Hey guys, I have been seriously considering looking into opening a hobby store recently but before I do anything I would love to talk to anyone who has owned or worked in one. I would love honest opinions and advice. Thanks guys!
[#welcome]
Never owned myself, but know a few that did and the word is, don’t. Not that you can’t make a living at it and you are your own boss but the downsides are many that didn’t used to exist like merchandise gets old quick now as people want the latest and greatest!
Nick,
I started working in the local hobby shop at age 14…in 1971.
And by age 20 I was managing the train department in another hobby shop…
Do you have lots of money? Do you have any business or finance experiance?
Do you know a lot about model trains or other hobby items you might want to carry in your store?
Are you tech savy - could you set up a web site on your own?
Unless you answer all/most of these questons “yes”, this is not a business for you.
Feel free to send me a private message for more info…
Sheldon
You can make a small fortune in the hobby business but just make sure you start with a large fortune.
All kidding aside if your dream is to open a hobby store then do it. Just make sure you go in with your eyes open and have a good business plan in place. Having a good business plan and financials in place will be valuable help. Don’t do it without it.
As with any investment, only put in what you can lose without feeling the effect.
I made some money in the market years ago - then I put it all in Real Estate, where I already had much of my money, and made even more.
The real money is in providing goods and services, not speculating on the efforts of others.
But retail hobbies is a high risk, low return business these days, not like back in the 50’s, 60’s or 70’s.
My offer is still open - any person, or group of persons, willing to invest 10 million for 10 years, I will start and run a top notch model train store and website - and make money.
But what do I know…
Sheldon
Two opened in my area last year.
Two closed in my area this year.
Both held a fire sale at the beginning of this year.
Both said, as I met both owners, that they could not make enough to pay for rent and utilities.
And yes, I am referring to the same two stores in each case.
Why could they not make enough money?
One said he could not compete with the internet guys…
Can’t say I do not understand that one. If you have a well known site, you sell to more people, including those who may have nearby B&M stores… (Brick and mortar.) Why drive 20-30 minutes away, or more, spend money on gas, time, and product, when you can order the same thing online in five minutes, and get a discount? And, it will be there by next week… If you order at a store, it is there next week, but you have to drive back…
If everyone followed that business model, we would still be living in log cabins with dirt floors…
Get a marketing plan, and a business plan. Know who your potential customers are, and know how much you have to sell to break even. Plan on some sort of internet presence, both for sales and information. To do these things requires human capital, so have good help. Help comes at a cost, so have a year’s worth of working capital to pay rent, insurance, expenses and salaries. If you finance the business, have an accountant prepare financial statements, income statements, and cash flow statements for your lenders and for your use. Plan for contingencies; what are you going to do if your sales don’t meet projections?
I did it for three years; and even with adequate capital and business experience, I couldn’t pay myself. I was in it to make money, and if you can’t make money, move on.
I think you must have an internet presence, as well as your brick and morter store. Test the waters first, if a local rr club has a swap meet, set up a table of some goodies with your proposed shop name. It may take some investment to get some stock in. You’ll need a good all round business experience, but have a backup plan, my fav LHS has technically closed his named shop but still works it as a self named business, slowly exiting the business but taking care of his solid customers. Doing the way he is saves money than doing it as a technical “business” which means registered as a business name and costing money that way or taxes or whatever else it takes to maintain the business on the business technical side cost wise…IE dealing with named business bank accounts or town/township taxes or who knows what moneys it takes that supports the business, so he’s doing it under his name. Thats fine.
The question is, Why?
Why would you want to open a hobby shop, especially one dedicated to model railroading? The day of the LHS is long gone, mostly thanks to the Internet.
I have never owned a hobby shop, but I knew, personally, three guys who did. All three LHS are now closed and gone. All three were initially set up out of passion for the hobby. And, therein lies the problem.
Are you thinking of owning and operating a hobby shop because you like model trains? Instead, if you want to open a retail store, think of something with true profit potential, whatever that may be.
Rich
I spent 20 years of my life as a currency trader in the City of London and 16 years travelling the world designing and promoting banking front office software to traders. I thought I knew what stress was. Ha! Then I opened a model shop. I sold scale plastic models mostly and then extended into airbrushes (Iwata agents) and DCC of various makes. Firstly, I stuck with what I knew intimately, hence those choices. Secondly, I bought intelligently so the stock was right. Thirdly, I made sure that I had all the little things that modellers require. Did any of this help? No. The 7 years that I ran the shop were the most stressful of my whole life.
As a good programmer, we had a very good and efficient web site that was always upto date to new arrivals. We shipped quickly with free postage. We had a very loyal customer base (still friends with some of them) and managed to get around 50% of our mail order/internet to be worldwide rather than just UK based. It ate money and we ended up selling our house and moving into rental to pay off the accumulated bank debt (we had no trade debt as we paid for everything as we bought it).
The problem in any business like this is that you have to compete with the well know concerns. For my part, it was the warehouse 50 miles up the road that stocked (at any one time) 30,000 items so I was always fighting against them, even though their service wasn’t anywhere near as good as ours. In the US I guess that you have to contend with Walthers, MB Klein, etc.
The main problem, eventually, was the intense “new release” syndrome. In the end it became such that if we bought in a new kit and still had it on the shelf after 3 weeks, it was almost certain that we wouldn’t sell it. Everyone who used the shop - foot customers or internet/phone had the spare cash to buy whatever they wanted at release time. If they didn’t buy it, it wasn’t that they would buy it later - it was because they just didn’t want it!
One tip, if you do start a
It doesn’t take too many testimonials and watching what happens to real shops over the period of a few years to see that the odds are stacked heavily against you and you will likely loose a great deal of money and incurr a lot of stress and and perhaps bad health effects by going into the business of a hobby shop.
It was a different line of business, but I worked for a guy in a different city who was advised not to go into the waste hauling business. He personally knew people in the business who had been doing it for years and basically those folks knew from personal experience that the only way you could make a profit was to pad tipping fee’s and to cook the books and do thing illegally. Most of these people had been in trouble with the law over time as well. It’s just the “economy” of that line of work apparently. Well, against all advise, he took out loans and bought two trucks and a bunch of roll-off containers and tried to run an honest waste hauling business. The only thing that saved him was that he ran another consulting business on the side which ended up making enough money to keep him afloat while the waste hauling business continued to lose money, as his friends predicted. After a 3 or 4 year “bath” he sold everything and worked to pay off the debts, lesson learned and went back to his original work which did make money.
Lesson? Listen to those who “know” from experience. Not that it can’t be done, but chances are infinitesimally slim and likely you’ll just join a long list of unfortunate statistics. Best you don’t do it and find a good way to make money and enjoy the hobby the way the rest of us do, as a “hobby”.
Hi, and welcome to the Forum…
I’ve played with hobbies (mostly MR) since the 1950s, and was a business analyst when I retired. Hearing of your thoughts on opening a hobby shop, my first reaction is “DON’T DO IT”. But, that is really not fair, so I’ll say more…
Any business needs three skill sets - people, technical/product/service, and money. Very, very few folks are adept at all three. Of course most folks think they are, but they are not.
Hobbies (in the normal sense of the word) have slowed down a lot over the last 60 years. Many of the long standing hobby shops have closed, leaving mainly the Hobby Lobbys and Michaels megastores.
Addressing MR shops, well, they are diminishing rapidly. Online stores may be doing just fine, but I suspect their business is pretty seasonal at best.
Many years ago, Model Railroader did a pretty intensive no holds barred interview regarding the ups/downs of owning a hobby shop (of course it was train related). This interview was before the internet popularity, but as I recall it’s points were timeless.
Some were:
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customers come in for advice and repairs and small purchases, but buy big dollar stuff from the big advertisers/discounters.
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you may love the Illinois Central or Florida East Coast and want to stock your store with their names. But, your customers want the Santa Fe and NYC.
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you hate “Thomas the Tank” stuff and refuse to stock it. But, that is what is selling (at that time).
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people steal. yes, even those nice friendly great guys may be shoplifters.
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owning/managing a hobby shop leaves you less time to enjoy the hobby, often turning you away from it (I personally saw this at an old LHS here).
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etc., et
Hi,
good for you for wanting to start a hobby store. As mentioned there are a lot of down sides and the competition is very stiff.
Interestingly enough I have watched a hobby store start, expand and thrive in this competitive marked. They started by selling out of the basement of their house, and went to the train shows. Also offered technical services and always discount their prices. At the same time they started a web site and sold online. The other major consideration is that their store is outside of major metropolitan areas where real estate is cheap. This enabled them to eventually build a store on their property and expand. It took a lot of hard work, sacrifices and a team effort of the family making this work. Even though I moved many hundreds of KM from them I still like shopping there.
If you do start a store, send me a pm, I can always mail order. 
Hope it helps
Frank
A guy in Dickinson had a shop, his daughter was in my nursing class, I bought stuff from him, but my railroad is so specialized, and my budget is so limited that I could not support him, and apparently many in Dickinson could not either.
Then there was Dave in Bismarck. He even advertized in MR, he had a good store with a great layout, but 30 years was a long time, and sales dropped (and thefts went up, especially in the War Lords section of the store.) In the end he quit and even abandoed the layout that he was working on, kinda lost interest in it all, and there was no buyer for his store or even for his layout.
BAck to Dickinson, a young lady and her husband opened a store, she was into trains and he into planes and cars. Looked like a good combination, but now the trains only occupy a small corner of the store, most is radio contrtol and UFOs or unmanned ariel vehicles (with cameras in them) She is doing good buisness with her arts, crafts and sewing sections. But she is in a small mall whitot a good physical presence and no anchor stores. The store with the most sales is the Chinese resturant, which has expanded three times, followed by the hardware store. The whole mall would have failed but what two big units are occupied by the motor vehicles department. They in turn got kicked out of the state building because the cops wanted more space.
She survives because her husband has an outside job.
ROAR
I take my hat off to any individual or whatever who is willing to open a train store in today’s high tech climate. Advice…? Give it a serious mess of thought and then think again. I have owned a shop, became an on line brass dealer, and promoted a huge model train show for over three decades and have learned a bit about the hobby business and still what I do not know would fill volumes.
I sincerly believe that a good (actually great) shop can survive and possibly do quite well. There is no middle road today. You have two choices…small and safe or huge like Caboose Hobbes in Colorado. You must decide to follow the path or make the path with the latter being a gamble, but rewards could be quite worth the effort.
I’m a high tech dinosaur and I hate with every fibre in my being today’s on-line activities, but if I were to open a shop today, I would first get a degree in computer science or take on a partner who is high tech savy. A business degree or great experience is also a major plus if not mandatory. A train store is a busness and must be run as a business.
I sincerely wish you the best of luck, and for the sake of the future of our hobby, I hope you succeed.
HZ
Lots of good advice here.
Owning a hobby shop is perhaps best regarded as a hobby in itself. To be even modestly successful, one needs to also have an internet presence. And you must discount…MUST discount…or the internet competition will be unbeatable.
Even then, shape your inventory closely. First, pay attention to what your customers want. That’s hard to do in model RRing, because of all the prototypes and the emphasis on modeling to prototype these days. That’s where many that otherwise would have succeeded have failed. Generic model railroading is a thing of the past, so if you stock your store like that, it soon will be, too.
Second, concentrate on fastmoving items, stuff people use everyday and may run out of and don’t want to wait on mailorder. If you don’t have basics like railjoiners, styrene stock, Kadee couplers, flex track, minature fasteners, and Bright Boys, you’ll miss a lot of small sales. They’re profitable and in some cases may even be doable at full price, unlike much of the rest of the stock, because people need them now when they run out. But still best to discount if you want to achieve quantity sales of any of these items.
Third, don’t order more than you think will sell in the next two months. Otherwise you end up with a store full of excess stock that no one’s interested in. People spending on the hobby regularly usually want the latest and greatest, after that it’s hit or miss.
Fourth, emphasize if you don’t have it in stock, you’ll have it quick. One store I use places Walthers orders when they reach the minimum required amount (whatever that is), so there’s no telling when they’ll have something for you. It might be next week, it might be next month. That’s unsustainable in the world of 2 day away mail order.
Fifth, be open hours when customers shop. Without evening and Sat/Sun hours, you’ll miss lots of customers, who have the internet available to them 24/7/365.
Now to be fair, you can make a good living at it but only if you do everything right, almost all don’t!!! You have to offer the things that the internet dosn’t, like decoder installs and be unbiased as far as power, IE DCC,DC or dead rail. There is a big demand for DCC decoder installs and dead rail. Sell the little things, don’t expect to sell alot of the big ticket items, think of Home Depot’s model, they make nothing selling the toilet but make a bundle selling all the extra parts like the seat and bolts etc. You need to have the internet. The one hobby shop owner that I know that realy made money was one that offered a layout building service as a side, of course all the hobby material for said layouts were bought at his shop (he accually had others do the building and he ran the shop).