How to Start a Vending Machine Business: The Complete Guide

It’s the perfect side hustle to start a vending machine business. However, the business involves much more than placing vending machines wherever you want.

Choosing a vending product, locating an appropriate location, and determining your investment and profit margin, among other things, are all important steps. In order to ensure the success of your vending machine venture, there are many steps in between.

In this article, we’ll help you set yourself up for success by understanding how to start a vending machine business.

1. Choose The Type Of Vending Machine You Want

Starting a vending machine business | Bottoms Up Vending

Vending machines are no longer rusty-looking machines that only take dollar bills and look like they have expired. You can choose from a variety of options available today.

  • Food and Beverage Vending: The majority of vending machines you see are food and beverage machines that sell snacks and sodas. You may wish to consider stocking different items in each machine, depending on the traffic in the area if you plan to purchase two or more machines and place them in different locations.
  • Bulk Vending: Restaurants and grocery stores often have these smaller machines located at the front. In bulk vending machines, you will find items such as toys, rubber balls, gumballs, or similar items. Generally, these products are the cheapest, and since they are manually operated, they also have the lowest overhead. The machines can however be an excellent source of passive income when placed in the right setting, which makes them ideal for budding entrepreneurs who are seeking a passive source of income.
  • Specialty Vending: Vending machines with specialty products are new-age machines that offer premium products that differ from your typical run-of-the-mill products. Almost anything can be dispensed, including electronics, hot beverages, and ice cream. You can also earn a significantly higher income from these machines, depending on the type of specialty products you offer. Despite this, you will also find fewer people taking advantage of your machine due to the higher markup.

You should focus on tailoring your vending machine offerings to your target market regardless of the type of vending machine you choose.

2. Find The Best Location For Your Vending Machines

Best locations for a vending machine business | Bottoms Up Vending

If there is anything as crucial as the products you sell in your vending machines, it is their location. If you want your vending machine business to succeed, you must place it strategically.

Consider the people you are targeting critically and conduct research. How does the location appeal to them, and what kind of crowd frequents it?

If you placed a vending machine near the local gym, for instance, you would offer protein bars, electrolyte-infused drinks, and shakes with pre-mixed ingredients that fitness enthusiasts would find useful.

Alternatively, you might want to consider fabric softener and individual detergent packs if your local laundromat has a specialty vending machine.

Listed below are some potential vending machine locations:

  • Schools
  • Airports
  • Universities
  • Bus stations
  • Train stations
  • Grocery stores
  • Manufacturing facilities
  • Apartment complexes
  • Malls and shopping centers
  • Hotels and motels
  • Hospitals and health centers
  • Laundromats

A vending machine cannot just be placed anywhere you like. You have to think carefully before doing so. Having a conversation with the property owners or managers is crucial if you want to make the right decisions. They may not want to offer you space or put their own vending machines in place so they cannot compete with you. When you’ve identified several locations where you’d like to place your machine, call these locations to see if they’re interested in having it there.

3. Name Your Business

One of your most important brand assets is your business name. It’s how your customers will recognize you from your competitors. To help you choose a business name, here are a few tips:

  • Make it catchy and simple
  • Think creatively
  • Become unique and original
  • Make sure it’s easy to remember
  • It is also important to ensure that no other business has already taken your potential business name. Run a search with the US Patent and Trademark Office to confirm.

4. Establish The Structure Of Your Business

It is important to consider the legal and tax implications of your business structure. Furthermore, it will impact the amount of time and money it takes to ensure compliance and maintain good standing with the state. The following legal structures can be used to register your business:

  • Corporation
  • Sole proprietorship
  • General partnership
  • Limited liability company (LLC)

A registered agent may need to be appointed if your company is incorporated as an LLC, S Corporation, or C Corporation.

5. Get Your Vending Machine Business Registered With The State

Forming an LLC or incorporating a vending machine business requires filing registration paperwork with your state. In the case of an LLC, you must file Articles of Organization, whereas, for a corporation, you must file Articles of Incorporation.

The majority of states don’t require proprietorships and partnerships to register their formations. If you choose a name other than the one that includes your first and last names, a DBA (Doing Business As) application will need to be filed. You’ll be using a fictitious business name.

You should also obtain the necessary permits and licenses for your business while you are at it.

6. Secure Financing By Developing A Business Plan

Business plans can also be used to obtain financing for your venture.

You’ll still need a few thousand dollars to start a vending machine business, even though the barrier to entry is much lower than in other industries. Look into other financing options if you don’t want to touch your savings or lack sufficient financing.

Make a calculation of how much it will cost you to purchase the machines and the items inside. You should also take into account other costs, such as transporting machines with trucks.

Next, decide whether you will apply for a short-term loan or an equipment financing loan.

The payback period of short-term loans is shorter, and the interest rate is higher than that of long-term loans, but the qualification process is easier for short-term loans. However, equipment financing loans are fixed-rate loans that use equipment as collateral if the loan is not repaid. If you have a poor credit score and tax returns for your business, you might have difficulty qualifying for this loan.

A business plan outlines how your company will operate. The following information should be included:

  • A brief description of your business
  • Your entire product and service offering
  • Describe your revenue-generating strategy
  • Executives and employees of your company
  • What is the source of your funding
  • The operations model you use

Use the money you receive to purchase vending machines and supplies.

7. Sign Contracts With Vending Site Owners

Businesses and property owners will require compensation for your vending machines to be installed on their premises. Typically, you will be required to pay a percentage of your total revenue as commission, which is why it is important to define the rates, terms, and conditions in writing.

Make sure your commission percentage is reasonable so as to satisfy the party providing you with the location and still leave you with an acceptable profit margin. Make sure you run the numbers before you sign a contract and agree to a number.

Here is a list of pointers to include in your contract with the property owner:

  • Agreement parties’ names
  • Duration of the agreement
  • Product(s) sold and type of machine(s)
  • The location(s) of the machine(s)
  • Amount of compensation
  • Parties’ responsibilities for repairing, maintaining, and servicing machines
  • Notification of a failure or damage to a machine
  • Provisions relating to exclusivity, if any
  • The right to add, remove, or replace machines
  • Termination clauses

Whenever you draft a contract or even just review one, you should always have a legal expert on your side.

8. Boost The Performance Of Your Vending Machine Business

Snack and drink vending machine business | Bottoms Up Vending

You should begin to see profits as soon as your vending machine business is established and operating. However, your work is not yet complete.

Optimizing your profits should be your next priority. The following are a few options to consider:

  • Manage your inventory efficiently:
    Tracking your inventory manually is required for many vending machines. It is therefore a good idea to invest in inventory management software if you have several machines that are similar.
  • Improve Customer Service:
    The best way to differentiate yourself from your competitors is to provide top-notch customer service. Assuring that your machines are always working, user-friendly, and stocked is part of this process.

Start Your Vending Business Journey With Us

Bottoms Up Vending is a trusted and reliable vending service provider in Chicagoland, Illinois, and Indiana. Keep your team and customers happy, productive, and satisfied by offering them vending products that are convenient for them.

Our company will handle everything you need from installation, delivery, maintenance, and restocking of your vending machines. Want to know more? Visit our website or reach us out at 708-926-2100.