8 Easy Steps to Start a Vending Machine Business

Starting a vending machine business is the perfect side hustle. But there&#;s so much more to this business than simply buying vending machines and placing them anywhere.

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You have to evaluate vending product options, scout for appropriate locations, decide on investment and profit margins, and more. There are a lot of in-between steps to ensure your vending machine venture&#;s success.

Today, we&#;ll help you understand how to start a vending machine business and set yourself up for success.

Why Starting a Vending Machine Business is Worth It

In this business, you make money selling snacks, beverages, sandwiches, hygiene products, toys, and other types of products to customers through a vending machine.

Vending machines appeal to a large audience. After all, everyone gets hungry or thirsty&#;or wants a toy&#;at some point. This makes vending machines universally appealing, expanding your target market.

Your profit markup here is also higher. For instance, you can sell gumballs, which cost two to five cents, for 25 or 50 cents each. Snacks and sodas can give around $1 or more per sale in profits.

Admittedly, you won&#;t likely become a millionaire anytime soon, but you can scale the business to the point that you can replace the income from your full-time job.

The flexibility you have when running your vending machine business is the biggest pro of them all.

You can set your hours, and there is tons of flexibility. Plus, you&#;ll make a decent sum of money while you&#;re at it. 

You&#;re your own boss, and you get to own it.

The Investment Needed to Start a Vending Machine Business

Most of the expenses to start a vending machine business come from the vending machine itself and the stock items. You can start with as little as $2,000, which will get you a basic vending machine&#;enough to get your business up and running.

Simple vending machines that sell gumballs for quarters only cost a few hundred bucks. But generally, vending machines can cost anywhere between $ and $10,000, depending on their size and features. For example, you might want one that takes credit and debit cards.

Snack and soda machines, on the other hand, will set you back $1,500 to $8,500.

If you want to reduce your costs, consider buying used or refurbished machines, which cost anywhere from $1,200-$3,000. It&#;s even better if you know how to repair the machines or get someone to do it for you at an affordable price. Then you won&#;t have to worry about warranties.

Entering into contracts with suppliers to get free machines is another option. Some suppliers will furnish and maintain a machine as long as you agree to purchase all of your supplies from them.

What&#;s more, vending machine supplies don&#;t cost much because they are nearly always purchased wholesale. Gumballs and small toys are very inexpensive when purchased wholesale, and while snacks and sodas cost more, they are still very affordable.

You&#;ll also have to pay a nominal fee to form your business, which varies from one state to another. You can find out more details by visiting your state government website or asking your lawyer.

8 Steps to Start a Vending Machine Business

Let&#;s get to business! Here&#;s a step-by-step guide to launch a vending machine business in the US.

Step 1: Decide What Kind of Vending Machine You Want 

Gone are the days when vending machines were rusty-looking things that only took dollar bills and looked like everything was expired. Today, you have a diverse range of options to choose from.

• Food and Beverage Vending: Most of the vending machines you see are food and beverage vending machines that serve sodas and snacks. If you plan to purchase two or more machines and place them in different locations, you may want to consider stocking different items in each, depending on the traffic in the area.
• Bulk Vending: These are the smaller machines you see at the front of restaurants and grocery stores. Bulk vending machines contain toys, rubber balls, gumballs, or similar items. These products are generally the cheapest, and as they&#;re manually operated, they also carry the least overhead. But when placed in the right setting, these machines can be an excellent source of passive income and are perfect for budding entrepreneurs.
• Specialty Vending: Specialty vending machines are the new age machines that offer premium products completely different from your typical run-of-the-mill items. You can dispense almost anything, from electronics to hot beverages to ice cream. Also, depending on the type of specialty products you have in these machines, you&#;ll earn a considerably higher income than from offering standard food and beverage items. That said, the higher mark-up also means fewer people will take advantage of your machine.

Regardless of the vending machine type you choose, your main priority should be to tailor your vending machine offerings to your target audience.

Step 2: Scout Good Locations for Your Machines

If anything is as important as the products you sell in your vending machines, it&#;s their location. Strategic placement is critical to ensure your vending machine business&#;s success.

Research and think critically about the people you&#;re targeting. What are their requirements, and what kind of crowd frequents the location?

For instance, if you place a food and beverage vending machine next to the local gym, you would want to offer protein bars, electrolyte-infused drinks, pre-mixed shakes, and other items that would provide value to gym-goers.

On the other hand, if you have a specialty vending machine in a local laundromat, fabric softener and individual detergent packs would make more sense.

Here&#;s a list of potential locations for your vending machines:

• Bus stations
• Manufacturing facilities
• Apartment complexes
• Grocery stores
• Malls and shopping centers
• Train stations
• Hotels and motels
• Schools
• Universities
• Hospitals and health centers
• Laundromats
• Airports

You can&#;t just stick a vending machine anywhere you want. You need to have conversations with the property owners or managers. They may not want to give you floor space or have their own vending machines in place and not want to compete. Once you&#;ve identified several areas you want to place your machine, start making calls to find out if those locations are open to having your machine on their property.

Keep in mind you&#;ll also have to pay a commission to utilize any location since it is likely owned by someone else. This is typically 10% to 25% of your total revenue, but you can always negotiate that before signing a contract.

Step 3: Name Your Business

Your business name is one of your most critical brand assets. It&#;s how your customers will identify you from its competition. Here are a few tips to help you finalize a business name:

• Keep it simple and catchy
• Be creative 
• Be original and unique
• Ensure it&#;s easy to remember

Additionally, your potential business name shouldn&#;t be taken by any other business. To ensure this, run a search with the U.S. Patent and Trademark office. 

Step 4: Finalize Your Business Structure

Your choice of business structure will have legal and tax implications. It&#;ll also affect the total time and costs involved to ensure compliance and maintain good standing with the state. You can register your business as one of the following legal structures:

• Sole proprietorship
• General partnership
• Limited liability company (LLC)
• Corporation

If you choose to be an LLC, S Corporation, or C Corporation, you may have to appoint a registered agent who will act as your company&#;s point of contact with the business. 

Step 5: Register Your New Vending Machine Business With the State

Filing registration paperwork with your state is mandatory to form an LLC or incorporate a vending machine business. The only difference is that while you have to file Articles of Organization in the case of LLC, you must file Articles of Incorporation for a corporation.

Generally, states don&#;t require proprietorships and partnerships to submit formation paperwork. However, if you use a name other than one that includes your first and last name, you&#;ll have to file a DBA (Doing Business As). It&#;ll be the fictitious name of your business.

While you&#;re at it, find out and obtain the necessary business licenses and permits you&#;ll need for your business.

You can use an LLC service like ZenBusiness to file all the relevant paperwork with your state. It only takes about 10 minutes, but you know it&#;s done right.

ZenBusiness is available in any state, and offers registered agent services, EIN services, business websites, advertising and more.

Step 6: Develop a Business Plan to Secure Financing

A business plan is also a formal document that you can use to obtain funds for your business.

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While the vending machine industry has a much lower barrier to entry than other industries, you&#;ll still need a few thousand dollars to start your business. If you don&#;t want to dig into your savings or lack sufficient funding, you can look into other financing options. 

Start by calculating how much you need to purchase the kind of machines you want and the items in them. Remember to account for other costs, like trucks for transporting machines, if required.

Then decide whether you wish to apply for short-term loans or an equipment financing loan.

Short-term loans have a shorter payback period with higher interest rates than long-term loans, but they are easier to qualify for. On the other hand, equipment financing loans offer a fixed interest rate and use the equipment itself as collateral in case of default. However, qualifying for this loan won&#;t be easy if your credit score and business tax returns aren&#;t good.

A business plan is a series of intentions about how you&#;ll run your business. Here&#;s what it should include:

• An overview of what your business is
• All the products and services you are selling
• How your business will generate revenue
• All your employees and executive staff
• From where you are getting funds
• Your operations model

Once you get the money, use it to buy your vending machines and supplies.

Step 7: Sign Contracts With Property Owners at Vending Sites

As mentioned, businesses and property owners will want compensation for permitting you to install your vending machines on their premises. You&#;ll have to pay a percentage of your total revenue as commission, which is why it&#;s crucial to spell out the rates, terms, and conditions in a formal agreement.

Try to reach a reasonable commission percentage that satisfies the party providing you location while leaving you with an acceptable profit margin. So don&#;t forget to run the math before agreeing to a number and signing the contract.

Here is a list of pointers to include in your contract with the property owner:

• Names of the parties entering into the agreement
• Agreement length
• The type of machine(s) and products sold
• Location(s) of the machine(s)
• Compensation
• Responsibilities related to machine damage, maintenance, and service for each party
• Notifications about machine failure or damage
• Exclusivity provision, if applicable
• Rights to add, remove, or replace machines
• A termination clause 

As with any legal document, it&#;s always better to have a legal expert by your side when creating the contract, or at the very least, reviewing it to ensure it serves your needs. Read our top recommendations for online legal services.

Step 8: Optimize your vending machine business&#;s performance

Once your vending machine business is set up and operating, you should begin to see profits coming in. However, your work isn&#;t done.

Your next focus should be on optimizing your profits. Here are a few options to consider:

• Optimize Your Inventory Management: Many vending machines will require you to track your inventory manually. So, if you have several machines of a similar model, you should consider investing in inventory management software that can streamline or automate the process.
• Improve Customer Service: Offering top-notch customer service is an effective way to differentiate yourself from your competitors. This includes ensuring your machines are always functional, user-friendly, and fully stocked.

Next Steps

There you have it&#;that&#;s how you start a successful vending machine business.

Start by looking into the different items you can offer and determine where you&#;ll buy or lease your machines. We also recommend hiring an LLC service like ZenBusiness to take care of your registration, licensing, and EIN.

Once your business is up and running, shift your focus on optimizing its performance and boosting your income. Eventually, you&#;ll earn enough money to replace your full-time income.

A vending machine business can be a lucrative entrepreneurial opportunity, either as a side hustle or a full-time venture.

It can allow owners to dive in with low startup costs and promising profit potential. Globally, the retail vending machine market was valued at $51.91 billion in and is expected to grow 10.7% annually in the next eight years &#; to $129.4 billion by , according to Grand View Research.

After all, when people are hungry and in a hurry, vending machines can offer a quick and convenient solution. Consumer demand for vending machine staples like chips, candy, and soda remains strong, and advancements in technology have broadened the scope of products people can get from machines, including everything from fresh fruit, yogurt, and juice smoothies to cake slices, pizza, and hot dogs.

Beyond food, vending machines can stock plenty of other items, such as toiletries, makeup, laundry supplies, electronics, and in some states, cigarettes.

Many businesses start with a small number of machines &#; or just one &#; to test the waters. A main advantage of vending machine businesses: overhead costs are low, since it generally doesn&#;t require office space. Plus, hiring employees may not be necessary if the owner plans to operate the business solo. Profits vary depending on the products and locations, but the money an average vending machine generates can add up quickly if you&#;re managing multiple machines.

Owning a successful vending machine business takes careful strategic planning. Here&#;s a five-step guide to starting, including the most important step: figuring out the best products to place in the right location.

1. Register the business.

To register a vending machine business, start by obtaining an Employee Identification Number (EIN) for free from the Internal Revenue Service (IRS), which can be used to file state and federal taxes. Rather than conduct the business in your name, it typically makes sense to set it up as a limited liability company (LLC) or other type of corporation, which protects an owner&#;s personal assets if injuries or damages occur. To set up a business, many states require owners to register and/or pay fees. Then the owner can set up a bank account to handle all business-related transactions, including purchasing machines and inventory.

To determine state requirements for licenses and permits, such as a beverage or health department license, business owners can refer to the business directory on the IRS website, which provides links to more detailed guidance for each state. Owners should also check with the cities and counties they&#;re operating in to learn about any required local licenses or permits.

2. Pick your products.

Choosing the right product(s) for the right place is key to a prosperous vending machine venture. Conduct research to determine which products to sell and where by scouting various locations that see plenty of foot traffic and thinking about what customers might demand in those spots.

Starting a vending machine company can be an attractive entrepreneurial opportunity, especially since the business doesn&#;t require many of the operating costs other businesses do.

For example, snacks and drinks might work well in office parks, while microwaveable meals could be a good match for hospitals. Healthy foods might thrive in gyms, and personal care products like shampoos and shaving creams may take off in airports. In , beverages dominated the vending machine business, accounting for more than 43% of global revenue, according to Grand View Research, which noted that hotels are a hot spot for beverage machines.

To maximize profits, vendors may want to contact various wholesale suppliers to pinpoint items with the lowest possible cost per unit.

3. Secure the property.

Once you figure out the best location for your machines, you&#;ll need to get the property owners on board. That means making connections with local business owners and developing a pitch for placing machines on their property.

Most vendors draw up a contract that outlines the products that will be sold, where the machines will be placed, and how long they will operate machines on a property. The contract may also stipulate that the property owner won&#;t allow competing vendors to place machines in the same location.

It usually also specifies the rent that you&#;ll will pay for occupying the space, which is typically a commission on sales &#; between 5% and 25% of product sales.

4. Purchase the vending machines.

There are different options for machines, depending on the types of products you plan to sell. The cost of machines ranges from a few hundred dollars to $10,000, depending on their features, with more sophisticated machines offering extras like interactive screens, voice accessibility, and remote monitoring software that sends alerts when stock is low.

Types of machines include:

• Bulk. These machines dispense one product at the same price, such as rubber balls, gumballs, or hard candy. Bulk machines typically accept coins, so they produce the least amount of revenue, but they&#;re also smaller and less costly than other machines.
• Mechanical. These carry several products at different prices and can accept dollar bills and coins. Think of the classic snack-and-soda machines.
• Electronic. Electronic vending machines accept credit or debit cards, either in addition to or in place of cash, and often feature touchscreen interfaces. These machines are growing in popularity to accommodate customers who don&#;t have cash on hand.
• Specialty. Some items require specialty machines, for instance, to keep coffee hot or ice cream cold. In addition, items like electronics and personal care products may require specialty machines.

To reduce costs, especially when getting started, vendors may consider buying used or refurbished machines or renting machines.

5. Monitor your machines.

Once the machines are set up, you can map out a route to keep close tabs on each location regularly, replenish supplies, pluck any foods that have expired, and empty cash from the machines. At the same time, you can check to make sure the equipment is working properly. Because there is typically no on-site staff monitoring vending machines, they can be vulnerable to theft and vandalism, so finding a secure location is key.

You&#;ll also need to be mindful to ensure the machines are continually in compliance with federal, state, and local regulations. Some cities may limit the contents of machines in certain areas, for example, by prohibiting soda in school buildings. Plus, vending machines must meet federal Americans with Disabilities Act guidelines to allow people with disabilities easy access to the machines. Owners of 20 or more vending machines must follow a requirement by the U.S. Food and Drug Administration (FDA) to disclose calorie information about food they're selling.

The Takeaway

Starting a vending machine company can be an attractive entrepreneurial opportunity, especially since the business doesn&#;t require many of the operating costs other businesses do, such as renting office space and hiring permanent staff. If vendors do their research, determine the best items to sell, and secure contracts with property owners, a vending machine company has the potential to be highly profitable.

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