A vending machine business is a relatively low-involvement way for an entrepreneur to make money. An entrepreneur looking to rent a vending machine should keep in mind that although vending machines provide relatively passive income, they are not a completely passive investment. Operating a vending machine requires regular machine maintenance and restocking.
Using a vending machine rental to generate income instead of buying a vending machine is a way many new entrepreneurs enter the vending machine market. A rented vending machine costs less at startup, and if the entrepreneur decides this is not the right income stream for her, she can easily exit the market when her lease expires.
Develop a Business Plan
Just like any other business, operating a vending machine rental requires a business plan. A business plan is a document that covers all information that’s relevant to the business, such as:
- The business owner and leadership team
- The amount of money invested to launch the business
- The product the business will provide
- Projected income and future growth
- Physical location, if applicable
- Target market
- Financing needs
For a single vending machine or a small collection of vending machines, the business plan is relatively simple. It might state that the vending machine will be placed outside a public library to provide cold beverages to library patrons. The business plan for a collection of vending machines might state that the machines will be placed at various spots on a college campus and provide healthy snacks to college students and staff.
A concrete business plan enables you and your investors to see any flaws in the plan and tweak the plan to fix these flaws. It is also a necessary document to provide to a prospective buyer if you decide to sell the business. If you want to place a machine in a location you do not own, you will also need to show the business plan to the owners of prospective locations and include information about how the location owners will profit from the machine, which could be purely through the space rental income or through a share of the machine’s profits.
Choose Products to Stock
Which products you want to sell will determine not just what kind of machine you need but also the suppliers from whom you can rent it. This will also determine your monthly operating costs, as machines with complex mechanisms like heating elements are more expensive to operate than basic machines.
The right products to stock depend on a few factors covered in the business plan. These factors include your startup capital and the location where the machine will be placed. If you have a substantial amount of startup capital, you can afford to stock your machines with more expensive products than an entrepreneur working with a smaller budget.
Similarly, the proposed location’s demographic plays an important role in deciding what to stock. While affluent commuters might gravitate toward organic and luxury products, a vending machine in a working-class laundromat will likely be more successful selling inexpensive bags of chips and cans of soda. During regular stocking stops, the lessee can also take note of which items frequently sell out and which tend to linger in the machine. If the business owner rents a modern vending machine with inventory tracking software installed, taking note of inventory levels during a stop is not necessary — he can see exactly how much of each item is in the machine at any time on his phone.
Research Vending Machine Rental Companies
Once you have determined which products you will stock, the next step is to find a vending machine rental company that fits your plan. Some vending machines are equipped to sell snacks, while others are equipped to sell refrigerated beverages. If you want to operate a niche vending machine, like a vending machine that sells hot coffee or one that sells cupcakes, it can take time to find a company from which you can rent a vending machine.
A few prominent vending machine rental companies are Vending Group and Vending Solutions. In addition to leasing options, these companies also offer the option to buy vending machines either outright or through lease-to-own programs. Another option for entrepreneurs looking to get into the vending machine business is buying a vending machine franchise. Companies like Coffee Business and Healthier 4U Vending make it possible for a business owner to operate and profit from vending machines with the support of a larger brand.
Determining the right vending machine rental company involves more than choosing a company that provides the type of machine you need. During your research, you also need to consider the terms offered by the companies you consider, the cost of renting with each company and the options they provide to lessees, such as the option to rent a vending machine with the long-term plan of buying it.
Draft and Sign a Lease Agreement
Any entrepreneur who wants to rent a vending machine needs to draft a lease agreement to secure the machine's location. This agreement should include:
- The length of the lease period
- The cost of the lease and its terms, such as monthly rental payments or a lump sum payment
- Where the vending machine will be located
- Whether the owner or lessee is responsible for machine maintenance
- Circumstances that void the lease
Before signing a lease agreement, it can be beneficial for you to have a business lawyer look it over and determine whether it can be amended to be more fair to the lessee. This might mean extending the grace period for late payments or changing the terms that could void the lease.