Opening a Hobby Shop?

Discussion in 'Getting Started' started by Myowngod, May 27, 2007.

  1. Myowngod

    Myowngod Member

    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.

  2. Peter T Davis

    Peter T Davis Guy Behind the Curtains

    I think it would be a lot of fun. I'd consider doing it myself, but foresee some difficulties such as the cost of building up inventory, the cost and scarcity of good retail space, the low margins in the industry, problems with finding and keeping good help, and having more fun playing with the stuff than selling it. ;)
  3. eightyeightfan1

    eightyeightfan1 Now I'm AMP'd

    From what I heard, those are the three main factors in opening ANY type of business.
    Not owning a business, but taking a couple of business courses in college, High visability, plenty of parking( I don't like going there, its hard to find a spot to park) and creating a "word of mouth" friendly helpful service, are usually the driving forces if a business succeeds or fails.
    In the hobby business, not too many people"Walk in off the street"(except maybe at Christmas), so making and keeping loyal customers would be the main goal.Word of mouth from them will draw in more customers(Go to this guy...He's great, friendly and real helpful).
    Starting small would be the best. The main LHS that I go to, the guy runs it out of his basement. So this might be the way to go.
    Hope these are helpful.
  4. Cannonball

    Cannonball More Trains Than Brains

    I keep thinking about opening a trains exclusive hobby shop. I would definately have to do a lot of internet sales since I doubt the local area would support it however.

    One thing I've noticed about the hobby shops here in St. Joe is that they are almost exclusively HO. None of them carry anything in O, S, or G scales. N is very rare but I see it here and there. The one excpetion to this is Hobby Lobby but they deal mostly in ready to run sets. Any little bit of scenery stuff or rolling stock is HO or N.

    I keep tossing around the idea but I don't know if I could make it fly. Perhaps if I lost my job and had no other options. But what bank wants ot give a business loan to a broke, unemployed guy?

    COMBAT Member

  6. Bones

    Bones Member

    Looks like they opened it up a lot, to give a more comfortable feeling.
    Of course, this also improves visibility for the owners/employees, and allows customers the chance to notice the item on the next isle..."oooh, almost forgot that coupler...oh and they have the retooled tank cars..."

    It also looks like the new layout allows for much better customer service, with a centralized counter and display area.

    I go back for the friendly service, and good people, but my LHS could really use a revamp like that. Most people don't even know they carry anything in S, O, or passenger cars in HO. They're back behind an illusionary wall created by tool, power supply, and styrene displays. Heck, half of the store is hidden behind this 'wal' of products, with a 18" squeeze between display racks to get there.

    Location is huge, but interior layout is also very important.
    Do you really want HO, N, or G scale guys to walk in and see nothing but Tinplate and Lionel because the rest is around a corner, or hiding behind the over-baring Lionel displays?
  7. Bones

    Bones Member

    Sorry, I know I'm not really on topic. I had one more thing to add though.

    Natural Lighting - get as much as you can. If that's not really possible, just try to avoid big swings toward oranges or blues with cheap lights.
    Lighting hues people aren't used to can drive them out of a store.
    And of course, lack of, or poor use of lighting can be just as bad.
  8. Myowngod

    Myowngod Member

    One of my strong points in retail is the presentation. I'm anal when it comes to the looks of the store. I learned that from my previous boss. I've always paid attention to the little details. I would definitely take care in the fixtures and lighting of the store. When ever I walk into a store and it feels like I walked into a dungeon, it is a big turn off.
    I'm fully aware of the Internet presents in our hobby... Heck, I do a lot of my shopping on the net. I would be as much a click and mortar business as I could be in the beginning and build it as the business grew.

    COMBAT Member

    Internet is where I get 95% of my stuff. Its cheaper, they have it in stock and there is no tax. :)
  10. trainnut65

    trainnut65 Member

    Well you have to stop and think. Internet sales are a good way to make up a lot of your lost profits form walkins ppl that come to the store you need to take up time with. make sure they are happy when they leave your store. internet sells are quick and easy they make the payment and you ship the item. Not a lot of time spent with this. And always make sure the store is clean and neat and stocked the one thing i hate the most is to walk in to a hobbie shop and they don't have what i need. then the next thing is we can order it for you. well i can order it from one of the online shops that have it. Just something to think about as well. Rent prices, power bills, and paying the help. taxes, and taxes and more taxes. give a lot of thought to this before jumping in
  11. COMBAT

    COMBAT Member

    Then one thing that I cant stress enough is service. Think of you as being the customer and what you would expect in dealing with your customers. Then if your happy as the would becustomer go one step further. Thats great customer service! :)
  12. Cannonball

    Cannonball More Trains Than Brains

    On the flip side, a hobby shop can't stock every]/u] supply a modeler might need. You would need a warehouse of immense proportions to pull that off. Most only have enough space to carry the essentials and one or two specialty items.
  13. Renovo PPR

    Renovo PPR Just a Farmer

    The ones that make it do in fact stock everything. While that is a ton of money to tie up in inventory in the long run they make it. In addition the have the happiest customers.

    I'm lucky to have one of those located in a very, very small town by the name of Homer City. I think the whole town and area has no more than 1,000 people. The nearest large city is an hours drive.

    I know he enjoys the business but then again he is the only employee and he works his love. He does stick to one gauge and one mfg though. But the moral of the story is he is doing very well.

    Just take a look at his web site.

    Welcome to Jim's Train Shop - Home
  14. zedob

    zedob Member

    If your locals are wealthy it's a definite plus, but I've seen one hobby shop survive in an area almost void of model railroaders and the owner didn't/doesn't even use the internet, much less no how. Not even a webpage. He started out a few years before the internet was even common place, so anyone within 100-150 miles looking for MRRing stuff had to visit him. He's still in business, but not getting rich by any means.

    Of the shops that I visit now, one is strictly trains and the other two have diversified and seem to prosper well enough.

    The strictly trains is an old shop, in an old house that is literally crammed to the ceilings (12ft BTW) with train stuff. The selection is there, if you can find it. The aisleways were just like most layouts, way too close. It's not fun trying to squeeze by another customer while wiping out hanging inventory. That shop has been in business since MRRing was first introduced. It reminds me of an old hardware store, hmm, come to think of it someone told me it started out as one.

    The two that have diversified seem to be the busiest. A few weeks ago I visited one that has trains up stairs and EVERYTHING ELSE IN THE WORLD downstairs (R/C,plastic models, dinosaurs, etc). I was the only customer up stairs that day, but when I walked into the land down below I was amazed at the amount of people who were in there, but it's summer and most modelers in the store were of the outdoor variety. In all fairness, the train section gets busy in the fall and winter. MRRing is a winter hobby and R/C stuff is the summer hobby, so SELL R/C stuff too!

    I hope it works out for you! :thumb:
  15. abutt

    abutt Member

    Have been a MRR all my life...and obviously had thought about having a shop. What stopped me was the fact that I would be turning my hobby into a business, and that meant losing my hobby and all the mental hobby benefits; relaxing with my toys, being my own God with my railroad, etc. So I never made the jump, and I'm not sorry. Six days a week listening to people bitch and moan about the hobby I love would be a real turn-off in my life.
  16. myltlpny

    myltlpny Member

    I had the opportunity to buy an already established hobby shop recently. It was in a good area, with a large clientèle. The owners were selling to move closer to family. They were great people and I had established a friendly relationship with them over the years. It was to the point even my wife would go with me to the hobby shop just to talk to the owner's wife.

    I briefly thought about taking over the business, but there were two major concerns for me;

    First, I already have a successful business that I've worked hard to build up over the last 12 years. I couldn't easily give that up. Up-front costs would not have been an issue as I already had a business history and could have gotten financing. My wife is the one who has the health benefits, so even that was covered, and that's huge by the way. I had to take it over for a while while my wife took off from work and it cost almost $1200 a month for my family.

    Second, and more to the point, were the hours. My biggest obstacle was that I'd have to work every weekend. That's also when they do the most business. You're expected to be open weekends and that's the only time I have available to get together with family.

    As I mentioned, I have a business now. It's an enormous amount of work. You can't go into it half hearted.

    Whatever you decide, I wish you the best of luck.
  17. Russ Bellinis

    Russ Bellinis Active Member

    One more thing to think about before you go into business is security. At my local hobby shop they used to pull out a locomotive and hand it to a customer to take to the sales counter for purchase, but too many $100.00 locomotives got out the door without being paid for! Now the guy behind the counter walks all locomotive purchases up to the cash register and hands them to the cashier to make sure they are paid for before they are taken out of the store. Also, all n scale rolling stock is kept in a glass case, the packaging on those things is just too easy to slip into a pocket. When I was in Las Vegas, I went into a hobby shop looking for some small screws and such. Teh owner had put them n a shelf in the middle of the store out of sight from the counter. The result was that in less than 2 weeks the entire stock of small hardware had been stolen! He was waiting for the new shipment and was making a space for the turntable display next to the cash register where the small bags could be watched.

    The other thing to do is get on good terms with distributors. Stocking everything someone might want is probably close to impossible, but if you can order from Walthers and get it in less than a week, you can keep most
    customers happy. If you have acustomer coming in from a ways out of town, perhaps see if you can set up a deal where you order the item, they pay for it in advance and you have it dropped shipped to their home address.
    Sometimes giving good customer service demands some imaginative ways of doing business. Here in the Los Angeles area, it isn't much of a problem, there are train stores all over town. In some localities where clientel drive 100 miles to visit a local hobby shop, you may need to find a way to serve them when you don't have the item they want in stock.
  18. Jim Krause

    Jim Krause Active Member

    I deal with a hobby shop that is in a craft store. The guy who is knowledgable about model railroading is only there about 3 days a week. Its a pain to get someone from the craft area to answer questions. Usual answer is "---- will be in on Saturday". Its a full time business as far as a customer is concerned. I wouldn't suggest trying to run two different businesses.
  19. stripes

    stripes Member

    Hobby Shop

    I agree 100% I am starting a Trains only hobby shop here is the thread on that

  20. Kanawha

    Kanawha Member

    Combat, you and I frequent the same shop it would appear. I remember the old Affair with Trains very well. Except for having to talk to Paul, it was a nice shop. lol Something about the closed quarters made it feel more alive. There were times when it had a dozen customers at once. I hardly see more than 2 people in there anymore. They've also decreased there in-store stock of freight cars and steam engines quite a bit, despite having more room now. And of course, its still extremely expensive compared to online places.

    I know local hobby shops cant sell at discount prices because they dont sell enough units, but they usually dont make an effort to bring in railroaders either. I mean comon, selling $450 dollar steam engines at list price when you can pick up a phone and get the same ones for $250? Of course you're gonna struggle to sell a lot or even make back your costs that way. If the price was more competitive, say within $50 of the online shops, most people would find it worthwhile to save shipping time and costs and actually be able to see it before buying. And you'd sell out your stock instead of having the same engines collecting dust for 5 years sometimes like Affair with Trains. Now that would be how I'd run a shop. And if it didnt work after a while, I could go back to charging hugely inflated prices. lol

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