How To Buy A Vending Machine Route
Although it is possible to start a vending machine business from scratch, many entrepreneurs look for existing routes or businesses for sale. The option to take over an established company is much simpler than doing everything yourself. Also, a geographic area may already be well-stocked with vending machines and service companies, so there is really no room left for another one. Competition is sometimes fierce when it comes to getting the best locations in the vending industry, but challenges such as this can be handled.
how to buy a vending machine route
One of the best reasons to purchase an established vending machine business is the immediate source of income it provides. If you start from scratch, it will take a considerable amount of time to establish a route and develop relationships that can help make a profit.
Having an existing personal or professional relationship with the current owner of the vending machine business you wish to acquire can help. Research about their business success, the routes they have and relationships with both vendors and location managers should be done well before you even consider making an offer on the company. This camaraderie also helps you know if the person is honest and trustworthy and whether they keep the vending machines in good repair.
What happens if you do not know a person who wants to sell a vending machine business? How do you find one to buy? By reading the steps outlined below, you can easily identify and locate a successful business to buy out.
An additional tip: be sure to get access to and go over the reports the vending machine software can generate for you to discover any potential performance issues related to each vending machine and its location.
Examination of the tax returns and accounting profit sheets for at least 3 to 5 years is essential to determine whether the vending business operates in the black and can therefore make you money if you buy it. If you are not experienced at owning a vending business, this paperwork can also help you understand operation costs and company structure. Other financial information is important to know: commission percentages to location owners, total revenue, profit percentages over cost and any assets, including the machines themselves, that are held by the company. Comparing the profit sheets and inventory reports with your prior information about sales at different locations should give you an honest look of the situation.
Check for any existing or repetitive complaints at the Better Business Bureau website that pertain to the vending machine business you might buy. Searching for any problems with this tool is completely free.
Purchasing a vending machine business can cost a lot of money, and should not be undertaken without due diligence of any potential legal trouble it had in the past. Contact local and state clerks to access public records that pertain to the particular company. Look for judgments, liens and any past or present litigation processes that have been filed. If you go on to purchase a vending machine company anyway, you will become liable for any legal damages determined from these court proceedings. If you want to make a profit with an honest company, starting out with a troubled one is a bad idea.
After you have completed all the previously mentioned research and due diligence, it should be easier to decide if the vending machine business in question will be a profitable venture for you or not. If you do decide to go ahead with making an offer and potentially buying out the machines and routes, you need to know how much the company is worth altogether. Paying too much can be just as much of a mistake as buying the wrong business, to begin with.
Your best bet is to hire a lawyer who specializes in business acquisition and has some knowledge or experience dealing with vending businesses in particular. A professional accountant may also help to go over paperwork and determine value. If you would rather not employ outside help and figure out everything on your own, it might be a better idea to start by purchasing a smaller business with only one or two dozen vending machines already placed at active locations.
Although many companies hand the reins over to the new owner immediately after the money is paid and paperwork is signed, it is a good idea to negotiate a transitional period with the sale. This means that the current owner would assist with all transition tasks for a period of a few weeks or even one month. This not only allows people new to the vending industry to learn the ropes from a seasoned professional but also allows even experienced vendors to learn more about the particular route and contracts in place. This time can include route optimization, machine maintenance assistance or education and introduction to key location managers and customers.
While these tips for finding and purchasing a good quality vending machine business do not cover all possible aspects, they provide a good starting point and valuable information on how to get the best value for your money and how to identify and acquire a business that already is and will remain profitable in the future.
That's a lesson Crystal Warren learned the hard way when she started her company, Vending Factory, which made six figures last year. She lost about $5,000 from a vending-machine route that she purchased without fully vetting the three locations and five machines.
She also hadn't tested parts of the machines, like the coin mechanism and bill validator. Instead of trying to repair the machines and salvage the route, she sold everything for $459, which was lower than what she should have gotten for them, she said.
While many vending entrepreneurs look for locations with a lot of foot traffic, Warren evaluates locations based on the target audience for the product. Foot traffic is still important, but it depends on what you're selling. For example, more people buy eyelashes at airports than they do at hotels, she said.
When most educational institutions closed for remote learning earlier in the COVID-19 pandemic, schools lost their appeal for vending-machine placement. Now that students are back in classrooms, schools are back at the top of Warren's list.
"Physical labor causes people to burn calories, and when you burn calories, you're hungry or thirsty," he added. "Breaks aren't typically long enough for people to go to the store, so they turn to the vending machine."
Steve Slagle, a vending entrepreneur, set up water and ice machines at two large condominium complexes in Panama City Beach, Florida. The condos are booked as vacation rentals on Airbnb and Vrbo, and he made more than $30,000 in revenue in one year, he previously told Insider.
Gram said that offices with more than 100 employees were good places for vending machines, though business offices don't usually perform as well as warehouses. For the entrepreneur to earn enough profit, the office space should have double the people compared with a warehouse, he added.
Airports have a lot of foot traffic and therefore more opportunity for your vending machine to be visited by travelers. Plus, TikToker @MeganHealeey said in a video that you can typically charge more for your products. Retail prices in airports are typically higher because customers are paying for convenience and speed.
However, it's important to consider that restocking and operating a vending machine in an airport will be more challenging than other locations since you'll have to travel through the terminal, on top of following any regulations set by the agency or company that runs the airport.
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The corporate world was trying to make me bounce around a lot and I wanted to stay in my strip of paradise. I decided to leave my job, buy a vending machine route, and have been doing this ever since.
Adam also discussed going to businesses and negotiating to place vending machines on their properties. He explained that this can be difficult because existing locations frequently have a service contract. He also gave tips on the best person to talk to:
Vending machine owners can also use the franchise model to start a vending machine business. This vending machine business model is often used by major vending machines companies like Coca-Cola and Pepsi. In addition, other vending companies like Pharmabox use this model. There are two basic models that these franchising opportunities use:
You can legally put a vending machine anywhere you have an agreement with a property owner. There may be licensing requirements depending on your location, but as long as you follow the laws and have an agreement in place, you can put your vending machines in almost any location. 041b061a72