Growing up poor in upstate New York, Marcus Gram never imagined he could achieve financial independence. He just wanted to make enough money to give his son a better life.
“After graduating with a master’s degree, I struggled to find steady work in my field,” says the 31-year-old. “I kept getting laid off.” Gram eventually landed a steady job at an assisted living facility that paid $30,000 a year.
“On the outside, people thought I was doing well. In reality, I was broke and struggling to survive.”
As American households continue to grapple with inflation, some are turning to the sublet economy as a side hustle to make ends meet, renting out smaller assets — cars, swimming pools, and bicycles — and even commercial appliances, such as vending machines. Gram began purchasing and leasing out vending machines as a side hustle while at his day job. After faltering initially, he found his rhythm, scaling the income stream into a full-blown business, Joyner Vending, that generated over $340,000 of revenue in 2021 from 25 vending machines across four states.
Here’s how Gram got started in the very niche industry of vending machines — and how you can do the same to jumpstart your next passive income stream.
When Setbacks Arise, Keep the Money Moving
To save money, Gram moved in with his mom, and asked an uncle for career advice. The uncle introduced him to the real estate business, advised him on how to start, and suggested pairing up with someone who had experience in the industry. After scrimping and saving $10,000, Gram and a friend pooled their resources together to try their hand at landlord life in Philadelphia. The friend suggested Gram move to the city to increase his chances of success.
“It was a tough decision, because I was afraid of losing my steady paycheck, but I figured it was less risky to bet on myself than work at a job I could lose at any time for any reason,” says Gram. He found a new full-time job in Philadelphia, and worked on his real estate aspirations as a potential side hustle.
Unfortunately, inexpensive real estate deals in Philadelphia were too few and far between. It’s a problem that many young people who are curious about real estate investing encounter: the initial barrier of entry can be high. Gram needed more money to play the real estate game, so his friend tipped him off to an unexpected source of extra income: vending machines.
The business partner revealed that he owned snack food and soft drink vending machines that were generating thousands of dollars a month, so he showed Gram the ropes and helped him get started. Gram enrolled in an online course to learn about the industry, built a website, purchased polo shirts and hats branded with his logo, and ordered a few boxes of business cards.
Editor’s Note: Inequality Legacies In Real Estate Lending
Black homebuyers are denied a mortgage to purchase a home at twice the rate of the population at large across the country’s 50 largest metropolitan areas, according to a report by LendingTree, which analyzed 2020 Home Mortgage Disclosure Act data.
One likely contributor is the legacy of discriminatory policies like redlining — in which borrowers were denied home loans in mostly Black neighborhoods — and discrimination by lenders against Black borrowers.
However, if you feel you’ve been discriminated against, you can report it either to your attorney general’s office or the U.S. Department of Housing and Urban Development.
Take Action, Even When Things Don’t Go According to Plan
Despite mentorship and information from the online class, Gram struggled at first. “It took a few months before I finally landed my first client,” he says. He eventually convinced a law firm to allow him to place two machines in their office. He spent approximately $5,000 to purchase two refurbished vending machines, stocking them with snack foods and soft drinks purchased from Costco.
The location turned out to be a lemon: the machines made just $60 after operating for five months.
“I was so excited to find my first client and start making money that I didn’t do a proper site assessment to determine if the office had sufficient foot traffic,” says Gram. After learning from his mistakes, the budding entrepreneur canceled the contract at the law firm and moved the machines to another location with better foot traffic.
The pivot was lucrative; the machines returned an average of $1,500 a month in revenue in their first three months.
Vending Machines: Boring and Reliable with Little Competition
According to the market research report Vending Machine Operators Industry in the USA, published by IBISWorld last May, the vending machine industry has a market size of approximately $10 billion. However, the marketplace is largely fragmented, with the top four operators accounting for only 3.2% of total industry revenue.
Gram says that anyone can buy a refurbished vending machine for as little as $2,000 to $3,500, and that the key to growing a profitable vending machine side hustle or small business is to do your homework upfront.
“You have to find your location first and assess its potential for success before you buy machines for that site,” he says. In some instances, refrigerated vending machines work best, whereas other locations are better for combination vending machines that offer both drinks and snacks.
Once you’ve locked in a site, the entrepreneur advises thinking through the following variables:
- The type of vending machine you’ll use. Determine whether you’ll dispense snacks, refrigerated drinks, or a combination of both.
- Where you will buy your products. Sam’s Club and Costco are popular options.
- The kinds of products you’ll sell. Think about the demographics of the people who will be walking by your vending machine.
- How you’ll collect payment. Older customers prefer paying with cash/coins, but collecting your money can be a hassle. If you equip your vending machine with a credit card or Apple Pay terminal, the money will straight to your bank account.
Side hustles that bring in money semi-passively can be a great way to build your emergency fund or save up for major expenses. You can maintain a full time job and run the business during your time off while getting the best of both worlds.
Use Your Momentum to Scale Your Business
Over time, Gram scaled his vending machine side hustle enough to hire employees to support many locations. His cold calling efforts and website traffic ensured that he had plenty of potential clients to pitch his services. Gram even hired his sister to run the operations and manage his employees in Philadelphia while he expanded into other cities.
“When the world shut down because of the pandemic in 2020 through 2021, I started looking for ways to expand my business,” he says. “I called trucking companies, warehouses, and athletic facilities still operating, and pitched the respective site managers the benefits of having my vending machines on their sites.” The entrepreneur’s company generated over $340,000 in revenues in 2021, based on documents reviewed by NextAdvisor.
“The vending machine business is a semi-passive income business,” he says. “The sale of the products is passive, but ensuring those sales are consistent and the customers are happy requires effort.” Gram believes the company can become a multi-million dollar business in a few years, and once he’s achieved his income goal, he plans to start investing in real estate so he can retire early.
Start Making More Money Today
Vending machines are a slice of the sublet economy that can scale up or down as much as you want to generate passive income. If you’re willing to work hard to make the business a success, you might be able to use a similar approach to achieve financial independence sooner than you think.
“There are still a lot of untapped opportunities out there for hungry entrepreneurs,” says Gram.