The Vending Machine Business: Semi-Passive Income and Great for Beginners

Vending machines and photo booth

Starting a vending machine business is one of the greatest businesses for a beginner entrepreneur to get into. Not only are you capable of making a ton of money, but you get to become your own boss and set your own schedule from day one! A lot of people call this a passive business but I would consider it more of a semi-passive business, based on the fact that you do still need to service your route and work to find locations. One of the greatest parts about starting a vending business, is that you can start it for a couple hundred dollars and grow as you go!

Best Reasons to Start a Vending Business

If you ask anybody who owns a vending route, they will tell you that they just fell in love with the idea of vending, so let me break down some of the main reasons that people are pulled to this type of business.

Cheap to Start and Grow as You Go

Depending on what kind of vending you get into, you should be able to get started for under $1000 (including your business license and any state/county fees). That is pretty good for any kind of business. The key is to find cheap, but reliable and good quality, machines to get started with. Once you find a location for your machine, you can use the profits off of that machine to buy more machines and build up to a larger number of locations. The more machines you have, the more money you make, and the more money you make, the more machines you can buy! See how that works? Expect to put most of your profit back into growing your business if you expect to make a full-time income off of vending.

Constant Cash Flow

One of the appealing things about a vending machine business is that it is a cash flow business. Meaning that if you ever needed some money in between checks, you could service your machine and have the cash in hand. Consider this your emergency fund, however I don’t suggest relying on that, rather than actually saving money and budgeting. However if you ever really did need to do it, it would at least be an option.

Semi-Passive Income Source

As I said in the intro, I consider vending to be a semi-passive business, simply because of the fact that you do actually have to work at it. Finding locations, servicing machines, and buying product is still something that has to be done. However, I know many vendors that spend only one week each month running their business, so for the other three weeks, this would be considered passive because your machines are still out there making money while you sleep. If you can do your collections, refill machines, but products, etc. in one day, then the rest of the month you can relax.

Collection Day

If you go on YouTube right now, you can find hundreds of videos of people doing their collections. If those videos don’t make you want to go out and buy your first vending machine, then I don’t know what will. Basically collection day is exactly what it sounds like. This is the day where you go and empty the money out of your machines and refill them, so that you can see if your machine is doing well in that location. Who wouldn’t want to spend the day going around filling up bags of quarters and pulling stacks of money?

Set Your Own Schedule

Not every person that owns a vending machine business is out there working 24 hours a day (although some are). There are plenty of vendors that work only on the weekends or in the afternoon. This business is great for someone with a full-time job or someone with a family. You can work whenever you want, and there is no boss telling you where to be and when.

What Do You Need to Start a Vending Business?

So what kind of things are needed to get your business off of the ground? Let’s look at what kind of stuff you will need to get to make sure that your business is legal and protected.

Business License

Like with any business, you are required to get a business license. This lets the government know that you are out conducting business, and ensures that you are able to pay taxes on any income that you make and write off expenses. If you are caught operating without a business license, you can be fined and nobody wants that. It also ensures that there is a separation between you and the business, so if you were to get sued, they couldn’t touch your personal belongings.

Insurance

Insurance is a good idea in any business, but there are so many risks that are an issue in vending. Someone chokes on your candy, machine falls on them, they eat something that they are allergic to, etc. It is better to be safe than sorry. Insurance will not only protect you if your equipment is stolen or damaged, but they can also cover court costs in the event that someone decides to sue you.

Vending Permit

Vending permits are required in most states or counties, so you should check with your local permit office to see what you need. I believe that here in Wisconsin, or at least my county, you have to pay a fee of $9 per machine every year, which is nothing compared to how much money your machines should bring you.

Machines/Locations

This is not a business that you can run online. You have to physically place machines in physical locations. I will break down the different machines and what types of locations you should be looking for later on. Just know that there will be upfront costs for shipping and purchasing machines, and most locations will require a commission in exchange for the ability to place a machine.

Products

Depending on the type of machine that you choose to use, you will need to find things to stock it with. Make sure that you are doing the math and getting good deals or you will have a hard time making a profit.

What Kind of Machines Should I Get?

There are a ton of different types of machines that you can use, so let’s break down what each machine is, the pros and cons, and how much money you can expect to make from each type.

Bulk Vending Machine

Often called a candy machine or a toy machine, this is what you would think of when someone says “gumball machine” they usually range from a 25 cents to $1 per vend, and they give out things like gum balls, candy, toys, or stickers. You usually see them in places like the entrance of a restaurant or a grocery store. They tend to come with one, two, or three heads (heads meaning different slots for products), or they come on large racks with anywhere from 5-9 different choices. They usually only take quarters (but feel free to install a change machine next to it). These are the machines that most people start out with. They are easy to move, take up very little space in a location, and are good for places with lots of children.

The average income tends to be around $10 a month, which doesn’t necessarily sound like a lot, but adds up once you have a large enough route. However, a good machine in a good location could pull in upwards of $30 or $40 per month so the location you choose is important.

Full Line Vending Machine

I know that full line is a term that only vendors really use, so basically it just means snack and drink machines. These are the ones that you see at rest stops, hospitals, schools, etc. They sell cans and bottles of pop, bags of chips, cookies, gum, and all other types of snacks and drinks. The downside is that these machines are large, heavy, and hard to move. They also usually need to be hooked up to electricity because they have electronic features on them. Once you get past the difficulty of moving and placing them, they are a killer way to make some big money.

Not only are the prices you charge higher, but the profit margins are pretty nice too. These machines have can accept coins, bills, and even credit cards. A bad location will still probably make you $50 a month, but in the right location (office building, factory, hospital, airport, mall), you could be pulling in hundreds of dollars every month of of one machine. The best part is, often times you can place a snack machine and a drink machine next to each other. In a busy factory or office type setting, you will have customers that will purchase from your machine every single day. For many vendors full line machines are what they strive to build up to. Nice full line machines will cost you a couple thousand dollars new, but can pay for themselves in no time!

Arcade Machines

We have all seen arcade machines, and we have probably spent way more than we should have playing them. These are your claw machines, coin pushers, racing games, and other things that you play to try to win a prize or just for fun. These machines can be great in the right location. Movie theaters and malls tend to have them, and kids will spend a ton of money playing them. Have you ever spent $5+ trying to win a stuff animal out of a claw machine, just to walk away with nothing? For the vendor that owns that claw machine, that is pure profit. Even if you did win on the first try, the prize only costs the vendor a fraction of what it cost for you to play it once.

You can expect to make a couple hundred dollars off of a good arcade machine. One of the guys in a Facebook vending group that I follow, makes almost $1000 a month off of his golden egg claw machine. It can be a couple thousand dollars for even a cheap arcade machine, but people love to play them so you should be able to make your money back fairly quick.

ATM Machines

Yes, believe it or not, ATM’s are a type of vending machine. Have you ever wondered why you have to pay a $2.50 fee just to pull out money from the ATM? That fee is how the vendor makes money. Unlike your normal vending machines, ATM machines don’t give out products like toys or snacks. The product is money and convenience.

Although you still usually have to pay a certain percentage of your fee to whatever company you use to process the payments, you can still make a killing with an ATM machine. Up here in Wisconsin, there is an ATM in every single bar, and considering most of the bars don’t accept card, people have no choice but to hit the ATM if they want to drink. You can easily make upwards of $1000 if your ATM is in a high traffic area where people are constantly needing cash. Keep in mind, you will have to have a lot of money to refill the machine so that it doesn’t run out.

How Do I Find Locations?

There are many different ways that vendors go about securing locations for their machines.

Walk-Ins

Nothing beats face to face interaction. All you have to do is go into a business that you think will be a good fit and ask them if they are interested in letting you place your machine. Usually vendors will offer 10-20% of their net profits to the location as payment for permission to have their machine there. The worst they can say is no. Keep asking different businesses until you secure a yes.

Telemarketing

If you don’t feel confident physically going into a location, you can try calling them or reaching out to them via email or social media. This can be a good way to ask a lot of businesses without having to spend your whole day walking around. Make sure that you are communicating with the owner, or someone who is in charge, and offer up reasons why it would benefit them to have your machine there.

Networking

Once you have a couple locations, you can try to find leads for new locations from the owners that you already have machines with. Business owners tend to know other business owners and this can be a great way to find places that will want a machine. You can also use the machines that you have already placed, as proof that your machines are a good idea when pitching to new locations.

Use a Locator

If you are 100% against going in and talking to people, you can hire a locator to find you locations. Basically, you hire them, they make the phone calls to locations in your area, and send you a list of locations that said yes to you placing a machine. This is as easy as it gets, but keep in mind that it can be fairly expensive for someone who is just starting out to hire a locator. Walking in and asking is free!

Thanks for Reading!

Like spelled out with tiles

It is as easy as that. Get your licenses, buy machines, find locations, and collect. Vending machine businesses are awesome, and I hope that you take a look at whether or not it would be right for you. It could be full time for you or it could be a way to make a little extra money on the side,

I hope you have enjoyed this post, and that you have a good understanding of how the world of vending works. Feel free to leave a like, comment, or subscribe for more content. Thanks for reading and good luck!

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