Seeking a retail operation that you can run at just about any location, 24 hours a day, without having to be there yourself, or hire a single employee? One that can service thousands of customers without needing time off or even having to take a bathroom break? Vending could be the business for you.
A vending business can deliver big profits.
The Canadian vending machine industry is expected to grow to approximately $716 million by 2018, according to market researcher IBISWorld.
Vending is no longer confined to drinks and snacks, or even the exchange of money. These days you can sell everything from office supplies to toiletries in a vending machine, and a whole lot more. As Mike Masse, president of food services at Compass Group Canada says, “People expect more from the vending machines today.”
And it’s just not the vending products that are diverse. What do retail stores, cinemas, factories, airports, college campuses, movie theaters, hospitals, arcades, skating rinks, supermarkets, restaurants, offices, warehouses, tourist venues and other recreation centers have in common? All of them are perfect locations for vending machines.
Vending is great for those who just want to dip their toe in the water of entrepreneurship. If you are apprehensive about giving up your full-time job to embark on business ownership, you could start a vending business on a part-time basis while retaining your employment.
The initial investment can be as little as a few thousand dollars. You can buy a few machines, place them in local outlets and maintain them in the evenings and on weekends. Maintenance is typically minimal for vending machines. Required visits to each machine range once a day to once a month (depending on the products sold). The biggest part of the job is collecting your money!
Furthermore, you can work out of your home and keep your costs to a minimum. As your customer base increases, you can invest in more machines and grow your enterprise as large as you like, eventually giving up your job to focus completely on your vending business – if that is your desire.
Some tips to follow when planning your vending business:
- Research the vending industry. Read industry publications to get a feel for the business. Look into the possibility of meeting existing vending business owners in non-competing machines/locations. It always pays to talk to someone who's already doing it.
- Prepare a simple business plan suited to the scale on which you are starting. Set out your goals as your business develops, the total cost of your investment, the working capital required, cash flow forecasts, your market position and your strategy for growing your business by adding new locations.
- Keep your administrative requirements to a minimum. This can be a part-time business run from your home. However, you will need a car or van to visit your locations.
- Choose your vending machines and the merchandise being vended with great care. Do the research to find out what types of vending machines are available and the reputations of their suppliers or manufacturers. If the machines are not manufactured to a high standard you will pay the price in maintenance time and cost, and dissatisfied hosts (retailers, offices etc.). Create a customer profile. It will be determine the product mix for the machines you buy.
- The key to success in vending is the same as in real estate – location, location, location. A vending machine pays for itself primarily through where it is placed. Find the right location and your machine will not only make money, it will be profitable for many years. The crucial thing is to get locations in high-foot-traffic areas. Also, if you’re planning to have several, place your machines in a concentrated geographic area overall. You don’t want to waste time – and gas money – traveling too far to service them.
- After you’ve thought about where you want to place your vending machines, visit the site(s) at different times over a couple of weeks to get a feel for traffic flow and customer demographics. After doing your market research, approach suitable merchants or hosts about placing your machines on their property.
- You must pay the location owner for use of their property. Some locations such as large corporations will allow your machines on-site free of charge because of the convenience to their employees, but most hosts will require a small percentage of your sales as rent.
- You should have enough mechanical ability to make basic repairs without help, or be able to understand instructions given over the phone by the supplying company. You’ll need a few fix-it tools like screwdrivers and pliers and a car or van to take you on your rounds.