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Visualize your way to SUCCESS!

Visualize Your Goals

One of the most common questions I get asked by people starting their own vending machine business is “how much money can I make?”

In all honesty, the sky is virtually the limit. Vending is one of the few markets left where an operator can start with a very small investment, generate a steady cash flow, compete with the big boys, and expand beyond anything he or she could originally imagine.

Successful vending operators can gross hundreds of millions of dollars per year, but so can other types of businesspeople. Your level of success will really depend on your drive, your business skill, your ability to generate customers, as well as other important abilities. The only limitation is where YOU draw the line.

So what’s the best way to succeed?

Think like an athlete. Visualization is one way that athletes anticipate challenges and prepare for victory, and vending is no different.

Getting a vending business off the ground is hard work. Once you lay the groundwork, the machines will start making money for you, but in these initial stages, your growing company will require everything you’ve got. Don’t expect to just waltz around, casually filling machines and become wealthy overnight.

The best way to succeed is to set specific goals. Let’s call them Super Goals. I’m not talking about goals like, “I want to be rich.”  You need to get down and dirty with the specifics. And if you think a goal like “I want to start my business with 3 machines and see where it goes” is specific enough, prepare to be surprised.

Your Super Goal should look something like this:

“This year I am going to secure 5 new locations, place 9 new machines, and manage my existing routes. My prices will be $A for chips and snacks, $B for candy and other options, and $C for bottled drinks and $C-.25 for canned drinks. I am going to service my machines 3 times a week and spend an hour and a half at each machine. I need to sell X amount from each machine to break even. If I sell out the products in my machine, I will generate Y revenue.”

Goal setting like this will maximize your profits because it is a hybrid: it’s both a goal and a plan. Really thinking through each step of your business will allow you to imagine different scenarios and problem-solve before the problem occurs. Success comes from being prepared and if you think like an athlete, you are setting yourself up for victory.

Spending Money to Make Money

How Profitable is Vending?

Vending machine businesses rake in over $22 billion dollars per year in America. According to estimates by vending industry experts, vending machines can yield up to an 80% profit margin. Not too shabby!

But how much can you really expect to make as a vendor just starting out? The answer varies quite a bit, but there are three different aspects of the vending industry that you can use to estimate your potential for success.

1. Location

A higher traffic location will yield a higher profit margin. But it’s not just about where you put a vending machine– you also have to think about what you are placing where.

For example, you wouldn’t place a soda and snack machine in the lobby of a restaurant, because people would be much less likely to buy your products when they are at the location specifically to dine at the restaurant. That may sound obvious, but there are other connections that may not be as immediately clear.

Another example: you shouldn’t place a junk food machine inside a health club– you’d get less profit there than if you placed the same machine inside an arcade. Instead, look into healthy vending machines as an option for the health club. If you match your machine and your products to your location, your revenue will be much higher.

2. The Type of Product

Bulk vending machines yield the highest profit because stocking the machines is much cheaper– items can be purchased for as low as 2 cents and sold for 50 cents.

Machines selling stamps, gift cards, or other high ticket items cost a lot more to stock, and don’t yield as high of a profit margin.

Machines that sell drink and snack items may not yield as high of a profit as bulk vending machines, but they tend to get a lot more traffic, which usually more than makes up the difference.

3. The Condition of Your Machines

The condition of your machines can vastly affect your profit margin, because costly repairs can eat away at your hard-earned revenue. Buying a used machine may seem like a great deal at the time, but if the machine requires multiple repairs and continual upkeep just to keep it functioning, you would be far better off purchasing a newer model.

Non-electrical machines, like the ones used for bulk vending, are usually the cheapest to repair and require the least maintenance. The larger electrical machines should be carefully inspected before you purchase them, especially if you are buying a used machine. If you are buying a new machine, see what your company’s warranty and maintenance policies are.

Finally, remember that spending a little for preventative maintenance could save you much larger bills further down the road, so keep your machines in good condition.

Making the right choices can help your business.

Do You Believe in Magic?

For vendors, that formula starts with the essential calculation everyone looking to start a vending machine business must make.

This calculation involves choosing a location. The easiest way to exponentially increase your success is to pick a location that will allow you access to repeat customers.

If that sounds obvious, good.

It’s a point that should be hammered home again and again, because location is the building block upon which you lay your vending success. A good location will have you rolling in dough; a bad location could have you bleeding money.

When vendors start out in the business, a frequent question is, “How much money can be made at X location?”

They want to know if they should place their vending machine at an auto-body shop, high school, truck stop, or small office. It would be great if we could assign money values to locations: a truck stop is worth Y amount a month and a high school is worth Z. Unfortunately, it’s not quite as easy as that. But it doesn’t have to be a difficult process.

Every location is different.

Two small offices with 50 employees each may yield very different profits. Factors that can affect profits include wages of employees, their tastes and preferences, and even when they have coffee breaks!

Vending locators are one way that you can find areas to place machines, although you should carefully consider whether using a locator is really the best use of your time.

With a typical locating company, you will call them up, tell them your business goals and types of machines, and they will go out into your community and search for profitable locations. The nice thing about using a locating company is that they will implement different marketing strategies and can help you establish relationships with location owners you may have overlooked.

However, you may be better off locating areas on your own.

You need to do a cost-benefit analysis and see if using a locating company will be a profitable investment for you. Many successful vendors have never used locating companies, and instead rely on business savvy and intuition to judge whether a location will be profitable.

In truth, it’s about testing the waters.

An auto-body shop with 40 employees may turn out to be three times as profitable as an apartment building with 200 tenants. Try to put yourself in the mindset of your target customer: if that customer is an auto-body shop worker, there are a couple components that make them ideal.

Auto-body workers often have long, dull breaks between flurries of activity, meaning they are likely to snack. The low prices of vending machines snacks will also appeal to them, and chances are, by having to work around the machine all day, they will be much more likely to buy. They have a constant reminder that snacks are easily available to them.

In contrast, the apartment tenants may only walk by the machine on their way to or from work. They might be hungry when they pass the machine, but would probably just wait to eat until they got back to their kitchens.

In short, selecting a vending machine location is not just about the number of customers: it’s about the preferences and tendencies of the individuals.

One way to figure out what your target customers want is to just ask them! It may sound obvious, but believe me, it’s easy to forget. If you keep in mind that each buyer is an individual and can cater to their desires and behaviors, you will ensure enormous profits. Guaranteed.

A Competitive Edge

Keep your spirits high!

Something that you should think about when starting your own vending machine business is how you will give yourself an edge over your competition. There are a couple of different ways you can establish yourself in the vending business. Showing both vending customers and location owners that you are ahead of the rest will keep the money rolling in and the customers coming back.

The key is bringing in cost-effective products.

Look at what is available for consumers in the area, and consider what you could offer them that would be different or better. For example, imagine you’re placing a vending machine at a health club. If patrons of the club have to pay $1.50 for water at the health club café, you can make a mint by charging $1.20 per bottle instead.

Secondly, consider the kind of product diversity you can offer.

Perhaps the health club café only sells a specific kind of sports drink, providing you with the perfect opportunity to step up and bring in some variety.  There is no doubt that there are customers in your location who are tired of drinking the same old brand, but buy it anyway out of convenience. With a fresh array of products, you could be their savior (and cash in!).

Finally, it is crucial that you keep your machines well-stocked and in working order.

You want your customers to trust that you will deliver consistent, quality products to them on demand. Establishing this trust will go a long way towards helping your vending machine business succeed. Provide a variety of quality products at value prices, and you’ll easily develop a fierce competitive edge.

The Three Biggest Threats Your Vending Business Will Face: Part Deuce

The Most Dangerous Threat...

Drumroll please….

The BIGGEST THREAT your vending machine company is likely to face is not from an external source. It’s YOU!

1) Out-of-Control Overexpansion

It’s crucial to control your growth. Don’t buy up an army of machines with the blind belief that you will be able to place them anywhere with ease.

Finding locations is often the most difficult part of starting your own vending machine business. The easiest way to control your growth is to ensure that you have a signed contract with a vending location before you purchase a machine.

This helps you avoid the trap of investing too much too soon, and minimizes your risk of excess inventory.

Many entrepreneurs have found success in the vending machine industry. But like any industry, it is important to properly evaluate your business plan, and create a business that works within your means.

Overextending yourself in terms of time or money is a sure way to lead to failure. I’m not saying to not be optimistic, just be smart and realistic. That’s true business savvy.

Happy Vending!

The Three Biggest Threats Your Vending Business Will Face:

A Two-Part Post

3)   Competition from Other Sellers

As every entrepreneur understands, a competitor with a lower price will undercut profits. However, if the choice is between a no-competition, no-foot traffic location and a highly sought after, high-traffic location, go with the high-traffic location. As long as you have heavy traffic, you don’t necessarily have to offer the lowest prices, particularly if you offer products your competitor doesn’t. If there is no competition for a spot, you have either uncovered a hidden gem for vending or there is no business in the area. I’m not saying these “gems” don’t exist, but they are extremely rare, so research your location wisely.

2) Broken or Vandalized Machines

Vending machines are easy targets for vandals, and coping with the aftermath of the destruction is time-consuming, costly, and often an emotional strain on vendors. You’ve spent a lot of time and effort building up your company, and with a few sprays of paint, some hooligan has seemingly destroyed what you’ve worked so hard for. The best way to ensure the safety of your machines is to think about placement. Is the location well-lit? Is it outdoors or indoors? How does the location change at night? Is there a 24/7 security system in place, close-circuit video, or some other kind of criminal deterrent in the area? Evaluating this ahead of time can help you ensure your machines stay safe and profitable.

COMING SOON… The BIGGEST THREAT to avoid!

(And it’s not what you think.)

1. Michelle Obama’s On Your Side

In case you haven’t heard, the First Lady’s pet project is battling childhood obesity through her Let’s Move campaign. Part of her campaign revolves around the HealthierUS School Challenge, an initiative that recognizes and rewards schools that consistently provide healthy food for their students.

How You Benefit:

Placing healthy vending machines in schools can help schools meet and exceed the standards set by the initiatives by giving students easy access to delicious, nutritious fare. Everyone benefits: the school can get grant money, you get rent money, and children across the US pick up healthier eating habits.

2. Vending Machine Businesses are All Cash

The past few years have been difficult financially for almost everyone, and issues like the sub-prime mortgage crisis have made it clear that for many ordinary people, financial responsibility is a tough nut to crack. What that may mean for business owners is a deluge of bad checks or late payments—a headache for everyone involved.

How You Benefit:

This one is pretty simple: because vending machine businesses usually are all cash and customers pay up-front (though some machines take credit now to aid convenience), you have a guarantee that at the end of the day, you’ll have money in your pocket for the products that you sold.

3. Vending Machine Businesses Have Consistent Customers

Vending machine businesses are part of a rare breed of businesses that (depending on location) tend to not fluctuate by a great amount depending on the season. People will always crave snacks, and until convenience goes out of style, your machines will satisfy a permanent human need: the 4 pm snack attack.

How You Benefit:

As long as you keep up-to-date on your consumer preferences and do some evaluation of your business strategy from time to time, your customers will return again and again.

4. Vending Machine Businesses Can Be Full or Part Time

Many companies have cut down on hours their employees are working, sometimes cutting shifts or days (or jobs!) in order to stay afloat. One of those employees? Looking to supplement your income with a healthy cash infusion? Starting your own vending business can be one way to do that.

How You Benefit:

This one is also a no-brainer. Who wouldn’t like a little extra cash? With a business that can grow whether you nurture it full or part time, you really set your schedule. Obviously, the more time you devote to the business, the faster it will grow, but any kind of time contribution is a step in the right direction. It’s a good way to transition out of your current job as well. As your business grows more successful, you can gradually make the change to managing it full-time.

5. Vending Machine Businesses Don’t Have to Require Massive Initial Investment

Vending machine businesses are also great because they allow you to test the waters of being a small business owner without going into debt or completely striking out on your own. Most vending machine companies will provide exactly the kind of support you need to get started, and you can make as much or as little of an investment as you want to.

How You Benefit:

Because vendors can start out on such a small scale by investing in a single machine, starting your own vending machine business doesn’t have to be a huge process. Depending on your interest level, amount you can invest, and time you have, you can tailor the business to suit your needs.

Happy Vending!

Make thousands each day!

Barely lift a finger!

Earn 100,000+ per year!

If you are reading this blog, chances are you are thinking about starting your own vending machine business. You’ve probably poked around on some websites and done a bit of research, and you have most likely come across some ads claiming things similar to the phrases above.

Don’t fall for the scams!

Though there are many reputable business people working in the vending machine industry, scams have become so pervasive that they have been given their own name: Blue Sky scams. Essentially, aggressive promoters will trick investors into purchasing machines or packages of machines at huge markups with promises of huge profits for very little work. These machine packages can be priced anywhere from $5,000 to above $80,000, and the scammers will try to get investors to believe that they will provide support either through in-person training or a special handbook full of vending secrets to help them succeed.

They also promise to help investors choose profitable locations. The investor, eager to take advantage of this too-good-to-be-true opportunity, will sign up for the program, only to realize later that no location assistance will be provided, the company charges far more than they had originally indicated, or the machines are worth only 10-20% of what the investor paid for them. The investor is then left with nothing to show for their brief business venture but a garage full of broken or unused machines and an empty bank account.

So how do you avoid the scams?

Beware of Blue Sky scams!

Simply put, do your research! Both the Federal Trade Commission and The National Fraud Information Center can provide information on known Blue Sky scamming companies. Industry publications like Automatic Merchandiser and Vending Times both produce lists of vendors and operators in the business. There are different industry associations, like NAMA, that can also provide advice on companies. It’s a huge red flag if an industry association has never heard of a company before. Finally, you can contact your local SCORE office, which is run by the Small Business Administration. SCORE is a fantastic way to get additional support when starting your own small business, and I highly recommend looking into getting some help from them.

Remember, if it sounds too good to be true, it probably is. Vending can be a fun and profitable industry to get into, but no one makes $100,000+ a year without lifting a finger.

Dump Your Boss and Successfully Make It Solo:

Start a Vending Machine Business!

It’s no secret that many of us dream of working for ourselves. Whether it’s because we’re tired of the regular 9-to-5 (or 8-to-7, as it’s become in many cases), sick of working for incompetent bosses, or frustrated with the type of work we are doing, we have all thought about what it would be like to strike out on our own.

But if so many people share this dream, why do so few take the leap of faith and pursue their own businesses?

The answer is one of the nastiest four letter words in the book.

Fear.

Fear of going broke, fear of being unable to go back to your job if your business goes bankrupt, fear of what your family will do if you can’t make ends meet– we are all consumed by a fear of failure. And in many industries, striking out on your own is incredibly difficult, and failure is a scary reality.

But imagine a situation in which you could be your own boss, but were guided through the steps of how to succeed by people who have done it before. That’s exactly the kind of situation you could be in by starting your own vending machine business. Like any business, there’s no guarantee of riches, but the kind of support that comes with starting a vending machine business with a credible company easily quadruples your chance of success. (See my post here about making sure you are picking the right vending machine company to do business with–the last thing you want is someone cutting into your profits). With a credible company, starting a vending machine business is like taking that leap of faith with a safety harness attached.

It’s a new year, and it’s time to start living your life the way you want to be living it. Forget endless commutes, mind-numbing meetings, and early mornings. Enjoy sleeping in, and happy vending!

Warning: CHOOSE WISELY.

When you are looking to start your own vending business, the most important thing is selecting the company you want to do business with. I cannot emphasize the importance of this step enough. Think of the relationship like a marriage: both of you are in it for the long haul and are really invested in making it succeed. But if you don’t thoroughly research your future partner, you might find yourself bound to someone only interested in you for your money.  There are four things you should think about when selecting a company.

1. LOCATION/PLACEMENT HELP

A company should have a well developed plan for helping you research a location to optimize your revenue. With vending machines, your location is just as important as what you are selling, and companies that fall short in this area probably do not have a developed-enough program to help you succeed.

2. WARRANTY

Check the warranty on the machines you are purchasing. A trustworthy company will be upfront about all of their policies, and should also have a showroom or some kind of system that allows you to see and test out machines before you invest in them.

3. PRODUCT SELECTION

The most critical mistake rookie vendors often make is not knowing which products to sell. Making mistakes in product selection can cripple your vending business straight off the bat, so a company that will help you understand your customer base will really enable you to succeed. Many companies don’t offer this kind of support, and that doesn’t mean that they aren’t worth looking into, but I would particularly recommend partnering with one that does. In the long run, this kind of attention to detail translates into much a larger profit margin.

4. UNIQUENESS

Look for something different. We’ve all seen the boring brown vending machines that populate airports and strip malls. Vending is a vibrant, fast-growing industry, and competition between different vending machine companies has led to improvements like attractive graphics, multiple areas for ad placement, and flashy LCD screens. You want a vending machine that will stand out from the rest, so partner with a company that has implemented these innovations. Your wallet will thank you. (You can go with the standard brown plastic, but don’t say I didn’t warn you).