What distinguishes a gold mine from ordinary junk depends on whom you’re talking to. When Andrell Harris and his friend Jason Owens happened upon old vending machines in Owen’s garage, they recognized a profitable venture underneath the years of dust.
Owens’ father stored more than a dozen small, unused candy and gumball machines in his garage. During their senior year of high school, Harris and Owens cleaned the machines and put some of them back into action. “We put two machines out and started making a little bit of money and used that to buy more machines off eBay,” says Harris, 19, of Terry, Mississippi. “It was all an accident how I got into this. None of it was intentional.”
More than a year later, Harris, a sophomore pursuing business management at Jackson State University, is turning this unintentional foray into a full-fledged business. When Owens headed off to Atlanta to attend Morehouse College, Harris eventually purchased his share of the business. Now, he has machines in 23 locations throughout the greater Jackson, Mississippi,
area including a couple at the Jackson-Hinds Comprehensive Health Center, Harris’ first client. “He was the most driven, hardworking young person I’ve ever seen,” said Dr. Jasmin Chapman, the center’s CEO. “He came in with a plan, was always early for his appointments, and made a very impressive pitch. I wanted to give him a chance.”Harris, a full-time student who maintains a 3.2 grade point average, uses some of the proceeds from his vending business to help to pay his college tuition. His business posted $9,000 in revenues in 2004. He expects to hit sales of $20,000 this year since he’s picked up more clients with high-traffic locations.
Finding a good location is critical when running a vending machine business, explains Harris. At one point, setting up his machine at a bad site almost prompted the end of the business. “I had an ‘I-don’t-want-to-do-this-moment’ when my machine got broken into,” recalls Harris. “That taught me to think about the location more. You have to use better judgment.” Harris also recommends buying vending machines outright instead of leasing them through a franchise. Buyers should be wary of deals that offer to place the machines for you, warns Harris.
The vending industry can be one of the most lucrative for a budding entrepreneur, according to Josh Patrick, president of The Patrick Group financial planning firm located in South Burlington, Vermont. Patrick, who operated a successful vending business for 20 years, offers these tips on how to start a vending machine business:
Find a good location. Look for a business that will carry a vending machine. Go to places you frequent as a customer that have at least 20 employees and a regular volume of foot traffic.
Buy a machine. It’s good to start with a used machine. The Internet can be a useful research tool. Sites such as www.vendfinder.com offers tips to find inexpensive machines.
Get your product. Purchase your inventory in bulk from a wholesaler such as Sam’s Club or Costco. Make sure to keep your vending machines filled with fresh stock.
Pay your taxes. Patrick urges owners to report their income. “This is a cash-based business, but the IRS wants its money.”
Join trade organizations. The National Automatic Merchandising Association is the national trade association of the food and refreshment vending, coffee service, and food-service management industries. Contact NAMA at www.nama.org or at 913-491-6502.