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Starting a Vending Business

We will make it simple.

But first, what do all these businesses - retail stores, cinemas, factories, airports, college campuses, movie theaters, hospitals, arcades, skate rinks, supermarkets, restaurants, offices, warehouses, tourist venues and recreation centers have in common? All of them are perfect locations for snack and drinks vending machines. If you want a retail operation that you can run at just about any location, 24 hours a day, without having to be there yourself or hire a single employee, one that can service thousands of customers without complaining, needing time off to go to the doctor or having to take a bathroom break, then vending could be the business for you. A vending business can deliver big profits.

If you are apprehensive about giving up your full-time job to embark on business ownership, you could consider starting your enterprise on a part-time basis while retaining your employment. Vending gives you the opportunity to do just that. You can buy a few machines, place them in local outlets and then maintain them in the evenings and at weekends. Maintenance is minimal. A visit to each machine once a day to once a month (depending on how much it takes) is usually sufficient. The biggest part of the job is collecting your money! These days vending machines can take not only coins, but also paper money and credit cards. You can work out of your home and keep your costs to a minimum. As your customer base increases, you can invest in more machines and grow your enterprise as large as you like, eventually giving up your job to focus completely on your vending business.

The initial investment can be as little as $1,600 and can rise to $100,000 as you add machines.

More than $22 billion is dropped into vending machines every year by Americans buying sodas, candy, coffee and other snacks. That's a lot of money and can add up to a lot of profit for the savvy entrepreneur with good vending locations. Vending is no longer confined to drinks and snacks, however. These days you can sell everything from artwork to Internet access, CDs, popcorn, perfume, golf-club cleaning, back massage and a whole lot more.

According to Vending Times, the discomfort created by the current economic situation can be relieved in small but appreciated ways by industries such as vending. "Vending is very competitive with other retailers of single-serving snacks, beverages and food items, and will remain so even if operators manage to pass their cost increases along to their customers as rapidly as those other channels do. Coffee service is more than competitive with gourmet coffee shops. And workplace patrons can enjoy vending and/or OCS without having to drive across town. What’s more, technology is working to the vendors' advantage. Today’s vend assurance controls answer one of the longstanding complaints consumers have had about vending, and today’s payment options can answer another one. The variety of sophisticated brewers that deliver outstanding coffee never has been greater, and would have been unimaginable a decade and a half ago."

Take the following steps when planning your vending business:

Research the vending industry. Visit SmallBizBooks.com to download a detailed step-by-step guide to starting a vending business. Read Vending Times, the main magazine for the industry - www.vendingtimes.com. Check out the possibility of meeting existing vending business owners in non-competing machines/locations. It always pays to talk to someone who's already doing it.

The key to success in vending is the same as in retail - location, location, location. A vending route or machine pays for itself primarily through its location. Find the right location and your machine will not only make money, it will be profitable for many years. The crucial thing in any route deal is to get locations in high-foot-traffic areas and, of course, as close to one another as possible. If your locations are spread far apart, you'll waste time and traveling expenses servicing them.

Your customer profile will be determined by the products in your machines and their locations. Think about where you’ll find people who’ll want your goods, then visit the site at different times over a couple of weeks to get a feel for traffic flow and customer demographics. Then approach suitable merchants or 'hosts' about placing your machines on their sites.

You must pay the location owner a percentage based on sales. Some locations such as large corporations will allow your machines on-site free of charge because of the convenience to their employees, but most hosts will require a small percentage of your sales as rent.

Choose your vending machines and the merchandise being vended with great care. Do the research to find out what types of vending machines are available and the reputations of their suppliers or manufacturers. If the machines are not manufactured to a high standard you will pay the price in maintenance time and cost, and dissatisfied hosts (retailers, offices etc). You should also have enough mechanical ability to fix machines without help or to understand instructions given over the phone by the supplying company. You’ll need a few fix-it tools like screwdrivers and pliers and a car or van to take you on your rounds.

Keep your administrative requirements to a minimum. This is simple with a part-time business that you are running from home. You will need a car or van to visit your locations.

Prepare a simple business plan suited to the scale on which you are starting, setting out your goals as your business develops, the total cost of your investment, the working capital required, cash flow forecasts, your market position and your strategy for growing your business by adding new locations.





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