How to Start an Ice Vending Business: $2500/mo in (Almost) Passive Profits

Making extra money on the side often requires finding ways to create leverage.

Leverage means getting paid multiple times for work you only have to do once, and making money without having to actively do the work yourself.

One side hustler who has cracked the code on leveraged profits is Steve Slagle. By day, Steve works construction jobs. But outside of his 9 to 5, he now earns over $2500 a month from Beachside Ice, his ice vending machine business.

In this episode, Steve takes us through the world of vending machine location negotiations, landowner compensation, and the importance of maintaining positive relations. We explore the finer details of partnering with manufacturers, securing permits, and overseeing installation and delivery.

Tune into Episode 579 of The Side Hustle Show to learn:

Ideal locations for steady demand with ice vending machines
Financing options for starting an ice vending operation
Local customer promotion with grassroots marketing
Maximizing profits through maintenance strategies
Scaling ice vending for semi-passive income

Table of Contents show

Finding the Idea

The original concept for Steve’s ice vending venture came when he realized that ice is a product with inherent, constant demand. “We see the demand there is constant. It’s not going anywhere,” he explains.

While bags of ice can easily be purchased at gas stations, grocery stores, big box retailers, etc., Steve noticed that profit margins are extremely thin for traditional ice distributors and suppliers. As middlemen, traditional ice companies make just pennies per bag sold.

This led Steve to realize there could be a major opportunity to cut out the intermediary suppliers and claim much higher profit margins for himself by installing automated ice vending machines.

This automated approach meant minimal effort was required for high profits once the machines were up and running.

Validating the Business Idea

Before investing in equipment, Steve validated the idea by surveying the competitive landscape. He took trips to visit existing ice vending machines in his area to assess customer demand and take note of any flaws in the user experience.

What Steve found is that most machines weren’t located in prime spots with high traffic flow. Customers still had to go out of their way to access them.

He also noticed a lack of branding and contact information on the machines. If something went wrong during a transaction, customers were left frustrated with no recourse.

Steve saw these issues as a chance to improve on the existing model.

He would place machines directly in the path of customers where ice was wanted most, and he would provide an exceptional customer experience if any problems arose.

“We do put our phone number on every one of them and we’ll get calls from some folks that’ll say, ‘I put my money in and nothing happened.’ And 99% of the time, it’s just us kind of giving them a brief instruction of how to use the machine.”

Startup Costs and Financing

The most significant startup costs that Steve encountered were for the ice vending machines themselves. Top-of-the-line fully automated ice vending machines range from $50,000 on the low and up to $60,000 or more on the high end.

In order to finance this major equipment investment, Steve thoroughly explored various options including small business loans, loans from banks or credit unions, and financing directly through the ice machine manufacturers.

Ultimately, Steve chose to work with a company called Everest, who partners with a financing company called Leaf Financial to approve loans for Everest’s customers.

With competitive industry financing lined up, Steve confidently moved forward and ordered two brand new Everest ice vending machines totaling over $100,000 in upfront costs.

This was a major financial commitment, especially since he did not yet have secured locations to install the machines.

But the looming delivery deadline lit a fire under Steve to start hustling to secure homes for his soon-to-arrive investments. As he explains this feeling:

“I like that a little bit of a nudge by having the pressure and having that deadline knowing a considerable investment was getting delivered,” he shared.

Identifying the Best Locations

Coming up with the optimal location strategy was an extremely critical component to Steve’s future success in the ice vending business.

He started by brainstorming where people typically buy ice when they need it. Gas stations, convenience stores, and similar quick-stop shops were the first options that came to mind.

But Steve knew he needed to pursue a smarter “destination ice” placement strategy. Rather than just convenient pit stops, he would target locations where people naturally congregated for recreation, events, and during vacations. This included:

Marinas where people needed ice for boating and fishing
Public parks and beaches where families gathered in the sun
Outdoor event venues and stadiums hosting crowds
Hospitality spots like resorts and condo complexes for vacationers

For his first two locations, Steve decided to cold-call condo complexes in his local beach town area. He pitched the managers on having a 24/7 self-serve ice vending machine exclusively for their guests and visitors.

The property managers loved this idea of a convenient new amenity for visitors that required zero effort from staff. It was a total value-add for guests.

Steve negotiated a monthly flat fee around $200 – $300 per machine instead of a percentage of sales. This avoided the hassle of collecting and accounting for sales data.

The condo sites quickly proved to be fantastic performers, validating Steve’s “destination ice” placement strategy.

“Some of the first things that come to mind are marinas, parks, any sort of outdoor recreation areas. And the more we thought about it, the more we started to kind of craft what we call destination ice.”

Spreading the Word with Grassroots Marketing Tactics

While location plays a major role, Steve couldn’t rely on foot traffic alone. He still needed to spread the word so customers knew about his new ice vending options.

To promote the new ice vending machines to nearby customers, Steve employed several simple grassroots marketing tactics:

Posting flyers in surrounding businesses to raise awareness
Placing vibrant branded signs and banners near the actual machines
Creating social media pages
Optimizing Google My Business listings to drive local SEO

Populating his ice vending locations on Google My Business proved to be a very powerful free marketing channel. Now when users search “ice near me”, Steve’s ice machines appear right on the map making them extremely easy to find. As Steve explains:

“The nice part now is you get on there and you Google ‘ice near me.’ It tells you how to get there. And that’s a free service. We don’t pay for advertising on Google.”

This organic search visibility allows Steve to attract customers who are already looking for ice in the area.

Maintaining the Business

With his machines up and running in prime spots, Steve developed a straightforward repeatable process for ongoing maintenance.

He visits each ice vending machine personally a few times per week to handle necessary maintenance tasks.

This hands-on work takes Steve about 10 minutes per location to check supplies, collect cash, clean the machines, and deal with any technical issues or restocking that’s needed.

To maximize flexibility and uptime, Steve can also remotely monitor and manage the machines from his smartphone whenever needed. This functionality allows him to travel and take time off without constant hands-on oversight of the business.

After the demanding upfront work of securing optimal locations and fine-tuning operations, the majority of income from the ice vending business is now almost entirely passive. The machines are now income-producing assets that reliably churn out profits with minimal ongoing effort.

Results

In just the first year and a half after launching his ice vending side hustle, Steve has seen remarkable growth and results:

His first two machines fully paid for themselves within the first 12 months
He’s rapidly scaled up to operating 4 consistently profitable machines
Sales spike over $1000+ per machine around major holidays when demand surges
He nets a solid $2500+ per month in passive hands-off income

And the business continues to accelerate and compound its growth.

As word has spread, new locations now proactively reach out to Steve inquiring about having a machine installed on their properties. Steve has shifted from cold calling to warmly receiving inbound requests.

Mistakes or Surprises Along the Way

When operating a business with physical assets like vending machines, vandalism is an unfortunate risk. Steve has been fortunate so far not to deal with any major vandalism or theft issues.

He attributes this to a few key factors:

The machines are fairly robustly built. They’re designed to keep honest people honest.
All of their locations have security cameras, either pointed at the machine or in the area.

While the machines can withstand some effort to break in, security cameras help deter crime and catch any bad actors. For additional protection, newer machines also have cashless payment options to remove the lure of burglary for cash.

Overall, through smart placement and security measures, Steve has avoided major surprises or crimes against his ice vending assets.

Growing the Business

Given the demand, Steve plans to continue steadily expanding his ice vending operations.

He’s currently looking at placing machines at complementary venues like RV parks, campgrounds, construction sites, and existing businesses with owners unhappy with their current ice providers.

Long term, Steve hopes to scale up the ice vending side hustle into a full-time endeavor and minimize the time spent on traditional construction work.

The leverage and automation potential of the machines makes ice vending a much smoother path to profits compared to physical contract work.

Steve is also exploring opportunities to expand into offering additional machine vending services beyond just ice. He sees adding in popular options like cold beverages, snacks, and food as a natural next step once the ice machines are running smoothly.

Key Takeaways

The keys to replicating Steve’s success with an automated side hustle like ice vending include:

Seek out high-traffic locations where demand is concentrated
Get your business visible online via Google My Business
Provide amazing customer service
Build relationships with location hosts and partners
Look for ways to systematize operations for passive profits

By putting in sweat equity upfront finding locations and optimizing processes, over time you can step back and let machines do the work.

The result is the dream combination of high-profit margins and minimal effort required to operate the business day-to-day.

For those interested in exploring a similar ice vending venture, Steve’s experience proves it can be a lucrative semi-passive income stream when executed strategically. His Beachside Ice business offers a model for tapping into consumer demand for convenient ice access.

Steve’s #1 Tip for Side Hustle Nation

“Keep your word.”

Links and Resources from this Episode

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