The ultimate guide to starting a vending-machine business from scratch

Jennifer Ortakales DawkinsJan 27, 2023, 17:41 IST

Some people make six and seven figures annually from their vending-machine businesses.Simona Pilolla/EyeEm/Getty

Vending machines have become a popular side hustle, thanks to entrepreneurs on Instagram and TikTok.
Vending-machine businesses require minimal investments and are low-maintenance to operate.

Vending machines have become a popular side hustle, thanks to entrepreneurs on Instagram and TikTok who claim they've made between six and seven figures in annual sales.

Vending-machine businesses are widely appealing because they require a minimal investment to get started, are low-maintenance to operate, and can eventually generate passive income if you outsource the daily upkeep.

One business owner on TikTok said he bought his vending machine for $600 on the marketplace OfferUp and booked $318 in revenue in three weeks. "I try to mark everything up about 100%, so for every dollar that comes in, I make $0.50," he said in the post.

But, like any business, it still requires hard work to get started and takes time to scale.

Ty Hill, who owns the vending company Queen of Vending, said in a TikTok post that her first vending machine only made $20 in the first month and she wanted to quit. Now one of her locations with two machines earns her $1,500 a month.

Insider gathered advice from top vending-machine entrepreneurs on social media, along with insight from founders we've previously interviewed, to learn how to start one of these businesses from scratch.

1. Calculate your startup costs

Bri Bucks opened a vending machine in her hair salon to make passive income.courtesy of Bucks

First, you'll want to estimate your startup costs. Vending-machine prices vary depending on the type of machine, its condition, and where you're buying it.

The TikTok account Vending University breaks down the estimated startup costs in one post:

Vending machine: between $1,000 and $2,500
Inventory: $250
Moving expenses: between $100 and $300
Cash and coins: $50

You'll also need to pay a fee to register your business, and additional but optional costs can include purchasing a website and buying marketing materials. These expenses can range between $50 and $100.

In total, the startup costs to start a vending machine business can be between $1,500 and $3,000.

First, you'll want to estimate your startup costs. Vending-machine prices vary depending on the type of machine, its condition, and where you're buying it.

The TikTok account Vending University breaks down the estimated startup costs in one post:

Vending machine: between $1,000 and $2,500
Inventory: $250
Moving expenses: between $100 and $300
Cash and coins: $50

In total, the startup costs to start a vending machine business can be between $1,500 and $3,000.

2. Get funding

Marcus Gram hired his sister to maintain most of his vending machines.Marcus Gram

There are many different ways to fund a business. Some entrepreneurs use their personal savings, while others prefer to use a line of credit or apply for a small-business loan. If you decide to go the debt-funding route, be prepared to pay that amount back with interest.

Marcus Gram funded his vending-machine business, Joyner Vending, with $10,000 in personal savings and spent $5,000 on his first two machines.

Maya Ray used a credit card to fund her vending-machine business, FYC Vending. Her first two machines cost $6,000, plus she spent $300 on the initial inventory.

Marcus Gram funded his vending-machine business, Joyner Vending, with $10,000 in personal savings and spent $5,000 on his first two machines.

Maya Ray used a credit card to fund her vending-machine business, FYC Vending. Her first two machines cost $6,000, plus she spent $300 on the initial inventory.

3. Scout locations for your vending machine

Jaime Ibanez's vending machine business was a launching off point for his YouTube career.Jaime Ibanez.

Next, search for businesses and buildings where you could place your vending machine. It's important to research each location thoroughly. "Get a full story before jumping in, especially if it's going to be a large investment," Ray previously told Insider.

Look for venues with high foot traffic, long operating hours, and that lack access to quick food and drink options. You may also want to visit these places in person to make sure they don't already have a machine or similar service nearby.

When starting out, you'll want to stay within a short driving distance of where you live so you can stock your machines often and be readily available for repairs. Once you've successfully placed a few vending machines that are generating consistent profit, you can consider expanding your operations to nearby cities or even other states and hiring people to help with upkeep.

Next, search for businesses and buildings where you could place your vending machine. It's important to research each location thoroughly. Get a full story before jumping in, especially if it's going to be a large investment, Ray previously told Insider.

4. Cold-call locations and pitch your business

Maya Ray operates three vending machines at Georgia State University.Maya Ray

Once you have vetted locations, vending owners recommend cold-calling the business owners and building managers to ask if you can place a machine there for free. Aim to reach out to at least three to five potential customers a day. You'll likely get a lot of rejections before your first yes.

To win clients over and compete with bigger companies, it helps to present yourself professionally, Gram said. Even if you're just starting out, a website, email address, and phone number will set you apart. Take it to the next level with business cards and branded polo shirts, he added.

5. Buy a machine only once you've secured your first location

Benjamin M. Smith

Vending-machine entrepreneurs said it's important to buy a machine only once you've secured your first location, never before. There are a few reasons they make this recommendation.

First, it's risky to spend money on a machine before you've secured a deal. If the deal falls through, you're out hundreds or thousands of dollars, plus you're stuck with a machine that isn't generating income.

Second, you'll want to cater your machine to the location's needs. For example, one building manager may want a snack-and-drink combo machine, while another may only want a beverage machine.

And lastly, you'll need to measure the space to ensure your vending machine will fit. That includes any doorways and entrances you'll have to move through when you install the machine.

You can purchase a vending machine on Craigslist, Facebook Marketplace, OfferUp, or at a vending-machine warehouse.

Many vending-machine operators recommend buying a machine with a card reader or installing one into a refurbished machine. Gram said that having card readers on his machines increased sales by 25%.

Vending-machine entrepreneurs said it's important to buy a machine only once you've secured your first location, never before. There are a few reasons they make this recommendation.

Second, you'll want to cater your machine to the location's needs. For example, one building manager may want a snack-and-drink combo machine, while another may only want a beverage machine.

And lastly, you'll need to measure the space to ensure your vending machine will fit. That includes any doorways and entrances you'll have to move through when you install the machine.

You can purchase a vending machine on Craigslist, Facebook Marketplace, OfferUp, or at a vending-machine warehouse.

Many vending-machine operators recommend buying a machine with a card reader or installing one into a refurbished machine. Gram said that having card readers on his machines increased sales by 25%.

6. Install the machine, stock it, and maintain it

Left: Ice vending machine entrepeneur Steve Slagle, right: one of his two ice vending machines.Steve Slagle

Once you've purchased the right machine for your location, you'll need to install it and stock it with inventory.

When you're starting out, you can purchase drinks and snacks in bulk at wholesale stores like Costco or Sam's Club. Then, as you scale your business, you can work with suppliers that typically require large-quantity orders.

Then you'll need to make regular visits to maintain the machine and restock it. One business owner on TikTok said that she checks her makeup vending machines once a week to make sure everything is running smoothly and to collect any stored cash.

Make sure the building manager has your contact information in case the machine malfunctions. You can also place your information directly on the machine to market your services and so that anyone can get in touch if an issue arises. The faster you can respond and fix the machine, the sooner you'll get back to making sales.