📖 Selling Ice and Water to Make Millions (Idea Feature #12)

🧠 Top of Mind Technology

• Forget running your hamster around a wheel, you now can bike your way to charge your devices from the comfort of your own home thanks to Lifespan’s Ampera bike. According to the company, “A half-hour of pedaling can charge the average phone about 50 percent,” and, “cycling over 60 revolutions per minute can charge a laptop.”

• The side effects of making t-shirts are significant to the environment. It is estimated that making a single cotton t-shirt requires 2700 liters of water. On top of that, the Textile Industry is estimated to responsible for approximately 20% of global clean water pollution from dyeing and finishing products. Keeping these issues in mind, a UK based company Colorifix has developed a new way of dyeing t-shirts leveraging self-engineered microorganisms based on colors naturally occurring in nature.

• According to our significant others, we have “selective memory”, which in our case usually means we forget about the Sunday barbecue that has been on the calendar for 2 months. But seriously, selective memory is a thing, and a team of researches has provided further insight into how our brain triages what is important and what isn’t.

🍪 Business Bites

• In a consumer driven world, Luxury Brands reign, and Ferrari sits atop them all. The company only produces just north of 13,000 cars per year, yet has a market cap of $75 billion, which is 1.5x greater than Ford or GM, both of whom make millions of cars per year. Read more about how they do it.

• The performance of Nvidia over the past years bears resemblance to… a radio stock from the 1920s? It does. MarketWatch tells us what Nvidia investors can learn from the roaring 1920s and the radio bubble.

• Want to learn more about what the big Investment banks are thinking about the economy and specific stocks? Banks like Goldman Sachs and Morgan Stanley offer free in-depth articles on market insights from their leading experts.

Idea Journal Feature:

Making Passive Income through Ice and Water Vending Machines

 💡The Idea

Ok we’ll admit it – this is not a unique idea. However, like we said last week, we will be featuring other cool business ideas and products going forwards. Today’s idea leverages the technology already established by industry leading companies such as Ice House America and Kooler Ice. They create ice and water vending machines that they then sell to entrepreneurs looking to make passive income.

Let’s first answer the question of: “What is passive income?” According to Investopedia, passive income is, “money that doesn't take much time or effort to make and you don't earn it from a traditional job.” To us, a passive income source is one that requires less than 5-10 hours of week of work, but ALSO makes money when you are not directly working on the income source. That means that driving Uber or mowing lawn for 5 hours a week is not a passive income source. The income source MUST make money for you while you are not there.

You have probably heard about why snack vending machines are such popular side hustles, but water and ice vending machines can potentially even more passive and lucrative. First of all, most of these ice and water vending machines can be connected directly to the water pipes, so they do not have to be restocked with ice/water each week. Furthermore, the profit margins on ice and water machines should be comparatively better than most snack vending machines, since you are only using water and bags as your source materials. And last but not least, ice and water are commodities that will never go away. We literally can’t survive if we don’t drink water. Sure, you can purchase bottled water or refill your water inside your house or at a water fountain, but for larger containers (think big jugs for road trips or sporting events), it may not feasible. For ice, you usually need to buy bags within a convenience store anyways, so why not buy them at an even more convenient machine for a cheaper price.

👷The Work

We’ll give you a quick overview of the work involved with starting an ice and water vending machine business, but we also highly recommend you checkout this in-depth interview that provides a much closer look on all the steps and costs involved with starting such a business.

Starting an Ice and Water Vending Machine Business

Step 1 – Find a Location for Your Machine – This can be the hardest part of the process. Unless you own the building outright, you’ll need to find a landlord willing to let you put the machine in their building and agree to a monthly rent fee or profit-sharing agreement.

Step 2 – Financial Modeling - Includes determining the installation fee, monthly fees you’ll pay, and estimated revenue from your machine.

Step 3 – Purchase a Machine – As you’ll see below, they aren’t cheap!

Step 4 – Install the machine and let it get to work!

💸Revenue

• Ice and Water sales – Profit margins on a bag of ice can range from $1.60 - $1.95 depending on your price point and cost of bags and water.

By the way – one of the companies that makes these machines provides a ROI calculator, free of charge. Check it out here. Most of the companies that sell machines to entrepreneurs estimate that you can break even on your initial investment within 4-5 years.

If you wanted to expand the business for your machine, you could offer ice and water deliveries/refills, and/or large ice shipments to restaurants, marinas, etc.

🔻Expenses

• Upfront cost - According to Ice House America, these machines typically cost anywhere from $60,000 - $145,000.

• Installation Fees – Many locations will require permits to tap into the electric and water lines, and you’ll also need to hire specialized electricians and plumbers who can help you install the machine.

• Monthly Payment to Property Owner – Whether you pay the landlord a fixed fee every month to rent your space, or have a profit-sharing agreement, you’ll need to pay the owner/landlord to have your machine on their property.

• Maintenance Fees – Even if you choose to maintain the machine yourself, you could still have costs associated with replacement parts. You could also hire a vending machine maintenance worker for whenever repairs are needed.

👍The Good Stuff

• Passive Income – Other than machine maintenance and installation, you will not need to work with the machines, assuming they are connected to the water line.

• A commodity that will never go away – Humans will always have a reliance on water and ice for survival.

👎The Risks

• The investment – Like we said before, the upfront investment is expensive.

• Picking a poor location – It would appear that these machines would be better suited for warmer weather areas with high foot traffic (like a supermarket or convenience store). Picking a poor location could lead to financial hardships.

• The “Landlord Switch” – Once a landlord sees how lucrative the business can be, they could decide to kick you off the property and import their own machine, which will force you to find a new location and incur extra costs or the deinstallation and next installation.

🤔 Musing of the Week

Do you really want to retire young? Why stopping work when you are young may not be as good as it seems.

You worked hard in high school. You worked hard in college. Now you are post college and you are working hard at your job. Maybe you are a bit worn out. Maybe you want a new job. Either the case, you think to yourself: Man, if I could just save enough money to not have to work, I’d be golden.

You set your goal – maybe its $1 million by age 35, maybe it’s more, maybe it’s much less. Either the case, you set the goal, you work your tail off for 5-10 more years and… you achieve your goal!

Sounds great, doesn’t it? We’ll admit it – it sounds really great. You’re 35 and never have to work a job you don’t want to again.

But let’s rethink this for a second. No, we won’t give you the speech about how, “you would be wasting the prime years of your life working that hard,” because you probably wouldn’t. Sure, you’d miss the occasional nigh out here and there, and may not have as much free time on the weekends as your friends, but we know you - you will still enjoy your 20s and early 30s.

What we want to rethink is: When you stop, what the heck will you do? If you’re the Type A personality that is able to achieve so much success while you are young, what makes you think after 30+ years of hard work your body will just want to stop?

The answer is: you won’t. So, stop working towards that “number” or goal age, and start working to live the life you want to live day in and day out.

📚For the Road

• Sadly, Giving Up On Retirement And Going Back To Work

• Pros and Cons Of Living the FIRE Lifestyle