Starting a vending machine business can be very profitable. With proper planning, execution, and hard work, you can achieve great success. Here are some of the key things you need to know to run a successful vending machine business:
Decide Which Type of Vending Machines To Manage
First, you must select the type of vending machine apps you want to manage. Vending machines sell sodas and water, for example. Grocery vending machines sell healthy snacks such as candy, potato chips, and nut and fruit bars. MFPs offer a variety of products.
There are also specialized machines, such as machines that only sell coffee and tea, and machines that only sell frozen food. You can also manage the types of vending machines that sell children’s toys, such as vending machines outside supermarkets and department stores.
Research what types of goods are most profitable in your area and decide what types of vending machines to offer.
Choose the Name for Your Vending Machine Business
The next step to starting a vending machine business is to choose your business’ name.
This is a very important decision because your company name is your brand and will last for the life of your company. Ideally, choose a meaningful and memorable name. Here are some tips when choosing a name for your ATM business.
- Make sure the name is available. Check your desired name against trademark databases and a list of state-registered business names to see if it’s available. Also check if a suitable domain name is available.
- Keep it simple Usually. the best names are those that are easy to remember, easy to pronounce, and easy to spell.
- Think marketing. Think of a name that reflects the desired brand and focus of your slot machine business.
Develop Your Vending Machine Business Plan
One of the most important steps in starting an ATM business is creating a business plan. The process of creating a plan ensures a thorough understanding of the market and business strategy. The plan also includes a roadmap for providing funding sources to follow if needed to fund your business.
Your business plan should include the following sections:
- Overview — This section should summarize your overall business plan so that the reader can quickly understand the important details of your gaming business.
- Business Overview — This section provides readers with the history of the gaming business and what kind of gaming business we operate. For example, are you a snack and drink vending machine manufacturer, or are you a specialist vending machine manufacturer?
- Industry Analysis — Documents key information about the vending machine industry. Conduct market research to document the size of the industry and the trends affecting it.
- Customer Analysis — This section documents who your ideal or target customer is and what their demographics are. For example, how old are you? Do you live or work in a specific area? What do you keep in mind when shopping at vending machines?
- Competitive Analysis — Here you document the main direct and indirect competitors you face and how you build your competitive advantage.
- Marketing Plan — Your marketing plan should consider the 4Ps of product, price, promotion and location.
- Product: Determine and document what products you will offer
- Prices: Document the prices of your products
- Place: Where will your business be located and how will that location help you increase sales?
- Promotions: What promotional methods will you use to attract customers to your vending machine business? For example, you might consider vending machine wraps to draw in customers.
7. Operational Plan — This is where you establish the key processes required to carry out day-to-day operations. Also determine staffing requirements. Finally, this section of the plan creates a projected growth timeline with the milestones you want to achieve over the next few years.
8. Management Team — In this section, learn the background of your company’s management team.
9. Financial Planning — Ultimately, financial planning specifically answers the following questions:
- What startup costs will you incur?
- How will your vending machine business make money?
- What are your projected sales and expenses for the next five years?
- Do you need to raise funding to launch your business?
Choose the Legal Structure for Your Vending Machine Business
Next, you must choose a legal form for your vending business and register with the Secretary of State in each state where you operate, along with your company name.
Below are the five most common legal structures:
Sole Proprietorship
A sole proprietorship is a business entity in which the owner of the vending machine store and the company are the same legal entity. A sole proprietorship owner is responsible for all liabilities and obligations of the business. There are no procedures required to start a sole proprietorship, and it is easy to set up and operate. The biggest advantage of a sole proprietorship is that it is easy and inexpensive to set up. The main drawback is that the owner is responsible for all the liabilities and obligations of the company.
Partnerships
A partnership is a popular legal form for small businesses. A contract between two or more persons who wish to jointly establish a vending machine business. Partners share the company’s profits and losses.
The advantage of a partnership is that it is easy to set up and the partners share in the company’s profits and losses. The disadvantage of a partnership is that the partners are jointly and severally liable for the company’s debts, making it difficult to resolve disagreements between the partners.
Limited Liability Company (LLC)
A limited liability company or LLC is a type of business entity that gives limited liability to its owners. This means that LLC owners are not personally responsible for the company’s debts and liabilities. The benefits of an LLC for machine companies include flexibility of administration, pass-through taxation (avoidance of double taxation as discussed below), and limitation of personal liability. Disadvantages of LLCs include not being available in some states and self-employment taxes.
C Corporation
C Corporation is an entity separate from its owner. It has its own taxpayer number and can have shareholders. The main advantage of a C Corporation for a slot machine company is that it provides limited liability for its owners. This means that the owner is not personally responsible for the company’s debts and debts. The downside is that C corporations are subject to double taxation. This means that companies pay taxes on profits and shareholders also pay taxes on dividends.
S Corporation
An S corporation is a type of corporation that provides limited liability protection to its owners and allows them to include business income in their personal income tax returns, thereby avoiding double taxation. S corporations are subject to various limitations, including, but not limited to, the number of shareholders they can hold.
When you register your vending machine business, the state will send you an official “decree”. You will need this when setting up your bank account (see below). We recommend that you consult an attorney to find out which legal form is best for your company.
Secure Startup Funding for Your Vending Machine Business (If Needed)
While developing your vending machine business plan, you may have come to the conclusion that you need to raise capital to start your business.
If so, personal savings, family and friends, credit card loans, bank loans, crowdfunding, and angel investors will be the top funding sources for vending machine businesses to consider. Angel investors are individuals who provide funding to early stage companies. Angel investors typically invest in vending machine companies that they believe have high growth potential.
Register Your Vending Machine Business With the IRS
Next, you need to register your business with the Internal Revenue Service (IRS). This will give you an Employer Identification Number (EIN) from the IRS.
Most banks require him to have an EIN to open an account. Plus, he needs an EIN to hire an employee because that’s how the IRS tracks payroll tax payments.
For a sole proprietor with no employees, he usually does not need an EIN. Instead, use your social security number (instead of EIN) as your tax identification number.
Open a Business Bank Account
It is important to set up a bank account in the machine company’s name. The process is very simple and involves the following steps:
- Identify and contact the bank you want to use
- Gather and present the necessary documents (usually company articles of incorporation, driver’s license or passport, and proof of address).
- Complete the bank application form and provide all relevant information.
- Meet with bankers to discuss business needs and build relationships.
Get a Business Credit Card
You should get a business credit card for your vending machine business to separate your personal expenses from your business expenses. You can apply for a business credit card from your bank or credit card company.
When you apply for a business credit card, you’ll need to provide information about your business. This includes your company name, company address, and the type of business you operate. You will also be required to provide information about yourself such as your name, social security number and date of birth.
Once your corporate credit card is approved, you can use it to make business purchases. You can also use it to build your credit history. This can be very important for securing loans in the future and maintaining business credit lines.
Get the Required Business Licenses and Permits
Each state, county, and city has different business license and permit requirements.
Nearly every state, county, and city has licensing requirements such as:
- General Business License — You can obtain a business license by registering your business with the state government. The process for doing this varies by state, but you can usually find the information you need on her website for the state.
- Marketing License — To obtain a marketing license, you must submit an application to your local authority. Again, the process for doing this varies by state, but you can usually find the information you need on her website for the state.
Depending on where you want to locate your vending machines, you will have to obtain the necessary state, county and/or city licenses.
Get Business Insurance for Your Vending Machine Busiuness
Business insurance policies that you should consider for your vending machine business include:
- Property Insurance — This type of insurance protects company property, such as vending machines. It can also help compensate for damage caused to your property.
- Liability Insurance — This type of insurance protects your business from potential lawsuits. For example, if you use a vending machine and someone gets hurt, you could be sued. Liability insurance can protect you from these costs.
- Product Liability Insurance — This type of insurance protects you from possible lawsuits if someone becomes ill or injured after consuming your product. It helps cover costs associated with defending yourself in court and compensating victims.
- Business Interruption Insurance — This type of insurance helps cover the cost of lost income if your business is interrupted for any reason. For example, if a storm damages a vending machine and renders it unusable for a period of time, this insurance can help recover lost profits.
Find an insurance agent, tell them about your business and its needs, and they will recommend policies that fit those needs.
Determine Where To Lease or Buy Vending Machines
Vending machine leasing is often more expensive than buying, but it offers several benefits. When leasing a machine, the leasing company is usually responsible for restocking and maintaining the machine. This saves a lot of time and effort.
However, there are some things to keep in mind when purchasing your own machine. First, make sure you are buying a reliable machine from a reputable supplier. Second, try to purchase machines that accept both cash and credit cards to reach the widest possible audience.
Whichever method you choose, be sure to research the company and the different machine models before buying.
Find Locations for Your Vending Machines
Vending machines aren’t very useful unless they’re placed in a high-traffic area. The best places to put the machines are in areas where people already gather, such as office buildings, shopping malls, and laundromats. You should contact the businesses or property owners at these locations and negotiate a contract that allows you to install the machine on their premises.
Once you’ve secured a few spots, you can start installing your vending machines.
Determine How To Stock Your Vending Machines
You also need to decide how you will stock your machines. You can store it yourself or ask a company to store it for you. If you lease your vending machines from another company, you may already be able to auto-refill your vending machines as part of your contract.
If you only have a few vending machines in a small area, you may be able to accomplish this by stocking your own vending machines. However, if you have a large number of machines spread over a larger area, you may want to hire another company to do the work. There are several companies that specialize in vending machine inventory management and will usually take care of all the paperwork and permits for you.
Purchase and Setup the Software Needed to Run Your Vending Machine Business
Vending machine businesses need software that helps them manage inventory, sales, and customer records. The software helps you track sales, monitor inventory levels, and generate reports on your customers’ buying habits. Common vending machine software options include VendSoft, Supply Wizards, and Parlevel.
Open for Business
Now you are ready to open your vending machine business. If you followed the steps above, you should be in an excellent position to run a successful business. Below are answers to frequently asked questions that you may find helpful.
