5 Mistakes to Avoid When Launching Your Vending Machine Business (So You Can Save Time and Money, Reduce Risk, and Ensure Smooth Operations From Day One)

Hey there, Vendpreneur!

Welcome to the first issue of Becoming a Vendpreneur—where every week I’ll 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 talk about the 5 biggest mistakes I made when I launched my vending machine business.

• Mistake #1: Skipping Market Research

• Mistake #2: Neglecting Location Importance

• Mistake #3: Choosing Price Over Quality

• Mistake #4: Underestimating Operating Costs

• Mistake #5: Failing to Adopt New Technology

But before we jump into more details, I want to share a few quick updates on franchising my vending business, Pod Plug:

Franchising Updates! 🚀

• Strategic Hire! We’ve onboarded a top-tier Senior Franchise Advisor to supercharge our franchising efforts.

• Deep Dive Sessions! Knocked out back-to-back 3-hour Zoom strategy sessions. We're laying down the groundwork for the future.

• Master Plan Unlocked! Got my hands on a massive 97-page blueprint and a killer 12-tab financial model, discussing the franchise fee, royalties, and a lot more. Looks like my weekend’s booked—let’s get to work!

Now, let’s dive into the first newsletter!

The Top 5 Mistakes Unpacked

Starting a vending machine business seems like a direct route to earning passive income.

(Myth busted: it’s not 100% passive income).

But, it’s not as simple as it looks.

There are mistakes you could make that might slow you down or cost you a lot of money.

You’re probably wondering, what’s the biggest mistake I could make? Why should I care?

I'm here to help you avoid a costly mistake that could disrupt your business, ensuring smooth operations and preventing unnecessary issues.

Are you ready to learn from my experiences? Let’s get started:

Mistake #1: Skipping Market Research

I assumed I knew exactly what my customers craved, but honestly, I was just taking shots in the dark without solid data.

The wake-up call came when my machines weren’t making money, just gathering dust.

So, I started using surveys to tap into what my customers were after.

This shift not only revived my existing machines, but also ensured the new ones hit the ground running strong.

My Recommendation:

Stand in front of your machine on a busy day and have your customers fill out a Google Form survey with these simple questions:

• How often do you use this vending machine?

• What time of day do you typically use this machine?

• Are you happy with the variety of products offered?

• What kind of products would you like to see more?

• Have you ever wanted a product that wasn’t there?

• What do you think about the prices of the products?

• Have you ever had any issues using this machine?

Mistake #2: Neglecting Location Importance

I initially placed my first few machines in locations that were convenient for me rather than ideal for my target customers.

A perfect example was a biker bar with dads over 50.

After a few months of poor sales, I had to improve my strategy.

I discovered that machines filled with items like vapes, phone chargers, condoms, tampons, gum, and mints performed way better in busy bars and clubs in the age range of 21-35.

This pivot was a breakthrough.

My Recommendation:

Here’s a step-by-step guide in finding your ideal location for your niche:

1. Where do you find your customers? Jot down the places your ideal customers hang out.

2. Who are your customers, really? Now, let’s dig a bit deeper into the demographic side of your ideal customers. If you’re dealing with businesses (B2B), consider factors like job titles, industry, company size, and type. In B2C, think age groups, genders, income levels, or professions.

3. What makes them tick? Now, it’s time to dive into the psychology of your ideal customers. What motivates them? What are their needs and desires?

Once you’ve got all this data, it’s time to build “The List,” where you’ll gather key contact info for potential vending spots (I’ll dive deeper into this in a future newsletter).

Mistake #3: Choosing Price Over Quality

To reduce initial expenses, I initially bought cheaper, used vending machines.

However, the savings were quickly offset by repair costs and revenue loss from machine downtime.

Shifting to refurbished or newer models transformed my losses into profits, thanks to their lower maintenance needs and higher reliability.

My Recommendation:

Invest in quality machines from the get-go.

Strong, dependable machines mean fewer problems, happier customers, and more sales.

Here’s a guide to the top vending models and where to find them:

Favorite snack model:

AP 112: (I use these for all my free standing machines)

• Price: $2,000 - $3,000

• Dimensions: 72”H x 33.5”W x 35”D

• Selections: 30-40

• Shelves: 6

Favorite drink model:

Dixie Narco Bevmax

• Price: $3,500 - $5,000

• Dimensions: 72”H x 47”W x 32”D

• Selections: 45

• Shelves: 5

• Robotic arm system for gentle product delivery

• Capable of vending 8.4 oz to 20 oz bottles

Favorite combo model:

USI 3565 Combo

• Price: $3,500 - $5,000

• Dimensions: 72”H x 41”W x 38”D

• Selections: 30-40

• Shelves: 5

Favorite touchscreen model: (what I use)

Custom (reply to this email for more info)

• Price: $3,995

• Dimensions: 39.4”H x 19.7”W x 10.6”D

• Selections: 10

• Shelves: 10

• Touchscreen

• Ability to display ads

• ID scanning available

Where to buy New and Refurbished:

• ​AMS​

• ​VE Solutions​

• ​Vending World​

• ​USI (U-Select-It)​

• ​Vending Connection​

• Crane Merchandising Systems

​Disclaimer: This advice mainly targets traditional snack and drink vending machines, but don't feel boxed in. Feel free to explore different vending machine types that match your unique concept—just like I did.

Mistake #4: Underestimating Operating Costs

When I launched my vending business, I thought the bulk of my expenses would be tied up in the machines and inventory.

That assumption missed the mark.

Here’s a breakdown of the overlooked costs that really impacted my bottom line:

• Commission: Traditional vending rarely involves commissions. If it does, cap it at 10% of sales. For niche vending, 10 to 20% of sales revenue is standard.

• Credit Card Processing Fees: Recommended rates are 5.9% for $5 or under AOV (average order volume), and 2.5% plus 10 cents a transaction for AOV over $5, based on my experience with Nayax.

• Inventory and Sales Tracking Software: Costs about $9.99 monthly.

• Maintenance and Parts: Budget roughly $30 monthly for these expenses.

• Inventory Cost: In traditional vending, inventory eats up about 50% of revenue; in niche vending, it’s closer to 30% (generally higher m

Mistake #5: Failing to Adopt New Technology

Initially, I kept things simple with basic machines and managed inventory on a spreadsheet.

This worked at first, but as I scaled, it became a major time sink and source of errors as I expanded.

Despite being aware of inventory tracking tech, I avoided them, thinking they were too pricey.

This decision led to constant stock issues, either overstocking or understocking, which hurt my sales and complicated operations.

My Recommendation:

Here are some tech upgrades for your machines (that you’ll appreciate long-term).

• Use either Nayax or Cantaloupe for credit card payment processing and inventory tracking.

• Ensure your machines are equipped with card readers that accept all cashless payment methods.

• In my vending setup, I've shifted entirely to cashless. Say goodbye to the troubles of coins and bills!

Recap

You now have the know-how to dodge common mistakes that trip up many new Vendpreneurs.

Remember:

1. Do market research—it’s a must.

2. Choose your locations wisely; they’re key to driving sales.

3. Invest in quality machines to minimize future expenses.

4. Keep a close eye on your operating budget.

5. Stay flexible and keep an eye on tech trends.

By avoiding these common errors, you’re not just avoiding failure.

You're building the path to victory for your vending venture.

With these insights, you’re ready to turn your vending dream into a money-making reality.

Let’s get those machines rolling!

That’s it!

Thanks for reading my first-ever 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