Start a Vending Machine Business – Set-Up Costs, Funding and Financing

By 9th August 2015Articles

One of the best things about the vending business is the low start-up cost for entrepreneurs entering the business. You can spend anywhere from only a few hundred dollars up to thousands of dollars, depending on the type of machines that you want, the financial risks you decide to take and your credit score. In this article we take a closer look at the start-up costs associated with starting up a vending business and we look at some of the typical funding or financing options available.

You can start your vending enterprise with a low budget and relatively little risk. You should avoid investing significantly until you begin bringing in some profit. You can get vending machines for candy and unrefrigerated snacks for less than $150 if you browse the online auctions or your local second hand market. Some simple gumball or snack machines can start your business. As two or three of those start making profits you can buy a few more machines. A business you started with $200 can quickly grow using this method.

Electronic machines that refrigerate or keep snacks warm are much more costly than the basic vending machines. If you really want to deal with these kinds of products, avoid buying new machines as acquiring good used or leased machines will minimize your risk while you scout out and test a few locations and see if the business is right for you.

Your machines won’t be your only start up costs, however. There are license fees, maintenance for your machines, fuel for your vehicle, insurance and advertising costs to name just a few. A lot of this will probably have to come from your own personal account for the first few months before you start to see any revenues so be sure to compensate for this in your personal budget.

With such low start-up costs involved it is wise to try and avoid going into debt right away. However, if you do find yourself in need of funds, borrowing from family or friends would be much better than getting a commercial or personal bank loan. You could also look for investors but may have to give up some control of the business if you accept their funding. If you don’t need a large amount of money, you would be better off retaining full control of your company and avoiding the headaches associated with partnerships or investors.

If you decide to apply for a bank loan be sure to try your personal bank first, where you have a stable account history. When you fill out the application, have a copy of your business plan with you and make it clear that you are funding part of the costs yourself to show your personal commitment to the project. You will also probably need collateral or a co-signer in order to secure a credit line from a bank.

You can also consider taking advantage of government agencies that offer loans with very favorable terms to small businesses. Before you do that though you should check to see if there are any state or federal grants available. Grants are gifts of money, usually fairly small, that do not have to be repaid. Again, you will need a business plan to prove that you will be benefiting the community if you are granted the funds.

Credit cards should be your option of last resort. Their fees and interest rates are structured to keep you in debt and when you borrow for your business with a credit card you embark on a very slippery slope.

If you do need external funding or financing, be sure to do it wisely and only if absolutely necessary. And once you have secured the funds to start your vending business make sure that you budget in a way that values every dollar in a way that will enable you to profit and grow.

Source by Steve P Sutherland