With the advent of Covid-19 and the multiple lockdowns, the way of going about life has significantly changed. The passive workforce is now increasingly rising in popularity. More than cafes with baristas and convenience stores with attendants and cashiers, we have drone deliverers, machines that scan and collect payments, and coffee booths. Michael Hoffman, a successful passive income coach and human performance analyst, believes that this is the best time to invest in a passive startup. He is the co-founder of Passivepreneurs, a company on aims to help people all over the world build passive Income Streams and Financial Freedom. To him, the best passive income investment today is the vending business.
Vending machines are unique for an abundance of reasons: they are easy to install, are high in demand, require little maintenance, and boast high-profit margins. Hoffmann himself owns many successful vending routes across multiple states in the US and believes that a good startup plan can go a long way to increase growth and profits. This is his guide to starting and calibrating a successful vending machine venture.
Procure a suitable vending machine
The first step in the 5-step installation process is to procure a vending machine. This stage requires due diligence to make sure the unit is in good condition and will hold against the usage over time. A machine that is refurbished or has small issues might cause long-term maintenance costs, reducing the net profit made per unit.
Make a list of high-traffic locations within 5-10 minutes of your house
The profit that you make per unit is contingent primarily on the site that you choose for the vending installation. A high-traffic site will ensure more sales and higher usage, thereby ensuring higher sustainable profits. These sites could include schools, shopping malls, apartment complexes, and military bases.
Start cold calling
Once you have your list ready, it is time to start calling the potential candidates. This is called cold calling, which is a call you make to sell services or goods. Some important questions to ask include inquiries about the availability of a machine on the site, its efficiency, and the client’s satisfaction with it. The end goal, suggests Hoffman, should be to make the customer feel FOMO by not taking a meeting with you.
Follow up and schedule a meeting with interested clients
The hardest part of the process is getting a meeting scheduled. Usual conversion rates for vending machine cold calls stand at 10%. Hoffmann estimates that it is possible to get up to 60 leads, with 6 meetings in total. The conversion rate after a meeting is 50% on average. A good meeting strategy according to him is to talk and ask questions – the client will ideally buy into your pitch themselves.
Sign the contract and you’re done
Once the client has agreed to the deal, leave the meeting with an estimated date of delivery, stock projections, and the 5-year contract. On average, a high foot-traffic site can bring in between $400-$900/month. If you manage to install 3 such units in different locations at a significant distance, the overall profit can reach up to $2000/month. This is passive income that requires little to no effort and can be redirected towards more lucrative startups. With their low maintenance costs and room for risk, vending machines then are a great passive income startup.