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A vending machine is a selling machine that makes money whether you’re there or not…right? All is well and good – until it isn’t. I had a vending machine of my own, which did OK but I ultimately deemed wasn’t worth my time or input. So, I sold it…for a profit! Doing so with this one machine got me thinking, there’s another way you can be making money with vending machines. A way that isn’t often discussed in vending or small business circles.
Check out Vending Machines on Amazon (clickable)Snack Machines on Amazon
Everybody is looking for the easy way – if you came here from a google search, you’re probably seeking the same. Vending Machines are sold as the classic example of ‘passive income’. The passive income school of thought isn’t really one I subscribe to(and you shouldn’t either).
But don’t let the lack of passivity throw you off the opportunity to spin some money up into more. Everybody should be, first and foremost an opportunist and remember, the opportunity is in the difficulty.
One of the key ways to make large amounts of money is by spotting undervalued ‘assets’ and getting them to perform at their maximum level, then on-selling. Normally I’d call an asset something that produces resources(monetary or otherwise) but in this instance its something that can make money for YOU.
This could be a neglected business, a run-down vehicle, a rusty bike, an old chandelier or(for the sake of this post) a Vending Machine.
This is how a lot of generational wealth families made their start, by flipping assets(usually businesses). Many continue to acquire family assets and grow their empire, whether to flip them, or hold them as operating businesses. Bit of a tangent, I know, but that’s what Dynastus is all about – generational wealth.
So many options, but what works best?
Tweaking Vending Machines
So what’s the secret here? If you manage to find a single vending machine, that is currently sited you’ll be able to give is a bit of extra attention and tweak it to perform optimally. Does your site prefer Coke, or Pepsi? What snacks do they prefer? What are the best crisps to put in, ripple or flat, and what flavors work best?
By testing out different combinations, and taking note of what’s selling the fastest, you’ll be able to put items in that will sell faster, and therefore produce higher revenue. Tweaking is the fastest way to multiply your input when making money with vending machines.
This is the core of a standard vending machine business. But you’re adding value to the baseline asset by performing these tweaks as well, because you’re growing it’s earning capacity.
What We did:
So using the machine my dad and I had as an example; we purchased it for $2000, sited, at a small factory with office one neighborhood over. Over the course of 4 months(along with 4 months of profit-taking) we managed to take the machine from $50/month to $100/month in profit. Here’s how we did it.
It had 2 drink slots with coke, so we swapped one for L&P, a popular lemony drink in my country. We swapped out the cracker and cheese snacks(yuck) for another chocolate bar and added a low and high-end option for chips. We added a premium chocolate bar(Whitaker’s Peanut Slab), and took out the low-cost gross chocolate.
Every time we visited the site, I gave one or two chocolate bars out to whoever was around and asked what they’d like in the machine. This gave them a taste for what was in the machine and converted them into repeat customers.
We added healthy(er) options in the form of baked crisps and yogurt bar options. But ultimately pulled this as the returns just weren’t there.
We made the drinks a little cheaper, as well as the chips, which boosted sales frequency. (This was my dad’s suggestion)
Once we had it where we wanted it. We let it sit for a month, just running down our stock levels and seeing how the machine performed. We had actually around doubled the income from the machine.
So we then decided to sell it for $2600. After a fee of $205 from the listing site, we had a capital profit of $395. This was on top of a profit of around $350 giving us a return of $740 on our original $2000 investment. Not too bad. This worked out to be around $60 an hour.
The Vending Machine We Sold
How You Can Be Making Money With Vending Machines:
There are a few ways you can be making money with vending machines using alternative to this method that come to mind. Which one/s work for you is going to depend on your skill set and goals.
Vending makes a great family business(yes, even for generational wealth) as there is scalability and with proper systems, time can be freed up to work on other projects or spend time with family.
Buy Your First Machine on Amazon (clickable)Mophorn Gumball Candy Vending Machine
Gumball and candy machines offer a low-cost entry to the vending business. If your capital is restricted, I highly suggest starting here. For usually under $100 you can have a new gumball machine and a pack of candy.
These machines are fully adjustable and typically take a quarter in exchange for a fixed quantity of candy.
Then the only problem is siting the machine. Hair salons, thrift shops, convenience stores, restaurants and just about everywhere else can oftentimes see the value in a machine such as this on site.
Door knocking and having business cards is a must. You’re going to get a lot of nos before you get a yes. But when you do get the one ‘yes’, you’ll have social proof(and leverage) and motivation to keep going.
Be sure you offer a unique pitch and offer value to people kind enough to let you put a machine in their store. 10% of sales is typical, but other times you can come up with another unique offer.
For example, you can make a community Facebook page, build a following then offer free monthly advertisements for your sites. More profit for you and more value for your customers.
Once you have a few machines sited, you have built a stand-alone revenue stream, which you can then sell for a profit as an entire run.
A performing candy machine run can sell for 3-4x your investment. There are no shortages of buyers for vending runs as there are plenty of people looking to be making money with vending machines out there.
Flipping Sited Vending Machines
On an earnings basis, unless they are in a very high traffic site, a single vending machine is never going to be worth it. Even if it is close, you’ll be repairing, cleaning, updating firmware and visiting it one in an isolated instance, not doing a full round like an efficient vending business should. I should know, this is what I had. A single, sited vending machine.
Running these as a micro business can be good to gain some experience in what’s required, or can help bolster your coffers for a time, especially when starting out your financial journey. But if you’re aim is to be making money with vending machines, running one isn’t going to cut it.
You’ll need to make more frequent trips to keep your snack stock fresh, I made the mistake of buying way too many packs of crisps, which eventually expired(and I fed to the chickens). If you live in a country/state that requires you have a license, you’ll need to worry about that too.
This isn’t to say you won’t be making money with vending machines, but the profit will be minimal and it really depends on you as an individual whether the income is worth it on not.
By tweaking and reselling these machines you’ll be able to spin your money up a lot faster.
Fixing Up Run Down Machines
If you have mechanical/electrical skills or a knack for problem-solving, then flipping vending machines can be very profitable.
Often times, with some painting, cleaning and maybe a firmware update to a note reader, you can flip a machine at a profit. Be wary of chiller units, oftentimes old machines will require a re-gassing. This shouldn’t cost too much(especially if you’re doing it yourself), but it will be a lot more expensive than some spray paint and cleaning.
It can be tough to do a full rundown on a machine, so have a little margin of error (I like 20%) in your calculations to work out your profit when making money with vending machines.
Grouping Vending Machines
If your area has the market for it, then buying multiple vending machines or businesses, rolling them into one and selling can prove to be the best way to be consistently making money with vending machines.
Another approach can be buying multiple vending machines/businesses, then selling clusters that are close together off in bundles. This can be a fairly simple path to making money with vending machines, provided there are enough single machines on the market.
If you have the time for it, you should be tweaking these machines too to maximize your returns both in profit and resell value.
You will need very good record-keeping for each machine or each run. This will help you immensely as most any buyer will want accurate financials(as you probably do when buying).
Breaking up Vending Businesses
The opposite of the above, your market may be better suited to selling individual machines to folks. If you can find a fairly valued(or undervalued) vending business you can then tweak the machines and sell the machines on an individual basis.
Depending on your business environment, and starting capital, this can be the fastest path to making money with vending machines. You’ll need to leverage your intellectual capital to maximize your returns if this is your approach.
Once you’ve got them performing better, you can sell them individually at a profit. In the world of business, low-end and lower-cost assets can be worth a punt to less knowledgeable individuals. This means higher multiples as well, as they’re isolated individual assets.
If you’re selling a bigger business, you’ll be targeting more experienced people. There’s an odd spot in the middle where you’ll struggle to sell. Where exactly, is localized.
If you have a knack for selling, a good network or the gift of the gab, siting machines will prove to be very profitable. In fact, this will be the most profitable way when making money with vending machines.
You can site machines you buy or simply contract your services out. If you go the contracting route, you won’t even need any start-up capital.
If you can fix machines up as well, then you can turn this into a real money-spinner. Buying machines at a quarter value, repairing them to full value. Then the added profit of siting. Then adding the tweaking process on top of that. You could multiply your money 6 times in a matter of months.
If grouping works in your area too, then you can sell ready-made businesses to people for an even larger multiple. This can result in crazy multiplication of your money.
Don’t get high on your own supply!
What to look for when buying?(getting the best value)
Condition: Making money with vending machines with the above method is going to work best if the machines don’t break down while you own them. If the radiators are full of dust, the coin mechs are clunky or the note readers are filthy, this is a sign of a neglected machine.
If you have a skill set for repair, this can spell opportunity too. I currently have a machine that I’m attempting to fix up with my father that was in a heck of a state when we purchased it for $900. With about $200 of parts, paint, and programming, we aim to sell it post-repair for $3000 however.
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Earnings: Ideally you want a good sales record from the former owner. Keeping track of this can be tough, but they should be able to give you a rough idea at the very least. Whether you believe them is a different story. You can usually access sales records(per slot and in total $ amount) in the machines interface.
Products: You want to find products with high margins. Cans of soda typically have high margins, but so do most vending machine products. The issue with soda is that it needs to be cold, bringing in more maintenance costs to your machine, and with chocolate bars…they melt. Climate will play a large role here. Good luck selling cold drinks in Alaska!
Season: If possible, try to buy the machine in winter(when sales are lowest on drinks) making an argument on the return when negotiating price. Drink sales are highest in summer, while snack sales tend to be higher in winter. If you live in a hot location, chocolates may melt in the heat too. Cold drinks can often be the key to making money with vending machines, particularly if you live in a hot climate.
Age: How old is the machine you’re buying? If it’s particularly old, then you may have difficulty acquiring parts. If the machine isn’t in use presently, it may not take some newer notes/coins. This means you’ll have to update the firmware and/or coin tubes. Old chiller units often will need re-gassing. Chiller compressors can also get to a stage where they’ll need replacement. Repairs due to age will severely impact you making money with vending machines.
Parts Availability: How difficult is it to get parts for the machine. If it needs repair now, or later, this will be a huge factor. Parts being available readily will also reduce downtime. Licensed suppliers and eBay will be your best friends here.
Documentation: How available are the manuals. Are you able to garner support from a manufacturer if you should ever need it? A quick google search will usually answer this question pretty quickly. A lot of manuals are available online
Localized Demographics & Traffic: Is the site of your machine going to get sufficient traffic for it’s size and contents? If it’s in a workplace, can you put in lunch alternatives(like tuna and cracker or rice in a bag). Is it going to need frequent visits?
Don’t Get High On Your Own Supply: Don’t be Like Tony Montana and consume your own cok..uhh chocolate. This can be a problem if you have a sweet tooth. Honestly, I had to curb this and store some of the supplies outside of the house as I tend to get a little ‘liberal’ (and I’m a conservative guy!) with my treat allowances if they’re in the house.
Totally me with chocolate in the house.
Making Money with vending machines is never ‘easy’ though they aren’t awfully difficult either. Whether you’re running a proper vending business or tweaking and flipping machines. If you’re looking to spin up your limited capital faster, then flipping machines(or anything) is going to be your best bet.
If you’re looking to build a serious business, then I highly recommend Antoine Cameron’s Book: How to Start a Vending Business. He breaks everything right down from start to finish, better than I can in this short post.
Vending machines can serve as an entry-level income source, however, or a great introduction to asset flipping – while producing some income along the way. They can even be great businesses for kids, with a bit of parental supervision, of course.
Even if you decide to keep them, buying under-performing assets is the key to any investment strategy. If you do wind up selling them, the money you generate doing so can be put into further investments to grow your family financial capital. These could be new business ideas, stocks, bonds, property or any other investment strategy.
The skills you learn along the way when working with vending machines will prove invaluable moving forward in your financial goals as well.
So are you making money with vending machines now? Any comments or requests? Let me know in the comments section below, I’d love to hear from you.
Thanks for reading. Yours,