How many of you have opened or considered opening a hobby shop? I know some of you own one now. How much off the street business or Internet business do you do? I manage a hardware store currently and the average margins run around 43-45%, what is a hobby shop run around? I have a location that would start at 1900sq/ft and in a year or 2 would be expandable up to 2800sq/ft., is this a good size store to house a hobby shop?
The demographics of the area is a VERY rich area, and from what I have heard and seen, it should support a shop. I’m thinking of model railroading of course, RC (cars, planes, helis, boats), regular plastic models, maybe RPG games, kites, Thomas the Tank Engine.
I’m loaded with questions but I want the basics answered right now, to find out if this location is feasible.
Thanks
Ron
There are various gov’t agencies that can probably help you there. There may be a fee, but they often have free advice available as well.
You will probably have to pay for demographic data, but they keep track of a lot of things. They can probably tell you how many customers you need to support a hobby shop, and what you could expect in terms of customer interests. Sure, the area may have an above average income, but what do they spend it on, and on average, how much per annum. Would there be enough customers in the immediate area to support such a venture?
A little expense here could save you a lot later.
Yes I’m aware of the demographic service out there, I was planning on spending the $100 or so on one to save my $100,000’s down the road… and a world of headaches.[xx(] I’m lucky that I live in THE HIGHEST income per household county in the UNITED STATES. That should help.[;)] The people in the area do not want to drive 20minutes to the nearest hobby shop if they have one right in town. Somerset/Morris county in NJ is a unique area. Many people with alot of expendable money… hopefully the demograph reports support what I’ve heard.
Hobby shops where I live are closing or about to close. Owners are tired, ill, going broke. I shop for my best and most expensive deals online because it makes sense for me to do that. So, unless you have a really good marketing analysis and strategy, enough capital and stand-by for about four years of tough sledding, you may be doing what coaches everywhere urge athletes to avoid like the plague…don’t set yourself up for failure.
[2c], but I’ll waive it since this is Memorial Day Weekend for youz guyz. [:D]
Do a “Business Plan” first!
Thin margins will hurt you if you dont watch it.
I hold FDT (Factory Direct Trains) as a example. You can have a 400 dollar BLI/PCM engine in the display case. Then you get to hear from your customers how they bought it online at the FDT website below YOUR cost for the same engine.
Is there a club or two in your area that you can “Feed”? Such a club can be a good revenue stream for your store.
Is there a number of people getting ready to build or is building layouts in your immediate area? Do you think that you can keep these folks in model items for a while at a profit?
Do you plan to do internet service? A small mail order on the side to supplement your retail brick and mortor seems to be the combination that serves well.
Once in a while I hear about a customer who orders expensive stuff sight unseen and find that it is not wanted after all. What is your supplier, distributor going to do once you call them about returning the unbought order to them?
Are you able to make a dollar more than what it costs to feed your store with electric, Heat/AC and staff?
Your hours of business must be firm. There will probably be someone calling you very early on your day off requiring an emergency shipment of a bottle of paint. Who knows?
Both of my Local Hobby Shops had to tighten and enact new Layaway and order policies over the last 6 months or so, there is a certain amount of capital that will be tied up in those items behind the counter waiting on the “Adoptee” to finally complete the purchase and take it home.
Did you consider the cost of the property and the associated problems of location, mortgage etc? Do you think that you want this store to be your primary means of making a living or are you running the store because you are already wealthy and can afford to?
What is going to happen when people show up at your counter asking deep questions about an item because YOU are percieved to be the EXPERT? It’s going to get w
Hardware and trains are very different businesses. I don’t know a lot of people that go on-line instead of going to the hardware store, but the train business is definitely moving in that direction.
Other hobbies in the store is probably the way to go. It takes a while to build up a reputation in the model train world, and the other hobbies can help. Don’t forget the wargaming groups - there is actually some overlap with trains here, because both groups use scenic materials and have similar modelling needs. Likewise, you can overlap paints with the model car/plane business.
A pretty good hobby store (mostly trains but other stuff too) is closing here in Fairfax County, Virginia. Fairfax County and Loudoun County to the west have both passed Somerset in the latest report of highest household median income, but that doesn’t seem to be enough (And to be honest I don’t know if he tried to sell the business or not). We have very few hobby stores in the county with trains - less now than years past when there were fewer people and less money.
I don’t mean to rain on your idea, but I would suggest you research your market and see how the hobby/craft business is doing for others in your area. People may have the money for hobbies, but are they spending it that way? Are they willing to pay msrp (or near msrp) or do they buy on the internet for price? The margins look good for msrp, but there’s a lot of discounting these days. Even in the minority S scale I buy most of my stuff these days for less than msrp.
Personally, I like hobby stores, but the market for them seems to be pretty sparse.
Good luck
Paul
It’s a tough business these days.
Here’s Tough Part #1: You have to keep everything in stock a modeler might reasonably need, even if it doesn’t sell. If you tell a customer you don’t have something, but you can order it for them, they’ll go right home and order it themselves. And pay less.
Your hobby shop has to be the place a modeler can go to get it now.
And plan to built an internet-based mail-order element, because that’s going to be what makes the storefront possible.
Hobby shops used to be a gathering place, but today that is rare, the owners just don’t seem to want to spend the time and they tend not to have the know how of their products. Also I have noticed they don’t tend to know bisness so they would have a hard time with any venture, I have seen long time hobby shops close because they don’t draw the varius types or hobbiest in or relise the dynamics of people that may not contribute to their bottom line much but assosiate with those that do (I do not spend much at hobby shops but my friend who I ussualy go with has been known to drop $1000.00 at one time, you treat either one badly and we are out the door. So I am not the one who supports his bottom line but as a pair the lhs dose well).
Open a liquor store or an adult book store. You’ll have more luck.
So you think I’ll see more model railroaders in those stores… is that what your saying?[:D]
A liqour store or spirits would be good, but keep those lotto machines OUT. People will spend thier whole paychecks on a friday night for a dream.
You may also want to consider your temperment. The one customer who turns out to be the Golden Goose might be having a bad day and a few words the wrong way can literally shut the revenue flow.
Hmmmmm. a train store for adults ONLY that sells liquor…[:)]
If you want hard brutal truth, then you will make more money stick them in a high interest bearing account because at least you won’t loose money!
How much money have you got? From the size you are talking about, I think you will need at least about $1M-$1.5M to get it started if not a couple of mil. So if you don’t have that in cash, then forget about it. Believe me, I have been in retail since late 90’s and failed. Most people getting into retail made the biggest mistake of not capitalised properly including me 10 years ago and then it’s just going to be a vicious cycle until you flat broke. It’s NOT as easy as most people think. 80% of small business fail within the first 6 months and within that 20%, only less than 5% will survive eventually. The good news is, if you made it pass the first year, then you have a 60% chance to make it the long run!
If you want to open a shop to make money, forget it. But if it’s for semi-retirement hobby thing, then may be. Most real business savvy guys open a shop not to do it for the long term but to gamble to either hoping a larger chain will buy it off their hands or sell it as franchise. The way I see it, there are other ideas that might work better for the above retail business model, Boost Juice Bar is an example, I seriously just don’t see hobby oriented business make it that big these days without some serious capital not just for operating but also education to capture a new market. Hardware can survive on 43-45% because of trade volume, for a high profile clothes shop need at least 200% to make money, hobby shops will have much less than 45%, so you better hope you sell to 30-50% of the entire train fraternity with your shop size.
If you still want to give it a go, then get capitalised properly and give yourself 3 years to make it big. If you can’t hack it in 3 years, I think it would be wise for you to get out completely before you loose your
Many of you are confirming my suspicions, that most hobby shops are a dying breed. At least a brick and mortar one. The internet is the place to consider. It seams that if your not a well established shop that has been around since tin plate engines then it’s extremely hard to build the reputation that is required to run a great shop.
Maybe I’ll stick to weathered freight on eBay, and small foam dioramas for RPG players. It’s amazing what some of the people get for custom weathered cars on eBay. Many times well over $100.
Yea, but you’ve gotta be good. Throwing some dusted chalk and a few sprits of paint here and there do not a modeler make[;)]. I’ve seen the ones that sell for big bucks and they are truly a work of art. These modeling artists also spend enormous amounts of time as well honing their craft.
No, I’m saying either of those will SUCCEED.
Iceman and everyone else, I was just testing the waters. Before I got to deep into the project and blew alot of money I wanted others opinions. Thank you all for the honesty, I wouldn’t want it any other way. If you would of tiptoed around the issue I would of had those rosey colored glass on… and ended up with a dead garden. The BIG BOXES and the internet is killing mom and pop shops. There is no way they compete with the big guys prices. It’s kind of a sad state for our country. I watched a movie “Walmart: The High Cost of Low Prices” and it saddened me to see the “monsters” come into a town and gobble up not just the small general store in town, but sometimes the whole town. Main street became a ghost town… scarey in more ways then one.[sigh]
Ron
Yes and in all honesty, that might be enough to fund your hobby but do you think you can really live on that? 
And with all thing creative, it’s like fashion, this month might be people’s favourite but next month no one wants them anymore. But at least creating unique things is heading in the right direction.
Seriously, if I can start my life over again, I would just become a lawyer or a docter and be content with steady high income although my pal who’s a lawyer tells you different and my family docter killed himself several years ago. So…that’s just life.