Vending machines have certain advantages that make getting into the vending machine business attractive, particularly to beginning entrepreneurs with limited capital. However, there's also a lot of self-interested sales information – otherwise known as hokum – about vending machine profitability and what it takes to succeed. While there are many pros to owning a vending machine business, there is a downside as well.
Pro: Low Start-up Costs
Starting a business often requires a large sum of money to cover the initial costs. But a vending machine business can be up and running fairly quickly with just a little cash. In fact, you probably can get started for as little as a few hundred dollars, which would cover buying a single used machine. It's a good way to find out whether this business will work for you without investing a lot of money or quitting your day job.
Pro: Starting Small Reduces Risk
Starting your business on a small scale also reduces your financial risk. By starting with a single machine you can get an idea of how much money you might actually be able to make in the business. You can learn the ins and outs of running a vending business, like frequency of stocking, placements and marketing. If you find that the business doesn't work for you, you haven't lost a huge investment.
Pro: Flexibility as the Boss
When you run your own vending machine company, you are the boss. You can set your own hours and decide on the frequency with which you service and stock your machines. You can select stores for your machines to be placed and set up agreements with the site owners. There is also great flexibility in terms of time, since your machine is working for you by selling your product without you needing to be physically present.
Pro: Control of Your Business's Growth
The success of your vending business may depend on the types of products you offer, but again, the choice is yours. Based on market research and trends in the industry, you can choose options that promise to be the most profitable for you. Most operators recommend vending products that cost only about a third of what you can sell them for and that generate as close to a $1 profit per transaction as possible.
Con: Profitability Depends on Scale
Sticking with the starting-small approach and a single machine, you may make as little as $5 to $10 per week, which means you're not going to get anywhere anytime soon if your growth strategy is simply to reinvest in the business. If you make $25 a month, it will take you a little under three years to accumulate sufficient capital from profits to buy your second used machine. While companies that sell vending machines talk about your ability to make lots of money easily, when you're beginning, you shouldn't expect quick profits.
Con: Not a Hands-off Venture
The work of operating your business does not end just because you set up your machine and stocked it with product. In order to achieve continued success, you may have to move machines from one location to another until you find a spot that works economically. You may also have to adjust product offerings. Once, you've discovered a formula that works, you may be ready to expand, and that means more hours and footwork.
Con: Competition for Prime Locations
Another thing that can affect your profits, sometimes dramatically, is the competition for a location. Areas with higher percentages of blue-collar workers are best because statistically, blue-collar workers buy twice as many vending machine products. Also, you don't want to be in an area that's already flooded with vending machines, and you don't want to be the owner of a vending machine parked in a location where customers are scarce.
Con: Added Expenses to Consider
A dream location might also be desired by your competition, so getting a good location might require paying an incentive to the site's owners. At any location, you'll need to pay for the space you occupy and electricity your machine uses. Typically, this is an agreed upon percentage of your earnings.
Con: Long Hours
You may have gained in work flexibility by owning your own business, but you probably will end up working longer and harder than with a traditional job. The more machines you own, the more time you will need to put into stocking and servicing them. To be successful requires real commitment, long hours and consistent work habits.
Con: Outside Influences on Decision-making
Another thing to think about when considering a vending machine business is the growing trend against sweet snacks, which traditionally have been the mainstay of vending machine businesses. Increasingly, sales of sweet snacks and sodas are being regulated, and sellers are required to pay special taxes on such sales.
