Are you considering starting a vending machine business? We all need to supplement our income with additional sources of passive income. The idea of quitting our day job and becoming our own boss is so romantic many try their own ventures and fail before they get started. A vending machine business, if run properly, can be a strong bet to achieving that dream.
Before I bought into my vending business, I didn’t know much about the industry. I kept asked myself if “Am I making the right decision?”. The allure of taking a risk and staking out for myself was just too enticing. I took the leap and bought a preexisting route with plenty of room for growth. How do you know if the vending Industry is right for you? I complied a list of the pros and cons after a year in the business. Here they are..
| # | Pros | Cons |
|---|---|---|
| 1 | Passive income | Hard To Become A 100% Passive Income Source |
| 2 | Ease of Scalability | Hard to Find Trustworthy Employees |
| 3 | Tax Write-Offs | Start as a Sole Proprietor |
| 4 | Gain Invaluable Business skills | Locations Drop You |
| 5 | Turn a Profit Quickly | Fluctuating Income From Different Locations |
| 6 | Pays for Itself and more | Customer And Locations Expectations |
| 7 | Practical Side Hustle | Storage for Machines and Inventory |
| 8 | Take Charge of Your Life | Trends In The Way People Pay |
| 9 | Develop Sales / Marketing Skills | Can Tie You Down To Certain Geographic Areas |
| 10 | Ability to Purchase Routes Inexpensively | Repairing Damaged Machines |
PROS
Earning Passive Income
By far the most exciting part about any vending venture is the ability to earn passive income. Im sure by this point you’ve heard the term before. If not simply put, passive income is money earned from an asset that doesn’t require time to generate. Vending machines are placed in a location where people can walk up, buy products and the vendor earns a profit without trading much of their time. Multiply this scenario over many machines and the ability to earn lots of money without working many hours is created.
The more sales your machines can generate the more money you can earn mostly passively. I say mostly passively because unlike other sources of passive income like dividends and real estate, there is work that has to be done on part of the owner. This all takes time away from the owner.
Many owners choose to operate the vending machines solely to increase profits. They’re responsibility is to change the candy, collect the money, make sure the machines are running properly and any other facet of service needed to keep the business running smoothly. Other owners hire someone to do this for them, taking a smaller return in money but keeping more of their time.
Ease Of Scalability
Vending machine businesses have the potential to grow quickly and easily. This is one of the beauties of owning a vending company because they are packed with potential. There are endless places that can make for great locations and it is a free service to whoever has one. It starts with one machine in and can grow to neighboring facilities, break rooms, bars and restaurants.
Once I was able to land one location at a chain muffler repair shop, all other locations in my city wanted one too! There are about a dozen of the same shops in my area and each one is an easy sell. One location turned into twelve quickly and easily. Scaling your vending business comes down to how much you want to put into it. But wait there is an alternative to keeping this as passive as possible!
There are many vending machine locating services available for you. Simply hire the vending machine locating service to find the quality locations in your area for you. At vendinglocator4u.com they charge $50 – $70 for co operated candy machines. At KickStart Locations they will find full size vending locations for you! All you have to do is drop the machine off to them and let them know someone will be back to clean, refill and service the machine regularly! They typically charge a small fee per location, which will be a write-off and paid for by the new business the machine generates.
Tax Write-Offs
Once you go from being an employee to a business owner you enter the wonderful world of tax write-offs. Any business expense like car mileage, business trips and dinners can all lower your taxable income. Ultimately, saving you money at the end of the year when taxes are filed. This also opens the door to better understanding the tax laws, which is essential if you desire to become wealthy. It is always advisable to hire an accountant to free up your time, energy and make sure the business is properly accounted for.
A write-off can be any expense for the business. Going to a Tony Robbins event for self development can be considered a a business meeting or consulting service. The tickets, airfare and dinners there can all be expensed, lowering the amount of income your business generates. You can improve yourself and lower your tax bill, its a win-win situation!
Developing a Strong Business Mindset
Everything from landing new locations, selling appealing products to your customers and understand tax law are vital skills to any business owner. Wether you continue in the world of vending to create a vast empire of vending machines or stake out in a new industry these skills will stay with you.
Vending Machines are a straight forward business model that most anyone can wrap their head around. Place a machine, sell snacks and drinks, make a profit and repeat. This is the very basis to any successful business in the rawest form. When you start or buy into a vending business you are taking on the responsibilities of an owner therefore forcing yourself to think and act like one.
You don’t know what that truly means until you are faced with the successes and failures, decisions and people bosses meet! It may sound good reading through a blog but once you actually experience it in real life you grow into a new and better individual!
Turn A Profit Quickly
One of the best pros of this industry is the ability to turn a profit quickly. Vending machines are relatively inexpensive and if you have good locations they pay for themselves right away. Most people aren’t aware that Pepsi will supply all the vending machines and repairs for you! All you need to do is have a qualified location and PepsiCo is going to give you a soda dispensing machine for free as long as you promise to stock it with Pepsi products only.
You can find more information on how to get a free vending machines here: PepsiCo Display Services.
You can turn a profit on your very first sale by taking advantage of this method. Leverage you time, communication skills and salesmanship to land you a great location and Pepsi gives you a machine to place there. The best part is if that machine breaks their technicians repair it for you! It’s an easy way to get straight into the business with low capital, limited overhead and reduced risks of getting a faulty machine while making profits right away.
Another idea is purchasing used coin operated vending machines like this one. It cost me roughly $150 for the machine, around $30 to stock it with candy and this location cranks out $25 – $50 a month in revenue. Lets say we earn an average of $30 a month from the machine and the initial investment is $180 in approximately 6 months time it has paid for itself and becomes highly profitable!
A Practical Side Hustle
We’re in the era of side hustles! Have you heard that you need one too? Side hustles can turn into main hustles and get you out of that cubicle or working for someone you don’t like. In buying or starting a vending machine business you are creating that side hustle! With only a few hours a week I am able to generate $500 – $1500 extra a month. This pays for all the gas in my car, and expenses related to my car and adds a layer of security so I feel better about my financial situation.
On my days off from my regular day job I run the routes myself making anywhere from 5 to 20 stops to collect money and refill the machines. It takes anywhere from one to four hours and I’m done. This is a super practical side hustle anyone can start today! On days I’m feeling like doing whatever I feel like I still have that option because…
Take Control Of Your Life and Be Your Own Boss
From earning passive income, developing a business mindset and the skills to go with it I am becoming my own boss. I feel way more confident about my financial future and know that if something goes wrong at the office I still am bringing in money. Although it isn’t enough yet to quit my day job it is quickly becoming a more reliable source of income.
This is allowing me to travel more and have a financial security net. The money I am able to save up from profits from the business is mine and I can do what I want with it. In taking charge of my own life I use this money to pay for an accountant and any travel I do. This is freeing up time and giving me more opportunities to see the world.
Developing Salesmanship And An Attitude of Service
Want to increase your income and get people to do what you want? Develop salesmanship.
“Theres no better future than that of a great salesman”
Jim Rohn
The richest, most influencial, successful people develop there sales skills to better serve the world. When you begin your vending journey you will need to sell the service to potential new locations. By presenting the information in an enticing way, overcoming objections and landing the spots you will earn more money! This will translate to any endeavor you take on in your life.
Ability to Purchase Vending Routes Inexpensively
In the title you may be wondering “What does buying a vending business mean?”. All over the internet you can find local vending businesses and routes with machines for sale. They range in size and scale, what machines are in them and what business locations have them. This is an amazing way to get into business for yourself, with a turn key business and improve something that needs help.
“We have 34 million businesses in America today, most are going to fail within 5 years. We don’t need anymore businesses. What we need is more people to come in, buy those businesses and make them better.”
Grant Cardone – Real Estate Mogul, Sales Trainer, Author
The vending route I purchased already had 92 locations and came with a storage unit filled with 50 more machines waiting to be placed. The business was well established and recognized in the city. I was able to strike a deal with the owner buying the entire business for $22,000. All the machines, candy inventor, polos with logos and routes were mine to do with what I pleased. I gave him half the amount in cash and he gave me a 3 year note to pay off the rest.
Basically, I was able to find an established business buy it for a fraction of what its worth and use the profits to pay back the previous owner! It was a great find looking through my local craigslist listing. I guarantee there are routes for sale in your area. Check out facebook marketplace, craigslist, let go or just by googling vending routes for sale.
Check out this site for different routes for sale: Routes for Sale!
CONS
Hard to Become 100% Passive
As we touched on earlier, time is precious and passive income saves our time. A vending business is about 75% passive but still requires time and energy to keep it going. Where we can bring in a lot of money without breaking our backs someone still has to restock the machines, collect the money and secure new locations.
If you’re not careful buying or starting a vending machine business could mean building another job for yourself. We want to make money without working by planting money trees throughout the city! We’ve touched on a few ways to automate the process and hire out. You’re going to want to hire an accountant, and taking advantage of the placement services will buy you time. The hard part is employing someone to run the routes which leads us to our next con.
Finding Trustworthy Employees is Difficult
Without a proper system in place for cash and inventory passing over the reigns to a new hire can be nerve-racking. This is typically an all cash business and the person running the routes would have a lot of inventory to munch on while they drive around stuffing their own pockets with your money! On top of that they are giving a key and the locations of every machine.
If you’re not careful, you could get burned hiring an employee. The bigger vending companies have it down with commission systems and set book keeping to keep their people honest. It is definitely one of the hurdles for a new owner if you want to make your vending business closer to 100% passive.
Starting Off As a Sole Proprietor
Without employees and you running the show yourself, you becoming a sole proprietor. The success is on you and so is the failures. Taxation in this category can be higher and there aren’t as good options for health insurances. Most of the risk is on you and it can set you up for financial ruin.
With proper corporations in place, good accounting and systems one can quickly get out of sole operator by hiring out. In the beginning everything is on you and it will take some time to be profitable enough to hire out other tasks so you can focus on the bigger picture.
Locations Will Drop You
You worked so hard, secured a great location and then you get the dreaded call. “Hey, we’re done with this machine you can come get it whenever!”. It’s the last thing we want to hear as locations equal cash flow. The less of them we have and the less profitable our business will be.
This can happen for various reasons like the company relocating, new management or going out of business. My best location is at a indoor sports center and the kids that frequent the machine are causing chaos. It has too much for the new management team to handle and after 10 years at this location they asked for me to remove the machine. Luckily, with proper communication and negotiations I was able to arrange it in a way that made it more valuable for them and keep the location.
It’s vital to develop the salesmanship, communication and staying on top of the routes. Ultimately, this is a product and service for the people so provided the best customer experience is key!
Fluctuating Income From Locations
Once you establish your routes, generally will know what to expect from each over the course of a year. Some seasons bring in more money and others don’t. Break rooms are filled with cookies, cakes and pastries during the holiday seasons which can undercut your business, after all those are free!
Most of the sales will come from a select handful of employees. Like the Pareto distribution states, 80% of the sales are most likely coming from 20% of the employees and people around your machine. Keep those customers happy with their favorite selections and money is surely going to flow in. Keep there job at the company, now that’s a harder situation.. If regular patrons stop coming by a once super profitable machine can turn into a sleeping dog.
Customer Expectations are Sky High
I learned this one the hard way! The moment I brought in a candy machine to my place of employment I was bombarded with complaints that it wasn’t giving enough candy and they weren’t happy with the selection or that tasted stale. Even for 25 cents the customer is always right and wants to receive the highest possible service. It’s our job to provide that.
Just about every time you go on a route prepare to hear “your machine stole my dollar, you owe me money!”. Typically, it’s the same employees wanting the same thing because they know if they complain they will get what they want.. Chill Karen.
Storage For Machines and Inventory
An underestimated expense and head ache if your business requires you hold on to a large inventory and store extra machines. Say a location dropped you and you have to pick up the machine, where are you going to put it? Storage units can cost in excess of $200 a month and this is going to eat into profits.
In my situation I have the ability to turn a back room of my rental property into a storage facility. It makes for a great spot to store candy in a cool dark place and the room has enough for 40 candy vending machines. Ultimately, it is still costing money being a room that I would traditionally rent out but it saves time and energy. Being on the second floor it wouldn’t make sense to put a full size snack or soda machine in my house. This definitely would require a storage unit.
If you’re about to jump into the vending business remember this expense and plan for the logistics of storing your equipment and inventory!
Trends In The Way People Pay
Money is changing here in the 2021 century. I can’t remember the last time I carried cash. This is opening up huge opportunities in the vending space. There are so many machines that are not converted to accept credit cards, and touches payments. I use Apple pay for most all of my purchases and most people I know do too.
A great number of the vending machines need to be converted to use credit cards. If you are able to start a side hustle of doing this for people the world is yours! As for coin-op machines the future isn’t looking the brightest and soon these dinosaurs could be extinct. Another great opportunity is figuring out how to keep these small machines in business. Comment below with your ideas!
Apple pay and credit cards make it easy for people to purchase goods and services. When you equip your machines with the ability to accept them small fees are tacked on by the CC companies. Also they require connection to wifi and require a monthly service charge typically around $15, which many limit the locations that are most profitable. All this and vending machines are still highly profitable in great locations selling higher end drinks like red bulls, protein shakes and Poweraid.
May Tie You Down to a Certain Geographic Location
If you don’t have any aspirations to move and you’ve found your forever home disregard this one! However, if you are planning a move and have vending routes in your area it may slow down the process. Unless you are able to hire out the servicing of the route or you’ve developed an exit strategy you’ll have to be around to service the machines.
Repairing Damaged Machines
This one is inevitable. Machines are going to get damaged. C’mon, haven’t we all tried shaking a vending machine to get it to work? Bills and coins get jammed, candy and drinks get wedged in incorrectly and someone has to come and fix this. Say you just serviced the machine and the first customer to use it jams a bill, well you’ll be out of money for that month unless they call you.
In some locations people try to break into the machines and get free candy and drinks. Kids will poke, prod and do whatever it takes to reach that candy! This results in broken off debris in the machines and jams. Be prepared to service the machines or get someone to do it for you!
There you have it 10 pros and cons for getting into the vending business! If you found this helpful leave us a comment below, and check out our coaching page to get started in the vending space today!