Soda Vending Machine

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One may think that all types of vending machines can easily be located just as anywhere the machine owner pleases. This is ultimately not true. Some vending machines are remarkably working well compared to others even if they are located in one spot. Other vending machines are bringing more profits at unexpected instances while others are just not working well the way the owners expect them to be. Different machines perform in variations even if they are placed in the same locations. Snack vending machines are most of the time complicated probably because most of the items being sold in machines of this type get hung and stuck up. Snack machines would usually need repair and one who wants to get into vending machine business should think carefully is he/she really wants to be in the snack vending machine business.

On the contrary, vending machines that sell sodas, water, juices, flavored water, and even energy drinks are really a hit anywhere a vending machine owner places them. Because people nowadays are always on the go and are too busy to go to the cafeteria just to buy refreshments, soda machines will definitely be a click because thirst-quenchers are just accessible. Sodas are inexpensive source of energy and people will find taking sodas often is not at all unsafe.

In addition, soda machines come in two types: one that is placed indoors of the establishments and the other one is the type that is designed for outdoors. Either way, if one intends to get into soda machine business, it is still but best to seek a locator’s guidance as to where to properly place your machine. Or better yet inform the locator ahead where an owner intends to have his soda machine located, whether it is indoors or outdoors. Most of the time, when an indoor designed soda machine is placed outside, the owner is likely to suffer losses. For sure, you would not like this to happen.

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Proper handling of equipment damage incidents starts at the time of placement. Accidents, vandalism and theft will happen, so I discuss these issues during the sales process and negotiate terms for dealing with them. You need to be comfortable with the placement terms. Generally, our company carries most of the liability – unless malice is involved. We do not tolerate theft or vandalism.

We actually have had forklifts crash into our machines on 2 occasions. One instance was a driver mistake; he bumped the machine and bent the door. It was obviously an accident, and we repaired the machine at our expense.

The second incident was radically different: An employee lost $0.65 in the soda machine, climbed on the forklift, skewered the machine and completely destroyed the piece of equipment. This was done in plain view of the other employees. We demanded that the account replace the machine and terminate the employee. They were one step ahead of us, had already terminated the employee, garnished what wages were due him, and had contacted their attorney to sue for malice. (They won the suit and garnished his wages for the cost of the machine.)

Simple refund policyAnother much more common scenario involves an employee losing money and wanting reimbursement. We empower our route people to handle this situation themselves; they simply log the refund and add it to their paperwork. We use this policy because we found that it is better to keep the vending account management uninvolved – don’t give them reasons to replace you.

Eventually, you will have an employee who always loses a dollar, every visit, and upon interrogation, cannot really justify why he lost money. I call this “working the route driver.” When we realize an employee is working a driver, we contact the management with our concern, and set up refunds through an account management program. This does one of two things: (1) It stops the problem immediately (because the employee does not want to be caught stealing), or (2) it alerts us to an equipment problem. Nine out of ten times, the first option is what occurs. We always discuss this possibility during the sales process, precisely because it is so common.

And then there’s vandalismEmployees will bump, grind, beat and damage your vending equipment. Product hangs, or, invariably, the machine will malfunction just as that employee (who is starving to death) has deposited his last 50 cents. Take these actions in stride: they happen; it is a part of the industry. Offer a refund policy that allays the employees’ fears.

But what if an employee breaks the glass or does significant damage? I look to malice for responsibility. If an employee goes to his tool box and grabs a hammer to break the glass, the account is responsible. (Actually, the employee is responsible and we have had several companies garnish the employee’s wages to pay for the repair.) Because most companies don’t want people with this kind of behavior, I present the situation by saying, “If they are doing this to our equipment, what are they doing to your equipment or, worse yet, your customers?” Writing on machines, leaving nasty notes and other forms of vandalism are handled in a similar way; keep it professional and impersonal. Give the account solid business reasons to support your position.

Disasters and other lossesWhat about catastrophic loss of equipment, such as if the building burns down and destroys my equipment? We also cover possibilities like this during the sales process. Catastrophic losses are usually covered by the account’s insurance, added into their loss. Our company has had several incidents where the account location has paid for equipment due to catastrophic loss.

A word of advice: When placing an account, make sure you have some sort of agreement with the location about your liability and their liability. It is best to have this agreement in writing, prepared by a lawyer, to protect yourself and your investment. But this process often raises a red flag and can cost you an account. I usually discuss the issue during the sales process, and send them the agreed-upon terms after equipment is installed. After installation, the agreement is usually just filed in the vending file and forgotten. We rarely need to refer to the agreement after the initial sales process; when we do, we are usually losing or removing the account anyway.

Preparing for incidents early, discussing the possibilities during the sales process, and coming to terms beforehand can save you a great deal of aggravation.

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In 2008, Americans bought more than $60 billion worth of vending products. No matter how you look at it, that’s a lot of snacks and drinks.

So where is the best place to purchase the products for your vending business? Before we examine that issue, make sure the products in the machine are what your customer wants. A simple survey letter on the front of each machine asking your customers what items they would like to see in the machine really helps a lot. Leave the surveys on the machine a few days and see what happens. When I’ve done this in the past, I’d usually get requests for beer and wine, but also helpful suggestions. There are a lot of regional brands that people like and the larger vending companies don’t have time to stock. Be different! Be unique! Learn from your customers!

Keep in mind that your existing accounts are the best source of new customers. This survey will generate goodwill for your business and lets your customers know that you care – it’s one personalized service you provide that the larger companies don’t.

Time to Go Shopping: The wholesale clubs – Sam’s, BJ’s and Costco – are generally the best places to buy snacks. They offer as few or as many snacks as you need, at reasonable prices. Check with some of your candy companies to see if they offer product rebates. And always make sure you buy the right size snacks to vend out of your machines. An easy way to find out is to pull an item out of the tray on a spiral snack machine; if the spiral comes out with the snack, the snack is too large.

The major drink manufacturers usually run sales on sodas from Memorial Day until Christmas. Scan newspapers for best prices and even clip coupons. Some of the smaller or independent grocery stores will let you buy large amounts of drinks at a great price at certain times of the year. The 1-to-2 cents you save per can is pure profit and adds to the bottom line.

For coin-operated coffee vending machines, you must buy product through a vending machine product distributor. These items are specially formulated for vending without binding up the machine with humidity. Vending-specific cups are important because they are made to dispense without jamming. Be very careful when buying a case of cups. Always keep the case standing upright so that you don’t flatten out the lip of the cup. If the lip flattens, the cup will jam and the customer will watch his coffee run down the drain.

Don’t be afraid to be different in what you stock, and make sure you charge a fair price for a quality product. These simple steps will help you keep your customers happy – which keeps ‘em coming back for more business.

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What is a good location? This question is relative, based on your company’s size and goals. A national vending concern considers a good account to have gross sales over $240,000 per year ($20,000 per month), whereas a small vendor working out of his garage might consider an account with sales of $6,000 per year ($500 per month) to be a good account. Start with your goals. What kind of vending machine business do you want? How much capital do you have? What are your operational plans? Is this a full time venture for you or a part time income?

For example, a vending machine account that generates $20,000 per month probably will have at least 6 vending machines (3 sets, snack/soda). These vending machines would need to be late model or new, an investment of at least $15,000 in equipment. To service an account of this nature, a vending machine operator would require:* $2,000 in parts for immediate repair – Customers like this expect service calls to be completed within 4 hours of the initial call.* A running daily inventory of $5,000 in vending machine product* Service 2-3 times a day* Fully insured – liability, workers compensation, etc.* Paying a commission* Driving a late model vending truck ($40,000)* Extremely professional demeanor* $62,000 in initial capital investment, plus ongoing expenses (telephone, office expense etc.), before the first dollar is generated

As you can imagine, this type of account is very rare, could require even more equipment than we discussed here, and is highly desirable.

A vending machine account that generates $500 per month can have as little as a single vending machine, which could be older and might even have been free. Servicing this account is much easier, requiring 2 route stops per month, service calls handled in a reasonable amount of time (within 5 days), could be run out of a car or pickup truck, would not be a commission account (unless you are crazy), and would have little ongoing expense. These accounts are much more plentiful and, therefore, less desirable.

Each type of account appeals to different levels of business expertise, and the rules of economies of scale do apply. Large organizations lose money in smaller accounts because of larger overhead costs. Smaller businesses can make money in smaller accounts by keeping overhead low. Where do you want to be? What is your skill level? How much capital do you have?

Now it is time for the market analysis. Once you have determined your goals, study the marketplace. Look for accounts that can generate the amount of money you desire within the framework of your investment – both time and money. Find out which operators service those types of accounts and study their operations. Analyze what you perceive to be their profitability. Are they making money in these types of accounts? Keep in mind that just having a vending machine account doesn’t mean they are profitable. Be conservative with your estimates and include all costs. Do not forget to include wages – your time is not free. If you can’t make more than your current hourly wage, do not enter the business.

So there it is, XYZ account, and your analysis determines that you can be profitable in the account. How do you get the XYZ account? ABC Vending has the account now and you have studied ABC’s operations. You have advantages over ABC and you know you can get the account. What do you do now? Go selling.

Thousands of good books have been written about successful selling, and I will not get too specific, but I will give some pointers that were successful for my vending machine operations.

* Timing is critical for two reasons:

1. Most sales occur after the 5th sales call. Be consistent and do not give up. If you have never called on XYZ, there is a certain amount of time required for the decision-maker to determine if you are “real.” How often do you personally purchase from an unknown company? Do you tend to purchase the first time? Of course not. Most people are afraid of making a bad decision and want to “get to know” the operator (or at least see that he/she has the desire to earn the account).2. The nature of the vending machine business is that machines will break down, service can get sloppy, machines get old, management changes, and a host of other situations. If you are consistent, you have to wait for one or more of these factors to open the door of opportunity for you. Every vending machine operator has lost an account due to a malfunction in his/her machine that was followed by a well-timed sales call from another company. I have personally obtained accounts while the decision-maker was in the process of reporting the loss to his current vendor. (He himself had just lost money, was sick and tired of hearing complaints, and replaced his vendor on the spot.)

* Under-promise and over-deliver. If you make a commitment, you must keep it, so don’t over-commit. Ever purchased anything where the salesperson says they can do this, that and the other thing, but the product only delivers “this”? What do you think of the salesperson and their company? On the other hand, have you ever purchased something where the salesperson says they can deliver this and that, then they deliver this and that – and include the other thing at no additional cost? How do you feel about that salesperson and his company? Under-promising and over-delivering will get referral business for you. It also strengthens your position with the decision-makers, building a win win situation for everyone.

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So you think you’d like to start a vending business. Do some soul searching and make sure you are the right type of person. Ask:· Are you an entrepreneur? This is someone who must assume all the risks of a business, but can also guarantee the benefits.· Are you self-motivated? There is no 8-to-5 in the vending business; you work until everything is done. On the other hand, there are days when the hours just fly. The really great thing about vending machines is they conform to your schedule: They can be installed just about anywhere, generate sales 24/7 and can be serviced most any time. But it’s up to you to make it happen.

Best ways to get startedThe more information you can get about vending, the better off you will be.· Contact NAMA, the National Automatic Merchandising Association, the trade association that handles issues involving the food and beverage vending industry. They have information on all aspects of the business, including education, health and safety, government affairs, NAMA-certified vending machines, publications, expos and careers. You can reach them at (312) 346-0370 or www.vending.org.· Work for a vending company. You will learn if you really like the business, and find valuable shortcuts, like installing and loading vending machines, buying product, inventory and accountability. Of course, you can learn all that on your own after starting a vending company, but it takes time.· Check with (or find) appropriate business counsel:o Accountant – How best to run the paperwork for the best return – on profits, as well as taxes. Also ask if you should set up your company as a sole proprietorship, corporation or LLC.o Attorney – To set up your corporation and advise on any legal implicationso Banker – Open new accounts solely for the business (don’t use your personal accounts)o State, county and federal governments – Any licenses, permits and other paperwork

Some people avoid all this; they just jump in, set up a couple locations, find out they like the business. . . and then have to go through all this. What a hassle. Do it right from the start and you’ll be able to focus your newfound excitement and energies on building your vending business.

A few words of wisdomBuy the right brand of vending machine – this can make or break your company. Check out the NAMA-certified vending machines and buy one of these. Call a vending company in your town and ask what brand of vending machines they use. If you have decided to buy a particular brand of machine, ask the vendor if he has heard of it or has any experience with it. There are only 5-7 brands of vending machines that I would buy. See my article: “What types of vending machines should I buy?”

Look at what Coke and Pepsi buy when you’re considering drink machines. They have more machines out than any vendors. Find the brand name and model number on the left side of the door, on a manufacturer’s plate. Make sure there is more than one company distributing the parts. If there is only one source and it goes out of business, the machine will no longer be useful to you when replacement parts aren’t available.

Watch out for “biz op” guys. These are the unscrupulous companies that try to rip you off by selling a vending franchise with substandard vending machines, bad accounts, and a franchise that is little more than name only. These companies are here today and gone tomorrow. They steal your money, bankrupt out and laugh all the way to the bank.

The people who stay in this business stay in it for life. Every day is different; you have new challenges and new ways of making money. I seldom see vendors retire, but if they do, they’re back to work in just a few weeks. Compared to running a vending business, golfing and fishing just aren’t enough.

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Be careful with placement fees and commission plans

Paying for locations in the vending machine business falls under three categories:1. Placement fees2. Commissions3. Locating services

Snack and soda vending requires a marketing and sales effort for account placement. The difference between marketing and sales is that marketing determines who your customer is, how much they are expected to buy, how they will get the product, and all other aspects of your business that induce customers to purchase your products. Sales is the act of getting the business: closing the deal, getting the money. The sales function is applied primarily to account placement, and the sales process uses the marketing function to make an offer to a potential account.

Let me illustrate the difference. Marketing for the vending machine business includes decisions about what type of vending machines to place (new, refurbished, as-is), what type of products to offer (snacks, sodas, food, brand name, off brand, etc.), what trucks to use, how to handle maintenance, who answers the telephone and what they say, if the machines accept $5 bills or credit/debit cards, how the route and sales people dress, and so on. Marketing includes every aspect of delivering product to the end user.

On the other hand, sales is the individual act of getting another person to say yes to your vending machine services. Salespeople use marketing tools. When approaching a potential account, a salesperson might include a product list, an operational procedure (if you have technical problems, we will dispatch a repair tech within 4 hours), a route schedule or other marketing tools. These tools do not generate business by themselves ‘they require a person to make the customer aware of them. Salespeople ask for business.

You can handle account sales internally, meaning you (or someone on your team) makes sales calls, or you can hire a freelance sales company, also called a “locator.”

Vending machine locators have several organizational types:· Telemarketing – Obtain leads over the telephone· Internet – Obtain leads using e-mail techniques· Straight sales – Generate accounts then resell them to vending operators· Consulting – Customize the sales function to meet your specific needs or requirements

Telemarketing and Internet locators generally pre-qualify leads and sometimes set sales appointments for you. You make the sales call and close the business. They offer levels of service related to the amount of information you want and charge accordingly. Pricing ranges from less than a dollar to several hundred dollars per lead.

Straight sales type locators have business that you are required to operate. Pricing is a function of account sales, averaging about one month of gross sales.

Consulting locators offer a more customized approach to vending machine sales. Consultants often have owned vending machine businesses, and can provide marketing assistance along with sales. Pricing is a function of both sales volume and time billed.

This is how a single scenario might look with each type of organization:1. A telemarketer would provide you an appointment with a hairdresser looking for a drink machine.2. A straight sales locator has an account across town in a factory that he/she expects to do $1,000 per month. This locator usually gets paid a commission of the gross sale for landing you a new account.3. A consulting locator meets with you to discuss your specific needs and goals, then works to help you land that type of business (in a certain geography, account size, account type, with equipment that’s new, refurbished, or as-is, etc.).

Commissions and placement fees are a marketing expense, like brochures or other printed pieces you leave with prospects and customers. Some vending machine accounts require commissions and placement fees. Both of these fees are a type of rent and are considered an expense for accounting purposes. Placement fees are a one-time fee for setting or obtaining business and the account usually has a pre-set amount budgeted. Commissions are an on-going expense, usually a percentage of sales.

I recommend against paying placement fees to vending machine accounts. If you have to pay to place your equipment, the customer doesn’t value you and won’t hesitate to replace you when the next vendor comes along with a better offer.

Commissions are a regular part of the vending machine industry, but not all accounts require them. Keep in mind that commissions result in higher pricing for the end-user customer. In the end, commissions can turn a previously profitable account unprofitable for just that reason. Many accounts prefer lower pricing and a better level of service. A commission program requires extra effort, since most accounts want sales reports and statistics. Although this might seem simple enough, it means you (or someone on your team) need to develop, format and produce these reports – on a regular basis. It is an expense category, and makes you no extra profit.

Avoid commission programs, especially in low volume accounts. Do not fall into the trap of paying commission for power bills or space requirements. Commissions programs, like placement fees, also can lead to lost accounts when competitors offer higher commissions. Considering these factors, commission rates generally run from 1 to 10% of gross sales, with rates as high as 50%.

Customers asking for commissions and placement fees are just another reason why you absolutely have to know your costs inside and out and have an airtight business plan. They can make all the difference between profit and loss.

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There is an opportunity here to learn a lot about the vending business. On the internet you can search and find information, like articles, and browse websites and find out about the business, but I mean to really get down to it and find out really, how does this thing work? How am I going to actually get a vending business up and running. It is important. You want to learn how to do it, but there is not a lot of information out there. Sure there are a lot of companies out there that want to sell you machines and stuff. You can find a machine anywhere, but what we really need to learn is how to get these machines on locations. How to make money from these machines? What kind of products that we want to put in. The kind of machines that we want to use. How to actually drive an income and build a business from vending.
Basically I have been a vending operator for over nine years. I work out of Toronto Ontario Canada. That is actually the main area where I work. I actually live in Hamilton. It is just a couple of cities away. I started this business with one single pop machine. A friend of mine from work was leaving the job, and had decided that he wanted just move on and do something else. He had a pop machine in the workplace. Basically what happened is he came up to me and said, Hey Chris, do you want to take over the responsibility of filling this machine? I said,Yeah sure. I can try it out and see what’s involved right? So at the end of the day it was a single pop machine with about six selections and we were driving city bus in a small town here in Ontario, Canada. It was set up at a transit depot, so there was bus drivers coming in and out all the time and just the workers going in and out to go to their shifts.
To make a long story short, I realized that after a few weeks of running this machine that I was selling pop and making money. I realized that when I go to the grocery store, I buy a few cases to put it in the machine. I was selling two or three cases a week. Next thing you know I am seeing,$5o, $60, $100 a week in my pocket in profit. I am like, “this is kind of interesting”. So then I thought well maybe I can go find a few more locations and set up a few more machines. For me, I was interested in doing something part time, because I had a job where I had free time in the day. I worked a lot of different split shifts, so I had free time in the day where I could actually run around and do some of this stuff. I went out into the community and I started knocking on doors, trying to figure out my way through the business.
The first thing that I did was I went to the place where my friend bought the machine to get some information about the machines and try to get myself familiar with the business before I just went out and starting knocking on doors. I did that. I got some information about the machines and what type of machines I should be promoting. I literally just went out and started knocking on doors and talking to people. To make a long story short I simply went out there and I didn’t stop. I basically kept going and going. I went from one location to another and started setting up these machines. Now I have a variety of different machines throughout my area. Mostly pop and snack machines. Some coffee and some food, and basically I have built up a business over the nine years that has been a very profitable business.
You may have found me by reading one of my articles, or maybe you went and got my free report. I have taken everything that I have learned in the business and I have put laid it on the table so that everyone can have a chance to learn how to do this. There are a lot of people in different areas of the world that have sought out my information. Some people in the U.S., some people in Europe, and all over the world, and here in Canada also. The principles that I am teaching, yes I have done it here in Canada, but you can apply this kind of stuff anywhere in the world. It is going to work wherever you live. You just have to adapt to sort of what is going on in your area. Because once you implement certain business building tactics then you will have the best chance for success in the vending business.

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The valuation of vending machine equipment is based on several factors:

1. Storage value2. Collector’s value3. Scrap value4. Parts value5. Operational value6. Market value

In trying to value machines, each of these valuations is significant.

1. Storage value: Machines in storage are generally considered liabilities, and they cost you money each month. Even if you store the machines in your garage, they’re taking space that could be used for something else (like your car), which leaves them a liability.

2. Collector’s value: If you have an extremely old vending machine, you might have a piece of equipment that is collectable. The most notable examples are rounded top soda machines. These machines were made in the 1950s, and are examples of the initial entry into the cold drink vending era. They were usually purchased by bottling companies and painted with a brand of soda (Coke, Pepsi, Crush, etc.). They were usually single-selection (one flavor) and operated with primitive coin acceptance. Snack machines are much the same; they were usually a mechanical vend process with primitive coin acceptance. To be valuable, they need to be working and in pristine condition. Few of these machines still exist; just because a machine is old does not mean it is valuable.

3. Scrap value: All old vending equipment has a scrap value, if nothing else. Scrap is the lowest value available and is calculated by weight. Because vending machines are generally made of steel, they’re heavy. The scrap value of steel fluctuates frequently, based on world demand. Scrap value is best figured by calling a local shredding facility that deals in scrap metal. Make sure to figure in the cost of transportation, as this figure can make it unprofitable to scrap machines. I personally use a local man who takes a truck and trailer load (pickup with a flatbed trailer) to the scrap yard; for his efforts, he keeps the revenue. Unless the value of steel is extremely high, we do not generate revenue from this process, but at no cost, we remove junk from our facility. We do not “junk” a machine until we have used all the available parts.

4. Parts value: Old vending equipment also has salvage value in the form of parts. The cost of replacing individual parts from vending machines can often be recouped by scrapping parts from other machines. Replacement parts can be costly and requires time to obtain. If you have a compromised machine, the parts value can far exceed the machine value. Vend motors, compressors, switches, computer boards, changers, validators, spirals, coin chutes, glass, etc., are all available if you salvage the machine. Our company has purchased machines (usually one that’s been vandalized) intending to use it strictly for parts. Repair parts are immediately available at a reduced cost. For example, snack machines have 30 to 40 selections, which means 30 to 40 vend motors and spirals. New vend motors start at $10, spirals at $5 – so one machine yields $600 worth of motors and spirals. The glass is worth $50; trays are worth $15. Nuts, bolts, specialty parts have some value. Changers and validators are worth $50 each. If you have the need, the parts value can add up quickly.

5. Operational value: Vending machines on location develop cash flow; they produce cash for your operation. The amount of cash generated depends upon the location, but if placed properly, one can expect positive cash flow from vending machines. The operational value is the amount of single net cash flow that can be generated by the vending machine in 9 months. Single net cash flow is the total revenue minus the cost of goods sold. Let’s do the math: Account A: $400 per month gross sales$50 Cost of goods sold (100% margin)Single net cash flow9 MonthsEquipment Value

$400 – $200 = $200 x 9 months = $1800 equipment value

This formula is a quick guide to equipment placement. If you can accurately forecast your sales, you can determine how much to spend on equipment. Your goal should be to violate this formula by spending less on your equipment. This will make your accounts more profitable.

6. Market value: Market value is the amount of money you will pay for a machine in the open market. Market value falls into two categories: new and used. New values for vending machines are determined by the manufacturer and sales organization. Like all value, the value of new vending machines depends on options, name brand, warranty, reliability, standardization, versatility, and so forth. Not all vending machines are created equal; some brands have features that are superior to others, and it is critical that the dealer stands behind that equipment and honors his warranties. Used equipment can be purchased several ways – through want ads, vending companies going out of business or updating equipment, and from dealers. Used values are determined by many of the same factors, but also include the seller’s motivation to move the equipment.

When choosing a vending machine dealer, remember that your dealer will become your unofficial partner in the vending machine business. A good dealer will have a solid business record (dealers that have run vending machine companies are preferred), should be honest, and have a list of satisfied (and dissatisfied) customers you can call. A quality dealer will carry several lines of new equipment and have a service and refurbishment department for used equipment. Most quality dealers offer several levels of refurbished used equipment to help you best meet your needs. They usually have some type of financing available, as well. Shop your rates and terms, because vending equipment is very difficult to finance; ask your accountant for your best finance solution. The dealer’s service staff should be available by telephone for quick suggestions on repair. They should have delivery services. Generally, a quality dealer has the ability to help you with all facets of your business and should be able to guide your decisions in an unbiased way. Of course this all comes with a cost: most quality dealers will be slightly more expensive than their competitors.

Keep in mind, though, that you don’t want to be “penny wise and pound foolish,” as the old saying goes. The added initial cost of your equipment will be overcome by the added service you will receive, and avoiding one simple mistake can generate thousands of dollars in added income. Use your dealer as a source of information and capitalize on that information.

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A vending machine route is an exciting way to start a small business and grow it to substantial income and financial independence.

First, remember that a vending machine route is a business. Like all businesses, success is not guaranteed. Before you embark down the path as a successful vending machine operator, you need to carefully consider what this business will look like and how you’ll run it.

Start by setting goals. Successful vending machine operators have a predetermined goal in mind when they start every year, month and day. Success is a plan, and plans start with goals. Goals start with vision.

Striking a visionWhat is your vision? Do you want to be rich? Earn extra income? Dominate the local vending market, the national vending market, the world vending market? Do you see yourself working part-time or full-time? Mentally create your perfect day. A word of caution: If you think that vending is an “easy” business – you just fill the machines, count your money, and presto, you’re a millionaire – think again. The vending machine route business is a great way to work hard and be well compensated, but with no hard work, there’s no compensation.

Planning your business, setting goalsOnce you have created your goals, start planning your business. What segment of the business do you want to attack? Are you going to be a soda machine supplier only; snack machine/soda machine only; full service, snack machine, soda machine, cold foods machine, coffee machine, commissary, or a unique products vender (CDs, bait, t-shirts, gifts, etc.). Each of these market segments – and there are more out there – requires planning. What equipment do you need, what type of route vehicle, how much money should you budget, which vending product suppliers will you choose (where will you get your product), how do you get your vending machines placed into locations, what financial software do you need, if any, and on and on.

Have I given you anything to think about yet? My goal is to prevent you from jumping into the business because you heard in a hotel ballroom that the streets are paved in nickels, dimes, quarters and dollar bills. The fact that you are doing research means you are on better path than the average potential millionaire.

Research is the great risk reducer in any forum. Doing this basic research means you are on your way, but there is much more to do.

In formulating your plans for a vending business, you also need to perform a basic market research analysis. This sounds complicated, but it really isn’t. Study all the vending machines that you see:· Who operates the machine/s?· Machine’s location· Pricing· Brand of vending machine· How clean is the machine?· Does it work properly?· Is it filled? If so, is it filled with anything you would purchase?· Are people using the machines? With what frequency?

These are some of the questions that will help you formulate plans. They will help you determine what kind of vending machine equipment you need to purchase, what kind of vending machine locations you need to secure, who your competition is, and what kind of pricing you need. This research will help you determine your unique vending machine business feature, what sets you apart from your competitors.

Analyze your prospectsThe next research to do is a customer analysis, and it can be done in conjunction with your initial research. Stop in to a location you think you would like to have and speak with anyone who uses the vending machines. What do they like – and what don’t they like – about their current vending machine operator? Most importantly, listen to the responses and ask follow-up questions. Get critical details: how often does he/she come, do they take requests, are they quick to respond to problems? Let them talk, and they will tell you everything you need to know to do business successfully with that site. Write down all of the responses. Can you do better?

When doing this type of research, be prepared with a sales presentation. I have done this, only to discover that I was speaking with the owner of the business. He was fed up with the vending machine operator they’d been using, and I generated a new customer on the spot.

Another word of caution: Don’t commit to a vending machine account unless you can provide better service than the current operator. Most managers/owners know other managers/owners, and one of your goals should be to generate word-of-mouth advertising. If you take on more than you can handle, or you don’t provide service at the level you committed to, you will generate bad word-of-mouth. That can quickly lead to your having a storage area full of vending machines. Do more than expected, give away a free sample every so often, stop in to talk with the manager, make sure everything is all right, handle refunds promptly, change up your product selection regularly, fulfill requests. These are the techniques employed by successful vending machine operators.

Another key to success in the vending machine route business is to have good accounting practices. Know, to the penny, where your money comes from and where it goes. Understand that many variables can affect your profitability – everything from cost shifts in your product/s to fuel prices. It’s critical to set up a proper accounting system early, one that allows you to grow. You don’t want to waste the time (and expense) of switching accounting systems at some point in the future. Talk with a good CPA and ask for suggestions on a system. There are several off the shelf software products and it’s important to select the one that best suits you and your business.

Careful planning and research are the keys to a successful vending business. Be sure to start your route off with all the benefits.

Have a nice day!

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Approaching a vending machine is generally an experience we don’t think too much about. It can take a while to decide what to purchase but after that the process should go very fast and smooth. This is something most consumers just take for granted when they want to have their need for a drink or a snack fulfilled.
Before that can happen though a great deal of work has to go into it. For those on the vendor side of things, a machine has to be put in place, products placed into it, and the machine working properly just about all of the time.
The customers have to be the focus and the priority of the business for it to be a success. What is it that people are looking for? What makes that vending machine experience a good one for them? What is going to turn them away from your machines with no chance of returning in the future?
The experience should be a very small part of the day for most customers. Not too many people think about it after it is done with. They do decide to go back another time though if it was a good experience. Getting ripped off though can be annoying and leave you with a bad taste in your mouth each time you walk by that particular vending machine. Most customers won’t make it a big deal if it happens once but more than that and they are done.
Keep every one of your vending machines well stocked. Even if it is working great it can be a disappointment to want water but all that is left is soda. It is important to realize that your vending machine business isn’t going to allow you to stock items during the busy part of the day. You will likely have to do it early in the morning, late in the evening, or even on the weekends. If you can’t commit to that then don’t get involved in this type of business.
The more tuned in to the needs of a customer that a business owner is, the better it will be. This type of business is no different so look for problems you have faced as a vending machine consumer. Use these experiences to offer better service and better options to those that come to your machines to have their needs met.
Customers love the convenience that vending machines offer them. A quick drink or a snack during the day is very important to be able to focus on the rest of the tasks that have to be done. This is a process most customers take for granted though until it doesn’t go according to plan. They don’t want to have to walk away empty handed when they anticipated making a purchase.
Both the owner and the customer are relying on each other to offer what they need when it comes to vending machines. Neither party should try to take advantage of it. You may think it is out of the ordinary to communicate with the owner of a vending machine. However, if it is in your office building and you will be using it several times a week then let them know what your needs are.

Have a nice day!

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