- Lakinya Francis came across an ATM investing in her quest for financial freedom.
- Now, she helps her clients understand how selling can be an affordable alternative to real estate investing.
- She shares her top tips for acquiring machines, managing costs and finding the perfect location.
- See more stories on the Insider business page.
In an effort to achieve financial freedom and no longer have to depend on a nine-to-five job, Lakinya Francis sought an alternative source of income that wouldn’t break the bank.
“Going straight to Real Estate Avenue was very popular, but it’s not accessible to everyone and it’s just the truth,” Francis told Insider.
She came across the world under the radar of investing in vending machines.
As a researcher at heart, Francis dug deep into the business model to discover the opportunity was more affordable and accessible than she ever imagined.
In 2018, she bought her first $ 500 snack machine to run alongside her full-time job as a teacher. Although the machines are affordable, it has been a learning experience for Francis over the past three years.
“Similar to the real estate market, location is everything and that can really lead the business in a positive or negative direction,” Francis said. “Acquiring a location is the hardest part of the business.”
Francis is now helping others get started through his consulting business, iKrave Vending. She also still owns six machines, but has them managed independently.
“The sale – the opportunity is insane,” Francis said. “It’s endless and goes way beyond snacks and drinks. At the same time, it’s a perfect business model for anyone who can get started.”
“[For] just an ordinary person who works nine to five, that’s an achievable goal. You can save and start without your savings. “
Acquire a machine
There are two options for acquiring vending machines, either through a single vendor or a single distributor.
The most basic types of machines are snack and beverage dispensers. However, the machines can also be customized to hold a range of products from cupcakes to beauty products. The more complex the machines, the more expensive they are.
Through a vending machine, a single snack machine will cost around $ 1,200 and a beverage machine will cost around $ 1,000. A combo machine will cost around $ 2,500 and is one of the more popular options.
“In terms of price, if you look at these numbers, it’s not bad to start a physical business,” Francis said. “You can really get your money back in a few months, not instantly, but in a few months and it’s turnkey as soon as you place the machine, people will start using it. first day.”
Going through a distributor offers the advantage of guarantees for the machines. However, going through a single seller often means cheaper prices.
For investors taking the sole seller route, Francis recommends:
- Plug in the machine and run some tests. If it’s a drink dispenser, make sure a cooling system is working and if it’s a snack dispenser, make sure the spirals are working.
- Take dollar bills and coins and make sure the machine accepts cash.
- Ask and verify if the machine is “MBD compatible” as you will need it to install credit card readers.
“If you have a salesperson who isn’t willing to do these things, that’s a red flag,” Francis said. “If you are selling something, you shouldn’t mind showing it to the buyer quickly.”
Is it really that simple?
Once the machine is acquired, stored and placed in the right place, it can begin to generate income for the investor.
Francis is reluctant to call it 100% passive income, as machines will always need maintenance, whether it’s replenishment or repairs.
Machine repairs can be intimidating, but engineers are easy to find, Francis said. The average fare will be $ 75 to $ 100, and more often than not, the problem can be fixed within an hour.
“What a lot of people end up learning is how to do these very minor things on their own,” Francis said.
Vending machines are basically just big boxes with a sign for the money, Francis said. It can be easy to fix them.
However, if individuals want a purely passive income stream, they should seek out a repairman before purchasing a machine, Francis said.
The same can apply to inventory management, which usually needs to be replaced on a regular basis. The owner can do this, but it is also possible to hire help. Additional costs may be business licenses, depending on where the person operates.
With pricing, Francis’ approach is to charge two to three times the amount paid for the product. It indicates that nearby convenience stores and gas stations may serve as a good criterion.
One of Francis’ clients who operates a combination snack vending machine at a school earns about $ 1,040 in additional income for about four hours of work per month. In a week, she typically spends around $ 200 on products and makes $ 460 in sales.
Homeowners can also earn more in high-traffic areas, like warehouses or call centers, but that means more frequent replenishment.
Specialist distributor models also offer the possibility of higher earning potential. One of Francis’ clients makes between $ 400 and $ 500 a week in profit selling lip gloss and false eyelashes at a mall beauty dispenser.
“I want to say up front that the location will either save you a lot of money, but not so much,” Francis said. “The key is that the machine has to be somewhere where there are people, because we want people to use the machine.”
Location, location, location
Surprisingly, investors rarely need to pay rent to install an ATM in most places.
To achieve this, owners must make the case that the vending machine will add value to the location. They can position it as a free machine that costs the site owner nothing and benefits employees or visitors.
“When you look at it from that point of view, it’s an equal exchange. I’m not giving you anything, you are not giving me anything… I’m providing something more to [their] employees and maybe even customers who can visit the warehouse, if that’s that style of business. “
Sometimes some places will expect a cut. An example is shopping malls, which typically rent on square footage, or high-traffic airports.
Regardless of the location, it’s important to spot it at different times of the day.
“You don’t want to do the job of bringing in a mover to bring the machine in, it’s sitting there and it’s not working well because you haven’t done the proper research,” Francis said.
Some key questions to ask are:
- What are the office hours and do they fit your schedule?
- How many employees do you have?
- What do employee breaks look like? If the break times are one hour, they can leave the site
- Will the distributor be open to the public? Or will it only be for employees?
While the market for snack and drink vending machines may seem overcrowded to a foreigner, the opportunities are always endless, according to Francis, whether it’s for snacks or more specialized products.
“Let me tell you a little secret, when you walk into a business, most places have an ATM and you’re like, ‘Man, this is a competitive business, a saturated industry.’ Francis said. “About 50% of the people I have worked with get placements because the company is not happy with the service.
Sometimes it doesn’t hurt to just ask, “Are you happy with the service?” “