Vending

Vending (and vending machines) are of course a great way to make money....

In theory.

You have a route of pay phones, candy machines, or soft drink machines that do nothing but generate income. All you need to do is stock them and collect cash on the weekends. Easy, right? Wrong!

The vending business is really a small franchise with more work. At least with a franchise you most likely have a fixed location and some kind of name recognition. Not in the vending business. The people selling you the machines will tell you, "Oh, of course you have name recognition! You have heard of Coca Cola, haven't you?" I think they are missing the point! Plenty of businesses that carried these and many other products, have failed.

Vending businesses don't fail because of products, they fail because of location. When you go into a bowling alley and see the aspirin machine in the bathroom, who do you think placed it there? There are only two answers: either management or someone with management's approval.

The whole problem with vending is trying to find places to stick your machines. Many businesses want a kickback or fee to let you place your machine there. Many others are just going to get machines themselves. What do they need you for? Plus, you have to work in the factors of theft and vandalism. Remember, you aren't exactly protecting your machines 24 hours a day. There are literally thousands of vending horror stories. Most go like this:

A husband and wife decide they would like to make some part-time income but they aren't sure what they're going to get into. They check into many different types of businesses and decide on a simple vending business.

They check the business references of the company they are going to buy their machines from and even call one of the other people on the sales sheet who's having good luck with the system. (Never talk to leads that companies supply. Most are being paid by the company. Why else would they take your calls.)

So they decide to go ahead. They buy 30 gum ball machines for $5,700. It seems like a fair price and well, heck, the brochure said some people are making $1,000 a month with just five well-placed units. They have 30. They take our their calculator and total up $6,000 for only one months work. They both can't believe how lucky they are. Their machines show up a few weeks later and they are off. Then, reality starts to set in..........

They get really excited at first and place three machines in a local arcade. The owner is a friend of theirs and says he doesn't care. Unfortunately, they don't have much luck talking any other local businesses into letting them place machines, so 27 of their 30 units sit in their garage.

Two weeks later they talk to a local small mall owner into letting them place five machines in two of his stores for half of the profit. Anything is better than letting them waste away in the garage, right? Two more weeks go by and two of the machines at the mall have broken and someone (the husband, who doesn't have that much free time) must go and fix them. Some money is coming in from the other machines but a lot less than they had expected.

Next, the three machines at the arcade, are vandalized. All of the money is stolen from them and the machines are ruined. Their homeowners insurance doesn't cover this type of expense and the couple has become so busy with all of this extra work that they haven't had time to place any of the other machines.

After four really frustrating months they sell all 27 machines to the mall owner for $3,000.

Oh, but your story is made up, right, Matt?

Yes, But...

Stories like this happen all the time in the vending business. I mean, come on! If vending was so easy why would so many companies be selling machines? Why wouldn't they just place units themselves? Because they're making money selling the machines.

I would look for something that doesn't involve stuffing vending machines with candy. Believe me, vending (unless you work really, really hard at it) is not a sweet deal.

Matt Gagnon