Running a vending machine operator

While watching a vending machine operator turn the key to his machine, open it up, and start to remove wads of bills and piles of coins many have had the thought: "Man, what an easy business! The machine does all the work for you!" While owning a vending machine business certainly has its advantages, it still requires the same amount of planning and careful execution to make it profitable as any other business. This guide will give you an overview of what to expect as you begin to do your research.

Why A Vending Machine Business Can Be Great

The obvious benefit of starting a vending machine business is that the machines automate transactions with customers, they are more mobile than a bricks-and-mortar store, and they don't call in sick! Depending on the number of machines you have, it can be a very low time-commitment business once it is up and running.

People who want a flexible lifestyle along with steady cash flow generally love owning vending machine businesses.

What it Takes to Start a Vending Business

Your first step is determining how much capital you are capable of investing. How much of your personal savings are you willing to invest? Do you have potential investment partners? Do you need financing? This is a critical determination to make, because how you proceed from here largely depends on how much money you have to invest.

If you require financing, which many first time operators do, the bad news is that it is very difficult if not impossible for first time vending operators to obtain financing since the market implosion of 2008. Most traditional lending institutions require at least 2-3 years of vending experience before approving financing for a vending business.

The good news is that the Small Business Administration can act as a guarantor on a loan for you, and can assist in pairing you up with a financial institution willing to supply financing with the SBA's backing. The requirements are a 680 credit score, a 20% downpayment and a business plan.

What Should My Business Plan Look Like?

Whether you need financing or not, it is a great idea to draft up a business plan. Your business plan should have the following:

1. Executive Summary 2. Investment Thesis 3. Company Overview 4. Industry Overview 5. Market & Customers 6. Products & Services 7. Organization & Management 8. Financials

The goal of the business plan is to create a comprehensive snapshot of your proposed company, the environment it operates in, and how you are going to achieve operational and financial success.

What To Do

First of all, do your research! There are over 8,000 vending machine companies in the United States. Many have franchise programs or "business-opportunity" programs (which means a franchise-like program without a franchise fee), with a myriad of different options. Make sure to do your research and compare the type of companies you are interested in before investing. Talk to their reps, ask for the contact info of existing vending operators, research what people are saying about them on the web, etc. Don't jump in until you're confident! Many companies will acquire locations for you, as well as sell you their machines. This is highly recommended unless you have great contact at locations with high traffic and a need for vending machines.

Go big or go home: meaning that the time required to maintain and run a route of 1-2 machines is not worth the effort. Buy enough machines (within your price range) so that you are generating an income that justifies the time spent running your business.

Be aware of the healthy vending niche. This rapidly growing sector within the vending industry is leaving the stagnant traditional vending industry in the dust. Legislation such as the Child Nutrition Act is going to provide incentives for schools to have healthy options and to get rid of junk food and soda machines.

Most importantly, invest in a reputable company that provides the type of service and product you could stand behind.

What NOT To Do

Don't just stick product in your machines without giving it any thought. This is your store! You need to optimize you product mix! One suggestion is to do sampling events at each location that you install a machine in. This will allow you to gauge what people like and don't like. Also, track your individual product sales. Replace the non-sellers with other products until you have a product mix that is successful.

Don't write off digital advertising on newer vending machines as an unnecessary feature. Newer vending machines with LCD screens have the advantage of displaying ads and generating another revenue stream for you.

Don't forget to ask about a warranty. Maintenance costs need to be considered.

This Should Be Fun For You!

The bottom line is that this type of business should be fun for you, otherwise don't get into it! You'll be much more successful and much happier in the long run if you choose a business that you are passionate about and enjoy doing.