Vending Machines as a Passive Income Stream

Hi, this is Rob from Building Better Developers, the Develop-a-Nore Podcast. We're excited to be on Alexa now. You can enable us by simply saying, Alexa, enable Building Better Developers, and we will be there ready for you every time you want to listen to your now favorite podcast. Whether we are your favorite podcast or not, we would love to hear from you, so please leave a review on Amazon. Now back to the show. This is Building Better Developers, the Develop-a-Nore Podcast. We will accomplish our goals through sharing experience, improving tech skills, increasing business knowledge, and embracing life. Let's dive into the next episode. Well, hello and welcome back. It is that time again. We are plowing into yet another episode of the season talking about passive income, side hustle with not so much hustle. Today we're going to talk about vending machines. This is an interesting little area that I stumbled across several years ago as a pretty good way to make some money. I did not do this by purchasing vending machines or anything like that, but did a little bit of research and actually this came back up again as I was looking for some topics for episodes of this season. Vending machines have been around for quite a while and the way they typically work is you have a vending machine, you have products in the vending machine, you charge a certain amount every so often, you get the money out of the machine, you refill the products, you're often running. It's really a very simple business model and it's one that actually can be moderately profitable depending on how you set things up. Typically it looks like from average numbers and that, it's not uncommon for people to generate a couple hundred bucks a month off of a vending machine, sometimes more, sometimes less. The thing I really wanted to put into your mind this episode along with just the idea of a general vending machine is a specialized vending machine. These we're starting to see more and more of because people realize that the general vending machine mechanism doesn't work for just candy bars and soda bottles or something like that. It actually can work for other products. You can have very high end ones and you'll see these in airports and things like that these days where they have like a, they basically call it like a, it's a best buy kiosk that you can step up to, you've got a credit card, you charge it and you can buy all kinds of stuff. I mean you can buy like an iPad, you can buy chargers of all several different types, you can buy a good set of headphones. I think they actually have phones there as well. A lot of stuff like that that would be, they're definitely, they're high ticket and they would be the kinds of things that you may want on like a vacation but you're probably not going to have it, it's not going to be something you're going to purchase like at your local grocery store while you're checking out or something like that. So product placement, machine placement is actually very key but if you go to some areas and just in general life where there are certain types of products that are used on a regular basis, a vending machine could actually be a really good way to take care of that, to help out the potential customers that have a need and yourself to have a, what's essentially a passive income stream because you just have to go, depending on how busy it is and things like that, you just have to go check on it on a regular basis to pull money out and refill it with product. And now they're getting to the point where there's, with Internet of Things and things like that, there are opportunities to get a machine that basically will tell you or that you can remotely check on and yeah, it's going to be more expensive but it also is going to save you some time and some headaches trying to get to your machines and check them out and find out that, oh wait, they got empty early or nope, I didn't even need to make the trip to get here because everything's still full. A great example I ran into a couple of times several years ago was at a hockey rink and they had a machine, particularly one that was inline roller skating and then also ice hockey and they had a machine that had mouth guards, they had laces, they had some spare wheels for inline skates, extra nuts and bolts to cover things like helmet falling apart, things of that nature and a couple other just, the kinds of things that you need, they're almost consumables, I mean they're products but you can typically go through them rather quickly and it's also the kind of stuff that you would need at such a location. So this includes things for the hockey, it's stick tape, it may be, maybe you got a couple of sports drinks in there or some nutrition bars and then some of the higher end items that tape and stuff like that isn't terribly high end but you could easily get some stuff in there that's three, five or more bucks a pop, you may even do things like a jock and cup and some things like that which would also work, those kind of stuff would work at like baseball fields. You may go as high as trying to put some gloves in there, I don't think that would quite be the deal but maybe extra baseball caps and sunglasses, baseball, some things of those nature, you can go to soccer places and maybe extra shin guards and again like shoe laces and stuff like that or always any kinds of sport event, whatever the main gear is, it's going to be useful and if it's the more that you have a uniform basically of gear, we have a lot of protective items, like basketball and soccer you don't have a whole lot, hockey and football or lacrosse or something like that, there's a lot of bits of equipment that depending on how you set it up and how those equipment pieces work, you could potentially have a little vending machine on a field so that somebody runs out of something, boom, you can run to the vending machine, run your card through or drop a couple bucks in, whatever it is, get your product and you're off and running. And you can even do this in business areas, when you think about the kinds of things that somebody may run out of or forget and leave at home, then much like the things you see at airports, you could have things like charger cables or chargers, maybe some office supplies, maybe a nice set of pens or dry erase markers or just things like that, maybe even a couple of basic cleaning supplies. You're going to want to research the area and there's probably some trial and error that's going to be involved in putting together those products. However, it's going to be worth it because you're going to be able to do a bit of a markup and you're going to get a better margin than you would at a standard store. Depending on how you set it up, you probably can get it set up in a situation where your machine can get placed there and you're not really spending any money, there's not a lease agreement or something like that. Or if there is, there's something where you're paying the owner of the business or something like that a very small fee because you're not going to generate a ton of money, but it's enough that will allow you still to pull away with a decent little margin coming off of it and get a nice little revenue stream. Of course, the nice thing is that one, you can always move machines around if you need to. Also, once you get one, then you can always use that revenue stream to fun getting another machine and another machine and another machine and start placing those around and start getting a little here, a little there. If you're generating even 50 to 100 bucks a machine a month and you get five or 10 machines, well, now you're up to, if you're up to 10, you get 500 or 1000 bucks a month coming from your various machines. It's not a bad little revenue stream considering, yeah, you're going to have to spend a little bit of time to maintenance and service and refill and all that kind of stuff, all those machines. But yeah, it's something you could do on a weekend or you could do it late at night or something like that. If you put them in strategically based on your life, maybe something that you would do, like check your couple on your way into work, couple on your way home from work, and maybe a couple on a weekend or something like that. There are a lot of ways to step into this business, this opportunity. I highly suggest that you do some research on it, take a look at some of the areas around, talk to the business owners or whoever you would need to in order to place a machine. Then once you've put that essentially business plan together, then go get a machine, get the things set up, get going with one and see how it goes, see what your trials and tribulations are. Assuming all goes well, you can add another machine and another machine. If it doesn't, you make some adjustments and keep trying until you essentially try to perfect it with one machine in one area. Then once you've got that knocked out, then you can start moving to other places. If you're lucky, the place that you initially position your machine is one where that owner has other locations. Think about a laundromat. Maybe there's somebody that owns five or six laundromats. Well, you could put some interesting vending machines at a laundromat. They're already in that vending mode because of the washers and the dryers and things like that. A lot of them, they have a desk and they sell cleaning soap, like laundry detergent, stuff like that. Maybe you go in and you place a machine in there that's got puzzle books or jigsaw puzzles or the regular books to read or little handheld games or something to just entertain it kinds of things. Again, things like power supplies or batteries and things like that. For people that are sitting there a while, they may run out of those things and say, oh, you know what? My battery died for my whatever thing is I'm using to entertain myself. I need to get some more. Oh, look, here's a machine where I can go pick those up. Those kinds of opportunities are pretty plentiful. You can pretty much walk through anywhere that has people that hang out for a while. You may be able to essentially like the checkout aisle at a grocery store, get something to maybe tantalize them into buying something else, spending a little money on your machine to get whatever the products are that you're trying to sell. There are multiple vendors of machines. This is something, again, where you may want to even just get an idea of what kind of machines are out there, what they're going to cost, size and things like that, because you will have to get it shipped, loaded, place it wherever it is. You're probably going to have a van or run a truck or something like that to be able to move it or have some friends or whoever you need to get it where it needs to be and set it up. Of course, like I said, you'll want to check on it on a regular basis. And give that a shot. See what happens. It's like a classic old school passive income approach, actually. Again, it's one of these that's not mentioned terribly often, much like video games back in the day. They've sort of gone the way of the dodo. But even there, as vending machines go, you could potentially put up a kiosk or an actual old school arcade game, cabinet game, maybe you put somewhere and make a few bucks off of that. There's a lot of interesting opportunities out there if you just put your mind to it and keep an eye open to the places that you frequent. You'd be amazed at how often you'll be sitting there and you'll go, I could really use X, whatever X happens to be, and realize that there's not an easy way to get it and realize that a lot of other people think the same thing. And that may be a good opportunity for a vending machine. That's exactly why you always had cigarette vending machines in bars for the longest time, because they didn't really sell cigarettes, but people wanted to smoke when they were drinking, so it worked out really well. So we went over there, get some cigarettes, and they're off and running. So you can do the same kind of thing. And the nice thing about products, physical products over consumables like food and drink, anything that's a soda-related has probably got a really good shelf life. Some of the other things that you may want to do as snacks or food or something like that, they may not. And then you also may have to worry about refrigeration and some things like that. It's going to require you a more expensive vending machine. Think about it. It's most likely whatever thing you last bought a Pepsi out of was a higher end machine than whatever you last bought a pack of M&Ms out of, or a pack of gum or something like that. In the first case, it was a refrigerated, higher end kind of thing, nice delivery mechanism, stuff like that, versus in the second case, it was probably something that was not refrigerated, was really not much more than some levers, some hangers, and a nice wall of little glass windows. You can see the products and a little touch pad or something like that. So depending on what you get, what you want to vend obviously is going to also affect where your tolerance and your minimums for a vending machine are going to be. It's an interesting way to go. It's definitely a more entrepreneurial approach than maybe some of the other things we've talked about. And it's something that has a value too. You will have inventory, you will have machines, you will have stuff that you can work with for a while. And you could even at some point just say, you know what, I've got a bunch of machines and I'm tired of doing this, and just start selling the machines off. And plus whatever, maybe end up to sort of drain the products that you have and then sell off some of the machines. Then you're off and running because you still have that value, that investment you can get a little bit out of. I don't know how much you're going to get out of a used machine. I wouldn't expect the price is going to dip too much. So it may not be a bad route to go. It may be one of those things where you can go in and it may even be worth it getting a low interest loan to go get a machine, pay that thing off based on the money it generates. And then eventually you're free and clear, you're making a lot of money and you can always sell that off to somebody else or pass it down to your kids, whatever it is that you want to do. So that's vending machines. It's a really simple business plan in a general sense. It's, hey, put something up there, put some product in it, wait for people to come and buy. There is more thought that goes into it, but I think it's a little research and keeping that in the back of your mind, you may stumble across some really good opportunities, much like, like I said, the vending machine I saw that had hockey equipment at the hockey rink or honestly just walk down any aisle of any wing of a airport and you're going to see some pretty interesting vending machines. Again, this is sort of a captive audience, so that works out really well. And you're going to see the prices they're going to charge for those things are going to be a little higher than normal. And there probably is in that case, some sort of a, you know, it's probably limitation to how you get into, how you get your machine into the airport. And there's probably a pretty good fee for having your machine in the airport, things like that. So you'd probably need a higher end set of products. But when you think about things like potentially selling, I don't know, tablets or laptops or something like that, that's probably going to be a bit much, but you could, I think you could easily make a case for even 20, 50, $100 products without too much trouble through a vending machine in a place like that. And then there's other places, you know, think of like golf clubs, maybe even high end restaurants that the people use aren't buying there, potentially like museums, you know, just places where the affluent are probably going to be hanging out. Those needs to be some really good places for you to put a vending machine up and try to catch a couple of people to buy your products. And challenge of the week is go out there and do a little research on vending machines. Take a look at what exists in your normal day-to-day activities. You know, the places that you frequent, are there any vending machines around? They definitely are not as big as they were, I don't think, 10, 20, especially 30 or 40 years ago, but they're still out there. And, you know, there may be some opportunities. And then spend a few minutes just, you know, go out and Google, you know, do search on vending machine companies or something like that. And take a look at some stuff that's out there. You may get some really interesting ideas and the next thing you know, you may have a nice little revenue stream working. That being said, we're going to let you get back to it so you can work on whether it's your primary or secondary or tertiary or beyond revenue stream. You know, might as well get back there and get a little bit of work done. So you can go out there and have yourself a great day, a great week, and then we will talk to you next time. Thank you for listening to Building Better Developers, the Developer Nord podcast. For more episodes like this one, you can find us on Apple Podcasts, Stitcher, Amazon, and other podcast venues, or visit our site at developer.com. Just a step forward a day is still progress. So let's keep moving forward together.