How To Become a Street Vendor
If you want to start a small business, consider becoming a street vendor. A street vendor is a business owner who operates out of a stall by the street (pushcart) or a vehicle. While there are some similarities to stationary brick-and-mortar businesses, street vendors have unique considerations when planning their business.
This article will walk you through various aspects of starting a successful street vending business. Learn more about:
- Market Research
- Licenses and Permits
- Equipment and Supplies
- Marketing and Promotion
- Merchandise Pricing and Sales Tax
- Business Challenges and Solutions
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Market research is necessary to gather information about your consumer's needs and how you can fulfill those needs. A brick-and-mortar store focuses on a specific location. These store owners must ask how their business would fit into the surrounding neighborhood. But as a street vendor, your market research is a bit different.
The mobile nature of a street vendor allows for greater flexibility. For example, you may research:
- Different festivals, street fairs, and markets where you could set up shop
- Popular neighborhoods with your target demographics
- Parts of town with few restrictions on mobile businesses
Market research is a key part of starting and developing your business plan. This research also helps when you are looking to secure loans, partner with investors, or obtain credit to grow your business.
Your market research should inform the niche for your business. It should also uncover the type of products that will work well for street vending in your area.
Depending on where you are, your business may have seasonal considerations. For example, having a year-round food cart in an area with harsh winters may be challenging. But maybe your town is known for its annual Halloween celebration. You can leverage seasonal aspects, too.
You'll also need to choose a business name. Select a unique name that is not already used by another business. Be sure to verify the availability of your business name before you start doing business to avoid trademark infringement.
To operate a business, you must first obtain any required licenses and permits. Licenses and permits allow you to operate a business within your town and state.
Depending on the laws in your area, you may need a special street vendor permit or license. Not every municipality allows street vendors to operate. So, it's important to stay up-to-date on your area's requirements.
Some jurisdictions have restrictions on hours of operation. Be sure to check this before setting your business's open hours. Try to choose hours of operation that meet your city's guidelines and maximize your visibility and opportunity for profit.
Business licenses allow a business to engage in commercial activities. You will need the required licenses before you can legally sell goods or services. You must complete business license applications and expect to pay license fees. You may also need to renew these periodically.
You will need two main licenses to start your street vendor business. These allow you to operate your business statewide and locally:
- State business license: This allows you to operate in the state where you plan to do business.
- Local business license: Depending on the area, this may specifically be a street vendor license.
You will also need to acquire a federal Employer Identification Number (EIN) to conduct business and pay federal taxes for your business. You can apply for an EIN directly with the Internal Revenue Service (IRS).
Business permits are specific authorizations necessary for certain businesses or industries.
Street vendors that sell food will always need a permit issued by the health department before serving customers. A health inspector must visit the premises before issuing a health permit. They will assess several food safety aspects, including:
- Employee hygiene
- Food handling and storage
- Compliance with local regulations
- Structure and maintenance
If there are violations, the inspector may give you a specified time to correct the issues. In these cases, a follow-up inspection is often necessary before a permit is granted.
You won't need a food permit if you sell crafts or other non-food products. But you'll likely need a sales tax permit called a seller's permit. These requirements can vary by location.
Although it depends on the jurisdiction, most non-food vendors can sell bottled and canned beverages and prepackaged snacks without a food permit. For example, a jewelry vendor could legally sell prepackaged candy and bottled water.
Your city or county may require additional permits. Contact your local city hall or chamber of commerce to know exactly what your business needs to operate in good standing.
Licenses and Permits in Major Metropolitan Areas
Some major metro areas, like New York City, require additional permits and licenses for street vending businesses.
To operate a food vending business in NYC, you'll need a Mobile Food Vending License and a Mobile Food Vending Permit. The license must be in place before applying for the permit.
To sell non-food items or services in a NYC public place that isn't a permanent storefront, you'll need a General Vendor License. If you only plan to sell at street fairs, you'll need a Temporary Street Fair Vendor Permit instead. This street fair permit is valid for one month.
Other large cities have their own requirements. For example, Los Angeles street vendors need a Business Tax Registration Certificate. Vendors in Washington, D.C. must pay a quarterly street vendor fee.
Check your city's official .gov website for guidance.
Insurance and Liability
You will want business insurance in place before officially opening shop. As a small business owner, you have certain liabilities. This means you hold legal responsibility for your actions, products, or services. These liabilities can result in financial or legal consequences.
Business insurance is all about protection from liability. For example, you'll need to protect your business from data breaches and cyberattacks. You'll also need to protect your business against lawsuits that might arise from:
- Injuries at your site
- Food you sell
- Use of your products
At a minimum, you will likely need general liability insurance and workers' compensation insurance if you hire even one employee.
Evaluate all your business's potential liabilities when shopping for business insurance policies. You can do this on your own or with the help of an insurance broker. If you use a broker, they should understand your business's particular needs and liabilities.
If your business is based out of a vehicle, ensure you have the appropriate insurance to protect you and your employees in the event of an accident on the road.
One benefit to operating as a street vendor is that your shop is smaller. You can set it up faster than a brick-and-mortar location. You likely don't have to worry about certain business operations, like commercial zoning and lease negotiation.
You may also have minimal start-up costs from your equipment compared to brick-and-mortar storefronts.
If you have a mobile business, you'll need to find a vehicle accessible to customers. A food truck might need a window with a serving counter on the side for customers to order and receive food. In contrast, a clothing business might need storage space for inventory.
If you work at festivals and markets, you'll need a tent, shelving, and product display options that are easy to set up and break down daily as you move from location to location.
Whatever equipment you buy, ensure you understand how to set it up before using it for your business to avoid accidents and injuries.
Once you've researched, received your licenses and permits, and set up your equipment, it is time to market your business. Being a street vendor gives you a competitive edge. You are mobile, you are unconventional, and you are small. With tools like social media, you can create content that highlights your business's uniqueness and draws customers to your shop.
When working on target marketing (marketing to your very specific customer profile), you cannot rely on geographical segmentation the same way a brick-and-mortar store can. You must focus on more than just customers within a small area around your store. If your business is mobile, focusing on such an area may not be as effective as if you were stationary.
Instead, you must rely on customer segmentation and identify the people most likely to buy your product. Once you have identified them, you can create marketing materials (both digital and in-person) that appeal to those groups.
For example, if you sell crafts that appeal to an older demographic, you may want to:
- Place ads in traditional media, like newspapers, radio, and direct mail
- Distribute flyers near senior centers and recreation centers
- Set up shop near farmers' markets and other morning events
Your marketing strategy may also focus heavily on social media. Platforms like Instagram, Facebook, Twitter, and TikTok are effective tools to let your customers know where you are setting up shop each day. Successful businesses have a strong and consistent online presence.
Create a unique branding identity and get creative with how you market and promote your new business. A few ideas to consider include:
- Introduce a loyalty or rewards program
- Encourage word-of-mouth marketing with a referral program
- Partner with other local businesses and stay active in your community
- Offer special promotions or discounts
- Build excitement with a grand opening or launch party
You are uniquely positioned to find your customers and physically move your business to where they are.
You will need to price your merchandise appropriately. Research other vendors in your area to understand how to price your food or goods competitively.
You will also need to include sales tax. You can charge your customers for this separately or include it in your listed pricing. Either way, you must pay taxes on what you sell. Check with your state's department of revenue for details on the percentage of your sales you must tax and where to send the payments.
Be sure to keep thorough records of sales and collected sales taxes in case of an audit.
While there are several benefits to owning a street vending business, it also comes with unique challenges.
One of the biggest obstacles street vendors face is the risk of vandalism or theft of property and equipment. These security concerns are valid, but there are several ways you can protect your business:
- Choose a secure, well-lit location
- Install security cameras and quality locks
- Secure your equipment with cable locks and anchor valuable equipment to your cart
- Remove valuables at the end of each business day
- Mark valuables with unique identifiers (making them easier to recover if stolen)
- Review your business insurance
Consider partnering with other vendors and businesses in the area, creating a sense of community among neighboring businesses. This encourages businesses to look out for each other and alert suspicious behavior to authorities.
Other challenges street vending and food cart businesses face include:
- Adverse weather
- Steep competition
- Fluctuations in foot traffic
For your business to thrive, you'll need to be willing to innovate to stay on top of trends. You'll also want to keep a pulse on evolving local regulations and market trends.
Successful street vendors also build strong community connections. Maintain positive relationships with locals, other businesses, and licensing authorities. Know what's happening in the neighborhood and be flexible to meet changing needs.
Ready To Start Your Business? Get Legal Help
Street vendors have even more laws and regulations to consider than the typical business owner. Consider contacting a local business organization attorney who will help you understand the legal requirements before starting your street vendor business.
When you are ready to start your business, use our simple DIY business formation process to ensure you meet all the legal requirements in your city and state.