I've talked a bit about starting businesses that are low management and low stress. Boring businesses are sometimes the best cash flow generators. Vending machines fits this mold.
Relevant Template:
Here are some advantages of starting and running a vending machine business:
- Low start-up costs: Vending machines are relatively inexpensive compared to other types of businesses, which can require significant investments in equipment, inventory, and facilities.
- Flexibility: Vending machines can be placed in a variety of locations, including apartment buildings, schools, hospitals, and airports, among others. This flexibility allows owners to target specific markets and adjust their product offerings accordingly.
- Passive income: Vending machines are a great way to earn passive income since they can operate 24/7 without the need for additional staff. It is sort of like running an e-commerce or online content business that generates revenue around the clock.
- Low overhead: Since vending machines don't require a physical storefront or staff, the overhead costs are minimal.
- Scalability: Owners can easily scale their vending machine business by adding more machines or expanding into new markets. In the financial model linked above, I made it really easy to plan out arbitrarily large / small scale and machine deployment over time.
Disadvantages of starting and running a vending machine business:
- High competition: The vending machine industry is highly competitive, and owners must differentiate themselves from their competitors to succeed. You will always see this when the barrier to entry is low and the startup costs are on the lower end. It's not like building a billion dollar cruise ship.
- Maintenance and repair costs: Vending machines require regular maintenance and repair, which can be costly and time-consuming.
- Limited product selection: Due to the size of vending machines, product offerings are typically limited, which can be a disadvantage if customers are looking for a wider selection.
- Dependence on location: The success of a vending machine business is highly dependent on the location of the machine. If the machine is placed in a poor location, it can significantly impact sales.
- Susceptible to theft and vandalism: Vending machines are often targets of theft and vandalism, which can result in lost revenue and repair costs.
- Cost of inventory: The cost of inventory can be a significant expense, and managing inventory can be time-consuming. This can get complex as you jump into the 20s to 100s of vending machines. You should have some sort of system to manage and track inventories at that point.
