As you evaluate the ice vending business, we have put together the Six Steps necessary to start a successful Ice Vending business. If you own the location where the machine will go, or you will not use financing, there will be fewer steps.
As you navigate this process, please feel free to contact your Regional Sales Manager anytime with questions.
- GET TO KNOW THE ICE BUSINESS IN YOUR AREA
As you research Ice Vending, it’s important to learn about ice and water sales in your market area. What business locations are selling ice? What size bags are they offering? For what price? If you plan to sell purified water, where is water being sold and what are they charging for 1 gallon and 5 gallons of water?
Most retailers pay at least $1.25 – $2.00 per bag for ice to be delivered and then they markup the price for retail, commonly by doubling the delivery cost. Retail bag sizes are usually 7lbs, but you may find other sizes being offered. When you price your ice and water for your machine, you’ll want to offer a noticeable or below market pricing as compared to traditional retailers, generally 50 cents or more. Since it normally only costs 40-50 cents to produce a 10lb bag of ice with our machines, you’ll have plenty of wiggle room to work with.
What’s really exciting is that profit margins will continue to increase over time as you take price increases up when retailers take their prices up! Our overhead is not directly tied to fuel and labor costs like the traditional ice package industry is. So, you can beat the competition on Price, Bag Size, Product Quality, and Convenient 24/7 curbside access. (Not to mention it’s the safest way to buy ice with the customer being the first person to touch the bag.) Over time as fuel and labor costs continue to increase, you will enjoy even stronger margins.
- CONSIDER CONVENIENT LOCATIONS FOR SELLING ICE
As a Kooler Ice owner, your long-term success is important to us, and having a convenient site for your machine is vital. Similar to other businesses, it is all about the location.
Most machines are located on main roads, have good visibility from the road, and are positioned where they are easy to access, multiple entry points into a property is beneficial so larger vehicles and service industry personnel pulling trailers can access the machine. Population density, traffic count and some basic demographic information is helpful as well. If you have not requested more details about Site Selection from your Regional Sales Manager, please do so. Our team has decades of combined experience with this and they will be happy to assist you, review sites over Google Maps Street View and give recommendations on machine placement. We can show you what makes for a good location, a strategy for mapping out and prioritizing sites, talking points, advice about placement and utilities, and provide example lease templates and editable leave-behind flyers.
A common misperception about our industry is that you must be near a lake, a river, the ocean or another outdoor recreation area with unusually high demand for ice, in order to generate substantial profit. This is simply not the case!!! Most machines are placed in urban and suburban areas, small towns, and underserved areas where there is no unusual demand for ice. Ice is a highly popular commodity everywhere and consumers want better prices, better quality, and better convenience, wherever they live and work.
- DETERMINE FINANCING
Now that you’ve evaluated the business, become more familiar with ice sales in your market area, and considered some locations where you may want to pursue placing a machine, it’s time to determine how the machine will be funded. Financing is common, and we recommend getting pre-approved for a loan or at least getting useful feedback from your lender, so you know what you have to work with. When you find the perfect spot and have a landowner excited to work with you, it’s important to be in position to take the next step with a site lease and not be in the early stages of figuring out your financing.
Financing is normally done in one of two ways:
- Business owners that have 2 years of established credit history commonly use an equipment finance company, such as CapCity Finance or LEAF for 100% financing. Site prep costs done by licensed contractors are allowed to be rolled into these notes. Financing for 5 years is most common, and often deferred payments and other special options are available. These loans are structured so you can take full advantage of the Section 179 tax benefit for businesses.
- Local banks usually lend on our equipment with a 20% down payment as equity in the machine. A 5-year note with a local bank is very common.
You may also consider an SBA Loan. Kooler Ice has an SBA registry listing, so this is doable. Just be sure to seek out a bank that specializes in these types of loans. SBA loans often take 3-5 months to finalize.
- FINALIZE LOCATION
Once you have figured out how the machine will be funded, and you know what you have to work with, then it’s time to start talking to land/business owners with the goal of securing a site lease. While leasing a spot is very common, it does require legwork and oftentimes meeting with multiple owners, to give yourself choices. We can also provide you with a flier that you can personalize to bring with you on these visits and we’re happy to coach you in this process. Because there are a number of variables involved in this process that are out of your control, we advise you to never buy an ice vending machine without having the location secured first. As you scout locations, we’re available to help make sure you’re on the right path with your approach, negotiations, etc., and we’ll help you make good decisions about machine size, utilities, etc.
When you have an owner willing to work with you, typically you will get the lease signed contingent on having your contractors reviewing the site to determine site prep and the costs to install the utilities. As you are going through this process feel free to reach out to us regarding machine sizing, placement and utility questions.
- ORDER MACHINE AND SITE PREPARATION
After you’ve secured your site and are ready to fund, it’s time to submit your order to Kooler Ice for your machine. When we receive your 50% machine deposit and your authorized sales order, your machine becomes next in line for production. Delivery lead-time varies and can be 12-14 + weeks out.
Once you sign the sales agreement, it is time to get moving on your site prep. Contractors stay in high demand and can be delayed by weather, so it’s important to order site prep right away, so that you’re ready for your machine before it’s finished at our factory. Our goal is to deliver your machine the week after it’s ready at our factory, as long as your site is completely ready.
- DELIVERY AND TRAINING
On the exciting day of your machine install, you will need a forklift rental, and your plumber and electrician on site for about one hour for final connections. We coordinate our delivery ETA with you at least a week in advance, to provide you with enough time to line this up.
Our technician will arrive, operate the forklift and maintain liability, oversee final connections, power up the machine and inspect it. We will also meet you the next morning at your machine for on-site training, with your machine operational. When we leave, you are in business and have the monitoring system available and access to our 12-hour every-day expert support hotline.
Our turnkey delivery service with on-site training is exceptional. It’s just one of the many crucial ways Kooler Ice distinguishes itself from other manufacturers in our industry.
