I’ve always been fascinated with ATM machines. Yes, I know that the acronym stands for Automated Teller Machine, but I still love saying ATM machines. I always wondered where that surcharge went and who was responsible for running them.
It turns out that ATMs are a great source of passive income, with some caveats, of course. Today, I will discuss the viability of starting an ATM, vending machine, or arcade coin-op business. I consider these the smaller of the Coin-Op businesses.
The three larger coin-op businesses are car washes, slot machines, and laundromats, but I’ll save those for another day. I want to talk about the similarities and differences between these Coin-Op businesses and how we can make them completely passive. Remember, we need to become entrepreneurs before we start our businesses. Entrepreneurs create systems and remove themselves from the process of making money—but keep the passive income.
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Similarities. First, let’s begin with the similarities between these businesses. Most of these machines share similar characteristics in getting started; however, the nitty-gritty details may differ. The book “Passive Income, Aggressive Retirement” goes more in-depth in the coin-op business.
In the book, the author lists coin-op as one of her main sources of passive income. I divide my passive income into five sources; retirement income, investing, cryptocurrencies, real estate, and business. Coin-Op machines fall squarely in my business pillar. Let’s get started.
Location, location, location. The most important part of being successful at these businesses is finding the proper location. They each have varying locations where they will succeed, but overall your mission is to find the best spot for your machines.
Now, once you scout out the competition, you will need to convince the owner to allow your machine access—to their profit, of course. You will need to leverage the selling skills you learned throughout your business (self) education.
Yes, if you do not own the location, you will need to share the profits with the owner. I’ll talk about starting your site later. It’s not terrible to share profits with the owner; they will have to manage the store. You will just have to maintain the machine and restock the items and money.
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Your routine. Each machine has a schedule that works best. You will probably need to restock ATMs weekly; vending machines should be similar. Arcade machines may be less work, but you will have to ensure they function properly. This may be skilled labor, so perform your due diligence before buying particular arcade machines.
Because we plan to make this business passive, we need to document every task we perform. We need to record all of our timelines, items, partners, etc., into a standard operating procedure (SOP). We can then use this SOP to train our employees or manager. I wrote the article “Don’t Fear Delegation” to remind us that leadership and management are vital to our passive lifestyles—we can’t do everything.
Getting started. Should you buy your machine first, or find your location first? Good question. If I had multiple promising locations, I would probably buy my machine first. If I only had one lead, I would work that lead to completion, then buy a machine.
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You can buy your machines used or new. I would start with used machines; however, you must understand that you are not a subject matter expert. Find a qualified (and quality) subject matter expert to inspect whatever device you intend to purchase.
You do not want to get caught with a bad machine. These machines are complex, so take the necessary precautions (and pay the money upfront) to protect yourself. You don’t need fancy new ATMs, vending machines, or arcades—older ones work just fine.
I grew up in the arcades, so I know which cabinets will still perform well today. Arcade machines may want to cost more upfront. You can even cleverly set up an XBOX or Playstation console with new games. You can have the owner hold on to the controllers until someone pays for a certain amount of time. Again, it’s your world; make it happen.
Getting paid. We are starting our coin-op business to add value to the location and to collect passive income. ATMs have fees that get split between three entities. The three entities are the service provider that connects to the banking system, the business owner, and the ATM owner.
The service provider fee is roughly $0.25 for each transaction. Next, you have to give the business owners their cut of the profits. Let’s say $1.00 of the $3.00 fee. That leaves $1.75 per transaction for you. Not bad.
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For vending machines, you will need to split the cost between you and the business owner. If you use a credit/debit card variant, you will have to pay a small percentage of the transaction to Visa/Mastercard.
You will split the profits between you and the business owner for arcade machines as well. Since the game is the product, the profit margins can be high with arcade machines; however, you will want to have a good maintenance plan before you install your arcade.
The differences. Let’s look at some of the unique attributes of each coin-op machine business. Knowing the intricacies of each business can allow you to have sustained success.
ATMs. It will be difficult to find a good location for an ATM. Finding a high-traffic area that doesn’t already have an ATM will be tough. Look for new locations in your area. A new store may welcome an ATM to bring in foot traffic.
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I recommend veterans associations like American Veterans, Veterans of Foreign Wars, and American Legion. You may be able to find a hidden gem by asking around.
You will have to reload the cash for your ATM, so your safety is of utmost importance. Ensure you read books on managing an ATM machine and take all the necessary precautions to protect yourself. Someone is always watching you.
Vending Machines. Besides location, the most crucial aspect of vending machines is food/drink selection. Take notes of what sells and what doesn’t. Taking the time to learn your location will pay off in spades later.
For example, my last duty station was at a military “A” school where Marines straight from boot camp go to learn their initial job. The schoolhouse had vending machines with soda products, candy, chips, and Lunchables. However, adding a vending machine full of Monster energy drinks was pure magic.
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Arcade Machines. Think of a place where parents talk with each other and friends, but drag their kids there as well. Then, put your arcade there. Think of the mom-and-pop version of Ruby Tuesdays or Applebee’s. Those locations will be your money makers.
Sure, kids all have phones, but you can find success if you offer them a chance to play against other kids in person. Don’t forget; adults play arcades as well. It is a fun way to get to know a new romantic partner.
Maximize profits. Now, let’s turn up our earnings to the max. We need to install all of our machines in places that we own. I don’t want to have to pay the owner unless I am the owner. We need to brainstorm ideas on how to start a passive business. From there, we can add our machines.
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Running a full-blown arcade out of your home could be a magical idea and a great start to converting earned income into passive income. Let’s dream together.
It would be best if we owned 3-5 acres of land and had no homeowner association impeding our ability to make money. Then, we had a finished basement or detached mobile home to house 10-15 arcade machines. We can also add in a big screen with an XBOX, Playstation, and Nintendo.
From there, we install our arcade machines, vending machines (food, drink, energy drink), and of course, an ATM machine. We keep all of the profits! Can it work? Yes, with the right mindset. I would instead take the time to plot this course of action than ask business owners to give them passive income.
Make it passive. The final step is to make our arcade passive—this also goes for any vending machine, ATM, or arcade business you are running. We need to install management to automate our profits fully.
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Yes, our profits will decrease, but we will free up our time to make more money or spend time with family. We are not in the business of being busy. We want our time back. Even if we don’t plan to move overseas, it is good to prepare our minds to think this way.
What if our kids and grandkids move across the country or overseas? What if we need to seek better medical services in a far-off state? There are too many variables out there to lock ourselves into a local business.
Train your employees well, build great systems, and automate everything that you can—these steps will lead to a successful coin-op business. And once you have a great, repeatable approach, share it with the world—at a profit.
Conclusion. I think I rambled on enough. But, it is good to stretch your mental capacity every once in a while. It’s great to own one ATM and share profits with a business owner, but it’s better to create a small arcade in your home. Dream big, start small, read books!
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Disclosure: I am not a financial advisor or money manager, and any knowledge is given as guidance and not direct actionable investment advice. I am an Amazon Affiliate. Please research any investment vehicles that are being considered. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article. All Right Reserved Military Family Investing
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