How to Start a Vending Machine Business

How to Start a Vending Machine Business

1. Create a business plan

A business plan is a blueprint for success. Sitting down to write one is the first step to starting your own vending machine business. 

Writing a successful business plan is easier than you may think. Before you start, it’s important to do market research and think about your goals. Then, when you write the plan, you’ll be able to clarify your business idea competently.

Set goals or “SMART” objectives. They can help you identify potential problems and measure progress. Think through whether you’ll purchase or lease vending machines, what you’ll sell, where you’ll place the machines, and how you’ll market the business.

Don’t skip the fine details. Will your machines accept credit and debit card payments? Will they incorporate interactive touch functionality? Will they have voice-activated screens? Will they dispense both food and beverages? Consider asking industry experts for advice as you work through writing your first draft. And be realistic. It’s better to beat your targets than to miss them.

2. Choose a business structure

Determining and registering your business structure is one of the most important steps in starting a business. Most vending machine businesses are either limited liability companies (LLCs) or sole proprietorships.

A sole proprietorship comes with little to no paperwork and no requirement to file a separate tax return. However, it’s much riskier than an LLC, even when you file for a “doing business as” (DBA) name. If a sole proprietorship loses a lawsuit, your personal assets are not protected. That means your creditors can seize your house, car, personal bank accounts, and more.

An LLC offers flexibility in management structure, taxation, and ownership. At ZenBusiness, we make it easy to tick all the boxes. With an LLC, you get liability protection and a choice of how you’re taxed (as a pass-through entity or a corporation). That gives you more flexibility, and in general, it’s the business structure of preference for many first-time business owners.

3. Create a business name

Choosing a business name is where the fun starts. This is the beginning of your brand and the entity that you’ll refer to in marketing materials and on your vending machines. Be sure it’s easy to understand, recognizable, and not offensive. 

As you get creative, keep a few things in mind:

• Is the name easy to understand?
• Is it different from any other LLC or business in your state? There may be legal repercussions if you violate the trademark or business registration of another company.
• Are there specific words your state prohibits in a name? For example, some states may not allow the words “bank,” “insurance,” or “corporation” in a business name.
• Is the domain name available? If you plan to build a website or implement a digital marketing strategy, this is an important point.
• Are social media profiles or handles available?

Once you’ve got a name, you’re one step closer to owning a working vending machine business. Consider partnering with a business formation service like us at ZenBusiness to help guide you through the important steps — it’s affordable and fast. 

4. Register your vending machine business and open financial accounts

When it comes to obtaining a vending machine business license, every city and state will have its own requirements. If you’re concerned about missing something, check in with your area’s SBA office or local business council.

Give serious thought to purchasing general liability insurance. Also, look into what your state requires for workers’ compensation insurance if you have employees.

Finally, you’ll want to open a business bank account. It’s a good idea to keep your business and personal finances separate. Not only does this help at tax time, but should you ever encounter legal action, separate accounts will make it easier to maintain your LLC or corporation’s personal liability protection. A business account may also be a requirement to take out some loans, especially if they’re government-backed.

5. Determine your business costs

A business plan is a great place to track your startup costs. Begin with a list of all the things you’ll need to purchase. This includes one-time expenses like the fee to register your LLC and state operating permits or licenses. List ongoing expenses next. They could include legal, tax, and accounting services, office supplies, website hosting, marketing materials, vending machine purchasing or leasing costs, and products to stock machines with.

You can start a vending machine business for the cost of a single machine, especially if you already have a truck. Vending machines cost anywhere from $1,000 to $5,000+. Many stores and locations will go with bigger vending companies, so you may struggle for market share in the early stages.

How can you fund your startup costs?

There are many ways to fund a vending machine business. The Small Business Administration (SBA) offers business loans ranging from $500 to the millions. Think carefully about what you need the money for, as not all loans can be used as working capital.

There are also certain eligibility requirements. For example, you must own a “for-profit business” and must have invested equity in the business. You must also have exhausted all financing options. Learn the restrictions on the different government assistance plans that exist. 

You can also finance your vending machine business with business credit cards, a personal loan, or asking friends and family to help. Credit card debt often has a high annual interest rate, even higher than many personal loans. With friends and family, the issue may become more personal. Don’t wait until you absolutely need the money to educate yourself about the financing options available to you.

6. Purchase equipment for your vending machine company

Don’t get so excited about your vending machine LLC that you forget about the equipment. Most vending companies need at least a vehicle and a machine or two to start. But as you grow, you may need a garage, storage space, office equipment, and tools for repairs and maintenance. Will you lease machines or buy them? If you buy, will you purchase new or used? Source a good inventory vendor too, so you understand the costs upfront.

Chat with vending machine business owners from other regions to build a list of everything you’ll need. These established owners are often your best sources for what supplies to buy and where to buy them, and they may be more willing to help due to not being regional competitors. Since you’re just starting out, consider keeping your costs low by buying refurbished equipment.

You can start out with one machine at $1,000 to $5,000. Going with used machines can save money, and keep in mind that you’ll need some other equipment:

• Truck
• Dolley
• Lifting straps
• Ramps
• Storage space
• Tools for repair

7. Market your vending machine business

Marketing may not seem all that important for a vending machine business, but you need to find new customers if you want to keep your business growing. Many new companies start their marketing outreach on platforms like Twitter, Facebook, and Instagram. Also, make sure potential customers can find you on Google. This may be a little tricky if we’re talking about a vending machine, but if you have an office, be sure to register it on Google Business Profiles.

A great website is a must these days, but don’t discount word-of-mouth. Starting with a few happy customers and going the extra mile is the best way to grow a local business. If you need some help, our marketing tips could provide just the boost you need.

Don’t miss out on online local directories as a modern alternative to old-school phone books. Last but not least, look into print advertising. You can advertise in local newspapers, magazines, or with flyers bulk-mailed to local businesses. Don’t forget — your machines are valuable ad space too. A sign with your business name and contact info can get new customers to notice you.

Vending machine businesses aren’t limited to selling snacks or beverages. Here are a few other ideas for vending machine businesses you can start:

• Laundry supplies: Laundromats and residential buildings often need suppliers to both place and stock machines. Laundromat customers need detergent, fabric softener, and dryer sheets. Check with local laundry businesses to see if they’re happy with their current vendors and pricing.
• Electronic accessories: These vending machines are becoming increasingly popular, especially in airports, bus stations, and other travel-related facilities. They can dispense both high-end and budget items, with some selling phone chargers, earbuds, headphones, or tablet cases.
• Skincare and hair products: Shampoo, conditioner, styling products, and makeup are hot commodities for people on the go.
• Toiletries and hygiene products: Supply toothbrushes, toothpaste, soap, and feminine hygiene products that people may forget in a rush. Hotels, conference centers, and train stations make good locations for this type of vending machine business.

Related: How to Start a Business as a Teenager