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Side Gig Thursdays: Michael Wong, Vending Machines
Posted By Jim On 11/29/2012 @ 7:21 am In Personal Finance | 10 Comments
This week’s Side Gig Thursdays  is a chat with Michael Wong, who started a side business where he ran vending machines. If you’ve ever wondered who runs that vending machine in your office, chances are it’s either a big vending machine company or it’s someone like Michael. He started doing it on the side while working at a network engineer and has sales of several hundred dollars a month – enough to keep him interested!
If you’ve ever been curious about how these types of business work, as simple as they may sound, Michael shares some of his experiences.
What is your day job?
Network Engineer for a financial services company
What is your side gig?
Servicing Vending Machines
What’s involved in servicing vending machines?
Buying product, place them on the machines, collect money, fix malfunctions, replace/repair defective parts, clean.
How much does it make each month?
Sales of about $600 per month.
Where do you put the machines? Do you pay the locations a flat fee or a % of sales?
I have them in small offices. I don’t pay fees.
Once I hired a locating firm, they were based in Illinois. I got stiffed. They wanted $300 per location, 50% upfront. I paid for 4 machines but they never delivered. They told me that I had to pay from 20% to 50% of sales, it was outrageous. They also wanted to charge me $100 to move the machines to the locations. Other locators have the same arrangements, but from my experience I will never hire them.
Is it typical for vending machine owners not to pay a fee?
It is typical for small offices. Stores and retail businesses typically charge a fee.
In big buildings, county or state offices, schools, colleges, typically there is a concession contract that requires a yearly payment to the county/state.
How did you start doing your side business?
I had read the book ‘Rich Dad Poor Dad’ by Robert Kiyosaki, he suggested to start a business to start on the way to financial independence. Then went to a free seminar pitching vending machines. I didn’t buy from them but I did some research and bought from another company. Then setup my company as a sole proprietorship and retained an accountant.
Do you own the machines or lease them?
Do you stock them?
How do you know what to stock them with?
I ask the customers what they would like. I provide them with a list to choose from.
How many hours a month do you spend on it?
About 16 hours per month.
Was there anything that surprised you about the business now that you’ve been doing it for a while?
It wasn’t as productive as I thought it would. It takes more work than I thought it would take.
Do you have a plan to try to turn it into your full time gig?
No. It doesn’t pay well enough.
What resources did you rely on in starting the business?
I also bought a book, something like “Idiot’s guide to starting a business.” I looked at business articles on Wall Street Journal and other internet resources.
Do you have any advice for people looking to start something on the side?
There is a lot to think about: legal, liabilities, taxes, marketing, sales, post-sale service, purchasing, accounting, financials, funding, vendors. Even how to get out if it doesn’t work out. There should be no conflict of interest with the day job for ethical reasons. Keep track of metrics to determine if the business is making money or losing money. And adjust operations accordingly if possible.
Mind expanding on the last bit – the “lots of think about” and what someone might do to mitigate all those risks?
I would say, besides researching, perhaps finding people that do the same thing and pick their brains.
I hope you enjoyed the interview and if you know someone who would like to talk about their side gig, let us know !
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