Starting a Vending Machine BusinessFeel like having a soft drink while walking down the street? ... What do you do? Well, it is likely that you look out for a vending machine, insert a coin, and out pops the can. While you have got what you wanted, someone, who perhaps is holidaying somewhere, has made a profit out of it. You could have been this person making profit while being on a vacation, had this vending machine belonged to you. Right? If you are thinking on similar lines, here is your guide to understanding the business, which will help you get going.
Know that this business is a 100% cash-only business with a nominal initial investment, i.e., if you are not opting for those huge machines, and one that does not require a history of sales-and-marketing experience. That you are your own boss, perhaps is the best thing about vending machines. You will be the one to decide the type of vending machine you would want to opt for and where it will be placed. You will also get to decide what the vending machine will sell. And yes, you will be the one responsible for servicing machine from time to time. Once you roll out your own business, you are the only person on whom the success (or failure for that matter) of this business will depend.
Setting It Up
It is better to start small, and climb the ladder of success, gradually. Ideally, you must go in for just one or two vending machines. Select a good spot for the machine, and see how it performs for a month. This way you will get a feel of the routine involved in running the business. If things are not going the way you expected, you can make the changes -- in pricing your goods, location, etc. -- as and when required. Once you are confident of the way things are moving, besides gaining a monetary incentive, you may opt for more machines.
It is quite unlikely that a vending machines business will ever go into loss, though that doesn't mean it will give you astounding profits either. There are quite a few factors that will decide as to how much profit each of your machines will make for you. As in case of any other business, you will have to take these factors into consideration when you decide to start this business.
Let us assume ... that you have decided to start this business with a single machine that will sell cigarettes. You have a competitor, who also decides to start selling cigarettes through a vending machine. Both buy the same machine and sell the same brand of cigarettes. You place your machine outside a gymnasium, or a sports complex, while your competitor places his, outside a pub. It is, but obvious that the competitor's machine will sell the entire stock of cigarettes even before your machine manages to sell a single pack. If both of you decide to remove the cigarettes and replace them with health energy drinks, your machine will finish its entire stock even before your competitor's machine sells one drink.
In both the cases, the machines were the same, so were the contents, but the sales figures were totally different. Why? There is a simple, one-word answer to this, and your entire vending business will depend on it: The Location.
Yes, location is the most important factor when it comes to vending machines. You should, ideally place your vending machine where human traffic -- foot traffic in particular, is constant. A vending machine will get customers only when it is visible to them, and they will see it only when it is placed strategically. If your vending machine is easily accessible, it is bound to attract customers and help you make a decent profit from your venture. Yet another advantage of keeping your machine where there is consistent human flow is security as doing so will rule out the chances of your machine being vandalized -- a problem which is quite common when it comes to vending machines. If you place your machine in an area which is hardly frequented, it will not make much profit, and chances of it being vandalized will only increase.
Good places to have vending machines include malls, busy street corners, movie theaters, inside or outside pubs and discos, inside the school premises or outside it, ... the list is virtually endless. Irrespective of where you intend to place the machine, mutual understanding with the owner of that place is a must. If you are lucky enough, you may get a place for your machine for free, or for a nominal share of the profit. Whatever deal you strike, it is always better to have an understanding between you and the other party on paper as doing so will rule out legal issues, which may crop up if differences occur at any point in the future.
Location will also depend on who your target customers are. As the above-mentioned example states, there is no point is placing a cigarette-dispensing machine outside a gymnasium. Instead, placing it inside, or even outside the pub will be a better option. Before placing your vending machine on any street corner, or outside a pub, or any such place, make sure that you check with your local authorities, and find out what taxes and tax deductions are applicable for this business in your region.
You need to trust only reputed vending machine manufacturers/dealers, and keep away from those, who make tall claims. A little research will always work in your favor. Today, almost anything can be sold through a vending machine -- soft-drink cans, gum, hot coffee, cold coffee, cigarettes, even hot dogs and pizzas. You can visit a few established operators in your area, and find out where and how they purchased their machines, and if they were experiencing any problems with them, how did they go about solving the issue. This way you will be sure of buying it from a good source. As these machines come in a variety of shapes and sizes, researching will also help you select the one that is right for what you intend to sell.
The vending machine industry, sure is a dynamic one. Your needs and requirements with regard to the vending business you are keen to set up, ought to be simple, yet thorough. There is no harm in starting small. You get the taste of managing your venture with little capital investment to start with; and finding yourself in the position to expand your business, you may increase the number of vending machines in different locations and reap good returns. Make arrangements for a standard vehicle to help you visit the location where the vending machine is placed.
After reading all of this, it may seem that this business is really easy -- buy a vending machine, place it at a strategically apt location, fill it up with what you intend to sell, earn good money, and refill the machine after regular intervals. Theoretically -- yes, it is incredibly simple. Practically speaking -- yes and no; it can, or cannot be so simple depending on how you would go about it. You need to understand that owning a vending machine is not some sort of magic formula to become rich as many advertisers will make you believe. This notion itself is one make-believe!
Going through the advertisements on vending machines, you will come across several claims of average profits of over $50 per vending machine every day. A majority fall heels over head for this, dreaming of all the money they will make if they start with 10 machines all at once. This, however, is not the case. These false claims have prompted a number of people to start their business only to find that they were not even able to recover the amount they invested in buying the vending machine until several months into the business.
Avoid buying machines from manufacturers, who make tall claims of earning big amounts from day one because the fact is, it's not possible. These people may be out to cheat you, and the aggressive marketing that they resort to is only to cover up the fact that the quality of their machines is substandard and their service, poor. It is in your best interest to buy vending machines from a reputed manufacturer/dealer. It may, initially cost you a tad more, but will be much more profitable in the long run.
To Sum Up ...
You just need to be sensible when starting this business. You should not get carried away by false claims of people becoming rich overnight (or over the fortnight for that matter). If you get confused and can't decide on a certain issue, it's better to take advice from someone you trust.
In order to make your business work, you will have to ensure there are a few essentials supporting your plan:
Place your machine at a strategic location.
Crosscheck with the local authorities for rules and regulations with regard to starting the business.
Ensure that the company from which you buy the machine has a good reputation in the market.
Insure your equipment.
Always maintain a fresh stock.
Opt for regular servicing of your machines.
So, when are you starting your own vending machine business? I may just be the one who feels like having a soft drink whilst walking down the street, and yours could be the vending machine that I may end up coming across!