Hey there, Vendpreneur!

Welcome to Becoming a Vendpreneur—where every week I help you navigate the challenges of running a vending machine business, whether you’re just starting out or looking to expand your operation.

This week I want to walk you through 10 simple steps on starting your own vending machine business, so you can start taking action immediately.

Here’s what we’re covering:

1. Start-Up Choices: Build new or buy existing.

2. Business Setup: Opening an LLC, name, & bank account.

3. Machine Selection: Picking the right vending machine.

4. Location Hunting: Finding the best spots.

5. Sales Mastery: Crafting the perfect pitch.

6. Product Choices: Selecting the right mix.

7. Site Contracts: Securing location agreements.

8. Legal Essentials: Obtaining licenses and permits.

9. Financing Options: Exploring funding solutions.

10. Software & Inventory: Selecting the right management tools.

Before we dive in, let's catch up on some exciting updates from my vending business, Pod Plug:

Quick Business Updates:

• We just closed two deals in Dallas and are close to locking in four more by next week.

• Welcomed Jillian to our Dallas sales team.

• In Austin, I’ve spoken to four potential buyers for our 8 machines, priced at $130,000. Looking to close this month.

• I had three interviews this week for an Assistant Operations Manager. This person will help streamline our processes, ordering, logistics, and a lot more. I’m deciding next week, so fingers crossed!

• I spent 5 hours revamping our cold call & email sales scripts and whipped up our latest sales flyer. Want a copy? Just hit reply, and I'll send it your way.

• We wrapped up our last Strategic Planning meeting with the iFranchise Group. We're looking at offering two kinds of franchises, including a cool new program for college students in university towns.

• Next week, I’m off to the NAMA show in Dallas. It’s the biggest vending show of the year, and guess what? Former President George W. Bush will be a keynote speaker. Can’t wait!

Now, let’s dive in!

Step 1: Building From Scratch vs Buying an Existing Vending Business

When starting a vending machine business, you have three options:

1. Build from scratch

   • Advantages: Full control over business design and startup expenses

   • Disadvantages: Time-consuming, requires strong sales and negotiation skills

2. Buy a vending machine franchise (highest success rate)

   • Advantages: Proven revenue model, support and training from franchisor

   • Disadvantages: High initial investment and ongoing fees

3. Buy an existing vending machine business

   • Advantages: Proven profitability, flexibility to rebrand and improve

   • Disadvantages: Potential hidden issues, may require experience in business recovery

When buying an existing business, ask:

• Why is the owner selling?

• Can you tour all locations?

• Are 3-year P&L statements available?

• Will the owner help with the transition?

Now, which one will you choose and why?

Step 2: Opening an LLC, Choosing a Name, & Setting Up a Bank Account

Before you start stocking machines and counting quarters, there are a few essential steps to take care of on the business side.

Let's dive into the process of opening an LLC, choosing a name, and setting up a bank account.

Advantages of an LLC:

1. Simplicity

2. Tax benefits

3. Flexible management

4. Personal liability protection

Step 1: Choose a name ending with "LLC" and run a free business name search here.

Step 2: Use a site like LegalZoom for a hassle-free setup (I suggest Pro: $249 + state filing fees).

If you do this, you won’t have to worry about creating an operating agreement, filing your articles of organization, getting an EIN, etc.

LegalZoom handles this all for you.

Step 3: Then, simply open a business bank account with one of the top banks for small businesses:

• Best Credit Union: Navy Federal Credit Union

• Best Online Bank: Mercury

• Best Brick and Mortar Bank: Chase Bank

• Best Bank for SBA Loans: Wells Fargo

• Best No-Fee Checking Account: US Bank

Step 3: Choosing the Right Type of Vending Machine

When it comes to choosing the right type of vending machine for your business, you've got two main options:

1. Food & beverage vending: Expect to pay $1,500-$3,000 for a refurbished unit, or $3,000-$5,000 for a brand new one.

2. Specialty vending: If you're looking for something unique, be prepared to shell out $3,000-$10,000 for a new machine. Refurbished options are harder to come by in this category.

Now, when you're deciding between new and refurbished machines, consider these key factors:

New Machines:

• Pristine condition

• Latest features and technology

• Manufacturer's warranty

• Higher price point

Refurbished Machines:

• Previously used but repaired and maintained

• Older features but still reliable

• More affordable

• Limited or no warranty

To decide which route to take, consider:

1. Your budget: Determine how much you can realistically invest.

2. Your target market: Some locations may require newer machines to meet customer expectations.

3. Maintenance and support: Evaluate the level of maintenance and support offered by the supplier.

My Recommendation:

As a beginner vending operator, I prefer refurbished machines. They're much cheaper and still work well, allowing you to enter the market without breaking the bank. You can always upgrade to newer machines as your business grows.

Here are 5 reputable vending machine suppliers in the US:

1. Crane Merchandising Systems

2. Wurth Industry North America

3. Cardinal Distributing, Inc

4. Betson Enterprises

5. Mars Inc

Step 4: The Best Types of Locations To Place Your Vending Machines

There’s one golden rule: if people can't see it, it's probably not making you money.

So, where should you be looking to place your machines?

Here are some of the best locations to consider:

1. Manufacturing facilities: These are often 24/7 operations with employees working around the clock.

2. Office parks: White-collar workers need their caffeine fix and mid-day snacks.

3. Apartment buildings: Residents often appreciate the convenience of having a vending machine in their building, especially when those late-night cravings hit.

4. Hospitals: Hospitals are another 24/7 operation with staff, patients, and visitors all needing access to food and drinks. Just make sure you're offering some healthy options!

5. Hotels and motels: Travelers often need quick, convenient access to snacks and drinks.

6. Gyms: After a tough workout, many people are looking for a quick energy boost & protein bar.

7. Schools, colleges, and universities: Students are always on the go and often need a quick snack or drink between classes.

8. Laundromats: People often have time to kill while waiting for their laundry to finish. Why not give them the option to grab a snack or drink while they wait? (or the detergent they forgot at their home)

9. Bars & nightclubs (I may be biased 🤷‍♂️): I can attest to the fact that this can be a lucrative location. Customers love mixing alcohol and vapes + when they can’t call an Uber, they’ll pay whatever it costs for a phone charger.

Step 5: Crafting the Perfect Sales Pitch

When it comes to landing new locations for your vending machines, having a solid sales pitch is key.

Whether you're cold calling or emailing, your pitch should be concise, compelling, and tailored to your prospect's needs.

To help you craft the perfect sales pitch, I’ve created a Cold Call Script Guide and a Cold Email Template.

Click on the links below to access these valuable resources:

• Cold Call Script Guide

• Cold Email Template

Remember, these templates are just a starting point.

Customize them to fit your unique selling proposition and target audience.

Step 6: Selecting the Right Product Mix

When it comes to stocking your vending machines, there are two main categories to consider:

1. Food & beverage machines

2. Specialty machines

The type of machine you choose will dictate the products you offer.

Popular options for food & beverage machines:

• Snacks: Snickers, Cliff Bars, Pop Tarts, Sun Chips, Reese's Peanut Butter Cups, Nature Valley Granola Bars, Chex Mix, Snyder's Pretzels, beef jerky, raisins, and trail mix.

• Beverages: Bottled water, Celsius, cold coffee, Coca-Cola, Pepsi, iced tea, lemonade, fruit smoothies, and protein shakes.

Popular options for specialty machines:

• Frozen desserts

• Vapes, cigarettes, cigars, and lighters

• Mini laundry detergent and fabric softeners

• Cleaning products, hand sanitizer, face masks, disinfectant wipes, and disposable gloves

The best part?

You can find 95% of these products at Costco or Sam's Club!

Step 7: Signing Your First Location Contract

A solid contract is essential when securing your first vending machine location.

This contract will outline the terms of your agreement with the landlord or property owner, including rent or commissions (usually based on sales).

Your contract should include:

1. Gross revenue

2. Termination clauses

3. Duration of the agreement

4. Exclusivity clause (if possible)

5. Rights to adjust the number of machines

As a special gift for you reading this newsletter, I've created a free vending machine location contract template that you can download here!

Step 8: Obtaining Business Licenses & Permits

To ensure your vending machine business is compliant, you'll need to obtain the necessary licenses and permits at three levels of government:

Federal: Comply with FDA regulations for selling certain foods and beverages, ensure accessibility under the Americans with Disability Act (ADA).

State: Research state-specific regulations for products and location restrictions

City/County: Obtain additional licenses and permits, such as:

• Vendor's license

• Resale license or permit

• Vending location license

• Local food service license

Step 9: Financing Options For Your Vending Business

Starting a vending machine business is relatively affordable compared to other ventures, but not everyone has a few grand lying around.

That's where funding comes in.

Here are some options to consider, ranked from lowest to highest interest rates:

1. Home equity line of credit (HELOC): Borrow against the equity in your home (interest rates: 3-8%)

2. Secured loan: Borrow money with collateral, often with lower interest rates (interest rates: 3-10%)

3. SBA loan: Government-backed loans with favorable terms for small businesses (interest rates: 5-11%)

4. Unsecured loan: Borrow money without collateral, based on creditworthiness (interest rates: 5-30%)

5. Equipment financing: Use the vending machines as collateral for the loan (interest rates: 8-30%)

6. Short-term business loan: Quick funding for immediate needs, usually paid back within a year (interest rates: 8-99%)

When it comes to lenders, check out these top picks:

• Firestone Financial

• National Funding

• Fora Financial

• Crest Capital

• Currency

• Credibly

• Fundera

• Lendio

Don't be afraid to shop around and compare rates and terms.

It’ll be worth the time.

Step 10: Choosing The Right Softwares and Inventory Tracking System

To keep your vending machine business running smoothly, you'll need to invest in the right inventory tracking system and softwares.

My top picks: Nayax or Cantaloupe

Pros: Supports all types of cashless payments, manages inventory and logistics

1. Cons: Can be complex for beginners due to many features

Other essential tools:

• Google for email

• Instagram for social media

• QuickBooks for accounting

• ZippyAssist for customer support

• Google Drive for file transfer & storage

Don't be afraid to try out different tools and see what works best for you.

With the right software and inventory tracking system in place, you'll be well-equipped to manage and grow your vending machine empire.

And That’s a Wrap!

Thanks for reading this week’s newsletter.

Hit reply and let me know what you found most helpful this week—I read every single reply and I’d love to hear from you!

See you next Saturday!

-Ethan