Opening a Hobby Shop?

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Myowngod

Pennsy Tuscan Red Blood
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
 

CIOR

Central Indiana & Ohio RR
Ron,
I think it today climate, you have to look at 2 factors.
1.) Location, are the other shops around, how have they faired in the climate today.?
2.) Can you have a low cost internet presence? Will you be able to compete cost wise with larger internet sources. And finally, can you make the internet option a larger part of the business model.

I know around me, most of the shops have closed doors. Why, the owners both retired and 2 others couldn't make a internet presence (weren't willing to dunk the prices down enough).

A brick and mortar store is what the owner makes of it. A little higher cost for better service will normally keep a smaller client base happy, but your limited even by that to time/distance factors. Even if your the best shop in the world, people aren't going to be willing to drive 500 miles to see you. Even if they do, that once per year or 6 month visit cycle won't be enough to support you.

There are many factors involved.
 

stripes

Member
Opinions wanted! What do you guys think of a hobby shop offering custom train sets? Soup to nuts. Customers can get ideas from the Atlas planning book or bring in their own diagrams and we could draw up the plans in a track planning program. Then based on what size layout, what era and RR line they want to model, order and sell them the whole package. Using quality products like Atlas, Athern, Branchline etc.. offer them a package based on their wishes and budget???
Any thoughts???
David
 

CBCNSfan

Registered Member
Staff member
Wow! no matter what anyone thinks about it on these forums, there are some serious steps to be taken before investing. I don't know how familiar you may be with doing a market research in your prospective retailing area but I for one would not proceed without it.
This could be costly to have it done professionally but then again there are other ways. High schools sometimes are looking for these types of projects for the graduating classes, also Universitys and community colleges have students do projects to get hands on experience. My daughter was involved in a few while going to school (over 30 years ago) a door to door canvass of the prospective sales area. Darned if I can think of which business they were but the one that had a favorable response from the public is still around.
A few simple questions would do it 1 Are you interested 2 If a hobby outlet was available in the area would you patronize it. and so on.
Lately a lot of shops have failed for numerous reasons, but one thing for sure, to make a go of it will require a lot of work and dedication.

smiley-cheers.png
Dismal Willie :D
 

IronBeltKen

Lazy Daydreamer
Ron,
I've never owned a hobbyshop myself so I don't have any answers to that question. But allow me to ask:

If this hobby was a major part of your livelihood, would you still enjoy it as much as you do? I use model railroading as an escape from the less-pleasant aspects of my life; I know that if I was surrounded by model trains all day, worrying about keeping a train-related business afloat, I would be much less inclined to do trains during my free time.

Just my 0.02, I wish you the best of luck whatever you decide!
 

sushob

Entrepreneurial Teen
Even running something as small as my website and eBay auctions is a lot to keep up with. I haven't had a chance to add new items in over a month because I've been busy with school. I was hoping to catch up this past week but now I've been busy with a couple other jobs. I should finally be able to get back to the website this coming week, and I have a lot of improvements I hope to implement.

I can tell you that you most likely won't see a 43-45% profit margin in model railroading (unless you're a giant company named Walthers). Sure, some companies may discount items to that extent, but to compete with online stores you will have to discount your items at least 10% - 25% off list. Add your expenses and the profit margin isn't that great :(

In the past two months my main supplier (a distributor for hundreds of companies) has decreased discounts across the board by 3% - 6%. It's hard for me to pass that on to my prices and still compete with other sites though. The most frustrating thing is that, as a small company, I'm not able to buy directly from many companies like Walthers or Athearn, so I have to use another channel which means more hands on the product which means more expense. I can't buy Athearn period, because Horizon forbids distributors from selling to dealers.

If you're really interested in setting up a hobby shop, I would suggest doing a little research. I'm not a big fan of paying somebody else to study/research, but some kind of market evaluation may not be a bad idea. My idea of research, however, is identifying and contacting some suppliers to determine what qualifications have to be met to buy at a discount, determining the real estate costs and estimating utility and personnel expenses, getting a rough idea of some advertising costs, and figure out how much you would really have to sell each month to turn a profit. You might even want to try to do a little online selling first just to get a taste of it, and you would definitely want to offer online shopping as an extension of your shop in the future anyway.

I don't mean to sound discouraging, as opening a hobby shop much like you described is something I've wished to pursue for a long time, but realize that it probably won't be a big money maker.
 

jbaakko

Diesel Detail Freak
Nate, I think thats why so many of the semi good shops out there also have their own products. I'm thinking, that when you get your spines up an running, the sales will go up.
 

OldGettysk

Running the MC & Buffalo
Wow . I can't tell you about a Hobby shop but I can tell you about a Flower Shop which when you think about it isn't that much differnt. You have a lot of work ahead to invest in your company and I don't mean just money . It takes all your time and energy which when you think about it is alot. And at the end of the day you just don't go home. It is always with you .
 

stripes

Member
Update on store

Well I did it! Been open for 4 days now, and so far so good! Here are some pictures;

shop011.png


shop005-1.png


shop010.png


and every train shop needs a layout, Right?

shop012.png



David
 




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