month, per machine. Most store owners will allow you space in their stores for free when you are a.ssociated with a charitable organization.
Should I use a locating service to locate my vending machines?
We firmly believe that the best way to secure quality locations for your vending machine business is to do it yourself.
What are good locations for vending machines?
In our experience, certain businesses have consistently proven to be successful locations. These include restaurants, bowling alleys, skating rinks, shopping malls, Boys and Girls Clubs, laundromats, movie theaters, high schools, colleges, markets, coffee shops, banks, automotive centers, taverns, and apartment complexes. Always be on the look out for more obscure locations that could prove to be really favorable. Some surprisingly successful locations that we have come across include auction facilities, casinos, bingo halls, horseback riding facilities, and airports. If you frequently have friends and guests over to your house, you might consider putting a small candy machine in your bathroom. Remember, any place with steady foot traffic is a good location for a vending machine.
Do I need a business license or insurance to operate a vending machine business?
You should consult with your local licensing department to find out the specific rules and regulations pertaining to the vending business in your state.
Once I place a machine, should I have the location owner sign some sort of contract?
This is up to you, but in our experience we have found that a contractual agreement is unnecessary.
Is theft and/or vandalism a big issue in the vending business?
Because bulk vending machines are typically placed in high visibility and high traffic locations where there are people or employees at all times, theft and vandalism is uncommon. If you are locating your machine in a questionable location, a simple and cost-effective solution would be to wrap a chain around the base of the machine and chain it to a fixture within the store. This simple solution would prevent any would-be thieves from attempting to steal your equipment.
How often will I need to service my vending machine business and how long does it take to service?
Our spiral gumball machine holds up to 3300 gumballs and could go several months without servicing. However, we recommend that you check on your vending machines at least once a month. Servicing a vending machine business, which includes collecting the money and refilling the machine, takes about three minutes per machine. A vending business consisting of 100 machines could take as little as 6 hours a week or two weekends a month to fully service.
Do I need a truck or van to run a vending machine business?
No. Our spiral gumball machines, bulk vending machines, and triple-vend machines easily fit within a standard vehicle. That is, of course, unless your vehicle is a bike. Then we have a problem.
Can I operate my vending machine business from my home?
Heck, you could operate your vending machine business out of your bedroom closet if you really wanted to. There is absolutely no need for an expensive office or warehouse.
Vending Machine Business | Vending Business Information
So I've did some research and come to find out that this business is a good money maker (if you need that money on the side) The only downfall is finding a location but here's a article
|04-06-2011, 03:37 PM||away - #2|
I have mixed emotions about the vending machine business, it is a pain in the a.ss to find locations that would be profitable.
- Cash only business
- No business license required
- Not affected by the economy
- Work 1 day a month
- Find silver quarters in them for a few extra bucks
- Food loss, out of date or too much supply
- Profit isn't great low for candy, a little more for snacks/soda.
- Cleaning the machines (unless packaged)
- Finding locations (extremely hard)
- Pay commissions
- Food stock changes, hard to keep same items
- Machine issues, (snack/soda the circuit boards go out really quick)
Last edited by 2K11; 04-06-2011 at 03:55 PM..