Considering taking on a side hustle? You’re not alone. A study by RBC revealed that 74% of Canadian small business owners and aspiring entrepreneurs are being driven to invest in side hustles due to the rising cost of living. A shocking number that skyrockets to 84% among Gen Z respondents and 86% for Millennials.
With so many people looking for opportunities to rake in passive income, knowing where to start can be a headache. Enter Priscilla Hartman, an acclaimed accountant and bookkeeper from London, Ontario, who recently supplemented her income by investing in a fleet of vending machines.
Hartman told Narcity that she came across the intriguing business opportunity while poking around on social media, quickly realizing how lucrative it could become.
“I was on Facebook marketplace, looking for some type of business, and this vending machine one kept coming up. That was appealing to me,” she shared.
Hartman eventually end up investing $28,000 into a row of 12 vending machines, which may seem daring, but her careful planning and research have helped turn it into a relatively low-maintenance cash cow.
She broke the whole thing down for us below, providing an insightful guide to how to make worthwhile investments.
Mastering the machines
Vending machines in Toronto.Cagkan Sayin | Dreamstime
The first thing you’ll want to research before buying your own vending machine is whether or not it has a working credit card reader.
“I wanted to make sure that [the machines] had credit card readers because a lot of people don’t have cash anymore,” Hartman said. “With vending machines, about 80% of your sales are on the credit or debit card.”
She also made sure to get a ton of information on the machines from their previous owner to maximize her chances of making them profitable.
“I just asked her all the questions such as, what do I do if a machine breaks down? Are they on warranty? Where do you get your stock? How much does your inventory cost you? And so she gave me a little insight into where the best deals are for each type of snack and drink,” she added.
So, what’s the best way to make things cost-effective? For Hartman, it’s all about finding which places have the best snacks and deals.
“For buying inventory, we go to Sam’s Club in the United States because they have different snacks that they don’t have in Canada. And people love that stuff. So we can get different types of granola bars and Twinkies and packs of cookies that we don’t have here. And when we buy pop we do it at Costco and it comes to about 50 cents per can and we sell them for $2.25. Chocolate bars are about 87 cents and we sell them for the same,” Hartman continued, before adding why it’s so important to zero in on profit margins.
“Everything’s marked up like three times the cost because you have to pay your credit card fees and it takes time to go and stock them and just sometimes inventory goes bad. So you want to include that,” she concluded.
Making location king
A community hockey arena in Ontario.Valentino Visentini | Dreamstime
Strategically positioned within a seven-kilometre radius around London, Hartman’s machines have been placed thoughtfully in daycares, hockey arenas, and factories. Why? Because finding the right spot is key to ensuring that the snack vendors remain profitable.
“We looked at the sales for each machine, and we decided that four of them weren’t really making any money. So we made a lot of calls for new locations and moved those machines,” Hartman said.
She then expanded on why making informed decisions like this is key to ensuring things stay cash flow positive.
“The one daycare made about $300 a month and the other daycare made about $10 a month. And then the hockey rink did well at first, about $100 a month. But, then we reevaluated our sales after two or three months and decided that it was costing a lot of money to move the vending machines. So I sold off the vending machines that were really low profit,” she added.
Hartman defined “low profits” as about $60 to $80 a month. “Half of that is your inventory. And if it’s a really slow machine, then your inventory is going to go bad, especially chips and snacks. So we sold off four machines that weren’t making us anything at all.”
How does she keep track of everything? Believe it or not, in our modern world, it’s blissfully simple.
“We have an app on our phone that tells us exactly how much each location is making and what they’re buying,” Hartman said.
What’s even more surprising is that Hartman doesn’t have to pay any sort of fees for having her vending machine at the locations she chose.
According to Hartman, the bottom line of her new side hustle has remained respectable overall thanks to her hard work and careful planning. It pays to be diligent, folks.
“At the end of the day, it’s about a 50% profit. So if you made $2,000 from all your machines in a month, your profit is $1,000,” she told Narcity.
Not bad considering that the route of vending machines Hartman purchased has been known to make gross sales of up to $2,300 a month. That’s an extra $1,150 a month, when all goes well.
Of course, no start-up operation runs smoothly all the time, and Hartman offered up a warning for anyone planning to invest in a similar hustle.
“A couple of the machines have broken down, that was really expensive to replace, considering your profit is usually only $1,000 a month,” she said.
“For one machine the number pad stopped working so I had to order a new one and that was $325. On another machine the card reader stopped working. So I had to order a new card reader for $600. So, that’s something that eats into your profit,” Hartman added.
But, no stranger to problem-solving, Hartman and her partner have already started to figure out how to solve such costly problems by fixing things themselves by looking up step-by-step instructions on YouTube.
Hopefully, this interview has inspired you to pursue your own side hustle idea. It can be hard work, but in the current economy, the importance of additional income really can’t be overstated.
If you want to buy your own vending machine, you can do so by visiting Red Seal Vending, which sells both used and new machines in Canada.
This interview has been condensed and edited for clarity.