The idea of generating passive income has grown in popularity in recent years, and one option you may be considering is vending machines. Most commonly known for dispensing snacks, vending machines are an easy way to generate passive income while selling a wide range of vending products, from electronics to frozen food to personal care items to home goods and everything in between. And because you don’t need to physically sell the items yourself, just rent the space, vending operators can enjoy the profitability of a vending machine while they’re busy doing other things. But what do you need to know about how to start a vending machine business from scratch?
That’s where the experts at Morison Insurance can help local small business owners looking to start a new vending machine business idea. From registering your business to getting vending machine insurance, we’ve put together this guide to help you learn how to start a vending machine business in Ontario, providing you with a roadmap to business success in the vending machine market.
The first start in any guide to how to start a vending machine business is creating a business plan. This will lay out the details of your business, providing you with a clear guide on how it is structured, expected expenses and revenues, the cost to start a vending business, and how you will be running a vending machine business. The vending machine business can vary widely, so it will also give any business loan providers and others confidence you know how to start a vending machine business.
Of course, to create a clear business plan, you will need to do market research and analyze your competitors. This will help you understand your target audience, ideal product offerings, and other business factors that will be crucial when considering how to start a vending machine business in Ontario.
Make sure your business plan includes things such as an
Be as clear and concise as possible, as not only will this lay out your business plan for how to start a vending machine business, but it will also help you identify potential challenges, such as local regulatory requirements and market saturation.
With your business plan all set, you now need to register your business in the next step in how to start a vending machine business. In Ontario, this can be done either online or in person at a ServiceOntario location.
When registering your business, you will need to choose a unique business name for your vending machine company. While you should have come up with one, and ensured it isn’t taken during the first step of how to start a vending machine business, it is a good idea to double-check during this time. Just in case it is taken, it’s a good idea to have some alternatives in mind to prevent you from having to go back to square one.
During this stage of how to start a vending machine business, you will also need to determine your legal business structure, such as whether it is a sole proprietorship, partnership, or corporation. Different types of organizations will have different regulatory requirements, so make sure you have researched this beforehand.
Next, you will need to register your business name and obtain a business number through the Canadian Revenue Agency. Consider trademarking your business name. If your business will make more than $30,000, you will also need to register for either a Harmonized Sales Tax (HST) or Goods and Services Tax (GST) number. As you are registering your business information, you will also need to obtain any necessary licenses or permits, such as a food handling permit if you have a food and beverage machine, as well as any other applicable taxes, such as a tobacco tax.
If your vending machine enterprise will have employees, you will need to register with the Workplace Safety and Insurance Board and get Employer Health Tax (EHT) if your business payroll exceeds $450,000/year.
Now that your business is registered before it officially launches, you need small business insurance coverage. While the only legally mandated business insurance is commercial auto insurance, it is a very good idea to have some type of insurance coverage for your business, as without it, you will be without any financial protection in the event you are held liable for an incident, your machines break or get broken, or your product is stolen. That’s why it’s important to speak with a Morison Insurance broker about any insurance coverage requirements for how to start a vending machine business.
We offer comprehensive vending machine insurance policies, which include insurance coverage for commercial general liability, commercial cyber liability, product liability, and much more!
During the planning stage of how to start a vending machine business, you should have done market research into what vending products you are planning on selling, and now it is time to purchase them.
Choose a good mix of products to offer in your vending machines, considering how well they complement one another, current trends, seasonal changes, and where you are planning on placing them. Once they are placed and begin to sell, keep track of your sales to determine which products sell best, what you may need to replace with another product, and how often you need to restock your units. Keep in mind that depending on what you need to sell, you may need to meet certain permitting or insurance requirements, so make sure to speak with your insurance expert on what insurance needs you need to know for this stage on how to start a vending machine business.
Any business owner will tell you that the right location is key to any business. You’ve done location research as part of the first stage in this how to start a vending machine business guide, and now it is time to place your vending machine in those locations.
Consider your product offering, and based on your market research, decide where you want to place your units. Ideally, your locations for vending machines would be high-traffic areas where people would enjoy the convenience of your machine, such as airports, transit stations, and hospitals. You also don’t want a location that’s saturated with vending machines, as you may have issues standing out. However, they should be in a secure and well-lit area, to lower the risk of theft or vandalism. Speak to your insurance broker about any concerns you may have about your vending machines’ locations.
Additionally, while securing locations, consider the kind of machine you are getting, including whether it’s a brand-new machine or several used vending machines. Depending on the product and location, you may have different requirements, so make sure the vending machine you chose is the right vending machine option for you.
With your location secure and your machines and products in position, now is the time to stock and set them up in their new home for this phase of how to start a vending machine business.
After the initial stocking and set-up, make sure to monitor your machines, restocking them at regular intervals. Keep track of what products sell most and rotate your inventory to ensure older products are dispensed first. Also, be sure to keep an eye on product expiry dates, eliminate products that are too close or reach those points, and take care to clean and maintain your machines. While you may have decided on product prices during the research phase of how to start a vending machine business, make sure to keep track of your competitor’s prices and account for any changes in the market so that you have a price that provides a clear profit margin for your vending sales. Start small, slowly scaling your business up as you get your vending machine business going.
Now that your vending machine business has officially launched, the final phase in how to start a vending machine business is to constantly maintain your units, promote your business, and analyze your market and business success.
Consider launching a vending machine business website, promote your vending machine business at local events, and explore other channels to promote your business. Make sure to also take care to maintain a good reputation by ensuring your vending machines are well-stocked, maintained, and clean.
Continuously collect and analyze data on your product sales, inventory levels, and customer feedback to help you evaluate your business’s performance at each vending machine location. Remember, just because your initial research done at the start of your how to start a vending machine business plan said this one spot/product was good, you need to be flexible and be prepared to find a new location/product/sales strategy if one isn’t working for you.
When considering how to start a vending machine business in Ontario, you may have a set plan in mind. But as a business owner, you need to be flexible, and as your business grows and changes, so do your insurance needs. At Morison Insurance, we want you to have the comprehensive insurance coverage you need, whether you’re a long-time business owner or are just starting to look into how to start a vending machine business.
Give us a call today at 1-800-463-8074, or request a quote online, to get the insurance help you need and find out more about how to start a vending machine business in Ontario.
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