I know this is kind of open ended, but I’m thinking of opening a Hobby Shop. Currently in my area is only a Hobby Lobby and HobbytownUSA. Neither of which have enamored the local MR communicy. One because they can’t/won’t carry more product and the other because of (supposedly) a choice to do the same thing. Modelers in my area have to go to either Green Bay or Fond du Lac/further south to get their items!
Any advice/comments?
Step 1: Make sure you have enough potential local customers to support a shop.
Without this, all else is moot.
Hit the Mega Millions lottery. Open your shop and stock it. Run your shop till your lottery winnings are gone. Have a going out of business sale and blame the internet![swg]
Unless you have a large customer base and can compete with Internet sellers, there’s not much chance of surviving in today’s market. Over the past 10 years, we have had at least 3 local hobby shops open and close locally because their prices and stockage couldn’t compete with on-line sellers. The nearest “local” hobby shop is now 80 miles away and with gasoline prices like they are most people prefer to pay UPS or USPS shipping charges instead of driving.
The first thing to do would be the same thing for any new business. Develop and business plan and then apply the demographics and economical data to it to determine if it will work. Marketing studies for the target area are essential. The increasing impact of the web and high fuel prices to business models should also be considered.
Have you considered contacting the Hobby Lobby or Hobby Town and seeing if you could just start and run a train department within their stores? It could be a win-win scenario if their franchise agreements allow for it. We have a Hobby Town here that carries pool tables & accessories so I know there is some lattitued with the franchise.
Cool! pre-made green grass train tables![;)]
With 6 tunnels, banked curves, hidden staging, and a triangular classification yard. just watch out for that slack action , though.
Hobby Lobby I’ve approached already, Store Manager and District Manager said they could only carry what corporate said, yada yada…so no.
Hobbytown is a no for reasons I won’t go into here(customer service is a biggie but too many details for this format), but I wouldn’t walk in there if I was given the keys.
Dan-
Isn’t Best’s Hobby Shop in Appleton still open? I used to go to their location in Neenah before they closed it to move to Appleton. IIRC, over half their inventory was model trains.
Fondy? Please. Other than Focus(which doesn’t have much) and that small shop at Forest Mall that shares space with the NASCAR store, I’d rather make the run to Oshburg or Appleton, or down to West Bend. JMO.
Yeah, but the uncoupling skewers that come with it are waaaaaaaaaaaaaaay too long and leave a blue chalky residue on anything their tips touch.
Another thing you need to consider is opening your own hobby website to go along with the store.
Yes, Oshkosh has nothing train related, as I spend some time there several times a year with the EAA, and every time I have ventured into Oshkosh looking fo model train items, I have been sorely disappointed.
I too myself have considered buying out a local LHS and totally reorganizing it, but it too has many problems, and right now it’s a risky business to enter into.
I’m also into RC model planes, but Dymonds left Oshkosh also for greener pastures in southern California.
Ed
What about starting up one’s own Internet based train store? Just curious, as it would be nice to find a way to fund one’s own hobby within the hobby itself. Your thoughts and/or suggestions?
-Rob
So…
Step 1)Buy a crappy run-down old building, which you can get cheap in today’s market,
Step 2)Renovate with family and friends
Step 3) Ship cheaply in bulk from UPS/USPS to keep costs down and have a real “local” place
Step 4) Enjoy profits from customers who don’t wish to spend time and money driving to Green Bay or Fond-du-Lac.
Admittedly my facts are a few years old but the Commerce Department once put out figures stating that most business bankruptcies occurred within the first 14 months of operation and most sole proprietorships fail because of insufficient start-up capital. If you require $2,000.00 per month to live on then you are going to need $28,000.00 in the bank PLUS start-up capital which can be extensive.
And, as Dallas Model Works stated, you need to make sure that all those guys who go to Green Bay and/or Fond du Lac are going to walk through your door - AND HOW OFTEN ARE THEY GOING TO DO THAT! Once a month and $10.00 may not feed the bulldog! There has been an awful lot of bellyaching here on the forum about “My LHS charges only retail . . . . . and I can get the same items from XYZdotcom for only half as much” unaware that XYZdotcom is three shelves in the far corner of the basement. Unless you are real fortunate you are going to have to come up with electricity and water, taxes, rent, and enough income that you can take your living expenses out of the cash register. And remember, as a sole proprietor, the tax code hates you: if you have $25,000.00 assets one year and $50,000.00 the next THAT’S $25,000.00 PROFIT AND IS TAXABLE. And as any tax accountant can tell you you will never recover that profit with a loss!
Sole Proprietorships and not General Motors or Westinghouse or whatever are the heart of the business community but they ain’t for the faint-of-h
One of the problems here is that you have to be able to guarantee distributors that you can move so much stock per month, and most have a minimum quantity that they will sell you.
let’s just take a theoretical figure.
XY distributor will tell you that you have to move a minimum of $5,000 stock per month of their items.
Distribtor AZ might say, you have to guarantee you can move $10,000 stock of their items per month.
So what do you do when the economy takes a dip?
It’s a tough business!
As others have said start with a TON of money. Then prepare to lose all that money because it will take years and years to recoup it (if ever). You need to make sure you’re going to guarantee enough sales to keep you going. Inventory is going to be one of your biggest expenses (especially if you want to attract customers that won’t get P.O’d when you tell them you have to special order it). You’re going to have to work with Walthers, Hobbico, Great Planes, Trost, Horizon, United and many other distributors. Not all of them will extend you credit off the bat. You have to prove you can move merchandise before they’ll do that. So you’ll have to pay for your inventory up-front. Once you prove you can move stock then they’ll extend you more favorable terms and deals on merchandise.
Prepare to pay big $$$ for a prime location so you’ll generate walk-ins. Your perceived customer base is only going to buy so much. You are going to have to count on walk-in sales to make up the bulk of your revenue. You may get a great rate on rent but that’s because the location isn’t the best. You’ll have to count on advertising and direct mail and other marketing methods to attract customers. The better the location the higher the rent. Make sure to figure out your insurance, payroll, furniture, shelving, utilities, etc. Those fixed monthly expenses can eat your lunch. Is your shop going to cater to other hobbies or just trains? With other hobbies (RC, Plastics, games, etc.) you can hope for a larger customer base but you’ll need salespeople that are knowledgeable about the product. It can be a double edged sword.
Now consider this…you need to run your hobbyshop like a business…NOT a hobby. I’ve seen lots of guys start a hobby shop because they were in a hobby and thought it would be neat only to fail miserable because they ran their business like a hobby. And you might as well give up your hobby. You’re going to be too busy making the business w
Sometimes the biggest problem is beggars. A few years ago I spent about 30 minutes in a local hobby shop talking to the owner, and within that time there were at least three people who came in asking for donations to charities. The proprietor said he gets more of them a day than actual customers, and finally had to stop giving to anyone because he was not making enough to pay the electric bill. And they ignore a “no solicitors” sign on the door.
You will never survive on just trains alone. You must have some crafts, airplanes, cars, etc, in order to survive.
I agree that there’s nothing in Oshkosh for trains. There used to be the old Depot Dry Goods in Neenah, who moved a few times, and are now in Appleton under a different name.
I get all my stuff from Galaxy Hobby in Plover, and once a while at that place in Madison. Madison has it going for them, and they will probably survive in the long run. Galaxy has only a small section of trains, but they’ll order anything.
Phil
I’d be very, very wary of starting a new business, especially one as potentially marginal as a hobby shop, in the current economy.
In light of the current mortgage crisis, securing a loan to start a business will be very difficult indeed.
I applaud your sense of initiative, and I do wish there were more brick-and-mortar LHSs around… but if you’re really, really serious about it I’d recommend you wait and see where the economy’s going. If we do hit a full-blown recession, not only with you have trouble getting a loan, your rent and uitilities for your storefront will go up and your potential customers will have less disposable cash for their hobbies.
Wait’ll this “economic downturn” stuff blows over, then have another look.
Get a job at one, then slowly take it over from the inside. I’m thinking of doing that to the LHS, so they cater to the local MR club.