In short
The Side Hustle Show - Episode 662: From Zero to $50k/mo in Vending Revenue in 16 Months
Episode Overview In this episode, host Nick Loper interviews Anthony Kolodziej from H&H Vending, who shares his journey of scaling a vending machine business from zero to over $50,000 in monthly revenue within just 16 months. The discussion covers key strategies for success in the vending industry, including location selection, negotiation tactics, and innovative approaches to vending.
Key Points
Guest Introduction
- Anthony Kolodziej: Vending machine entrepreneur who scaled his business to over 30 locations and significant monthly revenue in a short period.
- Background: Transitioned from a long career in real estate to vending machines to create a recurring income stream and teach entrepreneurship to his children.
Vending as a Business Model
- Passive Income Potential: Vending machines are viewed as a passive income source, but operational challenges exist, such as restocking and maintenance.
- Initial Motivation: Anthony sought a business model that would provide consistent income with less volatility than real estate.
Key Strategies for Success
- Location Selection:
- Essential to choose high-traffic sites for maximum sales potential.
- Aim for commercial locations with a significant number of employees or residential buildings with many residents.
- Avoid placements that have unclear employee numbers or low foot traffic.
- Negotiation Tactics:
- Avoid using the term "vending" when pitching to property managers; instead, refer to them as "smart markets."
- Present vending as an amenity that enhances the building's value.
- Consider offering revenue-sharing models to property managers to incentivize partnerships.
- Operational Insights:
- Initial locations may yield low revenue; Anthony's first site earned only $700/month due to poor location choice.
- Gradually aimed to improve his margins, targeting a cost of goods sold around 35%.
Financial Considerations
- Upfront Costs:
- Machines range from $5,000 (refurbished) to $12,000 (high-tech micro markets).
- Anthony initially paid cash to avoid financing costs, but later leveraged financing as he scaled.
- Return on Investment (ROI):
- Anthony calculated rapid payback periods for machines with high monthly revenues, leading to significant returns once machines were paid off.
Growth Strategy
- Expanding the Business:
- Anthony turned one lead into multiple locations through referrals, demonstrating the importance of networking within the property management community.
- He hired staff to handle machine stocking, allowing him to focus on business development.
Challenges and Lessons Learned
- Adversity in Business: Mentioned the importance of pushing through challenges and maintaining persistence.
- Learning from Mistakes: Emphasized the importance of thorough due diligence in site selection to avoid costly errors.
Personal Reflections
- Family Involvement: Anthony aims to involve his children in the business to instill entrepreneurial values and work ethic.
- Work-Life Balance: As he scales, he remains conscious of family commitments and the need to maintain a healthy work-life balance.
Final Advice
- Key Takeaway: Emphasizes the importance of perseverance and the willingness to adapt and pivot in business. Encourages aspiring entrepreneurs to take action and pursue their goals without regret.
Additional Resources
- Previous Episode Reference: Episode 599 featured Mike Hoffman discussing the vending business.
- Vendingpreneur Training Program: Listeners can access a discount for the program that helps aspiring vending machine operators learn the ropes.
Conclusion This episode illustrates the potential of starting a vending machine business as a side hustle, highlighting the importance of strategic planning, effective negotiation, and operational efficiency for sustainable growth.
Written by AI. May contain mistakes. Listen to the episode to check what was said.
Transcript
Automatic transcript. May contain errors.0:00From zero to 50 grand in monthly vending revenue in 16 months. What's up? What's up? Nick Loper here. Welcome to the Side Hustle Show, where we've been helping people make extra money since 2013. Today, we're talking about the popular, quote unquote, passive income business of vending machines and how my guest was able to scale up his operation to 30 locations and over 50 grand in monthly revenue in under a year and a half. From H &H Vending, Anthony Cologgi, welcome to the Side Hustle Show. Hey, Nick. Thanks for having me. You bet. Stick around in this one. We're going to learn how to negotiate your first vending machine placements, the right locations that make the best fit there, the startup costs involved, and just how passive and profitable the business really is if you're constantly having to restock products.
0:46But Anthony, take me back to the beginning, not that long ago, a year and a half ago, and you're thinking, why I ought to get into this vending machine business. I'm going to turn some snacks and drinks into some monthly cash flow. I've been in the real estate industry since like 2009. And I was like talking with my wife, And I'm like, my kids were three and five at the time. And I'm like, you know what? I've had the real estate business. I've been doing this here for 15 years. I go, I really want to do something for the kids. And I want to teach them entrepreneurship and work ethic. Now that I'm making this transition from this other real estate job I was doing, I go, we should look for some type of business that I could put the same blood, sweat, and tears that I'm putting in on the real estate side and put it into basically a business that It could be like a recurring income stream because with real estate, obviously there's the highs and lows and peaks and valleys.
1:38So, you know, once you sell a house or flip a house, it's like, okay, got to do it all over again. I came a guy across, Mike Hoffman on Twitter, and he had this vending printer community. Yes. Mr. Passive on Twitter, right? Mr. Passive. Yes, exactly. And I was like, hmm, vending, interesting. I go, and then I started like reading more about it. And then I was like, you know what? I go tell you, my wife's name is Taylor. And I go, you know what? I think this could be a really good business that we could do. Not a lot of upfront capital initially. We could grow it into something passively and do it with the kids.
2:12I can teach them entrepreneurship and work ethic. And I think that would be a really good idea for us to kind of go full blown. So it was like two, three weeks. I was going back and forth with Mike and his team and I ended up joining this community like end of September. And I just went full blown, like all in at the time. Fast forward, you know, 15 months later, you know, we did, with it just being the end of February a couple of days ago, you know, we were over$65 ,000 in revenue, you know, and I'm looking to be at over 75 ,000 by the end of April. Cause I have other machines that have just got installed this past week.
2:49And I got three more that are going in, three locations going in like next week. And so that's the name of the game is stacking locations and machines. And what's your take on this? Like, is there a place for one machine, two machines, like, you know, the toe dip? Hey, I want to get my kids, you know, some exposure to supply and demand and cash flow and product inventory turnover. Or it's like, do you need to go big? Like, do you need dozens of machines to make it into like full-time thing? I mean, a full-time thing, yes, but just to be able to operate. Yeah, that's a great question, Nick. And you know, my story is different from like everybody else's story.
3:25Like, so like I said, I ended up joining Mike's vendingpreneur community. And when I was in there, I talked to a lot of other different people that had different routes. I was kind of like treating them as like my board of directors, but there was a guy down in Texas. He's a high school football coach and a teacher, and he has only four locations and he's doing 20 K a month. You know, so you could be very selective with your locations of like how, like depending on your goals or what your time is like, Hey, I'm a fireman or I'm retired. I just want some supplemental income, you know, or I'm a teacher and I want to teach my kids to do this.
4:07They're 18 and 19 and you got some built-in stockers already and stuff. So it all depends on like what your goals are. So for me, when I first got into the business, like I was like so antsy. I was like, Oh my God, I got to get a location. Let's do this. Let's go. Let's go. But the biggest thing I tell people now when they, when they're going to start out something, I go, be poised, wait for the right location. If it takes four or five months to wait for the right location, wait for it. Don't just do your, let me use a sports analogy here. Don't use your spring training or training camp and like football on a location that is not going to be the best.
4:44That's what happened with me. When I did it, I ended up getting a location that was five minutes from my house. And unfortunately, I've only been doing like$700 a month because there were certain questions that I didn't maybe ask in the beginning of when I was basically looking, when I was basically qualifying that property when I first initially went. I don't know. 700 bucks a month is not nothing. Well, 700 bucks a month of revenue. Yeah. So once you deduct your cost of goods and your fees and all this stuff, you know, usually your cost of goods, you want to shoot from like anywhere from like around 35, you want to be like 35%.
5:16If you're growing exponentially, like kind of how I am, you're buying so much inventory because you're constantly refilling up new machines. I've been averaging a cost of goods of maybe like anywhere between like 40 and 43%, you know, but like once I plateau, my goal is to be 35 to 33 % cost of goods, you know, at that point. Okay. So interesting raw numbers, like sell something for a dollar. That means you bought it for 30 cents. That's correct. Okay. Yep. I try to shoot for margins for drinks and chips. I try to shoot for 65 % plus candy can't get there. Coco has gone up in price, you know, and just like with everything with inflation, you know, candy is going to probably be like one of your worst margins, you know, like it's, you're probably going to be like 50 to 57 % on your candy.
6:04And then what I've been doing is, since I've been going into a lot of class A luxury apartments, a lot of the seven 11s and Walgreens and, you know, just have been closing, you know? And so what I've been doing is I've been going in there with my pitch and saying to these property managers and say, Hey, you know what? I'm like, I'm also going to, it's not old school machines. I'm using these AI powered, um, smart markets now. And I'm saying, Hey, I could put incidental items in there, you know, Tylenol, toilet paper, paper towels, Vizine, Mucinex, NyQuil, Tide Pods, Bounce Sheets, whatever. Okay.
6:38Yeah. Yeah. More than just snacks and drinks. Sure. Yeah. You know, you, those are a little bit like around a smaller margin, maybe like 45 to 50%, but I put it in there because when I go in there to pitch a location, it's a value add that maybe a certain person, a certain operator that has machines in there right now, they can't offer. Okay. You know, so they see the value in me. Let's go back to this first location. The one that you said is doing 700 bucks a month. Yes. It's super close to home. It sounds like, you know business with training wheels okay you know low risk kind of uh kind of a thing i could stock it myself as as need be yep you don't have the machine yet i imagine you get a yes from the property manager what's the conversation like hey have you have you thought about mike was so mike was on the show episode 599 last year you go back listen to that one but he was like don't say the v word he's like lead with like modern amenities don't say vending but what's your what's your conversation like with this building or with this operator yeah uh Vending, it's out of my vocabulary.
7:35I say it's their smart markets is basically what they are. They're AI smart markets, and that's what I lead with. And then this is going to be amenity for your workforce. This is going to be an amenity for your building, you know, because if you don't want it, I'm going to go down the street anyway, and I'm going to talk to, you know, the other competitor. And if they say yes, that's an amenity that they're going to have and that your building won't have, you know. So it's a competition type business, especially in luxury real estate. But in manufacturing, or that's the one warehouse that I'm in at right now, they want their people to be satisfied and work hard, and it's a nice amenity for them.
8:16Was it an apartment building, that first location? No, the first location. So this is where I made the mistake. So whoever's listening and wants to start your own vending route, make sure you've qualified the location thoroughly. So when I went there, they told me they had two shifts and it was 75 employees. So I assumed that it was 75 employees for both shifts. Well, it turned out to be that there were 70 employees for the first shift. And then for the night shift, there were four. So I was thinking that this thing was going to be 150 employee place. And it was just a mistake on my part. You live and you learn, but, you know, make sure you're thorough and you ask those questions and make sure you understand what the, you know, how many people are working there.
8:59I mean, especially if you come across like one of these commercial buildings or office buildings, you know, what's the vacancy? Okay. Well, that's great. But how many people, how many of these suites and these people are working from home? How many of these companies inside this office building are supplying goods for free, you know, cause it might be like a wealth management, you know, team or office in there that has maybe a hundred employees that go in there, but then but they're supplying everything for their employees for free protein bars water all that stuff that's that's going to deter you deter them from going there so just make sure you're very thorough with with like asking your questions once you go there just so you're qualifying the property correctly because they might say hey we're 80 occupied but if there's they're only reporting into work two days a week it's not a lot of foot traffic yeah 80 times 40 of the week is a little bit lower.
9:48Is there a sweet spot that you found in terms of building size, number of residents, number of workers, or before anything lower and just like, yeah, it doesn't really make sense? If I'm evaluating a property site, it's got to have, for residential real estate, it's got to have a minimum of 200 units. And I don't like garden apartments. So I don't want the machines being in a clubhouse and then there's 800 units that are like a four block radius and then people have to walk to the clubhouse. I don't like those. I need a building that is all one building. So the elevator takes you down to the vending machine.
10:27It takes you up. You can't walk outside because again, convenience. Manufacturing facilities, I would want to be in there with at least 150 employees. If it's an office building, I mean, I'll tell you, I've been looking at some of the most beautiful skyscrapers in downtown Chicago for the past eight months. And I've had a ton of meetings with a lot of them down there because I've just been getting referred to them. But I would go through the same questions now of when I'm asking them, okay, what's the vacancy? Oh, 60%. How many people are working from home? Oh, well, you know, it's Mondays and Thursdays or there's about maybe a thousand people through the turndial, you know, and then maybe Fridays, there's maybe 300.
11:04I'm like, okay, so we're working with like around 2 ,300 people a week. So times that by four, you know, we're like around 9 ,200, you know, for the month. It's like, I'm like, all right. I'm like, but I don't know like how good it's going to do. And a lot of these commercial buildings, they have these empty seven 11s or these bookstores that they used to have where they were cooking before COVID, you know, and they got all these empty spaces, but I just don't want to be the Guinea pig. So what I've been doing is, and I haven't got anyone to take one yet. Mike has been a lot better than me. He's actually had some people that have subsidized.
11:33So what I do is, is with those commercial buildings, just so I'm not losing in the beginning is that I will go in there. And then I will offer them and I'll say, here, I don't know what your location is going to go ahead and do. I go, but I need a, and I'll work my numbers backwards with like what I need to be profitable on that location. And I'll just say, for an example, I need to make$2 ,000 in revenue. That way it could cover my cost of goods, my stock or any spoilage. This monthly or weekly? Monthly. Yeah. So if the machine, without me knowing it, if it goes in there and it does $1 ,300 a month, you know, okay, I'm going to invoice you for the difference of$700 where your building or your owner is going to have to pay.
12:08I know you guys want these amenities and stuff like that, but I can't take that risk of being a Guinea pig here and having this thing, having me lose money. And then I have to move the machine for relocation and all that. And like, I'm, I don't win, you know, it's not, it doesn't set me up for success. I haven't had anybody take me up on that yet. Mike has maybe done two or three of those out for him out in the West, out in Oregon by you guys. Like he has done, like he's been like a master at it. Got it. So that's the pitch. It's like, look, we could offer these amenities, snack, drink, food service ourselves as the business owners, or we could hire Anthony to do it.
12:44And we understand he's got to make some money and this is his minimum. And if it doesn't hit that minimum, then we're going to have to subsidize it. But it's still worthwhile because it keeps our employees, you know, keeps the tenants happier. That's the pitch anyways. Yeah, exactly. Yeah, no, absolutely. More with Anthony in just a moment, including what happens when your prospect building already has a vending machine and how much you might have to pay to place a new machine right after this. Are you still overpaying for wireless? It's time to say yes to saying no. At our partner Mint Mobile, their favorite word is no.
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15:03I want to invite you to get started for free. Plus, Side Hustle Show listeners get 20 % off your first six months at quo.com slash side hustle. That's Q-U-O dot com slash side hustle. Look at them getting that three-letter domain. quo.com slash side hustle. And if you've got existing numbers with another service, Quo will port them over and no extra charge. Whoa, no missed calls, no missed customers. I asked Mike the same question, like if this building has been around for 10, 15, 20 years, like have they literally never thought about this before? It's hard to imagine an office building or even a residential building that didn't already have this vending machine in the lobby or in the elevator bay.
15:45What I have found out in this business is extremely archaic. All these property managers, majority of them had operators in there, but they just couldn't get a hold of them or they weren't stocking it. So what I do is when I go into an appointment, I tell them, hey, I'm local. You could call me. You're going to call this cell phone number. You're going to get me. Okay. And I'm going to get back to you right away. When you're dealing with these property managers, these people that have decisions they have to make, they don't want another headache of chasing you down as a vendor. you know, and that, cause already doing that and dealing it with all these other fires that they're dealing with through the building.
16:19They're dealing with the painter, the scaffolder, the window company, the, you know, all these other different trades that they're dealing with. If you just call and you give them a nice experience of customer service back, it's refreshing to them. So when I go look at a property, I put a proposal together. I send it, I take pictures and video. I send it over to my mock-up guy. He gets it over to me within 24 hours and I send them a proposal within 24 hours. And every single time when I do that, they are floored the way of how quickly they got that proposal. So get back to people quickly, you know, set expectations from the beginning.
16:49A lot of these, like I said, a lot of these property managers, they are, they're, they're worried about when is it going to be stocked because it hasn't been regularly stocked. So I, I go in that first meeting and I set up the expectation. I tell them, I go here, when I'm, when we sign up, I'm going to let you know what day your property is going to be stocked on. So then that way, if you're getting down to like four Cokes or three Snickers, I don't need to have 30 property managers texting me, hey, it's getting low. I've already set the expectation of knowing that, hey, your machine is going to be filled up on Tuesdays.
17:18So if it's Monday or Sunday and it's low, I mean, we're going to be refilling it shortly. So they know I'm coming, setting that expectation. And I let them know after the first month, if I feel like your machine needs to be stocked twice a week or three times a week, we'll make the adjustments in our route schedule and we'll make sure that it's going to be filled. Okay. So you find a lot of time you're conquesting market share from some legacy providers. I do. That have gotten, you've gotten complacent or, you know, they're not answering the phone. They're not performing the way that you would like for somebody who's new to the business, who's young and hungry, who wants to go out and get it with a more modern experience or more modern machine.
17:56100%. Okay. Because a lot of the locations that I go into, some of them had the same machines that I had in, but the other half, you know, they had maybe the old school coil machines that maybe when me and you were growing up that we would see. Yeah. I remember, you know, banging on the track. Come on. Exactly. You know, it was like, so now I go in, I show exactly now this new machine, these new machines that I have. And, um, you know, they're blown away. You know, they're blown away. Okay. So that's what's in the proposal. The proposal says, this is the machine that we're going to use. You need to check out the specs, the model number, you know, how, what it's, what it could potentially hold in terms of inventory.
18:29This is when we're going to buy your stocking restocking day is Tuesdays. And, you know, here it is sign on the bottom line. are they looking for concessions from you in terms of, well, you're going to take up, you know, 12 square feet of our floor space. We're going to charge you rent for that on a monthly basis, or we're going to charge you a percentage of sales. Like what's, what's typical in terms of that arrangement? So usually there'll be a rep share agreement that I'll give them. When I go into there, you know, when I first initially thought when I got in this business, I'm like, ah, do I give rep shares?
19:02Why not? But I don't need Anthony 2.0 coming down the line and offering rev share to all my buildings and trying to boot me out, you know, uh, you know, a year down the line. It's always another person coming down the line. Exactly. After I just spent$400 ,000 on equipment, you know, this past year. But like, what I'm saying is I go in there and I say here, I offer it from them to the beginning of a rev share. And because I want to view it as a partnership, if I'm doing the job of what I'm doing and I'm constantly evolving, uh, and I'm making certain changes and I'm doing different things there, like with the machines and trying out new products and I'm just very, I tell everybody, I'm a very collaborative person.
19:38I don't care what it is to put into these machines. I don't care. Like I will put whatever. I have my variety that I put in there initially because I tell the, I tell everyone it's like dating, you know, it's like a month or so. And so you kind of learn that building. What do they like? Do they like Pepsi? Do they like Coke? Do they like Doritos? Do they like Cheetos? Like, do they have more protein? Do they like kind bars? If somebody has a suggestion, that person, that resident could scan that QR code and they could go ahead and send that back to me and my staff gets it and we review those weekly.
20:07And then we make those changes, you know, on certain those machines. If somebody's got a request for a La Columbe black coffee, I'll go in there and I'll take out one of the drinks that are maybe not selling. Maybe the Pepsi isn't selling and I'll just replace it the following week and put it in there. Okay. That's, yeah, that's kind of cool to crowdsource that wisdom a little bit. Yeah. You can take a stab at the beginning. This is what we're going to put in. And then you get some data pretty quickly if you got 200 residential units to say, well, what's actually moving here? And then take out the bottom 10%, bottom 20%, try something new.
20:38Exactly. No, absolutely. And then basically that's kind of like what I do. So if I get those suggestions, I'll review those weekly. And then I basically do a review of all the machines, like basically monthly. Okay. On the rev share side, what's typical? Three to 5%. Yeah. So when I go in there and it's of gross sales, because if you do it off profit, profit could get a little, it's a little tough. Not a ton, but it's just something to throw the property management company or throw the building owner. Throw the owner, yeah, absolutely. It's more about them getting a little bit of something back.
21:12They feel validated that they're getting something for return for this amenity. Because the alternative is they could just do it themselves. And I've been reviewing some like pro forma, like real estate syndication type of documents. And there's a line item on there for like laundry and vending. Like they count on this as the investment group as part of their revenue. And so there's some segment of the building owner population is like, no, we'll just keep that in house. We'll keep, you know, all that margin. But there's another segment, like the kind that you're catering to is like, we don't want to deal with the logistics of product and restocking and machine maintenance or anything like that.
21:47We'll just, hey, you want to give us 5 %? Cool. You deal with it. Yeah, they don't. because a lot of the people that I've experienced with is that they just have so many fires that they're putting out, fix this punch list on this unit here, this move in there, like all this stuff. So like I am, you know, there's just, there's just a lot of, you know, fires that they're putting out and to have them focus on restocking, that is just something that it's like the ROI is not there for them. That's not the best use of those, uh, those property managers time. Got it. So you mentioned, you kind of alluded to this equipment cost here.
22:18What does a vending machine costs? What's your take on financing versus buying versus new versus used? Lots of different routes that you can go here. I have five different machines, which is kind of hectic because now I'm dealing with five different operating systems in their backend and trying to have them all communicate to each other with me just pulling reports and all that stuff as well too. So it's a little bit of a pain in the butt, but I'm working through it. It's not like, like, it's not like hard and it's like so much like extra work, but it is, you know, it is a nuisance. In contrast to like the Southwest model where we're going to fly one type of airplane.
22:56So every, you know, any mechanic can work on any plane, like that kind of thing versus, okay, it adds just a little bit of complexity. Yep. Absolutely. So like the, I have a Futura combo machine, which it might be like one of those ones with like the coil and that one takes cash. You know, those, I have a, I have four of those machines at a shelter and those cost me like around 5 ,000 and I bought those refurbished. Okay. Brand new. They would probably go for 6 ,500, I think is the new pricing as of 2025. The micro markets. I have three of those. When I, when I say micro market, those are like those open markets, people, you know, honest policy people could check out at a kiosk, you know, and those roughly, and then I'd have to build and put those together and those run anywhere from like eight to like nine grand of what those are.
23:44But, and those items you got to look because you have some theft, you know? So it adds a little bit to my guy when he goes to stock it. Cause one of our policies are, one of our processes are when he goes to restock that micro market, he counts, he, he stocks the whole unit and then he has to go and verify all the inventory that is there, every single item. And then if there's 10 Cheetos that says on the system, but there's only physically eight, he has to change it to eight. Cause what happened to those other 10, well, somebody probably stole it. So those are the micro markets. I have Stockwells, which are an AI smart machine.
24:21Those run like around like eight grand, like nine grand probably once it's delivered with freight. And then the newest and latest machine that I've been installing, I've installed 33 of them within the past four months, has been these MicroMarts. So they are a refrigerator. They're AI power machines, work like a stock wall, but they hold more inventory, but they actually have a video digital board that runs on the machine. So, which is very powerful for me because like I can run ads on there is what I'm feeling like what I can do down the line. Once I have the data and that could be additional revenue that I could get in without even like, I haven't even tapped into yet.
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24:59Sounds fancy. Dude, when I was installing one of these last week in the Fulton market area, which is like an emerging area, like in the West loop in Chicago, like it's like where Google has their space and there's new buildings being built all the time over there. The property manager was doing a tour, owner's tour, and I was installing them. And when he was walking, when one of the people were walking by, they like looked at it, they took a picture and, you know, because they couldn't believe what they were seeing. It's not like anything that they have seen. It's a really good looking machine.
25:29So property manager comes around the corner and gives me a fist bump, you know, cause I made them look good on his tour. Nice. What are those things run you? So those with freight, they are like around like 12K on there, you know, so they're a little bit more expensive, but I'm counting on the ad space that I could potentially be selling down the line once I have the data in front of me. Hey, I'm at a 500 unit building. I've had, you know, there's a monthly I have over, you know, 800 transactions. There's been this amount of dollars, you know, and then, hey, Coke, Pepsi, Chicago Cubs, you guys are playing the Cardinals this week.
26:04okay you want to put you know something an ad space on here for 100 bucks a month or 50 bucks a month you know and run it okay yeah now you're in the media business all of a sudden exactly right got a little mini billboard here for you that's what i'm hoping i mean that's that's my goal there to kind of really increase the revenues on those machines so like that that is my goal so next year i hope i'll have a better idea about how that went this is helpful at the risk of doing public math which i've sworn off doing but it's kind of this upfront capital in equipment and inventory and then, you know, a payback period of a number of months or potentially years if it's a slow location.
26:40But like, how do you think about a winning location or what's kind of a target ROI, if you think about it that way, in terms of, you know, the payback period on one of these machines? So with me being initially started, I wanted to increase my cash flows right away on these routes that I had. Cash flow was very important to me. So I actually ended up paying some of my first locations cash just so I didn't have a finance payment. And that way I was able to increase like my cashflow net. I wouldn't have to factor that. You know, so one of those machines that I bought was like nine grand with, it was doing like 23, 22 to$2 ,500 a month.
27:19So my net payment of like what would come to me off of all that would be like around like 750 or 800 bucks. so I was like okay my net payment is$750 ,800 I'm going to break even on this in like less than a year and then like if I look at my return on that like every year over going over like I'm going to be making that it's like 100 % return so I'm like right after it's paid off I mean there's depreciation there's maintenance involved I imagine but you've covered your expenses and then it's all gravy yeah then it's all gravy and then like I'm running the numbers I'm like okay here it's like a each year it just goes up 100 % return return return return and then obviously there might be maintenance and it might not be go up as high each year's as that.
27:58But so when I was looking at the numbers, I was like, oh my gosh, I'm like, I have to like, I'm making like 8 % over here. I'm like, I'm just gonna take my money out and then just invest it into my machines. You know, it's like a better return. Right. Cause if you're looking at a 100 % return potentially. Yeah, exactly. So that's the way I looked at it, you know, initially now what I did was is that since I was growing, I leveraged like financing capabilities, you know? So some of these places had financing options. Basically what that meant was it would be like 0 % down and then they would finance it over 60 months and it may be like a 12 % interest note.
28:30And then maybe that machine would cost me like 160 or 175 bucks a month. But if I'm making$1 ,500,$1 ,600, the$160,$1.75, it really wasn't the end of the world for me to go ahead and make that payment because now I got extra cash where I could go reinvest back into the business by just buying inventory, you know, building out the warehouse and all that stuff as well, too, which I'll kind of talk about like how my transition went from like me actually like growing. And then when I actually hired my first person and like when I actually did that. Yeah. But yeah, so that's kind of like where I was at within regards to like evaluating these things, if I should pay cash or if I should go ahead and finance it.
29:13I will say besides those first couple of machines that I paid cash, I finance every single one since. More with Anthony in just a moment, including how he turns one location lead into three and hiring some help so he didn't have to keep stocking the machines all by himself right after this. There are less than 100 days left in 2025, which means less than 100 days left to hit those goals that you said or to refocus your energy on what really matters. If you've got some catching up to do and maybe you've been procrastinating on taking that next step, our sponsor Indeed can help you find the best candidates for the role you need to fill and find them fast.
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32:06on maybe a thousand dollars in sales like if we've got those that's even like really low margins you're paying for the machine you're paying for your inventory and even if you're breaking even for the duration of that payment period like you're adding equity to the business which is another really interesting thing it's just like yep yes there's this monthly you know semi-passive cash flow play but there's also like okay now if i've got this route that's doing 50 60 grand a month, like there's a multiple that a new, another vending operator would come in and buy that from you. Did you consider buying existing routes like to grow through acquisition if you know, from that old tired operator that you just wanted out or has it all been kind of new, new conquest or new, new placements?
32:49No, but I actually, we, I actually bought one in downtown Chicago. There was a kid through the community, Mike's community that was moving back home and we, I basically bought it from him and we transitioned him out as he moved back home. And I basically took over his route. Okay. When I joined his community in like October of like 2023, he has like a lead generation service and stuff like that. So I like paid for him to handle all that stuff. So as I was doing that, I was doing pop-up, pop-ins, hitting the ground and everything. Like it was very like light for me, like in the beginning, like I, like I got some leads, but like they weren't really like good locations to do.
33:22And then like February of 2024, it just like all happened like a waterfall. Like every property manager was answering the email campaigns that his team set up and it was like, boom, boom, boom, boom, boom. And I was like, what the, yeah, it was, it took me off guard. So I went to every one of those meetings and I closed them. Now I live an hour and a half away from the city of Chicago. So I didn't want to build a business model where I had to go down to the city. I wanted to build it out by my house and I wanted to do it within like 25 minutes of driving. Didn't work out like that. So I pivoted in my business and I ended up getting a storage unit downtown, started off in an 80 square foot unit, went to 150 square foot unit.
34:00And then we just like in September of last year, you know, we went to a 700 square foot unit spot. You know, when I went into those meetings with those property managers, I went in there and I closed every single one of them. And then what I did was the reason why I was able to grow so quickly was I was able to turn one of those leads into three other locations by saying, hey, you have another property manager, you have a regional manager that oversees other properties that would like to see our, get value from our amenity and see those other buildings. And then it was just like, introduce me here to there.
34:32I would go look at those things, put the proposal together for that one and then close it and go. So turning one customer into two, turning one lead into three, say again, how are you incentivizing those people to introduce you to other property managers? So like going back to the rev share, like people will talk about it and say, Hey, will you offer rev share? Yeah, I do. Well, and then what I would say is like, okay, it doesn't start until six months after because I have a huge upfront upfront cost of like buying the machines and everything like that. I'm like, so what I'll do is I'll start rev share after six months, but I will expedite, I will cancel that out and expedite the rev share for you.
35:03You know, if you refer me to over three other sister properties that you have within your network and they're like, Oh, well, we'll take it. Some of them, some of them jump on it. Some of them don't majority of them did. And then I was able to get into these other, you know, locations relatively quickly and kind of grow the route pretty quick. Do you find that, is that just a a virtue of like podcasters, no other podcasters, property managers, no other property managers. So it's just like, well, this, you know, ownership group just has other buildings around the city. It's more of that property manager, the company that they work for, how many buildings do they manage?
35:33Yeah. Okay. Okay. And there's some of them out there that manage 700 ,000 properties throughout the United States. There's other ones that manage 500 ,000. Yeah. But there's also other ones that are like smaller, which are good, you know, that you can go in and they might have 20 properties and you could gain access to all 20 of those. So it all depends. Yes. And then you have a warm lead versus a completely cold, cold call or cold email to some random property manager. It's like your coworker or your peer, you know, around the corner, you said we ought to get in touch and we can start that conversation.
36:02At what point do you bring on somebody to help stock these things? It sounds like you're spending a lot of time on the business development time. Yeah. Meetings with property managers, dealing with the higher level type of stuff, but at the same time, like, oh shoot, we're sold out of Snickers on third street. So now I got to go over here. It's like, talk to me about the logistics maybe early on and then what that kind of has transitioned to today. Absolutely. So my first machine was installed of December of 2023. I then had a bunch of other, these ones, I had another one installed in January 23 or 24, and then another one in March of 24.
36:33So I had three that were up and running, like out in the Western suburbs, like by me that I was handling and I was using a, I was basically using the third car garage out of my house for this, which my wife, you know, God bless her. She's been unbelievably supportive and amazing, you know, throughout this whole process. But, you know, she was like, okay, I don't know if I want to make this into our warehouses, our garage, you know? So you had to battle that stuff for a little bit. So then once I started growing into the city and then when I bought that route in May of 2024, I had them still stock the route in May for me.
37:06So it was good because it gave me like time to get my stuff settled down there in the city, find a storage unit, you know, which was a pain in the butt, you know, because a lot of these life smart and life cubes and life storage facilities, they don't allow you to have delivered food there because they don't want infestation. So I was actually able to find a place that was basically like a shared office space that hosted weddings and stuff like that. So they didn't care about food and they had a loading dock and everything. So I was thinking down the line with me growing this, I need to find something with a loading dock.
37:35So if there's a pallet that's going to be dropped off once my route gets big enough, like I need those tools and that accessibility eventually down the line. So that way I'm not jumping to another location. Okay. I didn't even think about that. Like, yeah, you got to have an animal proof type of space. Are you at that point now ordering like from, I don't know, from corporate or like a distributor? What happened? Like, how do you get the stuff? Yeah. So what I did was originally I was buying all the stuff in the big box stores, Mike, but what he did was he actually went with like the mothership since that community has grown so much.
38:09And he basically negotiated distributorships with all these different companies. And he went there with the volume basis of the community. So it was great. So what happened was we went to this one distributor and then now I could have pallets being dropped off at my warehouse now because now where my route is at, like I order a lot of inventory weekly. Last month's cost of goods for me when I did 65 ,000 was like$27 ,000, you know, and cost of goods again, a higher number because I'm buying, I installed so many machines. So I had to install in stock so many machines that were bare right now that number will come down once it's stabilized.
38:49Yeah, exactly. So what happened was I started interviewing people last year in June. I was stocking all the stuff myself in June. Mike really pushed me because Mr. Passive is like, you can't be stocking these machines. You know, you're not saying that you're not saying I'm not good enough for a 25 hour job, but like my skillset, I should be using it and focusing on stuff that's 800 or 900 or a thousand dollars per hour. I had to focus on business development and growing the route. Yeah. So he's like, but I'm like, Mike, I can't like afford it, you know, because I won't be in the red for a little bit, you know, with bringing on a guy and all this stuff.
39:21He's like, just do it. Just like, all right. So I did it. I went out there, I posted an ad and I was interviewing people and I was interviewing people based off of their car and their van. And do you have a van? Do you have a truck? Because I needed somebody to put all these tow containers like in there. So I'm telling Mike and he goes, Anthony, he goes, just buy a van. I go, Mike, I go, I've talked to you in two days. Every time I talk to you, You're costing me money. You're costing me 30 grand here, you know, with a van I got to buy now and all this stuff. But you know what? I bought in and he goes, you know what, Anthony, you have to, because how are you going to grow the route if you're going to be stocking and doing these machines six hours a day?
39:59You know, when are you going to do it? You're never going to see your family. It's going to be like another job for you. Yeah. The driver that you hired because he had a van leaves for whatever reason, and then you're back to ground zero. Yeah. You're back to ground zero. So I bought the van. I bought one of those four transit connect vans. and like 103 ,000 miles on it. I bought it, put zero down. It was like a$300 a month, monthly payment. Car insurance is maybe like a buck 75 or something like that. So I bought it. Then I was, I went back to interviewing people and I was able to interview people based on the best quality candidate that I could get instead of worrying about their, if they had a van or a car or a truck.
40:34So I was able to do that. I ended up hiring somebody, brought them on. It's nice that the facility that I have my warehouse at, they allow me to park in their parking lot. Now it costs me a hundred bucks a month, but that way I have the car parked there, you know, on site for my, for my guy to use. Yeah. And at that time I had like 2000 units I had at the time. Sorry, like rows of product in a machine? No. So what I mean, 2000 units, I meant like 2000, like luxury apartment units over five buildings at the time. Okay. Got it. Got it. Like one building was 200 units. The other one was 250. One was 600, you know, so I had 2000 units.
41:08So I needed to hit the pavement, start going around and, you know, start building that up, you know? So just this past month, I have eclipsed 10 ,000 units total across my whole locations. And I have like 36 locations actually now I'm counting the three that are going to be delivered and it would be installed here this week. But, you know, I would have not been able to add 8 ,000 units to my route if I was picking and stocking. So like, sure. Thank goodness I took his advice and I leaped and it sucked. I mean, I was nervous about it initially, but you know, I jumped and I went after it, you know, I don't want to say like a cliche saying, but like you got to start being like comfortable with being uncomfortable.
41:52And I know that's a cliche that a lot of people say, and literally that's what I did. And I leveraged myself and I went after it. Yeah. It's that kind of hold your breath for this short-term period. And it's, it's like that in a lot of side hustles where it's like, I can kind of see the light at the end of the tunnel and I know it's going to be uncomfortable to get there, but hopefully it's a short-term thing. And, and I believe in the business, I believe we can get there, but it's, it's not going to be fun for a minute. Yeah. You know, and it's going back to that cliche. Like I talked to somebody the other day and he's like, Hey, Anthony, I really want to get on.
42:27And he told me this and he was like, you know, I'm an IT guy and I'm an introvert. And, you know, do you have to be really good at sales? Like when you go out and all this stuff. And I'm like, I'm like, here, man, you are, you're going to not saying you have to be the best at sales. I'm like, my pitch now is totally different from when I started 15 months ago. I go, but I asked him, I go, are you married? You have a partner? He goes, yeah, I'm married. I got two kids. I go, well, dude, I'm like, you had to sell your wife on marrying you. You know, I'm like, you had some type of sales quality to convince her to know that she wanted to spend the rest of your life with you.
42:54I go, so I go dig down. You have the ability and just know that it's a numbers game and you're going to hear a lot of no's before you hear a lot more yeses. And you're just going to have to be, you have to get through it. And it's just a numbers game, brother. And you just have to work through it. What kind of common objections do you hear from property managers when you are making the initial outreach or even after you sent your proposal? With them, it's always like follow-ups because vending is not like their first priority. They're dealing with so much other stuff that's going on there throughout the building.
43:28So there'll be times where I send a proposal and, you know, I won't get assigned one back for a month and a half or two. You know, there's one right now that I've sent over last July and I'm still popping in and just touching base and doing all these different things monthly because that's the name of the game in sales and pipeline. You just got to build your pipeline up. And then once one says yes, one will say another yes. I mean, I got an email last week from somebody. Hey, Anthony, I talked to you back in October. When can I get the machines in? I'm like, okay, sounds good. Nice to hear from you.
43:57You know, but like, uh, so it does take some follow-up. It does take some sales strategy of like how you want to go ahead and follow up. You know, you don't want to be following up with people saying, Hey, did you get my proposal? Where you at now? You know, like I always follow up and I always want to add like some type of value. Hey, I, I just talked to the CEO and I'm going to be ordering machines this week. Like, you know, can I get that signed proposal back where I can kind of add you to that order? You know, creating some type of urgency, doing some type of different type of sales follow-ups to kind of always add value.
44:28I'm not a big person of like, hey, when are you going to get it back? Because like, if somebody reads that, like I know when I read it, when I'm so busy, like, it's just like, I'm like, all right, I'll respond back to you later. Like there was no value, but it's like, hey, I made a new vendor. I'm going to be installing crumble cookies in our machines now. What? This guy's going to be installing crumble cookies. Oh my God, that's so great. This is what, you know, and then they respond. Okay. Have you been able to get the kids involved at all? Oh yeah, no, absolutely. So on the weekends, we do our Costco runs and we do the picking in the garage.
44:55I'll have actually brought them to some locations with me where I actually stocked them myself because the stocker at the time couldn't stock it for me. So I go, come on kids, let's go. Let's get in the car and let's go. And I got photos of them doing it. And I'll tell you that, that was the main mission for me was to teach them entrepreneurship and work ethic when we first started. And then they were three and five at the time and they're now going to be five and seven here, you know, come in May. But just their transformation of their minds of like how they think about things like within regards of value.
45:27You know, we used to walk into Target all the time. We used to always be like, okay, we got to get one, get something, get something. You know, now I taught them about like coupons and discounts. And then they would look at like, Hey, maybe this could be good, something value for the vending machine. And then, you know, something that I did not realize that they just got so obsessed with vending machines. Like, so like we're watching Despicable Me 4 and there's a vending machine in the background. Dad, there's a vending machine in the background. Or if it's a Taylor, like the Taylor Swift song, we're listening to it in the car last summer and it's her song, Cruel Summer.
45:58And like 48 seconds into that song, there's a verse that where she says with the light of the glow of the vending machine hits your face or something like that. And then they went crazy, like in the backseat of the car, dad, vending machine. So like, um, that's the stuff that really moves me, man. And that's what motivates me every single day. Yeah. It's just, that's been so great for me to experience, you know, this past year is the impact of what it had on the kids. Because even when I was talking to other successful type people and just anybody actually, and they would always reminisce about, Hey, I used to go with my dad when he used to be a painter here when my dad used to buy this, you know, and they're, they get those little doses of real life experience, you know, uh, at such a young age.
46:43And that's what I really want to instill in them. Yeah. It's really cool. Cause it's an example of a business that is super easy to understand. Okay. Buy something for a dollar, sell it for two. Yeah. And, oh wait, I didn't have to be there to make that say, you know, that's like that little flip that can switch from like, oh, you're grow up, go to school, get a good job. And, you know, trade time for money. It's like, here's this little fork in the road. I think it's really interesting that, and it's cool that you're exposing to them, that to them at a young age. Thank you. I was so addicted when I first got into this business.
47:13I would be checking my, I would be refreshing my sales reports weekly. I mean, I mean, not weekly, I mean like every like hour, like it was so obsessive because I was so new to it. I would wake up in the morning. Oh my God, how much did we make overnight? You know? And it's awesome because like in the city, you know, some of these kids, they're going out for Halloween night or St. Patrick's day. Like I know Saturday night between one and 4 a.m. That thing's going to be cleared out at these luxury apartments because these kids are just going to go back and just wipe it out. Yeah. Refresh on the reports or pulled.
47:41Yeah, that's great. Any big surprises, surprises or mistakes? We'll tee it up like that. Yeah. Like I said in the beginning, just make sure you, when you're qualifying that location, make sure you're asking all the questions, you know, make sure you're figuring out how many people are working there. What's the times that they're working there? You know, just quantify that. Don't assume a second shift is the same as the first shift like me. And then don't overthink it. Like I come from a real estate world. That's always says like location, location, location, same thing here with vending, but it's foot traffic, foot traffic, foot traffic.
48:09So if there's going to be foot traffic and there's going to be people that are going to be walking by it, there are going to be sales. So just make sure that you are very conscious of the foot traffic that is there. Very good. What's next for you? What are you excited about this year? Where do you want to take it? If you asked me 15 months ago, if this is where I was going to be at, I would be like, you're nuts. There's no way that would be here. So my goal is to be at$100 ,000 per month. I'm going to reassess the business and see if I want to go ahead and double down or triple down and then grow it to a 200 or 300 ,000 or for even a$400 ,000 a month business.
48:42Wow. And then some serious, serious equity involved at that point. Now you're talking about a multimillion dollar valuation. Yeah, no, absolutely. So like, these are some of the things that I'm like tossing around and going around about. So I'm trying to think, Like, you know, where do I want it to go? Because I just don't want it to get it too big where it pulls me away from my family. And my stocker, the guy that I hired, he only taken off four days in six months. So great hire that I had. But he was sick in January and he had the flu or whatever. So I had to wake my butt up and go out there and pick and stock and do it.
49:15And it sucked. It just did. It sucked. But my kid, he had a basketball practice. His first basketball practice started at 4 p.m. And I wasn't missing it. So I told my wife, I go, you know, I'm going to wake up at 2 a.m., go do the route, pick all the stuff to make sure that I'm back in time. You're going to have to take care of the kids in the morning. She still works. She's a public school teacher out here in the Western suburbs for 22 years. And she's like, yep. She goes, I'll do it. I'll take care of the kids that morning. You go out and do it. And so it's been good. To have a supportive partner like that has been like, I wouldn't be here without her and with her support and just having the sacrifice and some of those days where I had to get out there and do it and hustle and not come home till late because maybe the machine was delivered and the machine was acting up and it wasn't working the right way.
49:56And I'm on the phone with customer support till nine o 'clock at night and she's handing them the kids and putting them the bed. So there's Murphy's law for sure. No matter what. Absolutely. Yeah. Whenever you're moving bulky technology, giant machines around physical inventory, there's people involved. Yeah. Things are going to happen, but that's part of being a business owner and you figure it out as you go. Absolutely. So this has been awesome. Anthony, I really appreciate you spending some some time with us and schooling us on the rapid growth vending model here at Chicago. HNHvending.com.
50:26You can find them over there. Let's wrap this thing up with your number one tip for Side Hustle Nation. This does not have to be vending specifically related. This could be whatever entrepreneurial wisdom you'd like to impart. Yeah. So you are going to experience some adversity, but you're going to have to push through it. And if you push through it and persevere, you will be successful. If you're thinking about a certain job that you're at and you want to, hey, I need a change or I need to do this, I tell somebody jump and make the jump and go ahead and do it and push forward and try to make it happen.
50:58So that way down the line, you don't have any regrets and say, hey, I should have tried this. I should have did this. Just go out there and try it. And then you'll leverage yourself to make sure that you're successful and it'll happen. You'll just have to push through it. That's right. Keep your risks low. Keep your upsides high and go to town. Again, hnhbending.com. Awesome episode. A couple of takeaways for me. you just alluded to this, hey, real estate is, the rule is location, location, location. In this business, hey, foot traffic, really similar to this location. How many people are going to be having exposure to this machine?
51:31How many people, you know, a certain percentage of those people are going to buy something if you stock it right and figure out the right product mix there. And the other side of it is, yeah, on the surface, hey, you know, buy the thing for a dollar, sell it for two, simple. But on the backside of that is this, it's a sales machine, How do we get in front of the decision makers? How do we do that consistently? How do we turn one lead into three? I really like that. Hey, well, the typical moratorium on the rev share is six months just because we got to pay back the machine. I love this line. Hey, but we can shortcut that.
52:01We can cut that out if you intro me to two other buildings, three other buildings. Really like that, building and nurturing that sales pipeline and recognizing that this is not their top priority. Do the follow-ups and make sure that you're top of mind because there might be another Anthony knocking at their door, sending them an email, cold calling them to try and get his machine in, her machine in. So trying to be top of mind on that front. We referenced episode 599 with Mike Hoffman, the vendingpreneur, Mr. Passive on Twitter. I think he's got a discount for Side Hustle Show listeners on the vendingpreneur community.
52:34Not positive on that, but if you mention Side Hustle Nation or Side Hustle Show, I know he'll take good care of you on that and go back and listen to his original episode if you're interested in learning a little bit more. Big thanks to Anthony for sharing his insight. Big thanks to our sponsors for helping make this content free for everyone. As always, you can hit up sidehustlenation.com slash deals for all the latest offers from our sponsors in one place. That is it for me. Thank you so much for tuning in. If you're finding value in the show, the greatest compliment is to share it with a friend.
53:04So fire off that text message for me to that person in your life who is looking for creative ways to make extra money outside of their job. Until next time, let's go out there and make something happen. And I'll catch you in the next edition of the Side Hustle Show. Hustle on.
From the publisher
Vending machines are a classic passive income source that continues to be profitable today.
We had Mr. Passive himself, Mike Hoffman, on the show before to talk about how to scale up his vending machine business.
And one of his mentees is here today.
Anthony Kolodziej from H&H Vending scaled his vending operation from zero to over $50k per month in just 16 months.
That’s 30+ locations, thousands of transactions, and a strategy that turns vending into something way beyond the old-school snack machine in the corner of a breakroom.
Tune in to Episode 662 of the Side Hustle Show to learn:
how to land prime locations
how to negotiate deals
why he never says the word "vending" when pitching a property manager
Want to go deeper? Check out Mike Hoffmann’s Vendingpreneur training program. (Side Hustle Show listeners get 10% off!)
Full Show Notes: From Zero to $50k in Vending Revenue in 16 months
New to the Show? Get your personalized money-making playlist here!
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