The preparation of your vending machine business plan will be the most important thing that you do prior to launching your new venture.
A business plan will be a crucial resource that will help guide your business in the right direction. A business plan sets out what has to happen in order for you to reach your goals, outlines how you will do it and sets out alternative plans in case things change further down the line. It forces you to do the research that is necessary in order to find out if there really is a market for the vending machines and locations that you have in mind.
It may be necessary to have a plan written in a formal, professional style if your aim is to use it to convince bankers or investors to support your idea. However, even if you don’t have anything to prove to anyone, your business plan will help to confirm the viability of your ideas in your own mind.
Keep a copy of your plan on your PC as well as in a file or binder in case of emergency. Don’t forget about your business plan once you have opened your doors for business. Refer to it regularly to make sure that you are on track to meet targets. Don’t be afraid to make changes to the plan where necessary.
Every entrepreneur or business consultant will have different ideas about how a business plan should be structured. There are many different templates available online and some sites even have samples relating directly to the vending machine industry. Below we offer an example of a suitable outline with section titles that you might consider including in your own vending machine business plan.
Cover and Contents Page
Start off with a cover page with a heading to let people know what the report is about, who the author is and when it was written. If you will be presenting the report to many different people then you may consider including a personalized cover letter with each copy of the plan. Start out with a table of contents so that readers can easily find their way around the report.
Summarize the other sections of your business plan. Present some brief information on the opportunities that you see in the market and summarize what it is that you intend to do with your business to capitalize on these opportunities. Try to entice readers into reading the whole report.
Offer the reader some background information on yourself and your reasons for starting a vending machine business. Provide details of any relevant experience or competitive advantages that you have.
You can also include a vending industry background showing national industry data as well as information about the local industry that you plan on entering.
A mission statement is usually a phrase or a couple of short sentences that summarises what your business is all about, what it does and how well it does it. It is a good way to remember the basic goals or philosophy of your company aside from the profit motive. A good mission statement could mention something about the standard of your machines and products or how you strive to be better than your competitors.
Goals and Objectives
State the goals that you wish to achieve in the short and medium terms. Goals could include placing a certain number a vending machines or reaching a certain income level per machine.
Set out a list of startup costs and calculate the total amount of capital that will be needed for the company to get started. Report on some of the funding options that are available to the owners.
In this section of the report you can also mention some of the other things that must happen in order for the business to commence trading legally and professionally. Mention the processes and the fees involved with applying for licenses, permits and other paperwork under the laws of the region where the business will be operating.
Ownership and Management Structure
Note who the founders of the company are and the particular ownership interest that each has in the business. For those who will be active in the management of the business it is important to outline what role they will play and their responsibilities. Will the business be registered as a sole proprietorship, a partnership or a corporation?
This section of a business plan should outline the details of how you plan on running the vending machine business. Include information on where your business will be based, administration, any plans that you have to hire employees and how your business will run on a day to day basis.
Include details on vending machines, maintenance, products, distributors, route planning and how you will record and manage sales data. What systems will you put in place to maximize productivity and efficiency?
Try to come up with solid reasons why you are choosing a certain vending machine, product line or system. Wherever possible include some supporting evidence from research that you have done.
Using data from your market research you can report on the current state of your target market and identify some of the opportunities. Here you can include demographic data as well as information that you have gathered from surveys and other investigations.
Provide information on the competition in your target area and examine their strengths and weaknesses. Look at ways of delivering products and services via your machines that are distinctly different from what your competitors are offering. Get ideas from them about what is working well and what isn’t. Look for a competitive edge. Don’t forget to also mention indirect competitors such as convenience stores, in-house cafeterias or food vans.
Outline a strategy for creating a vending brand that will meet market needs. Based on the market opportunities that you see, set out a strategy for meeting customer needs in terms of locations, vending machines, product lines and pricing.
Provide details on how you plan on getting new machine locations, arranging appointments with ‘decision makers’ and selling your services to them. Your marketing could mostly be done by approaching decision makers directly or you could rely on advertising to generate some enquiries.
Also outline your plan for marketing directly to your customers or end users. These could include ‘point of sale’ promotions on the machine front or how you or your staff will build relationships with customers when you visit the premises where your machines are located.
You should also mention how you plan on maintaining vending accounts and customer satisfaction in the long term. Customer retention is just as important as customer acquisition.
Use a spreadsheet program to set out forecasts of cash flows in and out of your vending machine business over a hypothetical two year time period. If you have done your research you should be able to anticipate monthly income and expenses going forward. You will thus be able to determine future levels of profitability and a break even point.
Run a variety of different scenarios that consider a conservative growth rate, an expected growth rate and an optimistic growth rate. Things don’t always happen like you expect so it is important that you plan for a variety of outcomes.
Lastly, you should attach an appendix to the report that includes any reference letters, documents, vending machine pictures or other supporting material that has been referred to in the contents of the plan. Try to back up all of your assumptions with proof wherever possible.
“This is a reposted article for the benefit”
Written by: Steve P Sutherland
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