It’s exciting when you’re a new business owner since you now have a tangible business you’ve been planning for months and years. But it’s easy to get caught up with the novelty of things, and whatever was designed on paper, some of them don’t translate well in real life. This is why there should always be contingencies. You can’t plan for everything that will happen to your vending machine business, but you can avoid making inevitable mistakes.
As a new owner, avoid mistakes can decide the future of your business. This is why when you’re doing market research, you’re not only looking at the success of other vending machine businesses, but you should also look at and learn from their failures.
At Bottoms Up Vending, we want to help startup vending machine owners to avoid rookie mistakes and, hopefully, allow you to work your way to a profitable future. Continue reading this article, and we’ll list the common mistakes to avoid when you’re a new vending machine owner.
Inaccurate Return of Investments
While there is a guarantee that you will earn profits from your vending machine business, the mistake is projecting inaccurately high returns on investments. This may be due to promises of vending machine suppliers that the cost of buying the machines will return in over half a year, but this can be wishful thinking. While it may be true sometimes, this is not always the case, and there are other factors to consider. Other additional costs may be incurred that are not part of your budget and may cut back on your profits. There is also the sales outcome which may be hard to predict and again depends on many other factors like marketing, location, products, and many more.
As a new vending machine owner, you should set realistic and attainable investment returns. Vending machines have investment returns in about a year or two due to concession sales.
Buying Older and Simpler Machine Models
Let’s say you were offered two free phones, one is an older model with old features but is durable, and the other is a newer phone with the latest features but is just as durable as the older phone model; which would you choose?
Any logical person would choose the newer model with the latest features. Now apply this to your vending machine patrons. Suppose your competitor uses a newer vending machine model with more options and recent technologies and features built into it, while you have an older and simpler model. Where do you think that customer would buy their desired product? Your vending machine must exude quality, security, and sleekness. It’s not enough that your machines are reliable because your competitors also have reliable machines. You have to attract the customer’s attention from the get-go, which means appropriately maintaining your vending machines and promptly upgrading them to keep up with the times.
Defective Pay Systems and Bill Validators
We’ve all seen some frustrated customers punch or kick vending machines out of frustration because their bills or coins are refused, or their products fail to come out. You don’t want this happening as this may further damage your vending machine, but consider that maybe your pay systems and bill validators are defective.
The rookie mistake here is not correctly checking your vending machine for possible defects before deploying them. To avoid potential profit and customer loss, always check if some vital features, such as your payment systems, are working correctly.
Misusing Credit and Lease of Vending Machines
While it is a viable option to have your vending machines financed if you don’t have the budget, this can be an early downfall if you don’t research well. It is also a must to have emergency funds equal to or greater than the amount you borrowed from the bank.
These extra funds protect and secure you from any additional problems or costs that you may incur. It’s also not advisable to go blindly into an extended lease agreement without reviewing your financial reports and reading the fine print. You have to learn to keep your hand and not make rash decisions regardless if you’re earning a sizable profit or not.
Bulk Buying of Machines
If you’re only after the discounts, you’ll get from buying the machines in bulk, that might be one of the biggest rookie mistakes you can make. Remember that before purchasing your vending machines, you should already have a specific number of machines, scout the locations, and plot out your routes.
Buying more than what you can handle is not sustainable in the long run and may be costly. You always have to choose efficiency and reliability rather than going for quantity. As for the extra, unused vending machines, you have to look for storage space, possibly pay for it and wait until you can use and place those vending machines. There is also the risk of your vending machines becoming defective while in storage, so consider this before buying in bulk.
Placing Vending Machines in All the Wrong Places
Proper vending machine placement is crucial in the vending machine industry because this can make or break your business. Suppose you have an eye-catching display, the latest in features, and quality products with attractive prices, but if you place the machine in the wrong location, no customer will buy from your machine.
The wrong places mean that your vending machine is in a location with little to no consumer traffic and where you have a lot of competition. A place densely packed with vending machines, cafes, restaurants, and convenience stores can cut into your profits and is not advisable. Another consideration is the security of the location. If your vending machine is placed in a dark place or where criminal activity usually occurs, expect customers to stay away from that place.
Refusing to Understand Target Audience
It is imperative to know your target audience. This means understanding your customer’s buying habits and what they truly want. Many novice vending machine owners would think that whatever products they sell is the best option, but this is a rookie mistake.
Refusing to place yourself in the customers’ shoes and mindset is missing the opportunity to sell your products correctly. For example, if you place your vending machine in a lower-income location, expect your customers to go for a fifty-cent product rather than paying a full dollar for a similar one. This doesn’t mean you sell just the cheaper option; the best way is to offer both products, so your customer has choices.
Selling Poor or Low-Quality Products
Remember that your customers will always opt for a famous brand that they’re sure is better quality than the generic one. Never go for cheaper and low-quality products; instead, always offer your customers the best. This shows that you care and understand what your consumers are looking for and always want the best for them. Offering them high-quality products will keep them coming back for more.
While this only represents a few pitfalls or problems in the vending machine business, it’s best to avoid them early to secure your future in the industry. Learning from other businesses’ mistakes ensures that you’re on the right track and serious about keeping your vending machine business up and running for years to come.
