Table of Content

    Vending machine business plan for starting your own company

    Starting a vending machine business is very easy and extremely profitable as well. If you don’t know how to start a vending business, just go through this business plan. It will guide you through everything which you need to know for starting this venture.

    The first thing you should do is to develop a comprehensive plan for your business. The business plan will not only help you in startup but it will also help you in taking important decisions for your company over the next years. In case you don’t know how to write a good vending machine business plan, we are providing a detailed business plan of a vending machine business startup ‘Crunch & Cool’ to help you avoid the trouble of making a plan yourself.

    Executive Summary

    2.1 The Business

    Crunch & Cool will be a licensed and insured vending machine business whose main office will be located in Downtown Manhattan. The company’s warehouse for storing the products will be at a 10 minutes’ drive from the main office.

    2.2 Management

    The business will be solely owned and operated by Jack Kith. Jack will hire a small team comprising of sales executives, drivers, technicians and assistants for helping him in his venture.

    2.3 Customers

    Our customers will primarily be the residential and working-class community living in Manhattan but with time, we also plan to increase our business in other cities as well.

    2.4 Target of the Company

    Our primary target is to become the best vending machine business in Manhattan within next 3 years of our launch. As per our vending machine business plan example, our secondary target is to achieve the net profit margin of $10k/month by the end of the first year, $15k/month by the second year, and $25k/month by the third year.

    Vending Machine Business Plan - 3 Years Profit Forecast

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    Company Summary

    3.1 Company Owner

    Jack is a business graduate of Harvard University. After completing his Bachelor’s, he worked with a couple of fast-food restaurants business plan at executive positions. He is known for his sharp business acumen and exceptional management skills.

    3.2 Why the vending machine business is being started

    The main motive behind Jack opening a vending machine business plan is his intense passion for business. Jack has exceptional business skills and this venture is just his first step into the business world.

    3.3 How the vending machine business will be started

    The company will buy used vending machines for startup which will then be installed in several regions in Manhattan. Nearly 35% of machines will be located in the residential zone while the remaining will be distributed in the commercial zone as well as near schools, offices, and other institutions. The company’s financial experts have forecasted following costs for the start-up:

    Vending Machine Business Plan - Startup cost

    The detailed start-up information is as follows:

    Start-up Expenses  
    Legal $55,300
    Consultants $0
    Insurance $32,750
    Rent $32,500
    Research and Development $32,750
    Expensed Equipment $32,750
    Signs $1,250
    TOTAL START-UP EXPENSES $187,300
    Start-up Assets $0
    Cash Required $332,500
    Start-up Inventory $32,625
    Other Current Assets $232,500
    Long-term Assets $235,000
    TOTAL ASSETS $121,875
    Total Requirements $245,000
    START-UP FUNDING $0
    START-UP FUNDING $273,125
    Start-up Expenses to Fund $11,875
    Start-up Assets to Fund $15,000
    TOTAL FUNDING REQUIRED $0
    Assets $23,125
    Non-cash Assets from Start-up $18,750
    Cash Requirements from Start-up $0
    Additional Cash Raised $18,750
    Cash Balance on Starting Date $21,875
    TOTAL ASSETS $0
    Liabilities and Capital $0
    Liabilities $0
    Current Borrowing $0
    Long-term Liabilities $0
    Accounts Payable (Outstanding Bills) $0
    Other Current Liabilities (interest-free) $0
    TOTAL LIABILITIES $0
    Capital $0
    Planned Investment $0
    Investor 1 $332,500
    Investor 2 $0
    Other $0
    Additional Investment Requirement $0
    TOTAL PLANNED INVESTMENT $695,000
    Loss at Start-up (Start-up Expenses) $313,125
    TOTAL CAPITAL $251,875
    TOTAL CAPITAL AND LIABILITIES $251,875
    Total Funding $255,000

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    Services for customers

    Before you move to starting a vending machine business, you must plan what type of vending machines will you install and what products will they provide to your customers because you can only plan the subsequent things after this stage.
    Our vending machines will offer following products:

    • Snacks such as chips, cookies, cakes etc.
    • Drinks and beverages including milk
    • Hot served drinks including tea and coffee
    • Frozen foods, chilled drinks and ice creams
    • Cigarettes and lottery tickets

    Marketing Analysis of vending machine business

    The most important component of effective vending machine business plans is their marketing analysis that’s why Jack acquired the services of marketing experts to help him through this phase. It is only after this stage that a good vending machine marketing strategy for business could have been developed.

    Note

    After identifying the local market trends in Manhattan, the marketing experts and analysts helped him in developing a brilliant vending machine business model. If you are starting on a small scale then you can carry out a marketing analysis yourself by taking help from this vending machine business plan template.

    5.1 Market Trends

    The vending industry annually contributes about $30 billion in revenue to the United States. There are more than 7 million vending machines in the United States and nearly 100 million Americans use one of the installed vending machines each day. Considering the convenience they provide to the users, the number of installed vending machines have been increasing during the last few years. In short, this industry has a lot of potential and a business in this industry can yield immense profit provided that you plan it successfully.

    5.2 Marketing Segmentation

    Our marketing experts have identified following type of target audience which can become our potential customers.

    Vending Machine Business Plan - Market Segmentation

    The detailed marketing segmentation comprising of the company’s target audience is as follows:

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    5.2.1 Working Community:

    The first category includes the workers and employees who work in the businesses or offices in Manhattan. This group leads a strenuous life, burdened with plenty of work and thousands of matters to think upon. Due to their busy routine, most of the time they can’t go to restaurants and hence use vending machines for grabbing a bite.

    5.2.2 Residential Community:

    The second group of our target customers will be the residential community. This group comprises of children, teens, adults and senior citizens. They also use vending machines to conveniently get their required products as compared to visiting the stores.

    5.2.3 Passers-by:

    The third category includes those people who do not work or reside in our target areas but have come to for any business purpose or commercial activity. This group also often tends to stop by vending machines for having a quick snack, beverages or cigarettes.
    The detailed market analysis of our potential customers is given in the following table:

    Market Analysis
    Potential Customers Growth YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 CAGR
    Working Community 45% 11,433 13,344 16,553 18,745 20,545 13.43%
    Residential Community 38% 22,334 32,344 43,665 52,544 66,432 10.00%
    Passers-By 17% 8,322 9,455 10,655 12,867 14,433 15.32%
    Total 100% 42,089 55,143 70,873 84,156 101,410 9.54%
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    5.3 Business Target

    Our business targets are as follows:

    • To become the best vending machine business in Manhattan within next 3 years of our launch
    • To recover the initial investment within next 1 year of launch
    • To expand the business and install vending machines in 3 other cities within 5 years

    5.4 Product Pricing

    After considering the market demands, we have priced all our products in the similar ranges as of our competitors.

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    Strategy

    Sales strategy is an important component of any startup plan hence it must be given proper attention before you think about how to start a vending machine business.

    6.1 Competitive Analysis

    Vending machine industry is one of the most competitive industries since there are more than 7 million vending machines in the United States so any startup in this industry has a really tough competition. To survive in such competitive environment, you must come up with some competitive advantage before thinking about how to open a vending machine business. Our competitive advantage is that our vending machines will be always full of fresh products and stock. We will make sure our every customer gets everything from our vending machines so that they don’t need to visit stores or other places.

    6.2 Sales Strategy

    We will install our machines at all those places where there are no prior vending machines installed. We will offer a 10% discount on all products for the first three months of our launch. We will also paint vending machines in various eye-catching themes for the purpose of attracting customers.

    6.3 Sales Monthly

    Vending Machine Business Plan - Sales Monthly

    6.4 Sales Yearly

    Vending Machine Business Plan - Sales Yearly

    6.5 Sales Forecast

    Our forecasted sales pattern is given in the following column chart:

    Vending Machine Business Plan - Unit Sales

    The detailed sales forecast is given in the following table:

    Sales Forecast      
    Unit Sales Year 1 Year 2 Year 3
    Snacks 1,887,030 2,680,320 2,588,240
    Beverages 802,370 815,430 823,540
    Hot Drinks 539,320 770230 1,002,310
    Cigarettes 265,450 322,390 393,320
    Lottery tickets 143,530 125,030 176,240
    Frozen foods 134,240 394,340 842,230
    TOTAL UNIT SALES 3,771,940 5,107,740 5,825,880
    Unit Prices Year 1 Year 2 Year 3
    Snacks $140.00 $150.00 $160.00
    Beverages $600.00 $800.00 $1,000.00
    Hot Drinks $700.00 $800.00 $900.00
    Cigarettes $650.00 $750.00 $850.00
    Lottery tickets $140.00 $120.00 $100.00
    Frozen foods $150.00 $1,300.00 $1,450.00
    Sales
    Snacks $2,149,800 $2,784,000 $3,383,200
    Beverages $120,050 $194,500 $268,500
    Hot Drinks $50,110 $71,600 $93,000
    Cigarettes $139,350 $194,600 $249,850
    Lottery tickets $62,350 $72,300 $82,250
    Frozen foods $229,500 $365,500 $501,500
    TOTAL SALES
    Direct Unit Costs Year 1 Year 2 Year 3
    Snacks $0.70 $0.80 $0.90
    Beverages $0.40 $0.45 $0.50
    Hot Drinks $0.30 $0.35 $0.40
    Cigarettes $3.00 $3.50 $4.00
    Lottery tickets $0.70 $0.75 $0.80
    Frozen foods $3.00 $3.50 $4.00
    Direct Cost of Sales
    Snacks $989,300 $1,839,000 $2,679,700
    Beverages $66,600 $119,900 $173,200
    Hot Drinks $17,900 $35,000 $52,100
    Cigarettes $19,400 $67,600 $115,800
    Lottery tickets $27,700 $69,200 $110,700
    Frozen foods $64,200 $224,700 $385,200
    Subtotal Direct Cost of Sales $1,294,100 $1,699,400 $2,104,700

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    Personnel plan

    After deciding the strategy, you must prepare a personnel plan before you start your own vending machine business. The personnel plan of Crunch & Cool is as follows:

    7.1 Company Staff

    Jack will act as the CEO of the company and will initially hire following people:

    • 1 Warehouse Manager for managing the operations at company’s warehouse
    • 2 Sales Executives responsible for marketing initiatives
    • 15 Assistants for filling vending machines with stock
    • 4 Drivers for transporting products
    • 2 Technicians for ensuring the vending machines keep working perfectly

    7.2 Average Salary of Employees

     Personnel Plan      
    Year 1 Year 2 Year 3
    Warehouse Manager $85,000 $95,000 $105,000
    Sales Executives $145,000 $152,000 $159,000
    Assistants $550,000 $650,000 $750,000
    Drivers $66,000 $73,000 $80,000
    Technicians $60,000 $63,300 $70,000
    Total Salaries $821,000 $938,300 $1,059,000

    Financial Plan

    The final thing to do before you think about how to open a vending machine business plan is to develop a comprehensive financial plan which will cover the detailed costs of startup.

    8.1 Important Assumptions

     General Assumptions      
    Year 1 Year 2 Year 3
    Plan Month 1 2 3
    Current Interest Rate 10.00% 11.00% 12.00%
    Long-term Interest Rate 10.00% 10.00% 10.00%
    Tax Rate 26.42% 27.76% 28.12%
    Other 0 0 0

    8.2 Brake-even Analysis

    Vending Machine Business Plan - Brake-even Analysis

     Brake-Even Analysis  
    Monthly Units Break-even 5530
    Monthly Revenue Break-even $159,740
    Assumptions:
    Average Per-Unit Revenue $260.87
    Average Per-Unit Variable Cost $0.89
    Estimated Monthly Fixed Cost $196,410

    8.3 Projected Profit and Loss

     Pro Forma Profit And Loss      
    Year 1 Year 2 Year 3
    Sales $309,069 $385,934 $462,799
    Direct Cost of Sales $15,100 $19,153 $23,206
    Other $0 $0 $0
    TOTAL COST OF SALES $15,100 $19,153 $23,206
    Gross Margin $293,969 $366,781 $439,593
    Gross Margin % 94.98% 94.72% 94.46%
    Expenses
    Payroll $138,036 $162,898 $187,760
    Sales and Marketing and Other Expenses $1,850 $2,000 $2,150
    Depreciation $2,070 $2,070 $2,070
    Leased Equipment $0 $0 $0
    Utilities $4,000 $4,250 $4,500
    Insurance $1,800 $1,800 $1,800
    Rent $6,500 $7,000 $7,500
    Payroll Taxes $34,510 $40,726 $46,942
    Other $0 $0 $0
    Total Operating Expenses $188,766 $220,744 $252,722
    Profit Before Interest and Taxes $105,205 $146,040 $186,875
    EBITDA $107,275 $148,110 $188,945
    Interest Expense $0 $0 $0
    Taxes Incurred $26,838 $37,315 $47,792
    Net Profit $78,367 $108,725 $139,083
    Net Profit/Sales 30.00% 39.32% 48.64%

    8.3.1 Profit Monthly

    Vending Machine Business Plan - PROFIT MONTHLY

    8.3.2 Profit Yearly

    Vending Machine Business Plan - PROFIT YEARLY

    8.3.3 Gross Margin Monthly

    Vending Machine Business Plan - GROSS MARGIN MONTHLY

    8.3.4 Gross Margin Yearly

    Vending Machine Business Plan - GROSS MARGIN YEARLY

    8.4 Projected Cash Flow

    The following column diagram shows the projected cash flow.

    Vending Machine Business Plan - Projected Cash Flow Diagram

    The following table shows the projected cash flow:

     Pro Forma Cash Flow      
    Cash Received Year 1 Year 2 Year 3
    Cash from Operations
    Cash Sales $40,124 $45,046 $50,068
    Cash from Receivables $7,023 $8,610 $9,297
    SUBTOTAL CASH FROM OPERATIONS $47,143 $53,651 $59,359
    Additional Cash Received
    Sales Tax, VAT, HST/GST Received $0 $0 $0
    New Current Borrowing $0 $0 $0
    New Other Liabilities (interest-free) $0 $0 $0
    New Long-term Liabilities $0 $0 $0
    Sales of Other Current Assets $0 $0 $0
    Sales of Long-term Assets $0 $0 $0
    New Investment Received $0 $0 $0
    SUBTOTAL CASH RECEIVED $47,143 $53,651 $55,359
    Expenditures Year 1 Year 2 Year 3
    Expenditures from Operations
    Cash Spending $21,647 $24,204 $26,951
    Bill Payments $13,539 $15,385 $170,631
    SUBTOTAL SPENT ON OPERATIONS $35,296 $39,549 $43,582
    Additional Cash Spent
    Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
    Principal Repayment of Current Borrowing $0 $0 $0
    Other Liabilities Principal Repayment $0 $0 $0
    Long-term Liabilities Principal Repayment $0 $0 $0
    Purchase Other Current Assets $0 $0 $0
    Purchase Long-term Assets $0 $0 $0
    Dividends $0 $0 $0
    SUBTOTAL CASH SPENT $35,296 $35,489 $43,882
    Net Cash Flow $11,551 $13,167 $15,683
    Cash Balance $21,823 $22,381 $28,239

    8.5 Projected Balance Sheet

    The following table shows projected balance sheet:

     Pro Forma Balance Sheet      
    Assets Year 1 Year 2 Year 3
    Current Assets
    Cash $184,666 $218,525 $252,384
    Accounts Receivable $12,613 $14,493 $16,373
    Inventory $2,980 $3,450 $3,920
    Other Current Assets $1,000 $1,000 $1,000
    TOTAL CURRENT ASSETS $201,259 $237,468 $273,677
    Long-term Assets
    Long-term Assets $10,000 $10,000 $10,000
    Accumulated Depreciation $12,420 $14,490 $16,560
    TOTAL LONG-TERM ASSETS $980 $610 $240
    TOTAL ASSETS $198,839 $232,978 $267,117
    Liabilities and Capital Year 1 Year 2 Year 3
    Current Liabilities
    Accounts Payable $9,482 $10,792 $12,102
    Current Borrowing $0 $0 $0
    Other Current Liabilities $0 $0 $0
    SUBTOTAL CURRENT LIABILITIES $9,482 $10,792 $12,102
    Long-term Liabilities $0 $0 $0
    TOTAL LIABILITIES $9,482 $10,792 $12,102
    Paid-in Capital $30,000 $30,000 $30,000
    Retained Earnings $48,651 $72,636 $96,621
    Earnings $100,709 $119,555 $138,401
    TOTAL CAPITAL $189,360 $222,190 $255,020
    TOTAL LIABILITIES AND CAPITAL $198,839 $232,978 $267,117
    Net Worth $182,060 $226,240 $270,420

    8.6 Business Ratios

    The following table shows data about business ratios:

     Ratio Analysis        
    Year 1 Year 2 Year 3 Industry Profile
    Sales Growth 4.35% 30.82% 63.29% 4.00%
    Percent of Total Assets
    Accounts Receivable 5.61% 4.71% 3.81% 9.70%
    Inventory 1.85% 1.82% 1.79% 9.80%
    Other Current Assets 1.75% 2.02% 2.29% 27.40%
    Total Current Assets 138.53% 150.99% 163.45% 54.60%
    Long-term Assets -9.47% -21.01% -32.55% 58.40%
    TOTAL ASSETS 100.00% 100.00% 100.00% 100.00%
    Current Liabilities 4.68% 3.04% 2.76% 27.30%
    Long-term Liabilities 0.00% 0.00% 0.00% 25.80%
    Total Liabilities 4.68% 3.04% 2.76% 54.10%
    NET WORTH 99.32% 101.04% 102.76% 44.90%
    Percent of Sales
    Sales 100.00% 100.00% 100.00% 100.00%
    Gross Margin 94.18% 93.85% 93.52% 0.00%
    Selling, General & Administrative Expenses 74.29% 71.83% 69.37% 65.20%
    Advertising Expenses 2.06% 1.11% 0.28% 1.40%
    Profit Before Interest and Taxes 26.47% 29.30% 32.13% 2.86%
    Main Ratios
    Current 25.86 29.39 32.92 1.63
    Quick 25.4 28.88 32.36 0.84
    Total Debt to Total Assets 2.68% 1.04% 0.76% 67.10%
    Pre-tax Return on Net Worth 66.83% 71.26% 75.69% 4.40%
    Pre-tax Return on Assets 64.88% 69.75% 74.62% 9.00%
    Additional Ratios Year 1 Year 2 Year 3
    Net Profit Margin 19.20% 21.16% 23.12% N.A.
    Return on Equity 47.79% 50.53% 53.27% N.A.
    Activity Ratios
    Accounts Receivable Turnover 4.56 4.56 4.56 N.A.
    Collection Days 92 99 106 N.A.
    Inventory Turnover 19.7 22.55 25.4 N.A.
    Accounts Payable Turnover 14.17 14.67 15.17 N.A.
    Payment Days 27 27 27 N.A.
    Total Asset Turnover 1.84 1.55 1.26 N.A.
    Debt Ratios
    Debt to Net Worth 0 -0.02 -0.04 N.A.
    Current Liab. to Liab. 1 1 1 N.A.
    Liquidity Ratios
    Net Working Capital $120,943 $140,664 $160,385 N.A.
    Interest Coverage 0 0 0 N.A.
    Additional Ratios
    Assets to Sales 0.45 0.48 0.51 N.A.
    Current Debt/Total Assets 4% 3% 2% N.A.
    Acid Test 23.66 27.01 30.36 N.A.
    Sales/Net Worth 1.68 1.29 0.9 N.A.
    Dividend Payout 0 0 0 N.A.

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