Re: Opening a Hobby Shop?

If you want to get into a part of the hobby, kitting planes for small designers could do it. Build a CNC foam cutter and buy a good laser cutter and you can do things for a lot of other industries as well.

You better hurry, though, because that's what I'm going to do when I return to the US!

Reply to
Paul McIntosh
Loading thread data ...

No, it's not just the vette. He has been successful, and has expanded his

> LHS by taking the failed business next door and knocking down the wall to > more than double his floor space. It's deserved, because his prices, > especially on items such as engines and transmitters, are excellent. I think > he makes up for low priced big ticket items by overcharging a bit for the > odds and ends. He also stocks a lot of car stuff and has a dirt track behind > the store, I'm thinking the car action is where much of his revenue comes > from, whereas I would like to concentrate on airplanes, but this may not be > feasible alas. As for the area, there is quite a bit of R/C action here, and > in the area where the city is expanding by leaps and bounds, there is no > LHS. This store is located in the older southern edge of town, a very far > drive from many. I think there is room here for another LHS, I really do, > but I imagine a massive initial investment in stock to get it going, among > everything else. I have long read that the hobby store business is a b*tch, > and you are dealing with a customer base who badly wants you to lose money > on every transaction, but it would be nice to spend all day involved in the > hobby I love... >

I've known a few owners personally, and all had successful businesses or inheritances that let them start in the hobby business without going into debt. Debt control is a very important key in the field, like any small business, but so is diversity. You are going to have to handle a lot of hobby items if you want to be successful, IMHO. Diversity equals larger customer base equals cash flow. Cars, boats, plastic scale kits, trains, rockets, and whatever else people in your area think is appropriate. My current LHS stocks all this, plus dart supplies. Last place I lived, the LHS had a lot of doll house stuff. Might have been a preference the owners wife stuck in, though. How you stock is going to depend on what terms you can get from suppliers and what kind of cash you want to sink into inventory. One thing I've noted is that all the successful shops I've been to lately will offer me the same price as Tower on kits and radios. Yes, they do make money on fuel, props, plugs, etc. But these low ticket items end up not making them a lot of money (if any), when you figure in how long that role of monokote sits on the shelf with a few dozen other colors before someone comes along and buys it. And a few hundred obscure bags of hardware are needed to keep the masses quiet. I've not owned a hobby shop, but I have owned my own business in the past. It takes a lot of will power to do it. Sometimes the business owns you. I wish you luck.

Reply to
John Alt

If you specialize in cars you are going to bring in a lot of young kids, but once school starts they tend to stop buying.

If you are serious go to the Annual International Model & Hobby Expo and talk with the major distributers. Our LHS owner has been going there for 19 years, even though he has a small shop most of the distributors know him by name, and he is able to get great service for his customers.

I'm just looking at their brochure and they even have a "How to Open a Hobby Shop" seminar.

formatting link

Reply to
Normen Strobel

All the hobby shop owners I have ever known have always had one or more additional sources of income. And usually more than one. Pensions, spouses, investments etc. Plus there are often silent partners to reduce the risk to each individual.

Reply to
Fly Higher

There have been many shops come and go in this area. Strangely enough,the owners of the most enduring and successful shops are not hobbyists. I have seen quite a number of hobbyists start a shop only to fold after a short while. Most of these were RC specialty shops. I really don't think many shops, if any, can be very profitable unless it's a full line hobby shop. All those plastic kits , games , etc carry a pretty good margin of profit. Most leader items such as radios , engines , kits , covering are lucky to turn 10-15 % percentage of profit if you intend to keep'em coming back. You just can't sell those items unless you meet or come very close to mail order prices. I always used Tower Hobbies as my pricing guide on leader items , which sometimes meant selling at or below cost , but it was necessary to get the sale on the incidental items that did have a decent profit. Incidentally , even though my shop was ran full time , it was never a livelihood. We did have other income.....which was a VERY good thing.

Not try>Is this insanity? Anyone out there who has succesfully owned and operated an

Reply to
Ken Day

Hi

There is one other thing to consider.

An old friend of mine was an enthusiastic, dedicated RC flyer. He left town and started a highly successful business, building and selling RC radio sets, becoming a fairly well known name here in the UK.

I eventually bumped into him on one of his rare visits to my hometown and asked him how his flying was going. He almost visibly recoiled in horror and said that he didn't fly RC planes any more; after spending all day every day for over ten years immersed in Radio Control for a living, the very last thing he wanted to do was to spend his spare time doing the same thing - all he wanted was a relaxing time at home with his family, to unwind.

This from a man who once lived and breathed RC flying!!!

Regards

KGB

Reply to
KGB

Hi

Be very careful about that one.

I once owned a hobby store for a few years here in the UK. Before opening, I made the mistake of contacting all the local hobby clubs to find out what they couldn't buy locally and offering them discount on production of a club membership card.

It worked a treat - from their point of view. The local wargamers for example filled my shop, ordering wargaming figures in ones and twos. What I stupidly hadn't allowed for was that I had to buy them from the manufacturers in packs of ten.

The other problem with wargaming was mounted horsemen. Inevitably I would order the wrong horses and the churlish little basta##s - err sorry, valued customers - would smugly point out that the saddles were the wrong shape and therefore useless. Eventually I could hardly get into my stockroom for part boxes of little metal elves and Napoleonic soldiers!!!

You can bet your life though, that once I announced a closing down sale and sold my remaining stock off at a loss they suddenly found a use for them and descended on my store like locusts.

Regards

P.S. I did well selling metal detectors but, once that craze passed, trade started dropping and I couldn't think of anything that looked like it may take the world by storm so, having been offered a job out of the blue, closed down my store and started a "proper job". I did briefly consider stocking computer games but thought "Nah!! Passing phase, that'll never catch on" (this was 1982).

Ahhh! If only. 8^(

KGB

Reply to
KGB

KGB....I agree with you completely on the war games. I thought about that when I was typing the post , but I was just generalizing when I said plastics , games , etc. A friend , who bought much of my inventory , deals in the war games and from what he says it can be a real pain in the a**. I never dealt in them.

Glad you mentioned this though. The RC cars and parts were also very hard to keep up with. One week motor "gotta have it" and " Zappo" battery packs would be super hot , you buy a bunch and then next week someone wins the local race with motor and battery "super hot" and you can't give away ole "gotta have it" and "Zappo". Before long you can have a back room full of "can't give it away". Believe it or not , after I sold most of my inventory , which , by the way is an almost impossible task ,unless it's at a BIG loss , I had all these outdated odds and ends that no one will buy. I actually COULD NOT give some of these things away.

Maybe others haven't had similiar problems but I somehow doubt it.

I don't think it's a coincidence that all the successful shops in this area are owned by "non-hobbyists". Before I opened my shop in 1988 I used to fill my spare time building and flying. I flew almost every day and I loved it .My son was younger of course and he always flew with me. After closing the shop I quit flying for over 5 years. Actually , I made 2 flights during that time. I had a little foamy ARF in the garage that I kept from inventory for some reason or other. It was a 3 channel with a .15 on it. I fueled it up and made 2 flights on a vacant street in a sub-division. Some kid came along and goes "wow". I gave the airplane away and that was the last flight for about 5 years.

I've been back in it for about 3 years and really do enjoy it ,but it just doesn't have the "magic" it once had.

As someone else here said , I would definately work in a shop for a while before even thinking about opening one. This will give you a feel of whats going on in the business , a chance to see what percentages of profit you can expect , and a chance to see how "sweet" many of your customers can be. Another thing , after you leave for the day the owner is more than likely still there doing bookwork , making up orders , shopping the catalogs for specials, etc. Or, as in my case , taking the work home.

Something to consider. As hard as I tried I could never do better than

25% gross profit. I did carry only RC products so this could be somewhat better with more high profit items other than RC.

Just consider how much volume you need to pay the rent , utilities , taxes. And , oh yeah , a paycheck for yourself , but I woudln't be thinking about a paycheck in the near future, That's usually a ways down the road.

Aga>>

Reply to
Ken Day

Another point to remember. The largest hobby is model railroading. Maybe that is also in the mix of products offered.

Reply to
Stoc005

To have a MILLION DOLLAR hobby shop, you need to start with TWO MILLION!

At least that's what I've heard......

Reply to
Bob Severance

Since I did work for a hobby shop that was operated by a hobbyist that was and still is successful, I will disagree with some of your assumptions. IMHO to make it as a LHS you need both interest in hobbies and the business skills to make it work. Or at least the understanding that your staff must have the interest and skills to provide good service to the customers. I have watched many a LHS come and go over the years and I have seen Hobbyist fail because they lacked the business skills and business people fail because they lacked the service capabilities or to hire and keep those that do have those skills as their staff. The only edge a LHS has is their outstanding service and the availability of quick access to key componets: props, covering etc... After that you are competing with the mail order companies and it is not a fight you are going to win. I am watching right now a local hobby shop purchased by a retired, with no hobby experiance, supermarket manager and I am not impressed with the results so far. He has driven off some of the best employees and I have clearly noticed a major drop in the number of people shopping in the store. We shall see if he figures out that running a hobby shop is not like running a grocery store before he runs it into the ground.

Bob Ruth

Reply to
BobAndVickey

I think the owner would need to have an active interest in the products that he is selling, or at least hire people that have extensive knowledge in the products. People will buy from a local hobby shop for 3 basic reasons, convenience, price, and customer service. You have to make sure you are providing them with something more than the typical mail order place.

As for initial investment, I wouldn't start a hobby shop unless I had a minimum of $250,000 capital or maybe $100,000.00 cash and a good credit line at the bank.

formatting link

Reply to
Mike Grey

There's one major problem that LHS owners face: your suppliers are also your competitors. Great Planes and Horizon are the prominent distributors that provide the LHS with most of their product. Both have their mail-order houses (Tower and Horizon) also retailing direct to the modeler. In effect, they control the profit margins that the LHS can make. Essentially, that margin is too low for most shops to make it if they have a real estate payment to make (lease or mortgage).

formatting link

Reply to
Randall Roman

PolyTech Forum website is not affiliated with any of the manufacturers or service providers discussed here. All logos and trade names are the property of their respective owners.