You’ve looked into the steps of starting a vending machine business, but you haven’t developed business plans. We’ll help you create a vending machine business plan.
Adam Hill has owned and operated Hill Vending since 2014, when he bought a $120 vending route. Now he’s making over $600K in annual sales. He’ll share vending machine tips so you know how to estimate vending machine profits and other costs.
What Is a Vending Machine Business Plan?
A vending machine business plan provides a snapshot of where your business is, where it’s going, and how you will achieve the business goals over the next three to 10 years.
Vending business plans will include market research on the vending machine industry, local vending machine associations, a marketing plan, an operations plan, and a financial plan to provide a clear path of how you expect your vending machine company to make money and grow.
Why You Need a Vending Business Plan
Your chances of starting a successful vending machine business double by writing and following a vending machine business plan. Plus, companies that follow their business plans grow nearly 30% faster and get more funding than those without a business plan.
Make sure to update your vending machine business plan annually as your company grows and achieves its goals.
How to Buy Vending Machines
The main ways to buy a vending machine business are personal savings, credit cards, private loans from the current business owner, bank loans, and angel investors.
One of the top ways to get into the vending machine industry is to buy an existing vending machine business. Business owners will often agree to owner financing, where you pay 0-20% down and then pay off the remainder over one to five years.
Banks will want to review your vending machine business plan and decide whether they believe you can accomplish the goals you’ve included. More specifically, a loan officer will want to see a professional vending machine business plan to verify that your financial assumptions are reasonable.
Another way to fund a vending machine business is by taking a loan or equity deal from angel investors. An angel investor is just a wealthy individual who helps people start businesses in exchange for a share of the profits.
Learn more about buying a vending machine.
Vending Machine Business Plan Template
You’ll want a business plan template for your vending machine business. Download our free vending machine business plan template below.
You’ll also get our How to Start a Vending Machine Business PDF.
Check out our other business plan templates for more resources or watch our interview with a business owner who started one of the fastest growing franchises in North America to learn how he writes a business plan.
What Should I Include in a Vending Machine Startup Business Plan?
A business plan for a vending machine company should include:
- Executive Summary
- Company Analysis
- Vending Machine Industry Analysis
- Customer Analysis
- Competitor Analysis
- Vending Machine Marketing Plan
- Vending Machine Operations Plan
- Management Team
- Vending Machine Financial Plan
Keep reading to learn what vending machine operators should include in their business plans. We’ll also provide examples of what key parts of a vending machine business plan might look like.
Vending machine operators should start their business plan with an executive summary. All an executive summary does is summarize what the rest of the document is about.
The executive summary should be under a page long and should include a sentence or two about each section so that people can get the main points quickly.
This section of your vending machine business plan should include:
- An introduction to your company
- Your company’s mission and values
- Your goals
- The vending machine services you’ll offer
- Your competitive advantage
Vending Machine Industry Analysis
In your industry analysis, you need to provide an overview of the vending machine business. Your research will help you understand the market, improve your strategy to utilize market trends, and prove to readers you know what you’re talking about.
Your vending machine business plan should answer the following questions about the vending industry:
- How much do vending machines make a month? (Both as an industry and per machine)
- How much of the industry revenue is in the local market? Use the industry revenue multiplied by your location divided by the U.S. population.
- Is the market growing or shrinking?
- Who are the market leaders in the industry?
- Who are the primary vending machine manufacturers and suppliers of products?
- What vending machine business trends will impact the industry?
- What is the vending industry’s 5-10 year growth forecast?
I suggest using the IBIS World report we linked to earlier because it includes all the information about the U.S. vending machine market. You may need to purchase a local plan as well.
Industry Analysis Example
The vending machine industry makes $10 billion per year across 17,739 vending operators in the U.S. That means they make an average of $563,729 per year.
The average monthly revenue of a vending machine is approximately $2,000, which means a company needs 24 machines to earn the average across the industry.
The Las Vegas vending machine business market is approximately $69,343,972.03, and there are 99 vending machine operators, which means each vending machine operator is making approximately $140K per year more than the national average.
The market is expected to slightly decline in revenue, but companies that capitalize on existing trends like Apple Pay, Google Pay, and specialized vending machines are able to see growth by creating new markets in high-traffic areas.
According to ThomasNet, the major vending machine equipment manufacturers and suppliers are:
|Company||Location||Year Founded||No. of Employees|
|Wurth Industry North America||Brooklyn Park, MN||1945||1000+|
|Haggard & Stocking Associates, Inc.||Indianapolis, IN||1972||50-99|
|Atlantic Paper & Supply||Pawtucket, RI||1948||10-49|
|Grune Technica||Gresham, OR||1997||1-9|
|Elite Restaurant Equipment||Newark, NJ||2001||10-49|
|Moses Enterprise LLC||Baton Rouge, LA||2015||1-9|
|Westerfield Sales and Service||Cleveland, OH||1946||1-9|
|Rockleigh Industries, Inc.||Rockleigh, NJ||1998||10-49|
|IVM, Inc.||Indianapolis, IN||1991||10-49|
|Lynde-Ordway Co.||Huntington Beach, CA||1925||1-9|
Adam suggested two manufacturers of vending machines he prefers to use.
In addition, snack foods and drinks are available from stores like:
- Sam’s Club
- Coke distributors
- Pepsi distributors
- Other distributors
Your vending machine business plan should describe the target market you will be providing vending.
Your target market will impact the pricing and product options you carry. Make sure to understand the demographics of the customers in each type of facility you serve. You won’t want to offer the same vending machine products in a gas station as you would a cardiac wing in a hospital.
Analyze customer demographics. You’ll want to discuss the age, gender, location, and income levels of decision-makers, their customers, and where you want to place your vending machines.
You’ll also want to include psychographic profiles, meaning the details of your customers’ wants and needs. You wouldn’t want to offer all candy and soda in a yoga studio vending machine because the students will probably want water and healthier snack choices.
Your vending machine business plan should include a competitive analysis that shows your understanding of the direct and indirect competitors you will be competing with for your target customers.
Direct competitors are limited to vending machine operators in the local area, while indirect competitors are any type of business where your target customers can get the same products.
A vending machine business will have indirect competitors, including grocery stores, convenience stores, delivery apps, pharmacies, and fast food restaurants.
Not mentioning these vending machine competitors may show lenders that you don’t realize there are other places where someone can buy the same products even when in a rush.
You want to describe in greater detail the other vending machine businesses you’ll compete with. Your direct competitors will be other vending machine locations within a mile of your machine.
Create an analysis of each local vending machine company that answers the following:
- What locations does each business serve?
- What items do they sell in the vending machines?
- How do they price each item?
- What are the machine owners’ competitive advantages?
- What opportunities do they leave open?
After you’ve done this, you should be able to answer questions like:
- How can I provide superior products?
- What products can I offer that competitors do not?
- How can I create an excellent customer service culture?
- Can I beat their pricing?
Finding ways to provide better customer service at a similar or lower cost will provide a competitive advantage. Just make sure the pricing is correct for your vending machine business to be successful.
Have you ever heard of the 4Ps of marketing?
Every vending machine business should include them in its marketing plan.
This section of your vending machine business plan should remind the reader what type of vending machine business you are. Make sure to be specific about the products you’ll be offering in your vending machines. You’ll want to keep the product list consistent across vending machines.
You should have already analyzed how other vending machine businesses sell their products. Now it’s time to create your pricing guide. Adam suggests pricing the products at twice what you pay for them.
If you buy a 12-pack of soda from Sam’s Club for $12.99, then your vending machine company should be selling each can for $2.25 if the market will allow it. At the very least, factor in 50 cents profit per item.
Where will you be placing your vending machines? Document every location, the types of vending machines at the location, and how often you’ll need to check it.
You should also explain why each location is a good spot for a vending machine in your vending machine business plan. Learn more about vending machine placement.
The promotion section of a vending machine marketing plan documents how you will help people find your vending machine company and the locations where you have placed a vending machine.
Some promotional methods you might use for a vending machine company include:
- A vending machine website
- Adding your branding to your vehicle
- Creating brochures for business owners
- Focusing on vending machine experience and user experience (UX)
- Keeping your vending machines clean and branding them to help people recognize your brand
- Placing vending machines in strategic locations
- Providing maps that show where your vending machine business is located
- Sharing cool features of your vending machines on social media
You could also create a course to help other people learn how to start a vending machine business. That’s one of the ways that Adam has built upon his vending machine business. Check out our free vending machine training.
An operations plan is part of your vending machine business plan that explains your daily operations. Your operations plan should include two sections:
- Long-term goals
- Processes for operational excellence
What milestones do you want to achieve in your vending machine company?
Your long-term goals might include the number of machines you want by a certain date, when you want to hire employees, and how much revenue you want within five years.
Make sure to add these details to your vending machine business plan.
Processes for Your Vending Machine Business
Your processes are the steps you will take during the day to keep your vending machine business running smoothly. Your main tasks will include:
- Buy vending machine products
- Store vending machine products
- Deliver machines
- Restock vending machines
- Clean vending machines
- Buy new vending machines
- Secure contracts for vending machine placement
- Buy vending machine routes
- Provide customer service
You should also include your management team and business structure in your vending machine business plan. Planning for a team shows that you have thought through starting a vending machine business and realize that you can’t do everything.
While vending machine businesses are typically able to be run by a single person, that doesn’t mean you won’t need help from other professionals including:
- Vending Machine Repair Person
- Sales and Marketing
Hiring people to manage portions of the company you don’t understand will make starting a vending machine business much easier. Emphasize how your leadership team is going to make you more successful by touting their past experience.
Direct experience in the vending machine business is best, but if your team has experience in other areas that are related, it works well, too. An advisory board familiar with vending machines is also an option.
When you own vending machine business assets, you need a financial plan. Your financial plan should cover one to five years from your vending machine business starting.
Three financial statements should be included with your business plan:
- Income statement
- Balance sheet
- Cash flow statement
A Profit and Loss statement, P&L, or income statement shows your revenues and expenses to show how much money you made or lost.
You’ll have to make some assumptions when you create an income statement. Vending machine owners will need to make and document assumptions that answer the following:
- How many products will you serve?
- What will inflation be?
- How much will revenue grow each year? How?
Example Vending Machines Income Statement
Let’s assume the following:
- We bought 10 vending machines for $20,000 with $0 down and one year to pay $25K.
- Revenue is $2K/month per machine.
- Gross margins are 50%.
- Taxes are 20%.
- Marketing costs $1,000 annually.
|Cost of Goods Sold (COGS)||$120,000|
|Earnings Before Income Tax||$92,000|
Note: EBITDA = Earnings before interest, tax, depreciation, and amortization
Balance sheets are used to compare your assets and liabilities. Your balance sheet will show five sections:
- Current Assets: Cash and items that can be turned into cash within a year, including accounts receivable, inventory, prepaid expenses, and marketable securities.
- Long-Term Assets: Items that cannot be sold fast, like land, patents, brands, trademarks, goodwill, and vending machine equipment.
- Current Liabilities: Any debt due within a year, including accounts payable, debt financing, payroll, rent, utilities, and other accrued expenses.
- Long-Term Liabilities: Any debts that last longer than a year, including bonds payable, deferred taxes, leases, loans, and pensions
- Shareholder Equity: Shares, reserves, and retained earnings are all parts of owners’ equity
Effectively, you are aiming to balance the equation:
Current Assets + Long Term Assets = Current Liabilities + Long-Term Liabilities + Shareholder Equity
Learn more about balance sheets.
Cash Flow Statement
Your cash flow statement shows how much money you need in your business bank account to cover startup costs and operating expenses until you are fully self-sustaining.
Your cash flow statement adjusts the net income to add:
- Decreases in accounts payable
- Increases in taxes payable
- Increases in accounts receivable
Then you’ll want to subtract the cost of any inventory to get the cash from operations. You’ll also want line items for any investment or financing you need for the following items:
- Cost of equipment like vending machines, refrigerated delivery trucks, etc.
- Cost of maintaining an adequate amount of inventory
- Payroll or salaries paid to staff
- Business insurance
- Taxes and permits
- Legal expenses
The final part of your vending machine business plan should be an appendix that includes all the supporting documentation for your business plan. You’ll want to include tables, links, and citations so that anyone reviewing your vending machine business plan can verify your facts.
For the sake of brevity, in this Example Appendix, I am only including the formula I used for the Las Vegas Vending Machine Industry calculation.
Vending Machine Business FAQs
How Much Are Vending Machines?
Buying a vending machine will cost anywhere from $100 for a small candy vending machine to a few thousand dollars for new and used drink or snack machines. The custom vending machine cost can reach $20,000.
How to Start a Vending Machine Business
Starting a vending machine business requires:
- Establishing if the vending machine business will be profitable
- Creating financial projections
- Writing a vending machine business plan
- Forming your vending machine business
- Buying a vending machine
- Getting products to fill your vending machine
- Finding a location for your vending machine
- Storing vending machine products
- Maintaining vending machines
- Restocking and collecting money from your vending machine investment
How Much Does a Vending Machine Make?
According to Adam, most vending machines make around $2,000 per month if they are in good locations.
Market research may show that other vending machines can have even better results, but use $2,000 a month per machine in financial projections for your business plan unless you can document that your machines will have better returns.
Of the $2,000, approximately 30% should be profits or wages.
What Do I Need to Start a Vending Machine Business?
The vending machine business model normally requires a:
- Vending machine
- Business license and LLC
- Location for the vending machine
- Way to handle refunds
Write Your Vending Machine Business Plan
Whether you decide to offer ice cream vending machines, coffee vending machines, or bulk vending machines, a vending machines business plan will help you make the most out of your new venture.
If you haven’t already, don’t forget to download your free business plan.
What will be your vending machines business model?