IRS Tax Support

9/25/08

You see them all the time - Biz Ops for vending machine routes. They all say easy money and quote big profit margins and low overhead and startup costs. If there’s one thing that can’t be stressed enough, it’s that THERE IS ALMOST NEVER A FORMULA FOR EASY MONEY! If making money were that easy, inflation would skyrocket out of control thus making the money you have worth far less, so it is somewhat self-regulating in that sense.

The vending machine business is one that is filled with the promise of profit and the horror stories of scams and hidden operating costs. The scams can include broken down machines and broken agreements for machine placement services leaving you stuck with machines and no place to vend! Don’t fall prey to the routes that cost thousands of dollars in an upfront investment. Start slow and minimize your risk by doing the initial legwork yourself. You can always crank up the pace later once you know what you are doing!

The profits come from getting your machines into the right places, servicing your business properly and choosing the right things to vend that minimize your commitment and maximize your profits.

Bolster Your Income With Bulk Candy!

Bulk candy is probably the best way to dip your toes into the waters of vending for the first time. Startup costs are relatively small and the return on investment (ROI) is pretty good, plus you get to sing that Sammy Davis Jr. song all day long!

What About Soda Machines and Other Types of Vending Machines?

I’m just laying out in this article the easiest way to gently wade into the waters of the vending business. Have you seen the live lobster vending machine game in Japan? You put around a dollar in this machine and work the claw to try and grab a live lobster out of the tank. I’m sure the animal rights groups are in a tizzy over this one!

Soda machines do make good money, but also need a lot of maintenance and restocking and thus require more attention all-around. If you have something making money for you at around a 200% ROI, why not just duplicate that over and over into a larger scale? If it gets so large that you don’t wish to deal with it, just hire someone to service your routes and take your profit off the top. At that point you are just kicking back and having money delivered to you! What could be better!?

How Much Money Can You Make?

With bulk candy and any other business, it is LOCATION! LOCATION! LOCATION! There are some locations with bulk candy you may only make about $5 a month and others that will pay upwards of $150 per month per machine. On the low end, this really doesn’t sound worth it except that if a location is that slow, you can just go by less often to restock and pick up your money.

The profit margins on candy are generally around 70% whereas gumballs will generally cost about 2 cents each and you sell them at a quarter, so do the math! (note: Many locations do not want gumballs out of a fear of having to scrape gum off their business constantly, so be sure to offer more than just gum!)

A triple vend machine (one that offers 3 different products) can be purchased as Sam’s Club or online for around $150 or even less if you buy used or in bulk. Thus, they pay for themselves rather quickly.

Restocking and Maintenance

Machines can generally go for about 2 months before restocking. You of course have to buy candy, drive to the machines, count coins and do your accounting.

You want to be as unnoticed as possible when maintaining your machines. The location should ideally not even know you are there, yet always have a stocked machine. NEVER LET THE MACHINE RUN OUT! This makes the machine a nuisance and gives the location owner a reason to have it removed. If you have a little candy left over, don’t be stingy about giving a little to the employees. They will gobble it up in a day and be back to buying from the machine very quickly and it’s great PR to have the staff on your side!

You probably would be best to transport your candy in a cooler with a few ice packs so nothing bad happens to it in a hot car.

It would also be handy to have a few of the following items for cleaning, maintenance and other requirements of your route:

* Clear Tape - you never know
* Zippered Money Bags
* Business Cards - always promote!
* Keys to the Machines - duh!
* Paper Towels
* Cleaner
* Screwdriver
* Rubber Gloves
* A Route Log - to track how much you are making from each location

Locations! Locations! Locations!

One of the best way to gain locations is to have a special charity to tout that you donate 10% of your profits to. This is a great selling point, a reason for people to want your machines in their location, a relatively small payout on your part and a wonderful thing to do in general (Don’t lie about the charity or a bolt of lightning will come down from the sky and fry the hell out of you and your machines!) It is probably best to choose a charity that is well-known, not riddled with scandals and is non-controversial. I suggest forming a relationship with a local charity, getting their blessing and making small promotional cards to insert into your machines touting this charity. The charity may even provide you with these cards if you ask.

Walk into a place of business with a pictures of your candy machines and speak with the decision maker and ask if they have an extra few square feet to spare for this candy service that will be free of charge to them and that 10% will go to such and such charity. You will do all the restocking and servicing and the machine will just be there as an added value to their staff and patrons and will require absolutely nothing on their part. Some will say no, but some will say yes. Nothing in life comes without the need for a bit of salesmanship and this is a great and low-cost way to gain these skills with little to lose.

You also want to have a few different types of candy for your locations to choose from. People are often more likely to purchase when presented with choices. Runts, Peanuts, M&M’s, Peanut M&M’s, Skittles, Reese’s Pieces and gumballs usually keep the longest. Hot tamales should only be offered if the place is well air-conditioned but they do go bad after a few months. It is usually best to have at least one sugary candy and one chocolatey candy offered in a machine. Be sure to set the machine properly in order to dispense enough not to have your customers feeling ripped off and not so much that you lose all your profits.

Candy is obviously something that appeals to a younger crowd, so seek out places that employ younger people so that you can place your machines into their break rooms which is an easier sell. If you can get front of house placement, that is even better as you will then be selling to both employees and customers, but this one can be the much tougher sell.

I never said it would be completely effortless, but vending is a very viable business and one that’s easy to break into and grow with a profit margin that is nothing to sneeze at.

Please visit my website at http://www.letsgetahead.com for more great articles like this one!

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