How to Start a Kiosk Business

Permanent or Temporary Location?

In cart sales, location is everything. Here's your first decision: Do you want a permanent location or should you move from event to event?

With a permanent mall location, you don't have to worry about purchasing a cart, moving it or battling bad weather (unless it's an outdoor mall). You can build a clientele and predict how business will go and how much product you'll need. On the downside, rent may rise. If mall sales slump, you'll suffer. And if your product isn't exclusive, a neighboring store could start offering the same merchandise.

There are many upsides to owning a mobile cart, says Clark, who does most of her business at special events. "You don't have overhead like rent and utilities," she says, "and if sales are poor, you just move."

Focusing on Your Target Audience
Choosing a location really comes down to one key element: "It starts with identifying who your target customer is. You want to locate close to where those customers are," says Howard Van Auken, academic director for the Pappajohn Center for Entrepreneurship at Iowa State University in Ames.

Thinking about her target customers worked for Diane Flannery, a Ben & Jerry's franchisee as well as CEO of Juma Ventures, a San Francisco organization that finds employment for inner-city kids. "When we started [with Ben & Jerry's] eight years ago, we were trying to find different venues where we could sell ice cream," she says. "We figured young people love baseball and ice cream, so the ballpark seemed like a good fit."

Once you've found your target customers, Van Auken says, "visit those areas and see what the traffic pattern is." In addition, according to Van Auken, you need to check with the property managers of your target location regarding such issues as product approval and display issues, security, operating costs, cash flow, staffing and lease length. (For a mall, you'll want to speak with mall management in charge of carts and kiosks. For a public place, contact the city or county to see if a cart is allowed and what permits are required. In a professional office building, contact building management.)

Susie Grant, specialty leasing manager for the Galleria at South Bay in Redondo Beach, California, also has a list of questions you'll need to consider:

  • What type of storage is available? While the Galleria's kiosks do have some storage space, tenants can buy more at an additional charge.
  • Do you plan on leasing during the holidays? Rent goes up considerably during that time.
  • How long a lease do you want to sign? Grant offers agreements that last anywhere from a month to a year.

After you've balanced out cost issues and decided on lease length, then it's time to find great staffers and set a move-in date. "[Location] is always based on availability," Grant says. "[Kiosk owners] may have something in mind that's not available at the time they're coming into the mall."

You'll also need to obtain a business license, and if you haul your cart like a trailer, you must get a license from the Department of Motor Vehicles. If you serve food, you'll need a permit from the Department of Health, which requires a specific amount of training in food preparation and handling. Malls often already have the carts permitted and insured.

While considering all these issues, one of the smartest things you can do is trust your instincts. "Go with your gut," Grant says. "If you have a good feeling about a location, it's probably going to be a pretty good place for you to start."

Make No Mistake

Beginning retailers make a lot of mistakes. Here are five of the biggest:

  1. Not doing a reality check. Do you have the temperament it takes to succeed in retail? "One of the biggest mistakes people make is thinking that retailing is going to be one way, and their experience turns out to be very different," says Daniel Butler, vice president of retail operations for the National Retail Federation in Washington, DC. "They're not realistic about the challenges." Retail is a lifestyle choice. Can you hack it? Butler suggests working part time in retail for a few months to find out before you start your business.
  2. Failing to research. Surprisingly, many beginning retailers don't develop a business plan or a marketing plan. "When someone comes to me and says 'This is the research we've done, this is why we feel this product will sell and why we'll be successful in this location,' it gives me a greater comfort level [in talking further]," says Courtney Lackey, a general manager with Jones Lang LaSalle, a property management leasing company that manages rental properties.
  3. Creating clutter. In retail, you're branding from day one. If your product displays have no rhyme or reason, customers have no reason to stop and shop. "The biggest mistake a cart or kiosk retailer can make is putting [out] too much merchandise," Lackey says. "Something that's well-displayed, colorful and catches your eye attracts customers."
  4. Competing with big-box retailers. Face it, as an independent retailer you'll never beat WalMart on price. But a lot of small retailers fall into the price trap of trying to compete with the big boys--a big mistake, says Bob Phibbs, a retail consultant in Long Beach, California. Instead, focus on your edge as a small retailer: customer service and a unique consumer experience.
  5. Choosing the wrong location. The rental rate may be great, but if the location doesn't draw people, you might be in trouble even if your product is good. Where are shoppers seeking your type of product going? What types of big-box retailers complement your product and will drive traffic your way? One no-cost way to find out is by sitting in a mall and watching the traffic flow. "If you decide you want upscale people, look at where they're already shopping and how you'd get that market," Phibbs says. "Know all these things {before} you sign leases."

Rules and Regulations

With shopping center leases, you're customarily charged for maintenance of common areas and for the mall's marketing efforts. Find out what the mall's plans are for any structural alterations or remodeling, resurfacing the parking lots, or replacing the roof. These can be devastating assessments for a young business. Requirements for hours and days of operation, employee parking restrictions, participation in community service events, gift certificate and loyalty programs, and storefront appearance may not fit into your business plan or capabilities. Make sure you'll be capable of conforming to these requirements.

Sources: Entrepreneur magazine and Start Your Own Business: The Only Startup Book You'll Ever Need.

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