What are the necessary things required to start a business? Is this idea profitable or not? How much investment is needed to start executing this business idea? You may want to ask these questions from an experienced vending machine business owner to understand the nitty-gritty aspects.
A comprehensive business plan, determination, and persistence are necessary to take it to the next level. Similarly, studying the competitors and determining the pros and cons before starting a business can make a lot of difference.
This article offers all the crucial information about budget, profitability, advantages and disadvantages of the ice vending machine business, and what factors to consider while creating a business plan.
How Much Does It Cost to Start this Business
The cost to start this business depends on various factors like vending machine price, installation costs, location, rental costs, licensing, etc. However, the average cost varies from $40,000 to $160,000.
If you buy a brand new ice vending machine, it costs from $20k to $100k. If you don’t have enough budget, you can opt for a second-hand machine also. But before buying a second-hand ice vending machine, ask yourself why the owner is selling it. Is he quitting the business or just wanting to get rid of the machine?
Check the following things before buying it:
Model: What model is it? Is the machine new or old?
Condition: Is the machine working, or has it worn out?
The vending machine needs some area where it can be placed. Depending on the location, the rent can cost you between $500 to $1000.
The vending machine installation and the plumbing and electrical work can cost between $10,000 to $20,000.
Permits, staffing, and other utilities can add up to increase the cost. So, considering these estimates, you can determine how much capital you should raise to start the business.
Ice Vending Machine Business Plan
Here are 8 steps to make a result-oriented business plan:
1. Market and Competitor Analysis
Before starting this business, analyzing the market demand and competition is crucial to foster its growth and success. Evaluate the necessity of this business at different locations and review the competition there.
Perform a SWOT analysis and examine the strengths and weaknesses of your competitors. List and include their shortcomings in your business plan to achieve competitive supremacy. Think about your target audience and their preferences.
Keep in view the customers’ demands and the market trend while creating your products.
2. Select an Appropriate Location
Business location is one of the foremost things that determines business profitability. A location with great hustle and bustle has a high demand for ice. However, choosing a secluded area can lead to business failure as there will be no sales.
3. Acquire Capital for Business
Adequate funding is vital to carry out all business operations without any hurdles. There are numerous ways to get capital investment for your business.
Family and friends
Ask for family and friends to give you some money as a loan which you can return to them later. Have a written augment with the money lenders to avoid future problems.
Apply for bank loans if you don’t get funding from friends and family. A range of options offers different investment amounts, repayment times, and interest rates. Read the terms and conditions thoroughly before selecting any plan.
Other options include angel investors, government programs, credit unions, etc.
4. Get the Required Licenses and Permits
Operating the business lawfully with all the required licenses and permits is crucial to avoid legal problems. Perform detailed research to get information about the documents and the permits required.
Go to the government offices. Read articles online. Discuss with an attorney to make an informed decision.
5. Choose a Business Entity
After that, it’s time to choose the right structure for your business. There are four main business entities available. So, select the one that meets your business goals and vision.
It is a single individual-owned business. He keeps all the profit but is also liable for the losses.
It is a business owned by two or more individuals. All the business partners share profits, losses, and debts. The responsibilities are also divided among them.
It is a hybrid entity offering limited liability and flexible management and tax options.
It’s a legal entity for shareholders providing a formal management structure and limited liability protection.
6. Get an Insurance
Business insurance is a must, as you can’t predict what can happen in the future. In case of a mishap, the insurance company compensates you.
For example, if a person damages your vending machine or a car crashes with it, the insurance company will pay you for the damages.
Numerous insurance companies are offering countless deals. Always go for reputable companies. Check out multiple forums and ask for their reviews.
Don’t rush while making this decision, as it can lead to severe consequences.
7. Create a Professional Brand
Create a strong business persona through professional branding. It gives your business a unique identity so people can recognize you just by your logo.
Big brands such as Nike, KFC, Starbucks, etc., grab customers by making a professional brand. For this purpose, choose a striking color palette, an extraordinary logo, and a captivating business name.
8. Market the Business
Advertising and marketing a new business can do wonders to stand out among competitors. Create a professional website listing all the services you offer.
Use the right keywords, and optimize the title, meta description, and content to improve your website’s visibility in the search engine. Have a customer reviews section to add the positive comments you got from the clients.
Make appealing social media profiles on all platforms to attract people. Post relevant content, including informational tips, quotes, and funny memes to engage people. Optimize your social media to get maximum reach. Use brand colors in the display pictures and profile banners to differentiate your brand from the competitors.
How Much Profit Can You Make from This Business?
You can profit about $2500 to $3500 from the ice vending machine business. It’s not a fixed amount, as your profit depends on multiple factors.
First is seasonality. People don’t use ice all year. It’s primarily used in hot seasons when people consume juices, ice creams, etc., to keep themselves cool. However, in winter, people like to drink beverages that keep them warm such as tea, coffee, hot chocolate, etc. Consequently, the demand for ice decreases.
Second, is the location of the vending machine. If it’s placed in an area swarming with people, your profit will be high and vice versa.
Advertising and marketing highly impact the revenue earned from a business. Making people aware of your business, service, and location can significantly transform the situation.
Pros and Cons
Comprehending the advantages and disadvantages of a business idea is compulsory to overcome the challenges while running it so you can make a rational decision.
1. Be Your Boss
Enjoy the freedom to set your working hours rather than having a 9 to 5 job. You can make all the decisions without anyone’s interference. Moreover, you’re not accountable for your actions if something goes wrong.
2. No Staffing
Hiring multiple employees for the vending machine business isn’t compulsory. You can hire an employee if critical.
3. No Inventory Management
The advantage of this business is that inventory is not a prerequisite. You can efficiently run this business without handling raw materials.
4. No equipment or tools
You can start this venture free from the worries of expensive tools and equipment except the vending machine.
The seasonality of the ice business can cause instability in your income. You can yield substantially in summer, while there may be no financial gain in winter.
2. Frequent Cleaning
To deliver clean ice to customers, it’s critical to take care of the hygiene of the ice vending machine. So, keep the machines neat to comply with safety and health regulations.
3. Continuous Supply of Electricity
To function continuously, it needs a constant supply of electricity. So, if there is any interruption, the machine won’t work.
Ice Cream Vending Machine Business Plan
The steps for the ice cream vending machine business plan are the same as that of the ice vending machines. Here are the summary outlining the main points for the plan:
- Do a market analysis and examine the top leaders in this business
- Target high-traffic areas to maximize the chances of hefty sales
- Offer unique flavors liked by children as they are fond of ice cream
- Get enough funding for the business via different sources
- Apply for licenses and permits to prevent legal issues
- Choose the right business entity
- Buy the mandated tools and equipment
- Utilize all the marketing channels to make the customers aware of your business
To conclude, an ice vending machine business plan must cover all the essential aspects to make this endeavor thriving and fruitful. Do proper research, explore rival businesses, and create impressive products that solve customer problems.
Obtain licenses and permits, register your business, and buy an insurance plan. After that, work on the branding and marketing strategies. Optimize the website and social media profiles to build a loyal customer base.
Frequently Asked Questions (FAQs)
Q: Are ice vending machines profitable?
A: Yes! Ice vending machines are profitable. However, considering some important factors to increase profitability is essential. These factors include the demand for this business, competition, the vending machine’s location, business plan, and marketing strategy.
Q: How much does an ice vending machine cost?
A: The average price for an ice vending machine is $40,000 to $160,000. It can vary based on various aspects, such as model, brand, economic conditions, the state where you live, etc.
Q: Is the ice vending machine business worth it?A: Yes! It is a good business idea if you want to earn some passive income. It has high-profit margins and low operational costs because there is no need for employees and inventory management.