How to write the business plan for a vending machine company
Are you looking to start a vending machine business or grow an existing one? Writing a business plan is essential for success in this competitive industry.
A well-crafted business plan can help you identify potential opportunities and challenges, establish realistic goals and objectives, and secure financing from investors or lenders.
This guide provides an in-depth look at how to write a comprehensive business plan for your vending machine company.
We cover why it's important to have one, what information you need to include, the components of the plan itself, as well as some useful tools that will make writing your business plan easier.
So, let's get started!
Why write a business plan for a vending machine company?
There are several reasons to write a vending machine business plan. Below, we cover some of the most important ones!
To draw up a roadmap
Writing a business plan for a vending machine company is an important step for entrepreneurs looking to start or grow their businesses.
A well-crafted business plan will help you identify and set objectives that are achievable over the next 3 to 5 years.
For existing businesses, writing a comprehensive business plan can be beneficial in evaluating current operations and planning to ensure continued success.
Not only does it provide direction and help focus on short-term goals, but it also helps you anticipate future challenges and opportunities so you can adjust accordingly.
To compare financial performance
It also enables you to regularly compare your financial performance against what was initially planned and adjust future financial forecasts accordingly.
This way, you can continually assess whether business finances are headed in the right direction and make adjustments as needed to stay on track with achieving long-term goals.
To raise financing from investors or banks
When looking for financing from an equity investor or a bank to start or grow a vending machine company, it is essential to have a comprehensive business plan.
This document will provide lenders with key information about your company and its prospects for growth and profitability.
The plan should demonstrate that investing in your vending machine business is likely to generate a good return on investment. Lenders will use your financial forecast to calculate metrics and ratios.
It should include details of how you intend to drive sales, manage expenses, manage cash flow and build value over time.
An effective business plan can be the difference between success and failure when seeking funds from investors.
Now that we understand why it is important to write a business plan for a vending machine company, let's look at the information needed to create such a plan.
Information needed to create a business plan for a vending machine company
Writing a vending machine business plan requires research so that you can project sales, investments and cost accurately in your financial forecast.
In this section, we cover three key pieces of information you should gather before drafting your plan!
Carrying out market research for a vending machine company
Carrying out market research is an important step before writing a business plan for a vending machine company.
Market research helps identify potential customers, understand their needs and preferences, and accurately forecast revenues.
It can also provide valuable insights into the competitive landscape that will enable you to develop strategies for success.
By carrying out market research, you'll be able to create a realistic financial forecast which is essential when trying to raise financing from investors or banks.
Developing the marketing plan for a vending machine company
Developing an appropriate sales & marketing plan, and budget, for your vending machine company is crucial before writing a business plan.
This will ensure that you have a clear go to market strategy in place, and that you allocate sufficient resources to hit your sales target when you incorporate these numbers in your financial forecast.
The staffing and equipment needs of a vending machine company
When writing a business plan for a vending machine company, it is important to include a thorough recruitment plan and investment strategy.
To do this effectively, you will need to think how the business will operate from a practical point of view. Where will you buy or manufacture the vending machines? How will they be delivered to customers? Who will service them? Etc.
This helps to ensure that you can realistically plan for the cash outflows required to hire personnel and purchase necessary equipment.
After gathering the necessary information to create a business plan for a vending machine company, the next step is to create your financial forecast.
How do I build a financial forecast for a vending machine company?
A vending machine financial forecast has three key statements to it: the profit and loss, balance sheet and cash flow forecast. It also has a source and uses a table that details startup costs and expenses.
In the following sections, we explain each one in more detail.
The projected P&L statement
The projected P&L statement of a vending machine business shows how much income it will generate and how profitable it will be in the future.
The projected balance sheet of your vending machine company
A vending machine balance sheet is one of the most important financial documents because it reveals the current financial position of a business.
It is a statement that shows the assets, liabilities, and equity of the company at a specific point in time.
- Assets, such as cash are owned by the vending machine company and can provide future economic benefits.
- On the other hand, liabilities represent debts and other obligations the company has to pay in the future.
- Equity includes capital contributions from owners and retained earnings, which is the profit the company has accumulated since its inception.
The balance sheet is used to assess the financial position of your vending machine company.
It helps to gauge the company’s ability to pay its current liabilities, such as accounts payable and other short-term debts by calculating key metrics such as the current ratio or quick ratio. And to assess its borrowing capacity.
The projected cash flow statement
A projected cash flow statement is a helpful tool for a vending machine company. It shows how much cash the company expects to generate or consume each month, as well as how much cash it will have left in the bank at any given time.
This helps the company plan ahead and budget its outflows so that it can make sure it has enough cash.
Knowing this information helps you decide when to invest and purchase more vending machines, or when to seek financing to avoid cash shortfalls.
The initial financing plan
An initial financing plan, also known as a sources and uses table, is a helpful tool which shows how you will finance the creation (or expansion) of your vending machine business.
Now that we have discussed the financial forecast of our vending machine company business plan, let's look at the content of the written part of the plan, which provides the context needed to interpret the figures of your forecast.
The written part of a vending machine business plan
The written part of a vending machine business plan has seven key sections.
From drafting an executive summary to presenting your financials, let's have a look at each of them!
1. The executive summary
The executive summary of a vending machine company business plan should provide a comprehensive overview of the company's operations, objectives, and strategies.
It should start with a concise description of the business, including its history, growth prospects and competitive advantages.
The market overview should then outline the size, scope and outlook of the vending machine industry, plus any key trends that could affect the business.
Following this, the summary should include a brief overview of key financial information, such as projected revenue and profits, capital requirements, and sources of funding.
2. The presentation of the company
The presentation of a vending machine company's business plan should focus on the structure and ownership, location, and management team of the company.
The structure and ownership part provides an overview of the legal structure, key stakeholders, and any partners or investors. It is important to clearly define each partner's stake in the business.
The location part should give an overview of where the company is implanted and what serviceable area it targets.
The management team should be given special attention in a vending machine business plan. This section should provide an overview of each member of the management team, including their background and experience.
It is also important to emphasize any past successes that the members of the management team have achieved, as this will help potential investors understand why they should trust in their leadership.
3. The products and services section
When writing the products and services section of your vending machine business plan, you should list all of the items that you will offer to customers.
This will depend of whether you are a manufacturer of vending machines or an operator.
If you are an operator, this will includes both food and beverage options as well as any other services or features that may be available to vending machine customers.
Most vending machines store soft drinks, crisps, chocolate and confectionery but yours doesn't have to!
You need to explain how your product offerings differ from those already in the market, so investors can understand why it is worth investing in your business.
If you are a manufacturer you will need to detail the key features of your machines.
4. The market analysis
When presenting the conclusion of your market analysis in a business plan, you need to include key aspects such as demographics and segmentation, target market, competition, barriers to entry, and regulation.
Demographics and segmentation are essential factors to consider when analyzing the potential success of a vending machine company. Knowing who your target customers are, how much they can afford to pay and their product preferences can help inform decisions about where to place machines or what type of products should be sold inside them.
Additionally, understanding which segments make up the overall customer base can also be beneficial when crafting marketing campaigns that reach those specific groups.
Knowing who the competition is will also help you shape your strategy for gaining market share. Additionally, researching any existing barriers to entry in the vending machine industry can provide invaluable information on the competitive landscape.
Be sure to also detail any applicable regulations or laws related to the vending machine industry because financier will want to check that your business is compliant with them.
By including these key aspects of your market analysis in your business plan, you can provide readers with a comprehensive understanding of the market conditions in which you operate.
5. The strategy section
A vending machine company should include an effective strategy section in their business plan that outlines pricing, sales & marketing approaches, milestones, risks and mitigants.
When creating a pricing strategy for your vending machines, you should consider the cost of producing machines and the cost of contents inside to help establish competitive prices.
When developing a marketing plan, you should consider where and how to advertise your product to reach the target customers.
The strategy section should also include milestones that can be used as markers of success along the way. Your aim might be to reach your break-even level of output within 6 months of launching the business or entering a new market, for example.
Finally, any potential risks associated with starting the business should be addressed along with specific mitigants for each risk identified.
6. The operations section
The operations section of a vending machine company business plan should detail the staffing team, roles of staff members, and recruitment plan.
The recruitment plan should include information such as the method of advertisement, the expected response rate, and the selection standards that prospective candidates need to meet.
It is also important to specify how many people are needed in each role and the qualifications they need to have.
In addition, the operations section of a vending machine company business plan should include details about the key assets and intellectual property that the business needs to operate.
This could include items such as software, hardware, or even trademarks and patents.
It is important to make sure that these assets are fully protected and that any legal documents are in place before the business starts operating.
Also, list the suppliers that you plan to work with to fill the contents of the vending machine and purchase or manufacture the machine itself. Mention why you chose to work with those suppliers (past relationships with them for example).
7. The presentation of the financial plan
This is where you will present the financial forecast that we talked about earlier in this guide.
Now that you have a better understanding of what should be included in your vending machine business plan, it’s time to look at the solutions that can help you create one.
What tool should I use to write my vending machine business plan?
In this section, we will be reviewing several solutions for creating a business plan for a vending machine company, including using Word and Excel, hiring a consultant to write the plan, and utilizing online business planning software.
Create your vending machine company's business plan using Word or Excel
Using Microsoft Word or Excel to create a business plan for a vending machine company has its pros and cons.
On the one hand, using Word and Excel are cost-effective options as they are widely available and familiar to many business owners.
However, it can take a significant time to create a financial forecast accurately, making it a tedious process. This is because modelling will be spread across hundreds of rows and multiple tabs.
And it is hard not to make mistakes unless you have significant experience in financial modelling.
You'll also need to format the document (on Word) once you are done.
Hire a consultant to write your vending machine company's business plan
Outsourcing the vending machine company business plan to a consultant or accountant can be advantageous and disadvantageous in equal measure.
On the plus side, consultants are used to writing business plans, while accountants have the financial acumen to create accurate financial forecasts without errors.
This can be invaluable in ensuring that investors and banks are presented with a comprehensive and accurate business plan.
However, outsourcing a vending machine company's business plan comes with its own set of drawbacks.
Accountants lack industry expertise to accurately forecast sales figures. Additionally, hiring consultants or accountants will be expensive, and there may be extra costs associated with any updates or modifications that need to be made.
Use an online business plan software for your vending machine company's business plan
Another alternative is to use online business plan software. There are several advantages in doing so.
- You are guided through the writing process by detailed instructions and examples for each part of the plan
- You can be inspired by already-written business plan templates and examples
- You can easily make your financial forecast by letting the software take care of the financial calculations for you
- You get a professional document, formatted and ready to be sent to your bank or investors
- You can easily compare your forecast against your accounting data to make sure you are on track to deliver your plan, or make adjustments if needed
If you're interested in using this type of solution, you can try our software for free by signing up here.
We hope that this article has helped you to better understand how to write the business plan for your vending machine company. Do not hesitate to contact us if you still have questions!
Also on The Business Plan Shop
- Practical example of a business plan outline
- How investors analyse business plans
- How to do a market analysis for a business plan
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