How to Start a Vending Machine Business
If you want to learn how to start a vending machine business in Nigeria, we have created a guide for you to start.
There are many unique and profitable ideas of being an entrepreneur and making money. One of them is to have a vending machine business, so if you want to get started in this industry, keep reading and you will find step by step instructions and some tips.
What is it and how do vending machines work?
A vending machine provides a convenient way for people to get the food, drinks, and products they need or want.
As people lead increasingly busy lives, they are looking for convenient ways to shop, without having to stop at a store or take a long time to make a purchase. Well, these machines are owned and operated by a vending machine business.
Although this industry is dominated by large companies, small businesses also have space and possibilities to be profitable.
The traditional model a vending machine includes food and drinks. However, times have changed and it’s possible to have a vending machine for anything, which could even be phone chargers amongst other things.
If you find the right business model, you can generate good profits.
What vending machine licenses do you need?
As with any other business, your state and locality will determine if you need specific permits.
Likewise, the products you sell will determine whether you need other types of licenses for your vending machine business.
For example, if you choose the traditional food and beverage model in this case, then you’ll need to get permits for digestible products, depending on they come pre-packaged or if it needs to be heated and readied.
Some additional legal documents that you may require are:
- operator’s license
- seller’s license
Check with your state’s regulatory agency to make sure you know exactly what legal documents you’ll need.
To operate a vending machine in the Nigeria there are several rules and regulations that must be obeyed.
Requirements to start vending business
In Nigeria, all food sold through vending machines must be approved by NAFDAC.
Therefore, they require prior approval before being offered for sale in a retail environment.
These foods include: rice cakes, dried corn kernels, popcorn, oversize candy (greater than 1 ounce), whole fresh garlic bulbs, non-canned fruits and vegetables. homogenized or glazed with syrups or sugar solutions.
In addition to this NAFDAC regulation of what foods are legally allowed in vending machines in the Nigeria, most states also have regulations that the vending machine itself must meet.
What permissions do I need to put vending machines?
There are several types of permits you may need to install vending machines, depending on your specific location.
For example, you may need a permit from the city or municipality where you are installing the machines, and you may also need a permit from the state health department.
In most cases, it’s best to contact your local government officials to find out exactly what permits you’ll need. They will be able to provide you with information specific to your area and what is required for vending machine installation.
How to start a vending machine business in 5 steps
The following are the basic steps to start a vending machine business.
- Choose which business you will focus on
The first step is to choose the approach you will take to your vending machine business.
In other words: What are you going to sell?
You could sell food and drinks, bulk sales (such as stickers or gum), or specialty sales (such as laundry products).
It is a good idea to start with just one approach and then expand to other sectors once you have proven your business model.
- Search and secure vending machine sites
The next step is to find good locations for your vending machines. Think about what you are selling and the areas where your products are most likely to sell.
Food and beverages are hot selling products at any public and private places, which include retail centres, cafeterias, and shopping malls. One unharnessed, yet interesting place to sell retail products are airports or train stations.
After you find your ideal locations, you must secure them with a contract. This is where your sales skills come into play.
You need to clearly communicate to the venue owner why they should allow you to install your vending machines at their location. Share the benefits it will bring to both of you.
- Get the vending machines
Now is the time to acquire the machines.
You can go to a manufacturer of vending machines, especially if you are looking for state-of-the-art devices or if you need multiple units.
You can also buy a second-hand vending machine in good condition. This will help you reduce costs.
- Then comes the inventory stage.
You must secure contracts with stores or companies that supply the products with which you will supply your machines. Of course, the higher the quality of the products you select, the better they will sell.
Your profitability will depend on how much you pay to acquire the products. Therefore, compare prices and negotiate the best contracts.
- Finance your business
Many small businesses fail because they don’t have enough funds for their business.
Although starting this type of business may not require as much capital as in other industries, you have to make sure you have an adequate amount to get your business off the ground.
Therefore, you must seek and secure capital for your business. At this stage, you can explore equipment financing, dip into your savings, borrow money from friends and family, or get a startup loan.
How profitable is a vending machine business?
Quick and Easy; the answer is yes.
Earnings can be as low as N 5,000 naira per week or as high as N 50, 000 naira or more per month.
The best thing is that it is a kind of passive income. Once the business is set up, interaction with customers isn’t completely necessary but still important. All you need to ensure is that you don’t run out of stock. Always, restock merchandise.
You should also consider that the most profitable companies make a lot of money because they have a large number of vending machines.
See the big picture, not just one machine. The more machines, the more total profit your company adds.
In other words, N 50,000 naira a month might not sound like much, because it’s just one machine. But if you have 20 machines, the revenue would be N 1,000,000 naira per month!
Cost of a vending machine business
There are several costs that you need to consider in running a vending machine business.
The initial cost goes towards purchasing the machines, obtaining licenses and permits, stocking your machines with the appropriate inventory, and doing marketing.
On the other hand, keep in mind that start-up costs can range from a few thousand dollars to much, much more, depending on how many machines you start with and whether they’re new or used.
A vending machine in good condition could cost you anything between #50,000 to #3,000,000 million naira, depending on what you want.
Alternatively, instead of buying a vending machine, you can rent one.
If you can, avoid spending excessively when starting up. Observe the business and if it’s something that you see you can fall back on, you can proceed to enlarge the business.
After your business has taken off, the expenses will be related to the service and maintenance of the equipment. This can include buying new parts and doing the repair yourself or paying a third party to do it for you.
Of course, recurring costs will include restocking the machines and administrative expenses, such as rent to put your machines in certain locations.
Advantages and Disadvantages of Starting a Vending Machine Business
Advantages of a machine business
Operating a business in this industry offers many advantages.
- The first is the low costs associated with starting the business. Vending machines are not only relatively inexpensive, but you can also grow your business over time as you make more profit.
- You can control the growth of your company, which in turn will affect how much you must invest in terms of costs.
- Apart from getting the machines up and running, you don’t have to do much since the business has more to do with administrative work. The management is relatively simple.
- Although the most successful business owners are smart and organized, there is no need for a skill set that is difficult to obtain.
Some of the disadvantages that a vending machine business presents are as follows:
You will have to spend a lot of time on the business, often going to multiple locations a day to manage your machines. If you have a large number of vending machines in far away locations, you will spend a lot of time moving from one machine to the next.
This job involves collecting the money, making sure the machines are well stocked and working properly, and then depositing the money in the bank.
Another disadvantage is that your machines can be the target of vandalism and theft. This is why it is essential to ensure that your machine locations are safe and secure, with possible video surveillance to protect your investment.
Business ideas for vending machines
There are many vending machine business ideas that you could leverage to generate profitability.
- You can go the more traditional route and offer packaged food and beverages. Or you can also have a specialized vending machine. The latter could include:
Hot beverages, such as coffee or tea products.
- You could also locate your machines in laundromats and supply laundry products, such as detergents, dryer sheets, and fabric softener.
- You could also sell retail products like headphones, neck pillows, and phone chargers. If you are not ashamed, you could even begin charging phones and electronics for a fee. After all, “Na Naija we day.”
- Today, with the health concerns caused by the pandemic, a mask vending machine could do the trick.
- If you live in a rainy area, you could sell umbrellas.
There is no shortage of ideas on how you can create a successful vending machine business.
Tips for success in vending machine business
- Choose the location well
After selecting the type of vending machine you want to have and the products you want to sell, one of the most important factors is its location.
Not all locations work for all types of vending machines.
You need to think about the items you are selling and where people would buy them.
For example, if you sell packaged beverages and snacks, you could sell in shopping malls, supermarkets, apartment complexes, public swimming pools, and office complexes.
Don’t forget that no matter what products you decide to sell, it’s essential that you keep your vending machine adequately stocked at all times.
- Market your offer to consumers
After choosing the location, why not see if you can put up a couple of signs showing the location of your vending machine? This will allow you to get more clients.
- Keep your machines stocked at all times
You never know when you’re going to make a sale, so you need to make sure that all the products you offer are always available.
Should you have low completely absent inventory, you will miss out on sales opportunities.
- Establish good relationships
Lastly, make sure you promote yourself correctly at your machine locations.
The owners and people who manage your vending machine locations want to have a good experience with you. Be nice and explain to them how you will make their lives easier and possibly secure a good location for your machines.
It’s time to start a vending business!
Are you ready to start your vending machine business?
We hope that in this article you have learned about this economic activity, since it can be very profitable and is a good option for entrepreneurs.
While it is possible to get started in this industry without as much capital as other businesses, you will need sufficient funds to get your business off the ground.