5 Things You MUST Know Before Starting A Vending Machine Business

have you ever wondered what it's like to buy a vending machine and start a passive income business well I know I did and that's why me and my college roommate one year ago bought a used vending machine from Craigslist and started our very own vending machine business and let me tell you there's a lot more that goes into a vending machine business than you might think so if you're interested in finding out how much we made and the five things that you must know before starting a vending machine business then make sure to stay tuned and watch until the end hey what's up guys my name is Chris and welcome back to another episode of the lifestyle design show the number one place for young adults to learn about personal finance and entrepreneurship today I'm gonna be telling you all about my very first business venture our vending machine so about a year ago my college roommate and I we started watching a lot of YouTube and we've started seeing videos of people making Bank by buying vending machines filling them up with inventory and then putting them in a location people buy snaps from you and there you go you're you're sitting pretty one hundred twenty one dollars so now it's over a year later and we've learned quite a few different things about this kind of business so here are the five most important things that you must know before starting a vending machine business and the number one thing you want to have a location before buying your machine I've heard quite a few stories where people will buy a vending machine and then they'll have to store it in their garage for six months while they're trying to call places and trying to say hey do you guys need a snack machine for us when we started our vending machine business we put it at a ranch and so even though we had a location that wasn't our ideal location we were trying to find other spots and we were calling and reaching out to many different places and to our vending machine to a local housing community by the college we go sue but the problem is we print all these graphics out and put the wrong email address state seriously but unfortunately we never found one and so that's why I picking your location ahead of time making sure they need the machine and also analyzing the traffic they have because getting a good location is such a big part of this business it really is hey have you guys ever used a vending machine before if you have make sure and destroy the like button for the YouTube algorithm the second most important thing that you have to know before starting a vending machine business don't put a snack machine or a drink machine should go and vice-versa we made this mistake and that's not properly analyzing your market before before you buy your machine look at where you're gonna place it I searched the audience if it's the right area for drink machine just put it there and because of that our sales were impacted our weekly sales were only about two to five people every single week and we'd be lucky at the end of the month to have made ten dollars people are at a ranch they're riding horses they're hot they're gonna want something to drink they're gonna thirsty no one wants to buy warm snacks it's best to be prudent before purchasing your machine and get the correct machine for that location we went with snacks because snacks seemed the easiest and the snack machine was a little bit cheaper it could have made a lot more money if we had properly analyzed the market and has gotten a drink machine oh well you live and learn number three make sure that you understand the start-up costs it's gonna cost anywhere from five hundred to a thousand dollars to start a vending machine business because to buy a new machine machines cost anywhere from five to seven hundred depending on what kind of machine and how old it is and then just fill it up with inventory so snacks and drinks it's also gonna cost you around a hundred dollars for us we split between two people so overall we were only out-of-pocket about three hundred dollars each but for someone starting this business stuff by themself remember there's definitely startup costs for this business the fourth thing that you need to realize about vending machine businesses is that it's not passive income and you know this was a perception I had before starting this business I thought that it would become passive once you know you purchased the machine and set it up that the initial time investment would eventually turn into a passive investment you know people just bought snacks from you and then you collected the cash unfortunately that's not the case with vending machines there is a lot of labor involved not only to actually buy the machines you know pick up the machine and have to move it to the location which it's really hard and these machines are ginormous they are so big and they're heavy more than that there's the restocking so whether you restock every week or every other week that takes a lot of time there's also cleaning the Machine you have to clean the glass there's also problems with the money collector sometimes it'll be jams there's just so many little things like this that make this business model not passive at all overall it was just a lot more tedious labor than we really ever could expect I mean we thought we were gonna make it rain dudes this crisp these crisp cash this is what we thought we were gonna get we started this business it's a cool feeling to have a business that is so situated around cash and we never got a credit card reader this is a little bonus tip it's really important if you want to increase your sales people are focusing more and more on cashless transactions credit card readers are a couple hundred dollars so they're just another investment into the business but yeah definitely pulling in all this cash was not the case we made around 90 dollars in total sales so eventually we did sell the Machine goodbye vending machine and we did actually sell the machine for a slight but profit because we did upgrade the machine a bit we added lot so altogether on our initial investment of about $600 overall we profited about $40 or maybe about $20 each it was an amazing learning experience and I'm just happy that we didn't actually lose any money in fact we actually profited so overall I'd say this is a win for a first business loss and the fifth thing that you have to know before starting a vending machine business is it's much harder to scale this business than you might expect we had really high hopes when I first started this business and we plan to scale at a rate of about 10 machines per year but the problem is scaling is so much harder than you might think scaling involves a lot of Labor these machines are big they're heavy they're cumbersome you have to have trucks you have to find locations to put these machines each machine needs to be serviced and restocked it's just there's a lot more that goes into this business on the back end then you might realize and it just stops you from being able to scale to the proper level we did the math and we believe that one machine should profit you when it's in a good location about $1,000 per year so we were hoping that I 10 machines we'd be bringing in about $10,000 gross and about $5,000 net when you subtract all the inventory costs but the thing is is that dream never came to fruition because scaling this business just comes with a hurdle of obstacles $20 worth of like quarters and other change that was just caught in the machine what that's so that's why it wasn't functioning earlier there I mean there's fixing machine making sure the machine looks nice yeah cleaning it off restocking make sure it has enough change in it to make change through making sure there's no like watching is yams in in the coin coin feed there's so many problems that can be that can happen like we another thing that happens we had Capri Suns in our vending machine and some of them would like pop the shelves would get sticky with just another unforeseen you know a little like thing that we had to deal with just a small little wish yeah so eventually we really came to the realization that this business model was not the model for us it was just too labor-intensive and that's to college students we just didn't have the free time that we would need to invest into this business the great thing is you were able to chalk this up to an awesome learning experience and all the snaps although they did expire we were still able to heat them and enjoy them ourselves so how would I reach the vending machine business on the side hustle scale of one to ten well I'm gonna give the vending machine business a five-point 875 the pros of vending machines are that they're always in demand we actually did quite a bit of research when we were making our business model and this shows that vending machines are getting more and more popular you're seeing vending machines for different kinds of products different items you see sneaker vending machines clothes vending machines you know athletic vending machines there's so many different kinds of vending machines and so this industry is gonna be around for a long time another Pro about having a vending machine business is there are a lot of write offs you can write off the depreciation of your machine you can write off the expense of the snacks and inventory you can write off some of the gaps expense that you had when you were traveling to service the machines there are a lot of different perks like with owning and equipment based business like vending machines another perk is it's a tangible business it's really fun to be able to say I have a vending machine it's tangible you can touch it you feel it it's just the overall fun business to be in another crow to a vending machine business there's the fact that you can get free or discounted snacks and drinks even though we never touched our inventory while we were conducting business we only broke into the snacks once they expired another Pro of this business is it just looks really cool it's a little bit of a blast you know people love to see content about vending machine businesses you can actually take them and visit your vending machine kind of a cool asset to have in your portfolio now the cons are this business takes a lot of startup capital and that's college students that was one of the main obstacles we ran into this business required more and more and more investment to get another machine or to get a credit card reader or take it you know locks with the machine another downside is it requires a lot of active work it's not passive another downside is that things break so we were able to figure out any problems that did come up but when you're actually conducting business there are so many things that go wrong motors can break and a little spinny things that eject the snacks might not spin or I know I don't even know the coin collector could break another con of this business is that it's hard to get good margins on your sales most times our margins would be a little less than a dollar for each snack and item that people bought from us that's not very good you know you have to make a lot of sales to make really any amount of money so these poor margins are all something to keep in mind and lastly this business is really it's not scalable it's really hard to scale it unless you make it your whole life and you really focus your time energy on scaling your vending machine business so overall that's why I rated this site hustle as a high five maybe even a low six because some people will find some massive success it all comes down to your location if you have a good location and you analyze your market and you decide this type of machine is going to be a huge hit in this kind of location then you might make some serious money but if you're a complete newcomer and you're trying to learn this business model by watching YouTube videos commend maybe looking at a different kind of side hustle and you could do from home you could do online doesn't require so much did work it doesn't require so much capital to get started if you're interested in learning some of my favorite side hustles that you could do straight from home all from your laptop make sure you go ahead and click right here and check out those videos this is the study room that we actually planned all of our vending machine adventures how many people could say that they owned a vending machine how many people could say that in college they started a business with vending machines there's just wild you know at the end the day we're all trying just to learn and do our best and honestly it doesn't hurt to try thank you guys so much for watching and I'll catch you next time

Channel: Chris D'Andrea

Views: 902,033

Keywords: how to start a vending machine business, how much a vending machine business makes, get locations for vending machines, is vending machines worth it, make money online, make passive income, chris deandrea, chris dandera, lifestyle design, how to find locations for you vending business, used vending machines, collection video, make money vending machine, how to vending machine, jamie ibenaz, reyes the entrepreneur vending, side hustle ideas, graham stephan, online side hustles

Id: J_PVDVoYZjk

Length: 11min 18sec (678 seconds)

Published: Wed Jul 08 2020