There are two distinct pillars of starting and maintaining a successful business – passion for the business and the ability to finance the vision.
Perhaps the most important thing in business is passion. The second most important aspect of starting a successful business is financing the venture. It’s the lifeblood of a business. Without it, the business is merely an idea backed only by passion.
Unfortunately, passion comes from within and can’t be taught.
On the other hand, finding and obtaining financing for your vending machine business can. Let’s go through the options and determine which best fits your needs.
Financing Your Business on Your Own
Check your bank account. Do you have enough money to purchase a refurbished soda machine for $1,500-$2,500 and cover your monthly living expenses? If so, that’s great! You’ll likely have enough funding for your initial vending machine investment as well as the vendible products you intend to sell.
If you don’t have enough in your bank account, don’t worry. You’re not alone. Many people are in the same position. Fortunately, there are still plenty of other ways to finance your passion.
Everyone has family and there’s usually someone who can spare enough to finance your vending machine venture. Oftentimes this will be the most flexible financing option. Repayment schedules aren’t strictly enforced and interest charged is minimal, if at all. In most cases, it’s less about the money and more about your family members just wanting to see you succeed.
Bottling Companies can offer alternatives
Bottling companies want to grow their market share at nearly any cost and will supply your business with a vending machine free of charge. In most cases, they’ll even service it at no cost to you! Financing is not even necessary! The only thing you have to pay for is the product that goes into the machines. However, bottling companies may sell the vendible products to you at a price higher than what you would pay to a wholesaler. Also, if the machine breaks, the bottling company may take longer to perform the necessary repairs. Of course, you’ll have to weigh the pros and cons to determine if it’s the right situation for you.
Financing through a supplier
Larger distributors and re-sellers of new and refurbished vending machines have the ability to offer financing to your business at a reasonable cost. This is the most common option used by many vending business start-ups. It’s quick, simple, convenient, and straightforward. Purchasing the machine and agreeing on the terms of the financing are all done in one meeting between you and the dealer.
The only word of caution is to know how much the it’s really worth. Do some research on eBay or other reputable sites to get an idea. This will give you a rough understanding of the cost of various vending machines.
Financing through Small Business Administration
Although the SBA is an agency specifically designed to assist new and small businesses obtain financing, vending machine businesses have a harder time than others getting approved. Since vending machine businesses are predominantly cash-only businesses, many banks will shy away because this is perceived as higher risk to them. Additionally, the SBA requires several documents and lots of information about the proposed business which requires time and expertise.
Over the last several years, peer-to-peer lending websites have sprung up to provide affordable financing to all types of businesses, including those in the vending machine business. Although this type of financing is less conventional than other methods, it can be very effective. As the owner, you can provide basic information about yourself and your business. Within seconds, you can be pre-approved for financing. Funding is generally deposited into your checking account within days of credit approval. Interest rates and fees are straightforward and relatively low. This financing option works similar to a regular business loan where your vending machine business must pay back what it borrows plus interest on an installment basis.
Another highly unconventional option to finance your vending machine business start-up is through crowdfunding. Similar to peer-to-peer lending websites, crowdfunding is a recent phenomenon that has proliferated on the Internet. The concept is different but fairly straightforward. Create a compelling campaign to finance your vending machine business on a crowdfunding website. Users then visit the website and contribute to the campaign if they find it worth giving to. Instead of having to pay the money back with interest over time, like a traditional loan, your vending machine business can offer something else of value. For example, you could offer vending coupons for free drinks from your machines as an incentive to give. It’s definitely unconventional but it’s better than financing your vending machine business through loans.
The Bottom Line
When considering the many options to finance your vending machine business start-up, know what you’re giving up in return for the money. The more expensive the financing, the less money your vending machine business will generate in profits for you. Consider all your options, make an informed decision, and act on your passion.
Best of luck and happy vending!