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How to Start a Vending Machine Business: A Seven-Step Guide

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Free Vending Machine Business Plan Template

January 26, 2024

13 Min Read

how to start a vending machine business
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While munching on a snack or sipping a drink from a vending machine, have you ever wondered, “How can I get into this lucrative business?”

If yes, you’re at the right place. The vending machine business can be a very fascinating and rewarding venture with the right planning.

In the USA, the vending machine industry size was valued at $6.24 billion in 2023 and is estimated to reach $11.95 billion by 2032, expanding at a CAGR of 7.50% from 2023 to 2032.

That’s enough reason to launch a network of vending machines, each like a mini-store, operating for you around the clock with minimal supervision.

If you’re aiming to earn a little extra money or want to run a bigger business, this step-by-step guide will help you start your very own vending machine business.

From choosing the right vending machines and understanding legalities and financing options, we provide all the details you need to start and succeed in your journey.

But before that, it’s time to discover the positive aspects of the vending machine business.

Advantages of starting a vending machine business

Low initial investment

As you know, most of the startups need a high capital in the beginning. But in a vending machine business, you don’t need to rent office space and hire employees. So, there’s no worry about overhead costs compared to traditional brick-and-mortar businesses.

You may solely focus on the primary expenses of machine acquisition, stocking them with products, and necessary repairs. To further minimize costs, consider buying items in bulk at wholesale prices.

Easy to scale

The vending machine business is highly flexible and scalable. You can easily start with one or two machines. And it’s not more difficult to restock or change products and locations to meet various consumer preferences.

Also, you can scale your business by increasing the number of vending machines and scouting potential locations.

Passive income potential

Once set up, vending machines can make sales 24/7 without actively requiring any supervision. And this allows business owners to generate passive income as the profits will roll in on their own.

So, placing vending machines at high-traffic locations is a great way to run your business and make money from home, either as a full-time job or as an extra source of earnings.

Now, without further ado; let’s get started on how you can turn coins into gains with your own vending machines!

1. Explore vending machine types

Many people often think that vending machines can be of only standard snack-and-soda type.

But if you’ve thought of starting a vending machine business, the first thing you have to do is familiarize yourself with the different types of machines available.

Generally, there are four main types of vending machines available. So, while selecting from these categories, think about whose products would be the most popular with your target market and location preferences.

Here’s a list of different vending machine types:

Mechanical vending machines

Some of the standard food and beverage vending machines come into this category, commonly seen in public places like motels, gyms, and airports. These machines with snacks, soda, and candy make up a promising vending market share in the US.

Also, you can get variations in this standard machine that just provides snacks, drinks, or snacks-and-soda combinations.

Few vending machine owners prefer to buy different types of machines for one location, while some choose only one kind of machine for multiple locations.

Electronic vending machines

Electronic vending machines are the most expensive and modern type of vending machines. They often come with the latest technology, such as touch screens and real-time tracking. You can also use credit cards for payments.

These vending machines are not just limited to snacks and drinks. They also stock things, like phone accessories, hot beverages, tobacco, laundry stuff, makeup, or lucrative travel items.

Bulk vending machines

Bulk vending machines carry a large quantity of single products, including stickers, gumballs, toys, or rubbers. Usually, these machines are mechanical devices that don’t require electricity or batteries.

Also, some candy or toy vending machines might need little repairs if you purchase older ones. So, they are an excellent option to test the vending machine market as their operational costs are very low.

Franchising options

You may consider buying a franchise if you don’t want to start your vending business from scratch. So, as a franchisee, you will join an established framework to set up your vending business. You will also get extra support and training.

But remember that you have to share some of your profits with the franchisor.

2. Prepare a vending machine business plan

Once you have explored vending machine types, it’s time for solid business planning—the most crucial step of the entire list.

A comprehensive business plan helps you develop business strategies tailored to your vending machine business and makes you confident in every aspect of your business venture.

This business document covers all the details of your business, including your big ideas, vending machine products, financial statements, and more. Here are a few sections you must include:

  • Executive Summary
  • Company Overview
  • Product and Services
  • Vending Machine Industry Analysis
  • SWOT Analysis
  • Sales and Marketing Strategies
  • Management Team
  • Financial Plan

To help you plan like a pro, we’ve developed a sample Vending Machine Business Plan Template just for you. This step-by-step guide will help you to stay focused and make your business plan writing process much easier.

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3. Find high-traffic locations for your vending machines

Deciding where you will place the vending machine is the most crucial factor for earning a profit from your business.

So, you need to look for an exact location where people need quick, convenient access to products. Also, consider answering the below questions:

  • Who owns the location, and would they likely permit a vending machine placement?
  • How many individuals pass by that location?
  • Is that location mainly outside or inside, and what’s the weather like (e.g., cold, warm?)
  • Are there any other vending machines available? What kind of products do they sell?

Next, create a list of high-foot traffic areas that provide more chances for a sale. So, you may think about ideal locations, including:

  • Schools and universities
  • Hospitals or medical centers
  • Busy office buildings
  • Laundromats
  • Shopping malls and airports
  • Manufacturing plants

While securing a vending machine location, it’s important to contact property owners or tenants, explain to them your business idea, and understand their needs and the needs of their patrons.

4. Legal paperwork and business registration

Before launching your vending machine business, you need to address some legal requirements and a lot of paperwork to stay compliant.

The legal regulations and business registration process may vary depending on the state in which you wish to operate. Still, consider the following steps to register your business:

Select a business name

First, you have to select a unique and catchy business name for your vending machine business, as you cannot start a new business without a name.

So, find an easy-to-pronounce and memorable business name. Also, get the most suitable domain name, preferably with the “.com” extension.

Here, you have to note one thing—your business name cannot be identical to another registered business in your state. Also, it should not be the same as another service or trademark registered to the USPTO(United States Patent and Trademark Office).

You can also consider DBA (Doing Business As) or a fictitious name if you plan to operate under a name different from your legal business name.

Decide business entity

Choosing the right type of business entity is a crucial step. It is the legal structure of your business that directly impacts your business operations, liabilities, the amount of taxes you owe, and other business aspects.

So, try to understand the different types of business structures and their advantages and disadvantages. This will help you decide on the most ideal one for your vending machine business.

Here is a list of common types of business entities:

  • Limited Liability Company (LLC)
  • Limited Liability Partnership (LLP)
  • Sole proprietorship
  • General partnership
  • Corporation

Register your business and obtain an EIN

Once you have selected the business name and type of business entity, you may start the official business registration process. You may begin by filling out forms with the secretary of state’s office.

As a part of the registration process, you’ll even need to hire a registered agent to receive legal documents and answer them on behalf of your company.

Complete the legal documentation, and then the secretary of state’s office will send you the registration certificate to apply for professional licenses, tax registration, and EIN(Employer Identification Number).

You must obtain your EIN from the IRS portal. A Federal Tax ID Number is a security number of your vending machine business that is necessary while applying for business bank accounts and credit cards.

Get the necessary business licenses and permits

After registration, take further steps to identify the licenses and permits that will be required to run your vending machine business legally.

Every state has different regulations and permits for various types of vending machines, so it’s wise to start early and avoid delays.

Now, depending on the scope of your business operations and your vending machine location, you might require the specific type of licenses and permits.

Furthermore, any vending machine you set in a public place may be subject to certain general vendor standards, and it’s a good idea to keep accessibility in mind while thinking of vending machine options.

You may also communicate with local business associations or the Chamber of Commerce to understand the specific requirements for your business.

5. Make necessary investments

Now that we have covered the registration part, it’s time to focus on making the business profitable.

So, thoughtfully invest in the necessary equipment and technology to establish a strong foundation for your vending machine business. Here’s what you should consider:

Purchasing the right vending machine

Depending on your business operations, location, and products you want to sell, select the vending machines that suit your needs. Decide whether to invest in new machines or save expenses with refurbished machines.

You should search for both local and national manufacturers or wholesale vending suppliers, secondary market sellers, or online platforms like Craigslist or eBay to get a better idea about different machines.

As you start your search, you’ll understand that vending machines come with several features and capabilities, all at different price points. Here are some of those special features:

  • Traditional snack and drink machines
  • Credit card options for large bills
  • Touch-sensitive screens
  • Advanced remote monitoring software
  • Low-stock alerts
  • Customizable wraps for bulk machines
  • Interactive display screens

While looking at vending machine prices, you may also consider the cost of inventory and vending machine offerings.

Vending Management System (VMS)

The vending equipment has pre-programmed management software depending on the technology in your machine. This management software is used to streamline operations and track inventory.

In most of the standard machines, you need to manually manage inventory, which might be possible for a few vending machines. But if you have 5-10 separate machines available, it’s great to invest in the vending management system.

VMS software helps you monitor your machines, record sales, track inventory remotely, and provide real-time updates on sales patterns and customer preferences.

Additional Equipment and Technology

The right equipment and technology will assist you in the long run through efficient operations, better customer service, and increased sales.

So, you may invest in maintenance tools and modern payment systems depending on your vending machine. Also, consider including security features if you put your machines in less secure or high-traffic areas.

6. Stock up on vending machines

Once you have invested in vending machines, now you have to stock up on them with inventory. Carefully select the products that cater to local, site-specific needs to increase sales.

You may start with a moderate stock or avoid over-stocking in the beginning. Regularly refresh and adjust your offerings based on what sells best and customer reviews.

Likewise, you have to restock your machines as and when needed if your business is underway.

You may streamline this process and reduce your travel time by choosing an ordered sequence of sites instead of random locations in the town. Selecting similar products for multiple machines will also help you in this.

Remember, if you stock up vending devices with food or perishable items, ensure you replace them in time according to the expiry date.

7. Discover your financing options

If you’ve considered the above steps and created a solid business plan, you’ll have a better understanding of your financial requirements.

However, starting a vending machine business requires low startup capital compared to other small businesses. Still, a few thousand dollars isn’t just pocket change.

If you need financial assistance to start a vending machine business, consider options like:

Short-term loan

Similar to traditional term loans, short-term loans provide a lump sum of money directly into your business bank account. And you’ll pay back your loan with interest over a set period.

Compared to long-term loans, these loans have higher interest rates, usually 18 months or less. Securing a short-term loan might be easier if you have a good financial history and personal credit.

Here, you should note that lenders will examine your vending machine business’s financials before approval.

Equipment Financing

An equipment financing loan can be ideal if you need a little help starting a vending machine business. Also, the terms of these loans are based on the value of the equipment you’re purchasing.

Vending machines can last over 10 years, which might help assure lenders of securing a loan. If you are applying for an equipment loan, you’ll need to provide quotations for machines and your financial details.

Furthermore, this is a good option if you need funds to buy inventory for your vending machines.

Conclusion

That was the ultimate guide on how to start a vending machine business. Follow these steps and get ready for a profitable business journey.

But before that, you have to take the first step and start preparing your vending machine business plan to achieve your desired goals and milestones in the vending industry.

So, what are you waiting for? Download our vending machine business plan sample and turn your business idea into reality!

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About the Author

Matthew                                                       
            Khalili

Matthew Khalili

Matthew Khalili is an experienced business planning expert and the founder of The Plan Writers. With over a decade of experience in the field, he has helped numerous entrepreneurs in creating investor-ready pitch decks and business plans. Matt has enabled 5000+ startups to raise over $1 billion through his business plan, market research, and financial modeling services. Read more

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