Taking part in the ATM industry and owning your own automated teller machine (ATM) is a popular business idea for many reasons. For example, starting and owning an ATM business doesn't require you (or your employees) to be around them all the time, which means they can create passive income – income earned without effort.
A single ATM machine might cost anywhere from $1,000 to $10,000. You can make money from the machine through ATM surcharge fees. The average surcharge per transaction is usually $2 to $3, so a mid-priced machine would only need to handle four or five transactions daily to make enough surcharge revenue to pay for itself and begin turning a profit. Over time, you can even expand your ATM business, using profits to buy more machines.
If you're considering purchasing some ATM machines and starting your own ATM business, this article will explain everything you need to do to plan and prepare.
The Planning Process
The first thing to do before embarking on any new venture is to plan and develop a business model. Careful planning done before you start taking action can help you make better strategic decisions and avoid problems down the road. The list below provides a preliminary set of topics to cover during your planning process:
- Determine your startup budget. Determine how much money you have to invest in this venture. This will inform how many and what types of machines you can buy when starting out.
- Determine the scope of your ATM business. Decide how much time, effort, and startup funds you want to dedicate to your ATM company. For example, perhaps you want to start out with a single machine and grow from there, or perhaps you want to invest in a whole fleet of machines.
- Identify good ATM locations. You may want to contact specific merchants or retail stores whose customers have a need for cash on their premises, identify areas in a mall with a lot of foot traffic, or scope out a popular gas station convenience store when finding the right ATM placement. Placement next to vending machines that only take cash often works really well. Ideally, you want to place your machines in high-traffic areas where they will earn you the most.
- Determine your ATM transaction fees. Look up typical ATM processing fees in your area. Note that ATM fees sometimes vary significantly based on venue - an ATM located in a casino, for example, can get away with charging a heftier fee than one located in a mall. You want to set your fees high enough to make you a profit while not so high that customers refuse to use your machines.
- Estimate ongoing expenses. This includes things like servicing fees for ATM operators (if you contract out the ATM servicing) or the cost in time, gas money, and receipt paper if you are servicing each machine yourself. You'll want to look into ATM insurance, as well.
- Research ATM models and prices. Look into what is available for purchase in the ATM market. Do your research about what different ATM models have to offer so that you can make an informed decision when it's time to purchase. You might also look into the pros and cons of purchasing a used ATM machine.
- Write a business plan. A business plan is a document outlining exactly how you plan on running your business. It should include an executive summary, establish your business strategy, detail industry and market analysis (which you can use to identify good locations for your machines), and more.
Forming Your ATM Business and Handling the Details
After the planning is complete, you can begin taking care of all legal considerations in starting your business, develop a marketing strategy, and put a plan in place for managing your business after you place your first machines.
Establishing Your ATM Business as a Legal Entity
The exact process for legally forming a business varies by state and jurisdiction. Usually, you can find the information for your local area on your secretary of state's website. You will be directed to the appropriate paperwork, which you may be able to file online but will likely need to mail in. Often, there are usually small fees that must accompany any filings.
The first decision you must make is what type of legal entity your business will be. If you are simply using your own funds and managing a few machines as a side gig while working full-time elsewhere, you can probably establish yourself as a sole proprietor - which doesn't even require filing at all in many places. Other possible business designations are partnerships, limited liability companies (LLCs), corporations, and S corporations. Be sure to research the legal and tax implications of each business type when making a decision.
If you plan on operating your business under a name other than your own legal name, then you will need to either include the business name on your business registration documents or you will need to file a "doing business as" (DBA) name to establish the name of your business with the state. Note that most states have online business listings so you can check if the business name you want to use is already taken.
Once you establish your business as a legal entity, you will want to visit the local bank or credit union and open a business bank account. This will make it easy to keep your business finances separate from your personal finances and will also make it easy to apply for a business credit card or line of credit. To open a business bank account, you might be required to provide certain documentation, such as formation paperwork, your business plan, and personal identification.
Last but not least, look into local tax laws. LLCs and sole proprietorships are often taxed as pass-through entities, meaning that the taxes are dealt with on your personal tax return. Make sure you understand when and how businesses like yours should be paying taxes. You may need to obtain federal and/or state tax ID numbers for your business. At the federal level, this is called an employer identification number (EIN) and it can be obtained online.
Your ATM Marketing Strategy
Your marketing strategy might do best with a two-pronged approach - first, you will need to market to locations that you would like to place your ATMs and then you will need to market to prospective ATM users.
When it comes to marketing to merchants or owners of locations where you would like to place your machines, you might do best to directly contact these locations and explain - elevator-pitch style - why having one of your machines would be good for them. Having a machine on-site gives customers easy access to more cash, which they can spend on-site.
How far you delve into consumer advertisement is up to you. Consumers should be made aware of your machines with signage as needed, so consider where to strategically place ATM signs. If you know there are competing ATMs in the area, find a way to set yours apart either by advertising lower transaction fees or by keeping your machine in better condition so that it's more appealing.
As you look to expand your ATM business, consider sending out mailers or email advertisements to owners of prospective sites for your machines.
Starting and Running Your ATM Business
Once all of the planning and paperwork are complete, you're ready to get started. The following list outlines things to do and consider as you begin:
- Purchase your machines. As mentioned previously, ATM machines can be purchased as new or used. Used machines are cheaper but they may have issues or become quickly outdated. New ATMs are more expensive but may come with additional warranties and capabilities.
- Finalize locations. Formalize any agreements you have with the locations where your machines will be placed and consider adding new locations.
- Install and manage your machines. After you have ATMs and locations at which to place them, they can be installed with wired or wireless internet access. After they are installed, as ATM owner you must begin monitoring their performance and maintaining them to ensure they are always working properly. You may also want to invest in camera equipment to monitor the immediate area surrounding the ATM. Finally, consider paying for a phone line so customers or businesses can contact you if there are any issues with the machine.
- Monitor your business finances. You must manage your business's finances while your ATM business is operating. Skynova offers all-in-one accounting software designed just for small business owners, which can come in handy for this type of work.
Simplify Your Bookkeeping With Skynova
Once your ATM business is established, you only need to manage and monitor your machines. If you are starting your business in order to earn passive income, you likely want to spend as little time and effort as possible dealing with accounting and bookkeeping. Luckily, Skynova has your back, with accounting software, business templates, and a whole host of other software products designed to simplify the work and lives of small business owners.