If you have a desire to start your own vending machine business, there are several factors you must consider before starting the business. These considerations include choosing the right location, securing inventory, and negotiating sales commissions. If you don’t have the capital to start your own business from scratch, you may also consider acquiring refurbished or used vending machines. While you may have to pay for the machines yourself, you will be saving a significant amount of money in the long run.
Finding a location
Often, a vending machine business will operate within one city or region. A high-profit vending machine business may place its machines in locations as far apart as 50 miles, but smaller-scale vending businesses often operate within a much smaller radius. Typically, the going rate for a space lease is $50 per machine per month, but this can vary depending on the cost of living in the area and the number of machines you plan to place. If you’re unsure about where to place your machines, consider a six-month lease.
Before choosing a location, you need to consider who you’ll be targeting. Are you targeting children, senior citizens, or other business professionals? If so, you should choose an area where these individuals frequent. Likewise, if you’re targeting a large office building, you should consider a location that has lots of business professionals entering and exiting the building on a daily basis. While cold-calling may not be effective in small locations, it can be a highly effective approach if you know the owners personally. Alternatively, you can use your network to source locations.
Securing inventory is vital when you are starting a vending machine business. In the beginning, you can use your personal vehicle, putting only the products you need in the machines. You should consider getting inventory management software, which will help you print reports that will let you know what needs to be stocked in your machines. In time, you can purchase larger vehicles for your business, if necessary. And if you’re just starting out, you’ll likely only have one vehicle to manage the machines.
Next, you need to secure locations for your vending machines. Depending on the size of your business, this could mean cold calling property owners or asking them for permission. While cold-calling may work for smaller locations, you should approach larger businesses and companies to ensure that they will allow vending machines. Be prepared to pay a commission to place the vending machines, which can range from 10% to 25% of total revenue.
Negotiating sales commissions
While cold-calling to vending machine owners is a popular method, it is also advisable to contact businesses directly and get to know the owner personally. You can use the local Chamber of Commerce to identify major businesses in your area. Make sure to target companies with at least a hundred employees and significant foot traffic. Then, negotiate your commissions. Generally, vending machine owners should be able to get between ten to twenty percent of the net sales from each location.
When choosing a location, make sure the location is high-trafficked and has little competition. You don’t want to compete with five other companies at one location. However, if you can find a good location, you’ll enjoy much better profits. You can also leverage your network to source locations. For example, you can speak with the owners, office managers, and HR of these companies. If you have a good network, you can leverage it to find a good location.
Setting up an LLC
While it is not legally necessary to set up a legal entity in order to start a vending machine business, doing so is a great way to protect your personal assets and pass business profits through to your personal tax return. In addition to this, LLCs are easy to form and maintain. A vending machine business is a lucrative and convenient way to earn income while maintaining your personal freedom. Before getting started, make sure you have permission to operate on private property. If you do not have permission to operate on private property, look for a high-traffic area.
Once you have determined the location for your vending machine business, you’ll want to make contact with the property owners. While cold-calling may work for smaller locations, you’ll need to be familiar with the owners to get the ball rolling. For larger establishments, consider contacting the local Chamber of Commerce to find out which major businesses are in your area. Try to target those businesses that employ over 100 employees and have a high volume of foot traffic.