Vending Machine Passive Income – How To Generate?

You’ll usually see vending machines around commercial buildings, hotels, streets, gyms, schools, etc. 

You might not know that you can make good money by starting a vending business. 

Some of you may have a full-time job but can use a side hustle to earn extra, and this idea might be it. 

If you’re searching for a business venture that doesn’t need much of your time and effort, you should consider it. 

You won’t need training or exceptional skills to be a qualified vending machine operator. 

Vending machines as passive income generators are slowly becoming a great idea because it’s easy to manage. 

However, you should know the right way to start this business. 

In this post, you’ll read about the hows of a vending machine business. 

How Does a Vending Machine Business Work?

vending machine passive income

Vending machines work like retail shops, but the only difference is that they are automated shops.

Owners stock their inventory into their machine and make it available, usually 24/7, unless there’s a problem with the device. 

The usual products in a vending machine are beverages and food, but people are more creative these days. 

You’ll see vending machines filled with makeup, toiletries, a whole meal, flowers, and more. 

The machine works by dispensing the item after the customers pay and press the button of their respective product. 

As the demand for vending machines grows, you’ll find more variety of devices around the streets now.

They don’t drop the items anymore, as some can dispense a cup, and the machine fills it with your hot or cold brew. 

Some owners even add colorful designs, unique items, entertaining sounds, and other gimmicks to attract more customers.

Various payment methods are available nowadays, such as cashless payments, instead of the usual bills and coins. 

Related Reading: How To Turn $100 to $1000 Quickly – Learn Here.

What is the Business Model of a Vending Machine? 

Before diving into the vending machine business, it is essential to know the business model it follows. 

The retail industry, of which vending machines are part, is fast-paced worldwide. 

It makes vending machines an excellent business opportunity because people can earn without supervising their business. 

However, when choosing the type of product you’ll sell, it must cater to the daily needs of consumers. 

Most other types like this can be expensive upfront, but they are easy to maintain, saving you more in the long run. 

Despite its simple business model, you may need to remember that it requires planning.

For example, the business capital you’ll need may be costly at first because you need to pay for machines, inventory, and permits. 

However, you can secure loans or deal with an excellent financial institution to help start your business.

As an owner, you’ll want to be actively managing your vending machine to interact with customers at the start of its operations.

If you offer meals, juices, and sodas, you must ensure that you sell top-quality products. 

So as much as possible, always fix technical issues immediately if your machine breaks down during operations. 

It would be best to repair your machine because the more customers you miss every minute it does not work. 

Additionally, it is preferable to have your product suppliers nearby so they can quickly deliver stocks. 

Finally, you must keep your business safe from accidents or crimes because it can be a considerable loss. 

You’ll need to invest in CCTV cameras, business insurance, or a security guard to watch your machine. 

How to Start a Vending Business?

How to Start a Vending Business

If you find the vending machine business something you want to try, you need to be hands-on with it. 

There is planning, research, and decision-making on the business owner’s part. 

This part will show you how to earn passive income with vending machine businesses.

Pick Your Business Structure

Like any other business, vending machines must follow legal and tax obligations.

By choosing a business structure, you can earn legally and possibly, expand soon. 

Some legal structures are sole proprietorship, partnership, limited liability company (LLC), and corporation. 

If you want multiple machines, you may consider being an LLC so you can make a profit legally and collect costs on your taxes.

There will be an assigned agent that can act as your company’s representative for your business. 

Aside from it, you may also need permits and licenses to operate in your chosen location legally. 

Once you know where you’ll put up machines and your structure, you can easily do paperwork. 

Think What Your Market Is

There are different vending machines depending on which market you want to hit.

The food and beverages section is the most profitable type because the general public buys it daily.

So if you want two or more machines with snacks and beverages, place them in busy areas with different products.

Aside from meals, there are also random objects, for example, toys, that you’ll see in vending machines. 

You usually insert coins and turn the knob to dispense your goods like toys or gumballs. 

They are cheaper and easier to maintain because they are manual, meaning they don’t use digital keypads. 

Knowing where to set up this vending machine can be your perfect income source. 

Finally, you also have a specialty vending machine that has unique products that you won’t usually find in a vending machine. 

It can be anything from electronics, gourmet meals, flowers, gifts, ice cream, and more. 

The markup is a little high because they are premium products, so you need to consider that fewer people may use them. 

However, you can earn a higher income if you have the right place for the general public. 

You’ll want to choose students, office workers, or people in the hospital as your target market. 

These people usually need something on-the-go because they are in a rush.

Setting Up in the Best Locations

As much as the customers are critical in a vending business, you also need a good location to sell better.

If you set your vending machine in a school, putting candy, snacks, and beverages should make sense.

If it is in a gym, it can help to have a sports bar, energy drinks, and light gym equipment. 

Dormitories or apartment complexes can use a machine with different detergents and fabric softeners. 

Most of the time, these locations are the busiest they can get because people want to grab something convenient. 

You can also check out factories, train stations, hospitals, airports, bus stations, malls, hotels, and more. 

Also, you can put your machine anywhere because you have many options.

You need to talk to the property owners and discuss agreements to avoid complications when you start your business. 

Once you know where to stick your machines, try contacting the managers to see if you can have them on their property. 

Choose the Right Type of Machine

Choose the Right Type of Machine vending machine passive income

Vending machines have different types depending on your products and how you want them to operate. 

First, you have the bulk machines where you can usually see gumballs, sanitary pads, and chocolates stocked inside. 

You only need at least one dollar to dispense the product you want in bulk in that machine. 

It is cheaper because you can thrift a bulk machine for at least $50 and then stuff it with your products. 

Second, mechanical machines are the usual vending machines that accept bills and coins.

You can usually spot the twisting ring inside that pushes out your item when you insert your payment. 

They are larger than bulk machines and can store different items.

These vending machines typically cost a thousand dollars or more. 

But you can quickly get your returns because it is more profitable than a bulk machine. 

Finally, the recent version of vending machines is in the form of electronic ones. 

Because of its latest technology, you can expect an electronic vending machine to be more expensive than a mechanical one. 

It has a touchscreen feature and can accept cashless payments like credit cards.

It can also have more premium product choices like higher quality food so that the cost can be higher too. 

You can transfer the payments directly to your account, but ensure they don’t charge hefty fees. 

Fill Your Machine

It is easy to stock up on inventory, but you also need to know how to stock items properly using a system.

You can research trends, like what people like to eat or what new products are to sell, so that it can keep up with the demand.

It is your choice whether to hire someone to do it for you or you can do the job yourself. 

A good example is that more people are health conscious and would look for healthier options.

So think of healthy snacks to fill up your machine and what products they usually prefer to eat.

For snacks and other items you’ll purchase in bulk, it is best to have a go-to wholesale supplier to get discounts. 

The cheaper you get your stocks from your suppliers, the more profit you’ll earn in the long run. 

Try Different Financing Options

Vending machines are costly upfront, mainly because of the devices, but some options are cheaper. 

You can start this opportunity with small starting capital to avoid spending six digits on your initial costs. 

As mentioned, machines can cost up to a thousand dollars which isn’t a tiny amount. 

If it still doesn’t fit your budget, you can try getting a loan to help you fund your starting capital.

You can secure a short-term loan if you have a business financial history that can back you.

Lenders will give you a lump sum then you can pay the loan with interest depending on the discussed terms. 

However, you usually have shorter repayment, usually barely two years, with higher interest. 

But you can easily qualify for a short-term loan compared to a long-term one, so it is as best as possible. 

Before your approval, lenders will review your business’ financial documents.

The better your business history, the better your chances of getting their approval for your loan. 

Another option is the equipment financing loan that lends you a certain amount depending on how much your equipment is. 

The equipment or machine can also be collateral if you fail to make your loan payments. 

As long as you know how to sustain the machines correctly, they can last for years, allowing lenders to trust you more. 

So if you want to get off this loan, you must prepare your business plan, equipment quotes, and financial documents.

If you also need funding for your inventory, there are also inventory financing options that you can consider. 

How To Buy Vending Machines?

Buying a brand-new machine is the best way to start a vending machine business with a budget. 

This way, you can easily find locations for yourself and contact property owners to occupy commercial spaces. 

However, you can also buy pre-owned vending machines so you can have a better grasp of the machine’s history. 

There could be technical issues with the machines that you’ll have to fix immediately. 

It could be better to sell them because the owner is deciding to quit the vending machine business. 

But still, some technicians can access the problem of the machines so they can start working properly. 

You can also consider being a franchisee from an established business, so you don’t need to prepare for a lot.

Most of the decision-making will come from the franchisor, but they’ll benefit from your earnings. 

Related Reading: Which Business Should I Start – Read More Here.

Are Vending Machines Making Money?

Vending machines are underrated but very lucrative as long as you do your homework. 

Many people will patronize your machine if you can get your supplies at the lowest prices.

In the long run, you’ll earn their trust and more money because of satisfied customers with only a little time and capital. 

Do You Pay Tax if You Have a Vending Business?

Vending businesses need to pay taxes like how food, drinks, and other product sales have tax obligations when exceeding ten cents. 

Furthermore, the vending machines can also include taxes along with the location that the owner rented. 

Related Reading: How To Start An ATM Business – Learn More Here.

Conclusion

Vending machines earn an overwhelming amount yearly, even up to billions, without you realizing it. 

Now may be the right time to break into this profitable industry so you can make at least $1000 for vending machine income. 

Business owner earns more with careful market research and location research, taking business risks, and making vital decisions. 

And when you feel like you already know the patterns of running a vending business, consider expanding. 

Slowly, you can start investing in more vending machines without getting a loan and possibly make it full-time. 

So if you are still considering starting a vending machine as a passive income venture, this post is your sign. 

Disclosure:  this article might contain links to the resources discussed.
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Brooks Conkle

Brooks is an Entrepreneur, Sponge, Father, Husband, & Follower of the Golden Rule. He has over 15 years of experience as an entrepreneur after graduating with a BSBA in Finance from Auburn University. He’s addicted to growing new business ideas and any food that includes chocolate and peanut butter. Brooks is a firm believer in creating multiple streams of income and creates content here on BrooksConkle.com to help other hustlers in the areas of marketing, online business, personal finance, and real estate.