Usually it’s recommended that all new business start ups have a business plan. A business plan shows that prospective owners have a clear understanding of the business they’re getting into, plus it gives something to show perspective lenders. Well, vending isn’t really this kind of business; a business plan is over thinking things when it comes to vending. Honestly, there’s not that much involved in vending. Buy machines, fill with candy, collect quarters – it really is that simple.
If vending really is that simple then why do so many people fail and end up quitting? I think the biggest contributing factor to the high failure rate in vending is that most people don’t know how much work they’ll have to do when just getting started. The early stages of building up a business is always the hardest part and vending is no exception. If you’re starting with very little money, expect to spend 2-5 years building up a route. A lot of people don’t realize that it will take this long and end up dropping out when they find there’s actual work involved, so don’t get into vending if you’re looking for an easy way to make a living. Some of the startup costs involved in vending are:
Liability Insurance
Insurance is one place you don’t want to cut corners. When you’re selling food and toys to consumers, especially children, you really need to consider liability issues. I’ve only been in vending for 3 years, but I’ve already been personally impacted by a potential liability issue. Remember the pistachio recall last year? Well, I was selling pistachios in a few machines when I finally read about it. I happened to be lucky that my product wasn’t involved in the recall, but what if I hadn’t been so lucky? For $300 a year, I sleep better knowing I’m covered.
Coin Counter
Once you get past 50 machines, you’ll need to buy a quality coin counting machine. A good one can be had for about $200. You may want to consider buying one with an adapter that be run in your car, so that you can count as you go. Some people prefer the count as you go method while other people do there counting at home. No matter how you decide to do your counting, keep in mind that you should be discreet in order to minimize your chances of getting robbed.
Machines
Vending machines are the single biggest expense you’ll face. It takes about 100 machines to make about $1,000 a month, so we can do some quick math based on these numbers. 100 brand new machines at about $200 apiece will cost $20,000. Clearly not everyone has $20,000 just sitting around waiting to be spent, this is why so most people start small and hope to build up. When you’re just starting out, you really don’t need new machines. To get a feel for the business and just get started, you can buy some cheap used ones online; this way you can get a feel for the business without risking a lot of money. If you’re going to be in the business for the long term, eventually you may want to go with new machines from all one manufacturer, but this is an unneeded expense at the beginning.
Machine Locator
Not everyone uses a locator, but if you’re looking to get your machines out as quick as possible then a locator may be a good option. Locating is very time consuming. If you have more time than money, then definitely get out there and hustle up your own locations, but if you don’t the time don’t hesitate to use a locator. Of course, you need to be careful when you work with a locator, because there are a lot of rip off artists out there. I would never pay for more than 1 or 2 locations at a time. Locators charge about $40-$60 per machine, some even offer earnings guarantees and free replacements if you get kicked out. A machine in storage makes 0 money, so using a locator can pay for itself in 4 months or less.
Candy and Product Costs
Filling up 100 machines is a significant investment. It costs about $15-$20 to fill a double head machine, so expect to pay $2,000 to fill all your empty machines. Most people won’t be doing this all at once, but this what you’ll be paying by the time it’s all said and done. Keep in mind that when you’re just starting out, your product expenses will be a lot higher than normal; this is because you’ll have a lot of underperforming locations.