Don’t Make These Mistakes!
You made the decision to start your own ATM business. Hopefully you followed the 7 “must-do’s” to set it up right. Now you must keep it operating smoothly and profitably. Here are the 8 mistakes you must avoid:
1. Overestimate cash flow
There are many sources online which tell you that you can make $500 per month or more from each ATM. Most of the time, these estimates are much too high. My recommendation is to do your homework and count on $250-$300 of income on the higher side. $150-$200 on the low side is a safe bet. Make some calls, talk to merchants and be conservative with your income estimates
2. Purchase used equipment
Buying used equipment can sound appealing but right now you need to be cautious of what you buy. With EMV requirements right around the corner you should invest in new equipment when starting an ATM business. Pay for new equipment and you get a 1-year warranty on parts and set your business up for success. If you buy old equipment, you could run into many repairs and potentially lose locations due to out of service machines.
3. Underestimating capital requirements
You will need cash to load the machines on a rotating basis. You should count on at least $2000 per week per terminal. If you plan on deploying 10 terminals you will need at least $20k of working capital to service the machines if not more.
4. Overlook EMV
Do some research on EMV and make sure you know what makes/models can be upgraded and what the costs to upgrade are. This will save you headaches down the road when EMV is implemented.
5. Not setting up a bank relationship first
With operation Chokepoint and other issues in play, you should contact your bank or locally recommended banks and make sure they can support the needs of your ATM business. Some banks will not support the ATM business at this time so make sure yours does.
6. Set your margins too low
Be careful when negotiating your surcharge fees and your commissions to your merchants. Don’t give away too much of your margin. You need to know the market and understand what is expected but at the same time not give away too much. If you set your margins correctly out of the gate you will be much happier with the income in the long run.
7. Not having signed contracts
If you plan to sell your locations or defend your location, you should make every effort to get signed agreements with all of your merchants. I have seen many operators who run their ATM business without contracts and when its time to sell, the valuation is eroded. You will also have nothing to stand behind if the merchants decide to have your ATM removed or allow a competitor to come in. Bottom line is, get signed contracts.
8. Poor geography
Make sure you don’t spread your locations too far from your home base or each other. Choose a territory wisely and do your best to stick with it. The further out your locations are, the more your time and service costs go up. A tightly knit route of machines is far more appealing to buyers as well.
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