If you are looking for a business you can set up immediately, it’s tough to go wrong with a vending machine company. These enterprises fit and restock vending machines, usually on commercial premises, and always have a string of interested clients.
But how do you actually go about the process of setting one up? That’s the big question we ask in this post. Here’s everything you need to know:
Work Out Who You’ll Serve
The first step is to figure out who you will serve. The vending machine market is usually quite mature, so you’ll want to try to secure a deal with a company with a lot of locations first before you go to the expense of buying vans and paying staff.
Start by researching the vending machine industry in your area and who the big players are. Look at the challenges they face and some of the problems you could solve by setting up your own firm. Take a look at what the competition is already doing and whether you could improve on their processes.
Create A Financial Plan
The next step is to create a financial plan. You’ll want to figure out your startup costs and whether you can afford to keep pouring money into the business, even as it makes a loss for the first few months.
Usually, you won’t want to self-finance. But you can get investors to provide funding if they think they will get a return on the money they put in (which is another reason why it is so essential to create a compelling business plan).
Unfortunately, setting up a vending machine company can be expensive because of wages and vehicles. So it’s a good idea to plan your cash flow in advance, based on the customers you think you can win in the first few weeks.
Get The Money You Need
Once you know your financial position, the next step is to go out and get the capital you need. You can use savings or remortgage your home, but that’s high risk and only something you should do if you think your vending company idea has a very strong chance of working (such as already having a contract with a major client signed).
Another option is to apply for a business loan and shield yourself from debt by attaching it to your company. Make sure you list your vending machine company as a corporation, not as a sole proprietorship as this could land you in serious trouble later (and is effectively equivalent to risking your personal assets).
You could also bring in private investors. The best people to work with are those who previously had managerial roles in the vending industry because they can often spot opportunities and tell you whether your current business plan is going to work. Furthermore, they are often willing to be more lenient with your company’s performance in the short-term, since they understand better how the industry works compared to, say, banks.
Buy Your Vending Machines
Most vending machine companies have to buy their machines and install them. However, you can look into a restocking-only business.
Used machines are inexpensive and usually work okay, as long as you have someone with engineering skills on your team who can fix them. Newer machines are more enticing for customers, but they cost a lot more and aren’t always necessary unless you’re working in environments where there is competition from existing machines operated by different companies.
Think carefully about the niche of vending machines you want to service and whether it makes sense to use them in your area. Most entrepreneurs get into snacks and drinks, but you might find opportunities in specialty products, like vapes, in your area.
Stock Your Machines
The most challenging aspect of vending machine businesses is stocking machines. Planning routes and filling them with items is essential for success but not always straightforward.
You’ll need to start with inventory management. Rotating stock helps you identify when it might go out of date, allowing you to restock machines with in-date products first before moving on to your newest supply.
If you’re just starting, the cheapest option is to keep stock in your garage or shed on your property. You won’t have to pay rent for this. However, if you grow beyond a few locations, a commercial warehouse will become essential.
You will also need to plan the routes your vehicles take. Getting this right helps to bring your costs down and makes you more competitive.
Reading articles like “What Is Route Optimization? | A Guide For Fleet Managers” can help with this sort of thing. If you know how to shorten distances between stops, you can reduce restocking expenses and improve your margins.
Finally, you’ll need to work with reputable suppliers who can provide you with goods for refilling machines. It’s essential to get on good terms with these people and work closely with them to coordinate everything.
Don’t work with suppliers who push you to the bottom of the queue. That’s never a good strategy. Instead, choose firms that will serve you when you need them, even if they don’t have the best products. Then, when you become more established and can make larger orders, you can switch suppliers.
Scale Your Business
The key to breaking even and earning profits as a vending machine business is scale. If you can grow, you can potentially earn a lot of money.
After starting, look for new locations where you can expand your business. Search for potential clients in new areas and see whether there is an opportunity to slot your firm into their operational processes.
If you can automate parts of your operation, do it. Vending machine businesses operate in a competitive market where even small cost advantages can mean the difference between survival and perishing.
If you can create a brand (instead of looking generic), then that can help too. Differentiating yourself from the competition and building trust is an excellent way to get more firms interested in your services.
What do you think?