Intro

Intro Credit: Dreamstime

Who hasn't dreamed of opening their own shop? The problem, of course, is that retail is notoriously expensive. Rent, inventory, staffing, fixtures and advertising can cost well over $100,000, and that's before you open the doors. 

The good news is that cheaper alternatives exist. BusinessNewsDaily gets the lowdown on alternative retail operations that allow you to own your own store without the exorbitant overhead.

Kiosks

Kiosks Credit: Dreamstime

Mall kiosks got their start in the 1980s, and originally were tied to seasonal opportunities and marketing ventures, according to Jim Allen, executive vice president for local leasing at Simon Property Group, which owns malls throughout the U.S.

Today, there are thousands of kiosks in malls nationwide, selling everything from jewelry to skin care products.

"It is the easiest entry for small-business entrepreneurs," Allen said.

Kiosk operators have far fewer costs to deal with than entrepreneurs who open full stores, Allen said. Rent is considerably cheaper, and the amount of product needed to stock a kiosk is considerably less.

"You have a lot less of an initial investment," Allen said.

According to kiosk expert Brady Flowers, the rent varies by mall, but usually ranges between $1,000 and $4,000 a month.

And with kiosks located in the walkways of nearly every mall in America, Allen said they offer new business owners the chance to have their product seen by thousands of shoppers each day.

"You get that visibility to the consumer that you wouldn't otherwise get," Allen said.  "You can take advantage of all of that foot traffic."

Overall, there is far less risk involved in opening a kiosk.

"If you give it a try and it doesn't work out, you haven't lost an arm and a leg," Allen said.

He anticipates kiosks' popularity continuing to grow among small-business owners and mall operators.

Food Trucks

Food Trucks Credit: Dreamstime

Those looking to take advantage of their culinary background without spending hundreds of thousands of dollars on a new restaurant now have food trucks as a cheaper alternative.

Over the last three years, food trucks have evolved from lunch trucks serving hungry construction workers to roving gourmet restaurants.

Josh Tang, founder of the mobile cuisine consulting firm Mobi Munch, said many factors have contributed to their rising popularity, including an increased culinary talent and more demand for specialty foods like vegan and gluten-free.

"It has been this perfect storm of all of these trends," Tang said, adding that there have been 250 new food trucks added to the streets of Los Angeles in the last two years alone.

Like other alternatives to opening a traditional business, cheaper costs are a main advantage of food trucks. Without the added expenses of building or renting space for a restaurant and staffing a full kitchen and dining room, Tang said food truck operators are able to quickly open without a large investment.

"Food trucks are able to offer more variety, innovation and convenience at a better price point," Tang said.

Food trucks can be rented for $3,000 a month or purchased, he said, with the price tag running from $40,000 for a used truck to $130,000 for a new one.

"It all depends on what type of kitchen equipment you want in it," Tang said.

Another advantage: Statistics show food truck owners have a much better chance of
surviving in the competitive culinary industry, Tang said.

Failure rates are between 60 and 90 percent for new restaurants; the rate drops to just 10 to 20 percent for food trucks, he said.

"You are not making a big bet," Tang said.  "That is what makes it so attractive."

He suggests owners take a hands-on approach in order to succeed. "You have to make a real commitment to working on the truck," Tang said. "If you are an absentee owner, then you are only increasing your chances of failure."

Extreme ReTrailers

Extreme ReTrailers Credit: Dreamstime

Another retail alternative, retail trailers, offers an opportunity to take your show on the road.

Extreme ReTrailers, specializes in turning 7-by-14-foot trailers into state-of-the-art, fully functional retail businesses — complete with exterior and interior branding, shelving and other interior fixtures, wireless Internet access and heating and air conditioning.

"We have made them fully functioning retail outlets," said Julia Hutton, CEO of Extreme ReTrailers. "It is just a little store on wheels."

Hutton hatched the idea for her mobile business after being stuck in a bad location in a regular retail outlet.

"I never wanted to have a brick-and-mortar store again," Hutton said. "I didn't want to be held captive."
Operating a business from a trailer offers the freedom to continually set up shop in new and lucrative spots, she said.

"The main advantage is that you are not stuck by a lease," she said. "You are able to always position your store in a good location."

In addition to consulting with others on their mobile businesses, Hutton operates her own mobile business. She sells motorcycle apparel from her retrofitted trailer at rallies and other car and motorcycle events throughout the year.

It gives her the opportunity to take her business directly to prospective clientele, rather than waiting for them to show up at her shop's door.

"When I open my doors, those are all potential customers," Hutton said. "I am doing 20 times the amount of business I was in my brick-and-mortar."

While there are other vendors selling products at the events she attends, Hutton said many are housed in tents that need to be set up and taken down at each event.

"All you do with this is open the door," Hutton said, adding that trailers are also weather-resistant.
The trailers cost approximately $35,000.

Hutton says all types of businesses, from quilting to sports memorabilia, present prime opportunities for operating from a trailer. "The sky is the limit," she said.

Recreational Vehicles

Recreational Vehicles Credit: Dreamstime

An avid vintage collector who had been selling handmade items on the online site Etsy for years, Vanessa Lurie of Portland, Ore., decided to open a retail business out of an RV. She was inspired to start her traveling retail mobile, called Wanderlust, after seeing the success of food trucks in her area.

"There are over 600 food carts in Portland, so it's hard to avoid them," Lurie said. "I just looked at my husband after we were done eating (at one) and said, 'Why don't we open a cart that sells something besides food?'"

Traveling shops like Lurie's slice entrepreneurs' expenses and offer the ability to pack up and move to a location whenever it's necessary to jumpstart sales or renew interest.

"It gives us flexibility if a certain location isn't working out," Lurie said. "There's not as much time and money invested into a spot, so if we need to, we can just pick up our shop and go."
Lurie said shoppers seem to respond well to the alternative setting.

"People are so excited and, although occasionally people are confused at first, once they walk inside, they're always really excited to talk about it and look around," she said. "Everyone always wants to know exactly what I changed inside the trailer and where I found it."

Depending on size and interior features, concession trailers can cost between $10,000 and $50,000.
While she didn't want to give specifics on how much it cost to get Wanderlust off the ground, Lurie said it was cheaper than it would have been to invest in a full retail location.

"Less upfront cost was a big factor in being able to open up," she said.

Her trailer business has been on a roll for more than a year now, and Lurie says she believes most businesses could operate out of a mobile storefront like she does.

"I'd love to see a personal trainer, a record shop or a book store open up," Lurie said. "The possibilities are endless, and it's such a unique and cost-effective way to run your business."

Pop-up shops

Pop-up shops Credit: Dreamstime

While you might think of pop-up shops merely as seasonal ventures during the holidays, opening a store temporarily is an option small-business owners can take advantage of at any time.

Christine Norsig, founder and CEO of PopUpInsider, a national online exchange for temporary real estate, said pop-up shops provide retailers with an effective way to quickly jumpstart sales, and their marketing and branding efforts.

Norsig defines pop-ups as temporary tenants taking empty retail or commercial real estate , outfitting it to suit their business needs, and then operating the space on a short-term basis.

Norsig, who opened eight pop-up shops of her own throughout New York City, said a great advantage is the ability to move the businesses around and open in different neighborhoods, exposing the merchandise to a wider range of customers.

"You are able to build on your customer base," Norsig said. "I was able to pull from all of those different neighborhoods."

Pop-ups also give business owners a chance to check out new locations, clear overstocks and test new products and concepts, she said.

Their temporary nature helps boost sales, since shoppers feel a need to buy right then rather than wait, according to Norsig.

"There is a sense of urgency with pop-up retail," Norsig said.

While pop-up shops can be used for holiday stores, concept stores, brand marketing, events, galleries, exhibitions or restaurant promotions, Norsig said they also are a great option for online businesses looking to test their product in an actual brick-and-mortar location.

In New York City, the cost of opening a pop-up shop varies greatly. Norsig said she has seen some stores rented for $15,000 a month, while others go for $25,000 a week.

"It really all depends on the location and square footage," Norsig said.

She advises business owners who take the pop-up route to approach it just as they would if opening a full retail location.

"Just because it is temporary, doesn't mean it shouldn't be professional," Norsig said.

E-commerce

E-commerce Credit: Dreamstime

The cheapest foray into opening a business is online.

Without any of the overhead expenses needed to run a full brick-and-mortar location, entrepreneurs can inexpensively get off the ground, e-commerce consultant Mark Mathis said.

"You are able to test your concept for little or no money," he said.

All that's needed to get an e-commerce business up and running is a website with a shopping cart feature — and something to sell.

Some sites can be built for free, but Mathis said small-business owners can expect to pay up to $1,000 for a quality website.

"That will build something that is fairly robust," Mathis said.

E-commerce also offers owners a seemingly endless list of possibilities for business types — with anything and everything now able to be sold online.

E-commerce businesses totaled more than $165.4 billion in sales last year, up nearly 15 percent from 2009, according to the U.S. Department of Commerce.

As opposed to regular retail locations where a variety of merchandise is needed, Mathis said e-commerce businesses have the advantage of being able to focus solely on one thing.

"You can target a much more specific niche than you ever could with a brick-and-mortar store," Mathis said. "The more specific you can get, the better."

And entrepreneurs don't even have to have their own merchandise to run an online business.

Mathis said there are a number of drop-shipping companies that provide e-retailers with their merchandise only after they make a sale.

"You have no inventory risks," Mathis said. "It allows you to try an infinite amount of ideas."