One of the great things about starting a vending machine business is that it is possible to do it with minimal startup costs. If you do have access to considerable funding though you could also choose to purchase existing routes or jump straight into your own more professional set up. Depending on how you want to kick off your venture into vending, getting started could set you back anywhere between a few thousand dollars and several hundred thousand dollars.
A vending machine business can be started on a really low budget so it is best to start off slowly and take on less risk. You can then invest more heavily once you start earning some profit and decide that vending is definitely a business that you want to be in.
When it comes to determining the amount of capital that is required to start a vending business you need to take more into account than just the costs that you will face up to the point where you start doing business. You also need to consider the operating expenses that you will have over the first six months while your profits are still low.
If you start out full time then you may also need to set aside funds to cover your living costs for a period of six to twelve months until your business becomes profitable.
Let’s take a closer look at some of the vending machine business startup costs that entrepreneurs in this industry typically face.
The amount of startup funding needed will vary greatly depending on the kind of machines that you want to start off with.
One trick to starting off on a shoestring budget is to start with candy vending machines which can usually be bought very cheaply on online auction sites for around US$150 or less each. These machines are cheap, simple to operate and candy and gum balls offer a great profit margin for little effort. Buy them in lots of one, two or three at a time and slowly grow your business as you find suitable locations.
If you do want to start out with larger, electronic vending machine equipment that vends snacks and hot or cold beverages then you are looking at much larger startup costs. New machines for vending food or beverages range in price from around $2000 up to $6000 per unit. As an inexperienced operator you would be crazy to buy new machinery and would be much better off leasing some machines for a period while you test out a variety of locations. Buying quality second hand machines is also one way to lower your initial outlay.
Other startup costs associated with vending machines include, security locks, tools for a maintenance kit and extension cords.
Don’t forget to allow for machine parts and repairs if you are reliant on hiring a technician when the need arises.
Rent for Business Premises
Most operators start a home based vending business and therefore don’t have the overhead costs associated with leasing commercial premises. If you have a spare room for an office and some space in the garage for storing machines you should be fine. Otherwise you can look at renting storage space.
Office and Administration
Depending on what equipment you already have and the scope of your plans you will have to spend a certain amount on kitting out your home office. You will likely require a desk, filing cabinets, a PC, printer, Internet connection, phone connection, stationery and possibly other office equipment as well.
To service your route effectively you will need a suitable vehicle. Depending on the kind of machines that you operate you may not be able to get away with using your own car and you may have to consider leasing a vehicle. You may require a larger van or light truck for transporting machines and stock and you might even require a vehicle with a refrigeration compartment.
Professional Fees, Licenses and Permits
You will be applying for licenses and permits in order to set up a legal operation that is in compliance with local regulations. You may also require the services of an accountant, an attorney or other professionals during the process of setting up your vending business.
Don’t forget that most of the time the machines that you are likely to purchase are empty and you will therefore need to buy stock for them. This can represent a considerable startup cost at first as you will certainly be looking to buy your inventory in bulk in order to save money.
Marketing and Branding
In order to get started making money with vending machines you will need to secure your first few locations. The initial marketing of your vending business may require some spending on advertising. At a minimum you will want to get a logo designed and have a set of business cards made up. Your initial marketing efforts will most likely involve making phone calls and pounding the pavement and the major cost here will only be your time.
Other Startup Costs and Operating Expenses
You will also have to figure in other startup costs and operating expenses such as market research, insurance coverage, cell phone costs and possibly commissions.
Don’t forget to make an allowance for unforeseen expenses and price changes. Your forecasts may be inaccurate and prices often rise over time or end up being higher than you first anticipated.