Transcription
I built a $50,000 per month vending machine business, all while working a full-time W2 job. And the best part? I did this with less than $1,000 in startup capital and barely spent an hour a day managing these machines. Today, I'm letting you copy me because I'm laying out the exact step-by-step process I use to start and scale my vending machine business from one single location to a cash-flowing monster. Whether you are brand new to this or already have a couple machines running, this video is for you.
So the first thing you're going to do when starting a vending machine business is identify where you're actually going to put the vending machine, because we want to put it in high-traffic locations. So let's get an idea of what that actually looks like. Step one: let's find the right location. So when I think of locations, the first thing I think about is: is the parking lot full? If the parking lot's full, then there's a great chance that there's going to be high traffic in that location. Think about anywhere where there is a lot of employees; the parking lot is going to be full. Think about anywhere there's a lot of traffic. Think of your airport parking lots, think of your medical office parking lots, think of your YMCA—all those places are going to have a full parking lot.
To make it easier here, I'm going to write up a list of the type of locations in your city that would crush it with a vending machine or a micromarket. Think of places like apartments. I have over 20 machines in apartments right now, and they crush it. In fact, one of our micromarkets in an apartment complex just did over $115,000 last month. Some more ideas are going to be office buildings. Even think about the office buildings or multiple tenants work in the same building; a lot of those high-rise buildings where they have different employers on different floors of the building, but they all roll from the parking lot right through that lobby. Other places with high foot traffic are going to be gyms, think of schools. The great thing is, if you have kids like me, you probably have an "in" at a school, and that school, if it's an elementary school, feeds into a middle school, which feeds into a high school, or vice versa. So once you get in with one, you're going to get in with many. Obviously, there's a bunch of other businesses and places where you can have vending machines, but this is just a starter to help you get going down the right path.
And if you're worried about all these types of places having a vending machine already, good. I hope they already do, because we're going to go take that market share, because these locations, they're tired of the big, bulky Coke machine that has never been restocked, and now they want the more modern approach with micromarkets or the smart machines we use that have way more options than just a Diet Coke or Snickers. I'm serious; it's literally this simple: the right location is the difference between being profitable or not. I'm going to be dropping a separate video on how to find profitable locations soon, so keep your eyes out for that. All right, let's move on to step two: Outreach.
Now that you've identified the location, what do you actually pitch to these locations to get your machines in the door? When we talk about outreach, it's really important to understand the value in being professionally persistent. At the end of the day, those that make the decisions on putting your machines in these buildings are putting out fires, literally, all day. Vending is not a priority, so you need to be professionally persistent and consistently try to stay at the front of their mind. Another thing is to showcase the value you're going to provide and how it's mutually beneficial. So when we talk about value and we use a business, what is the value to the decision-maker for putting this in to their business? When we talk about value, I'm going to use a real-world example: we have a micromarket in a roofing business. When we reached out to the owner of this roofing business, the value for him was actually keeping his employees there during their break. Because previously, before he brought us in to their roofing business, all his workers would take their work trucks—which cost him, as the business owner, gas and fixed costs—and these workers would drive down to the 7-Eleven and get gouged by the prices at the convenience store. So not only were they spending their paychecks on overpriced items, but they were also taking the work trucks, gas, and time away from what he wanted, which was focusing on their business.
Another example of value is our micromarket that did $155,000 last month; the property that brought us in gets 10% of that. So every single month, we're cutting a check to that property for over $1,500. So you may think, well, why would I want to give a revenue share? Well, guess what? They are pumping out content to their guests and their residents to go use our market because they know they're going to get a piece of that revenue. Ultimately, like any negotiation, you want to make it obvious that it's a win-win for them and for you. I found that this one message script has performed way better than all the others we've done, and I'm going to give it to you for free—and the link is in the description.
Now that we've actually discussed the important steps, let's do a little role-play. So if I roll into an apartment complex, here is going to be my talk track. I literally am going to walk up to the front desk lady, ask her, "Hey, ma'am, I work for a smart vending, luxury micromarket company." As a property manager here, when she intros me to the property manager, the first question I'm going to ask is, "Are your residents going and leaving the building late at night when it's cold, going into the winter season, to just go get a snack at 10 p.m.?" Nine times out of 10, she's going to say yes, and that's my pain point that I'm going to press on over and over again. What about that resident that just went to the 7-Eleven at 11:00 p.m. and got struck by a homeless guy? I can press into that pain point because we can solve and prevent that by just providing the amenity right on-site. And for a lot of these nice complexes, they have an amenity lounge, and what these building owners want is that amenity lounge to be used. Think about that room in the lobby that's got a pool table or that's got some computers with free printers; a lot of times those rooms collect dust unless residents have an excuse to go in there. So these smart machines that are aesthetically pleasing, building owners love because it drives traffic to these amenities that weren't being used.
Once we've done outreach and we found that there is a property interested, the third step is actually negotiating and getting that proposal out to them. Now, when we talk negotiation, a lot of people think right away, we got to rent space in the building or give a revenue share. Well, you wouldn't believe this, but over half of the properties where we have machines in don't get revenue share from us. In fact, we do not lead with a revenue share unless someone asks for it. So when we negotiate, the first thing we mention is there's no cost to them. So that really nice machine, they don't know what it costs, but we make it clear they're not paying for it. The second thing we make known to them is there's going to be no work that falls on their staff; all the stocking, all the maintenance, all the upkeep of the machines and the markets will all be done by us. This is really important, because if you think of hotels and what those grab-and-go's in hotels have, a lot of times hotels are frustrated because their employees aren't incentivized to keep those grab-and-go's stocked because they're just an hourly-waged employee. Now, don't get me wrong, some business owners and employers are smart; they are going to ask you about revenue share. When these people ask you about revenue share, don't run from it; in fact, lean into it. What I mean when I say lean into it is, for example, if I have a property owner that's like, "Hey, we'll let you put this vending machine in here, but you got to pay us 5% revenue share," my counter to that is, "We don't do revenue share unless we get three or more properties to make it economically make sense. So if you want to intro me to your sister properties, then we would absolutely be thrilled to give you a revenue share." And right away, you just went from a one-property, one-machine to now three or more properties, three or more machines, doing the revenue, getting you to freedom that much quicker.
Now that you've gotten the deal, step four is actually getting the machine. Now it's really important as we get into step four that you notice that getting a machine is not the first thing you do when you start a vending machine business. In fact, I've had many people reach out to me on social media that will always say, "Hey, I got three or four vending machines." The first question I ask is, "What are those machines doing in revenue per month?" And they tell me they're sitting in my garage. So please don't jump to step four just because machines are sexy or they look cool. Now, when it comes to machine selection, you're not getting just a traditional vending machine; you want to find the type of machine that aligns with that location's specific needs. For example, if it's an office building, they care about incidentals; they don't want to go down to the store if they forgot their phone charger. Or if it's a gym, gyms want healthy-only options, so they want protein bars and protein shakes; they don't want to see Diet Coke or Snickers in their machine. Just like with a school, you got to follow the kids' nutritional guidelines by the government, so you can't even have those type of items in your machine anywhere. That's why it's important that when we think about machines, we align it with what the location wants.
Now, when we talk the type of machines, there's multiple different options. The most common option and one I recommend for anyone that's really unsure what the machine might do for revenue is going to be a combo micromarket. The reason I like this one is a combo means that it can hold both drinks and snacks at the same time, plus incidentals if you needed that too. The other thing you can get is a drink-only machine. Now, a drink-only machine—the great thing about drinks is they have higher margins, but they also don't have any shelf life that's going to expire anytime soon, so you can get away with stocking a lot of inventory without it worrying about expiring. The third option is going to be a snack-only machine; this is going to be one that holds a ton of food options. I usually don't lead with this just because a bag of chips has a 90-day shelf life; that clock starts the minute it shows up, but it's a good option to put next to a drink machine if you have a location that justifies two machines. And then the fourth option is going to be an open market. The reason I like open markets is it gives you flexibility; the downside of an open market is going to be if you're worried about theft. If I'm in an apartment complex where I have a lot of late-night activity and no one's there attending to an open market, I probably would go with a locked machine instead. Instead, if I have an office building where this is in the employee break room and I put up a sign that says, "If you steal an item, you're going to be fired," then I might do an open market because no one's going to steal. This is why it's important to match the machine to the type of location.
Now, the other component to this is the more aligned you are with the location and what type of machine and products you're going to put in it, the more sales you will get. For example, if it's a gym and they're either sponsored by a specific product, or if it's an office building and they really want to push those types of incidentals, they're going to be more aligned to really help market whatever is in your machine. For example, right now during the winter season, these office buildings love when you carry DayQuil, NyQuil, anything that's going to help these employees feel better and stay at work. So if you put those items in your machine, they're going to help market that to their employees.
Now you're probably asking, "Mike, where the heck do I buy a vending machine from?" Pay attention and take some notes, because I don't want you to get screwed like I did. I made the mistake of buying my first ever vending machine off of Craigslist, thinking I was getting a steal, only to see it break six months later and to see that $33,000 go down the drain. Buy it right or buy it twice. Instead of being an idiot like I was, you should trust these three suppliers. I have a free linked training in the description where you can find these different machine manufacturer options, and the best part is they even offer financing options. So if you're starting with almost nothing, you'll be able to find a solution for you.
Now let's move on to step five; this is where you get all your time back and your freedom. Step five is all about scaling. Now that you've locked your first location in and you're actually making money from this, how do you go about making this truly passive income? As far as getting more locations goes, it's literally just a rinse-and-repeat process of the different steps I just laid out for you. Now, when it comes to making your first hire, I'm a huge believer in learning how to do it first and then ultimately delegating that. So the first thing I like to do is figure out: are you trying to maximize your profits or are you trying to remove yourself from your business? So if you're like me, who had a W2 when I got into this, I was trying to remove myself from the day-to-day as quick as possible. So what I did is I did a job ad online in what's called a gig economy. What do I mean by that? I went on to Craigslist, and Craigslist has broken out into two different types of jobs: normal jobs and gigs. Gigs are where all your Uber drivers, your DoorDash—anyone that turns on a switch and works when they want, where they want—those are the type of people I want to hire. So the guys that I hire, I find on that gig economy where I tell them in the description, "I don't care if you stock a machine at 6:00 a.m. because you're an early riser, or you're a night owl and you want to stock the machine at 10:00 p.m." At the end of the day, it just needs to get stocked. So in this case, I would put in an ad: $20 an hour. And what you can do is you can start to parlay how much work you give them based on the number of machines. So if you have one machine doing really well, that machine might need stocked two to three times a week. Well, in that case, you just hire them two to three hours, and you just ramp it up as you ramp up more and more locations. We're to the point now with our operation in two different states where I have over 50 machines and I'm not in the day-to-day. So we have a general manager and over both of our routes here in Oregon and Illinois, and then we also have full-time stalkers that will help on the day-to-day stocking of the machines. In some cases, your general manager may be your stalker until you get to enough locations, but the whole idea is to scale this thing so you're doing the high-leverage tasks like getting more properties and removing yourself from the low-leverage tasks like picking product to take to those locations.
The main thing I'd like to share with this is the process that I just described hasn't just worked for me; I've seen it work wonders for people who have had zero experience running businesses before, like Charles, a high school teacher in Texas, who has over five machines doing over 20 grand a month, or even in Minnesota who has four teenage kids that need help paying for college, and so what he did was he gave each kid their own location to pick what products they put in that machine and also compete against the other siblings on price and which machine is doing the best. Or another one, Joe; Joe just retired up in Wisconsin because he had so many machines and markets going that he was able to replace his W2 income and retire early. The list goes on and on. I could talk about Aaron and Carney in Indiana, who are literally now building an entire operation where they're in everything from apartment buildings to sheriff offices and warehouses, all in between. Or we can go to the next one, like Zach, who just started in July out in the Northeast, and he's over 20 locations that are going to break 50,000 a month within the next couple months.
Now, for those of you that want to avoid the headaches of trying to do this on your own, I have something just for you. All of the people I just mentioned are part of my private community called VendingPreneurs, where we do the heavy lifting; our team will take care of the outreach, the emailing, the cold calling on your behalf. There's no doubt it's still going to take a lot of work, but it's way easier than you trying to go over these speed bumps yourself, but it will be a much more streamlined process than you doing it yourself. There's going to be a link in the description with a free training video on how to get started. Thanks for tuning in; Mr. Passive signing off. See you soon.