It's incredible how many different ways you can make money, and financial guru Graham Stephan was impressed to hear that someone makes $300,000 per year with a vending machine business.
He proceeded to compare it with real estate, explaining that vending machines generate cash flow without having to worry about tenants. Stephan pointed out that each vending machine has to be maintained and that a business owner likely has to restock the machines every one to two weeks.
"It's not bad," Stephan said while expressing approval for the business model.
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You don't have to invest in real estate to generate cash flow. Vending machine businesses may be right for you, and they are easier to build if you're on a budget.
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Upfront Costs
You don't need a lot of money to buy a vending machine. The price of a good vending machine ranges from $2,000 to $10,000, depending on whether you want an old machine or a new machine with the most features. Then, it's a matter of stocking the shelves with the initial inventory. Once that inventory performs well, you can proceed to buy more inventory and reinvest the profits into additional vending machines.
You'll also have to contend with some legal registration fees and franchise fees. The location fee is also a factor; this fee usually represents a percentage of total sales, typically 5% to 25% of that machine's revenue. Most commission arrangements are on the lower end, but the location plays a big factor.
This is a great business model since the owner of the location is financially incentivized to promote the vending machine and keep it in good condition. The business owner who puts your vending machine in their area will want the machine to do well since it translates into more revenue.
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Looking For Profitable Locations
There's a lot less pressure with finding your first profitable vending machine location than there is to be profitable with your first real estate investment. The relatively low cost of vending machines makes it easier to scale, but naturally, you still want to be profitable with every vending machine location.
Some cities and suburban areas have more foot traffic than others, but you should also assess which types of buildings get the most traffic. Schools, hospitals, and office buildings are some of the most promising areas. You will have to contact the property owner to determine the terms and see if it's a good deal.
It's perfectly fine to contact several property owners before deciding on the right location. Reaching out to multiple people will give you an idea of what payment structure you can negotiate.
Set Ambitious Goals
The vending machine business model can offer steady cash flow without the stress of managing tenants. It's also more affordable to enter the industry than real estate and can be lucrative.
You will still encounter some obstacles along the way. If there weren't challenges with this business model, then everyone would be rushing to do it.
Stephan showcased an individual who makes $300,000 per year with vending machines. Stories like those demonstrate what is possible, and if you set ambitious goals and work toward them, you can become the next case study.
Read Next: Can you guess how many retire with a $5,000,000 nest egg? The percentage may shock you.
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