How to Start a Vending Machine Business in 6 Simple Steps
The vending machine business presents a low barrier to entry for many aspiring entrepreneurs.
The company is low maintenance, has few overheads, and is relatively easy to set up and manage.
If that sounds good, I will show you step by step how to start a vending machine business.
6 Steps to Start a Vending Machine Business
Ready to get started? Just follow the simple instructions below:
The Easy Parts of Starting a Vending Machine Business
A vending machine business is generally one of the easiest commercial ventures to start. There are many entry points into the industry. These include low-cost options such as vending machine leasing that you can finance yourself.
Also, a vending machine business does not necessarily require special expertise or industry experience. Typical daily tasks include restocking products, restocking coin machines, emptying safes, and reordering products. These tasks can be completed in just a few hours, making your smart vending machine business very easy.
Negotiating space on the machine is just as easy. Most landlords and operators will happily agree to pay a fee in exchange for space.
Pay the landlord a percentage of the winnings from the slot machines. Alternatively, some landlords prefer a fixed monthly fee. With proper care, finding a place to put a vending machine isn't too difficult.
Also, you can choose from different locations that can get heavy traffic. Examples of profitable locations include office buildings, hospitals, airports, laundromats, and schools.
In addition, we stock our machines with a wide range of products, including traditional snacks, healthy options, gourmet treats, laundry detergent, and even electronics.
The vending machine industry today is highly developed, making it even easier to run a vending machine business. With the help of vending software, most routine and repetitive tasks can now be automated. Linkitsoft is an exceptional example of such software.
Linkitsoft helps you streamline logistics, improve inventory management, manage machinery in real time, monitor finances, and simplify logistics.
Linkitsoft prices start at $1 per machine per month with a minimum payment of $19/month.
The Difficult Parts of Starting a Vending Machine Business
Many agree that the barriers to entry into the slot machine business are relatively low. However, some aspects of starting a business can be difficult.
First, building a business structure can be tedious. However, you can save yourself some effort by setting up a sole proprietorship or a partnership. In most cases, you do not need to register your business with the state. This is especially true if you use your first and last name to run your business.
However, this method leaves you and your partner vulnerable to lawsuits and financial problems. You are personally responsible for the Company's tax, legal and financial obligations.
You can protect yourself and your assets from personal liability by forming a limited liability company (GmbH). To properly handle the proceedings, you will need to submit paperwork and consult an attorney. It also means that you need an Employer Identification Number (EIN) to operate your LLC. This also applies when hiring employees.
Other legal requirements may include filing a Doing Business As (DBA), filing the Articles of Incorporation, and appointing the company's registered agent.
These tasks are not particularly difficult, but they can be time consuming and slow down the process of starting a slot machine business.
Step 1 – Do The Background Work
There are a few critical tasks to accomplish before you dive headfirst into the vending machine business. Your success or failure primarily rests on the quality of your pre-planning.
Do Your Market Research
According to a report by Allied Market Research, the vending machine industry is expected to reach $25.25 billion by 2027. This figure is up from $18.28 billion in 2019. Moreover, the industry's 2021 and 2027 compound annual growth rate (CAGR) is estimated at 6.7%.
The general outlook for the industry is optimistic, but it may not be where you want it. You may have to drive around to locate the high traffic areas. Also identify areas with existing vending machines. This helps us identify our competitors.
Also, pay attention to what your competitors are selling. This research will help you develop strategies to beat your competition. Best places for research include gyms, motels, hotels, shopping malls, and office buildings. Take it a step further and talk to people walking, shopping, or working in the area you're looking for. Ask if you want to use the vending machine and what you want from the vending machine. Take your time and gather valuable information for this step.
Decide What To Sell
There are many types of products that can be sold in vending machines. What you want to sell depends a lot on the results of your market research. However, some products tend to work fine almost everywhere.
Options such as snacks, sodas, coffee and water are generally in high demand. It is recommended to choose this route if you want to act safely.
There are also non-food items that sell well in vending machines. Examples of these products include over-the-counter pain relievers, laundry products, and skin care products. Other options to consider are:
Travel items such as deodorant, toothbrushes, and toothpaste
What you choose to stock in your machine depends on a number of factors, including location and demographics.
Register Your Business
We've made it easy for you to understand that registering your business can be easy or complicated depending on the method you choose. For example, you may not need a business registration if you plan to do business in your own name. However, you miss out on potential tax benefits, personal liability protections, and legal protections.
The next best option is to register an LLC. Business registration details vary by state. Check with your local government for specific registration and licensing requirements to start an ATM business.
There are also online legal services such as CorpNet and LegalZoom that can help you register your business for a fee. In addition, these services can also help you deal with other legal aspects. B. Obtain proper business license, EIN and Taxpayer Identification Number (TIN). Now is a good time to decide on a company name.
Step 2 – Sign Up for Vending Machine Software
Getting started is easy when you register for the vending machine software. This software is especially useful when installing multiple vending machines in different locations. You should probably start with a few machines before expanding. This strategy gives you the best chance of success.
Choose Your Software
We chose Linkitsoft to perform this step because of its affordable pricing and automation features that make the job easier. Its features include:
Inventory Management – This feature allows you to monitor and manage your inventory. Track product fill levels and expiration dates, review maintenance history by machine or location, and view detailed product information such as inventory value, average cost, and unit price.
Locations - Linkitsoft also allows you to quickly add locations and see them at a glance. Here you can calculate the easiest route to where the machine is installed, assign locations to drivers and analyze the product mix at each
location. Detailed Reports - Linkitsoft provides detailed reports to help you stay on top of your business. These reports include sales by product, location, and month. Reports on profit and loss, cash flow, fees and sales tax are also available.
Select Your Plan
Linkitsoft offers two plans. You can change the scale at any time. Additionally, Linkitsoft offers a 14-day free trial for all plans. This is a great opportunity to try software before you buy it.
Step 3 – Choose Your Vending Machine Location
Even the best machine isn't worth it if it's in the wrong place. So take your time and find the perfect spot for your machine. You should also secure a location with your business owner or rental company before purchasing any equipment.
Only after finding a location can you accurately assess which machine to buy and which product to store with.
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Leverage Your Networks
Finding the ideal location is not always obvious. However, you can reach out to people in the slot industry for tips on finding great spots. Also use the network to search and find his website.
Interlocutors within the network may include business owners, executives, human resources managers, and office managers.
After all, people prefer to do business with people they know, like, and trust. It takes time to make a name for yourself in the industry. Until then, use your network to find vending machine locations.
Investigate high traffic areas
Slot machines are numbers games. The more people that pass in front of your machine, the more profit potential you have. Look for places with a lot of foot traffic. The best places are:
It's important to think of each location as a different area. For example, potential customers at an airport have different needs than a target group at a large office.
The former may be interested in travel gadgets such as earphones, snacks, toothbrushes and toothpaste. The latter layer may be more interested in sandwiches, hot meals, and tea or coffee.
Spreading out the locations and target markets is always a good idea. However, it is important to consider which products are likely to sell in which locations.
Negotiate Contracts
Once you are satisfied with the location, negotiate with the real estate owner. First, the business owner should be compensated for the cost of using the premises and possibly the electricity bill as well.
Most vending machine contracts are commission based. The industry average is around 7% of sales or profits. However, this number can vary greatly depending on the size and number of machines.
If possible, hire an attorney to draw up a contract. This step makes sure you haven't missed anything. Homeowners are also more likely to comply with contracts drafted by lawyers.
Step 4 – Choose Your Point of Entry
There are several ways to get into the slot machine business. Therefore, it is beneficial to consider all options before purchasing a machine. Which entry point you choose depends a lot on your budget.
Acquire an existing business
If you have the budget, buying an existing business is the easiest way to get into the vending machine business. An existing business provides an established customer base. And you get a revenue stream right from the start.
It is beneficial to do some research to find out if the business owner wants to sell. Here are some things to keep in mind for existing businesses:
Consider a Vending Machine Franchise
Another easy way to get into business is to buy a vending machine franchise. Benefit from an established business model. Additionally, this type of company has an established operational and management infrastructure.
Many franchisors offer a good level of support to get you started. To participate in the business opportunity, you must pay an upfront fee. The franchisor then receives a fixed monthly fee or a portion of the profits.
Be sure to read the Franchise Agreement and agree to the Terms of Use. Some restrictions may apply to franchisors, such as the types of machines they can purchase and how many they can have in stock.
Additionally, many franchisors have specific rules in place before participating in an opportunity. For example, you may need to register a legal entity such as an LLC.
Start Your Own Business
Starting your own business is the longest road. However, you have complete freedom to build whatever type of business you want. This is also a great opportunity to grow your brand, realize your vision and keep most of your profits.
There are still some ways to reduce the initial cost. For example, many suppliers offer significant discounts for bulk orders. Financing may also be secured from machine manufacturers and suppliers.
Step 5 – Acquire Your Vending Machines
Now is the time to take physical action to start a business. You can now buy it from vending machines. There are some considerations to keep in mind at this step.
To Buy or Lease?
If you're short on cash, vending machine leasing is a great option. You can test the market without committing a permanent asset. Some leasing companies also offer attractive perks such as: B. No payment for 90 days and need a brand new vending machine.
When renting a vending machine, please note the following:
Also, be sure to create a rental agreement that clearly states the terms of the lease. This includes the rental period, rental price and who is responsible for what.
Another option is to purchase the machine directly. Again, this option gives you complete freedom in how you run your business. If you're on a tight budget, you can always buy a used vending machine. However, always check the machine carefully before purchasing.
The new machines are also available to small business owners. Many vendors offer technical support, financing, and extended warranties. These perks are worth the extra money you spend on your new machine purchase.
Here are some places where you can buy vending machines:
Decide the Features You Want
Vending machine functionality can range from simple to highly technical. Use market research and the product you want to sell to determine the features you need. In general, more complex functions increase the cost of the machine.
Some features to consider include:
Software integration is an important feature. Most modern electronic machines are integrated with software that helps monitor inventory levels remotely. You'll also benefit from Linkitsoft's comprehensive capabilities, including reporting, route management, and mobile apps.
Step 6 – Start Selling
Now you can install the vending machine and start selling. Machine operation is typically low maintenance. Your main job is to restock machines, maintain them as needed, and collect money.
Sign Contracts
Be sure to sign a contract with the property owner or manager. It is important that everyone recognizes their responsibilities. For example, who is responsible for service, maintenance, and damage? Also consider who will notify you if the machine fails.
Setting up Linkitsoft
Make sure to connect your vending machine to Linkitsoft. The process is easy and intuitive. Start setting up your inventory by adding products. Next, create a place to place the vending machine. You also need to define the machines, including vendor price, product type, and product line for each machine.