How to Start a Pop-Up Business

During the holiday season, most major U.S. cities open up temporary public marketplaces for people to purchase gifts, treats and other seasonal items. But pop-up stores aren't just for the holidays — all year round, both new and established brands set up limited-time retail locations to generate buzz about their products.

Whether you're an e-commerce merchant testing out your goods in a brick-and-mortar setting or an entrepreneur scouting out a good permanent location, a pop-up store can help you achieve your business goals. Business News Daily spoke with two industry experts about why pop-ups work, and how to open one successfully.

The perks of pop-ups

The pop-up model's temporary nature offers several advantages over a traditional brick-and-mortar storefront.For one,pop-up store owners can afford to be more creative and experimental in the design of their short-term space, said Jeremy Baras, author of "PopUp Republic: How to Start Your Own Successful Pop-Up Space, Shop, or Restaurant" (Wiley, 2015). There are also fewer inherent risks when you don't have the long-term commitment of a commercial lease.

Melissa Gonzalez, founder of the Lion'esque Group and author of "The Pop Up Paradigm: How Brands Build Human Connections in a Digital Age" (Lioncrest Publishing, 2014), agreed that pop-up stores' limited engagements give them an edge, especially when it comes to establishing corporate partnerships.

"You can test partnerships [with a pop-up]," Gonzalez said. "They can share a space [with you] and see if [you] work well together."

Consumers love pop-ups, too. Gonzalez said that shoppers come into a pop-up store with a different mind-set — instead of expecting consistency as they do from regular retail stores, they're coming into pop-ups to discover new things and "be surprised and delighted."

"Customers love a F.O.M.O. (fear of missing out) experience, and given the exclusive, 'here-today-gone-tomorrow' type of atmosphere that pop-ups offer, customers are naturally drawn to them," Baras added.

Unique challenges

Despite their benefits, pop-ups do have to deal with a few challenges that traditional retail businesses don't face. One of the biggest issues relates to the process of planning and marketing. Opening any type of store requires an enormous amount of work to coordinate all the logistics. But whereas regular brick-and-mortars have time to build momentum, pop-ups need to generate tons of interest and sales right off the bat to make their investment worth it.

"Marketing is challenging because you're there in a temporary space," Gonzalez said. "If you're Marc Jacobs and have millions of followers, you put it out on social [that you're doing a pop-up], and people will show up. As a new brand ... make sure there's a proper plan to notify your following and build your digital footprint ... throughout the duration of the pop-up, so people know."

To achieve this goal, Gonzalez recommended a slightly longer pop-up time frame (several weeks instead of several days) to allow time for word of mouth to travel. She also said to set a large enough budget to give you room for the right location, décor, staff and promotional activities.

The other major challenge pop-up stores face is the ability to properly license their business. Pop-ups aren't quite a mainstream retail concept yet, so there haven't been any special licenses or permits developed specifically for them. Baras said securing the appropriate documentation will become easier as economic development and local government officials learn about the benefits of pop-ups and how they can affect communities.

Tips for success

Gonzalez and Baras offered the following advice for entrepreneurs looking to succeed with a pop-up model.

Have a goal. Don't open a pop-up just for the sake of doing it, Gonzalez said. You should have a larger objective in mind for your brand.

"Be clear on your goal [and make it] something specific," she said. "It should be to test a new product, enter a new market, educate [consumers], etc. Then, understand the customer you want to go after."

Review your options. You don't necessarily have to seek out a full-scale storefront for your temporary shop. Baras said that the "store-within-a-store" concept — setting up a small booth inside an existing store to sell similar, complementary products — is becoming popular, and Gonzalez noted that mobile units and kiosks are great ways to enter the pop-up space.

If you do decide to go for a brick-and-mortar location, apps like Storefrontcan help you find available retail space in the city you want to open your pop-up in. Storefront allows you to search by geographic location, and the rental fees for most of the locations are listed as the price per day.

Keep the customer relationship going. Your relationship with the people who shopped at your pop-up doesn't end when the store closes. Gonzalez said it's important to think about the long-term marketing implications of the data you gather during your pop-up event.

"Your pop-up is open for a week and you make some sales, but it's the information you're collecting about customers that drive sales throughout the next two quarters," she said. "Where are they sharing information — Facebook over Twitter? Instagram over Facebook? What products, colors, etc. [did they buy]? How many people are coming inside [and] converting?"

Technology can also help you stay connected with customers after they've left the store. Customers often use pop-ups for "showrooming" — visiting a physical retail location to see and touch a product, and then purchasing it online later. With technology like in-store tablets and augmented reality, pop-up owners are able to extend their inventory offering without bringing the actual items into the store, Gonzalez said.

Enjoy the ride. As with any entrepreneurial venture, you'll have a lot more success with your pop-up store if you're passionate about it and truly enjoy what you're doing.

"Everyone has a hobby, and pop-ups allow individuals to turn their hobbies into a business," Baras said. "By being creative and having fun with it, 'popupreneurs' can create a concept that stands out, generates significant foot traffic and enhances their brand. And who knows? Maybe a successful pop-up can, in fact, turn someone's hobby into a successful business."

_Nicole Fallon