I'm a "micro-business." I'm registered with the tax folks in my home state (Georgia), collect sales tax at all the shows I do, remit as required, and report my company sales as income to the IRS and get taxed for it just like everyone else.
I have (and pay for) a county business license and pay county property taxes on my inventory.
You'd better believe it. I have expensive accounting software to maintain a paper trail just like any B&M, pay my bills on time, have a business bank account, etc, etc.
I'm a legitimate business, I just don't have a brick and mortar store. I don't deal in rolling stock, so I don't have a dog in the Athearn/Horizon fight, but I resent very much your implication that non-B&M's in this hobby are a bunch of crooks and tax dodgers.
Mike Tennent "IronPenguin" Operating Traffic Lights Crossbucks Special Effects Lighting
I understand that, but I think Charles was referring to a prior statement that distributors like Walthers would be dumping their stock. If he wasn't, I am.
Presumably a smart distributor would stock Athearn stuff that sells well. Since it will sell anyway, why would they have any incentive to "dump it" just because the supplier is changing? Or is it slower selling stock that's being referred to?
Mike Tennent "IronPenguin" Operating Traffic Lights Crossbucks Special Effects Lighting
o - Dealer or wholesaler who will no longer be able to get Athearn Product due to Horizon's policy. He can sell off their remaining inventory, but will no longer be get more. Eventually he will have just the 'slow movers' in stock. He can either sit on them, or 'blow' them out by a sale. At least he will be able to take what money they get from the 'sale' to buy other inventory that he can get and move. In the case of distributors like Walthers who will no longer be able to get Athearn Products, they may very well 'blow out' the remaining inventory so they can invest it in products they can get and wholesale to retail dealers. There is no sense in advertising/cataloging products they can no longer supply to their dealers.
o - Dealer who is able to get Athearn Product from Horizon. This will be business as usual. They should be very good service from Horizon, based on what my LHS has gotten from them in the R/C market. Now, if he ordered too much of a slow moving item, he may want to 'fire sale' it recover some of his investment to apply it to a faster moving product.
Yeah, but it's also half the price of brass and probably would run a lot better. The rumor was it was to have Athearn can motors and guts. And it would be a small run. A few thousand units tops. North Shore fans are sometimes willing to pay more to get their beloved stuff. Check brass sales on eBay. Brass North Shore cars typically run upwards of $200 or more, and that's before the auction closes and sniping takes place. The Walthers kits are still fetching over $80 with no motors, and their level of detail pretty much sucks, at least on the car sides.
Contrary to popular opinion, Inventory isn't an asset, it's a liability. Holding on to inventory means you don't make money on it; you're losing money. Which is why manufacturers do the just in time thing. They don't want to store stuff for any length of time.
Which is also why some Internet dealers aren't fully responsive; they don't have the inventory they advertise. The best of both worlds is a distributor with a 24hr turnaround to the seller, and the seller to you. The seller doesn't hold, and the cash does flow.
"Art Marsh" wrote in news:m5HMb.6251$ snipped-for-privacy@newsread2.news.pas.earthlink.net:
A brick and mortar store can't hide inventory from the tax man (If they
*have* inventory. Most I've seen don't) Frequently the tax man isn't even aware of the home discounter, and even if they were, it is doubtful that they would bother with them. Frequently home stores are exempt.
In addition, a home business doens't stock tens of thousands of dollars in products. (If they did, they wouldn't be a home business!) Stocking products in that amount requires money. If you have the money, then it's your money at risk, not in the bank drawing interest. If it's not your money, then you have to pay interest on it in addition to the risk.
So, we have some reason why a brick and mortar store can't price as a home business:
Taxes - Inventory, display cases, cash registers, and other fixtures are charged a tax that has to be paid. Home stores frequently evade these taxes and get away with it because they are small sources of income, or are exempt from the tax altogether. Heck, in Texas they also charge you a tax on the office supplies you have!
Interest - If it's the brick and mortar store owner's money, that is money that is not invested (and earning money elsewhere) or it's borrowed money, which he has to pay interest on. A home store frequently doesn't have any stock at all.
Business licenses and inspections - Home stores are frequently exempt or evade (or are unaware of) the requirements. Brick and mortar stores cannot.
Capital investment loss - If you are a brick and mortar store and choose the wrong products, this loss has to be made up somewhere. A home store doesn't have that problem. No (or not much!) stock!
Other business expenses - A home store frequently is not required to certify their books. A brick and mortar store almost always is. That means hiring a CPA to check your accounting. As for gas, water, sewage, electricty, a home store already has these expenses. A brick and mortar store has to have these services in addition to providing a living for the owner, employess, return on investment for stock holders or partners... Also, a home store already pays for "show" space. A brick and mortar store has to pay, and frequently pays at a higher rate for commercial zoned business. Don't forget ads! Yellow pages, radio spots, and the like.
Return on investment - Again, at some point a brick and mortar store owner has to say to himself "Gee, I can get MORE for my money by collecting INTEREST on the investment I have in stock. BS on this, I'm closing up! No more idiot customers! No more bums sleeping in the doorway! No more tagging to paint over! No more having to get up at night and go to the store because the police called when the alarm went off! No more shoplifting! WOO HOO!" A home store doesn't have these problems. They stock very little, or nothing at all.
I don't know what a home store would have for volume.
I'll buy that total volume affects discount levels. I'd have to say that with no facts to back me up that home stores do not have the volume a hobbyshop does. But like I say, I could be wrong. I simply do not have the data.
A home store can be profitable because it flys under the tax man's radar, and doesn't require the huge investment in fixtaures and services a brick and mortar store requires. The home store's total cost of doing business is lower (I'd venture to say *much* lower) than a brick and mortar store.
I'd also venture to say that a brick and mortar store gets a better discount, but needs higher margians due to the higher total cost of doing business. For the reasons above, I think it fairly obvious that a home seller can always price lower than a hobby shop, given the same discount rate.
I'd say the simplistic answer is "Because it costs *more* to run a hobby shop as a brick and mortar business than it does to sell out of the home."
I've owned 5 businesses. I ran 2 from home, and 3 from store fronts. I know whereof I speak. (And all but one sold for a profit.) A home business can be very inexpensive vs. a store front. If you run your business out of your home, you don't have to buy "slip & fall" insurance, for one. Many states mandate that a store owner have libility risk insurance. It's not free.
No business open to the public has an easy time of it, be it brick and mortar or home selling.
I haven't been ignoring your response to me. I just haven't had time to get a proper answer down. I've been thinking about it, though! I'll get to it eventually.
Don't bet on it, I have known a couple of people who ran mail order business in the 90s. Their basement was full of their product. They always bought bulk, getting the best value for the dollar spent. Like one fellow told me, I have to pay the same wether my basement is nice and clean and empty or filled with product for me to sell. If you buy enough, you get a discount. You pass the discount on to the clients as your average markup is he same.
The one fellow Adam ran a discount comic book mail order business. He would buy new from the manufacturer and used from various sources, then list all in his catalog and sell away.
I also knew a fellow in Oakville who ran a mail order business for 8mm and
16mm films, his basement was full of boxes with product in. When VHS tapes hit the market, he quickly liquidated his 8mm and 16mm and went into the mail order VHS business.
Both of these fellows had upwards of $15,000.00 dollars worth of inventory.
Have not heard from Mike the Video felllow in quite some time, by now I guess he has moved to DVDs as I have.
This looks like as good a place as any to jump in.
I bought my grandson a train set for Xmas and now I think I would like one myself. I had an HO set when I was about 10 and I remember well how authentic the details were. I was especially impressed with the realistic couplers and trucks with live springs.
I just found this group and read all the messages. I need advice on what brands to start with and which to stay away from.
There is a train store in Houston but it isn't very convenient to me. I can go there and ask these questions, but then I run the risk of the dealer trying to sell what he has on hand.
Through this medium I also learned of the Model Railroading magazine so I will pick that one up also.
Thanks. I found Papa Ben's Train Place in the phone book but no listing for Houston Roundhouse. I also tried the Yellow Pages and there is nothing at all under model, trains, or railroading. I searched for a newsgroup several times before thinking of railroad instead of train.
" snipped-for-privacy@CreditValley.Railway" wrote in news:PN%Mb.378$ snipped-for-privacy@read2.cgocable.net:
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Thank you for your reply. I have looked books for hobby shops (brick and mortar) that had upwards of $50,000.00 worth of stock. Looking at the store, you wouldn't think that much was there (bare shelves, mostly).
I'm not saying that home hobby resellers are a bad thing. I'm saying that it takes both a hobby store and home resellers to make a vibrant hobby. However, if one has to go, the home hobbist shop would do less damage in the short run. In the long run, model railroading is in trouble unless more new people discover it or come back to it. Everybody loses if that doesn't happen.
Showing off the hobby is best done for John Q Public in brick and mortar hobby stores. Shows are good, but not something that would appeal to anyone not already interested. Home tours are good too, but suffer the same problem as shows. If someone doesn't already have at least the beginnings of the bug, it's of no import to them.
A steam engine running around in a display window draws such a crowd.
It pulls in people from all walks of life, all levels of society, and all income levels. You can see in their minds eye as they watch; the smoke laying down against the coaches, the lonesome moan of the whistle, the clack of the rails and adventures far and away.
In America, there are 3.4 million people out there that don't have a job. (More than that really, but that's the "official" number.) Many are so afraid of losing their job that they work ever harder, ever more hours to keep what they have. Leasure time shinks as the ever increasing demands of efficiency are answered, the tidal wave of increasing costs of housing, health care and insurance saps the econimic might of this nation. (Durn, I sound like I'm running for office!) As income and leasure time decrease, so does the ratio of the numbers in the hobby vs. the number of people in our nation. Model railroading simply becomes something too expensive in time and money to afford.
Costs for things that really matter: A home, a doctor, children, all increase, while the things that really don't matter, like cars, tvs, computers, and yes, model railroading things, shrink.
Now, as I see it, there are many reasons for the hobby not growing at the rate of the population (which means that it's shrinking, even if the absolute numbers are growing).
Not much passanger rail anymore. Sure, there's Amtrak. Most won't go on Amtrak. A trip that you can do in a car in two days, or a bus in one takes three and a half days on Amtrak. Most people want to spend that time on vacation, not riding the train. (Aside from foamers like us.) Look at the price of a bedroom on Amtrak vs. Motel 6.
So people don't get direct experience with railroading, much. Sure, they see trains, lots of freight moving. If it is even thought about much, it's only to curse the train for blocking the street and making them wait, or read in horror when a "train struck a car" (like the train can swerve or stop!). (Again, unless they are foamers like us.)
Leasure time, lack of money (as above).
Bad press. When was the last time something positive was said on the local news about railroads? Most often it is a talking head recounting the bloody horror of a person ripped from the loving arms of their family by a train too cold and impersonal to swerve or stop. If it isn't that, then it's the noise and traffic snarls they cause. Never mind the brick for their home came by train, fate forfend they should remember that the gravel for their roads came by train, and the plastics and cars? Right out the window.
Law suits. Be it CSX buying land or Amtrak being late, a drunken bum that shouldn't be in charge of a train, or runaway equipment crushing the life from a worker, railroads are almost always shown in an unfavorable light in the press. Why would you want a hobby that reminds you of things so negitive?
The sheer task of building a layout can be daunting to this "tab a in slot b" society. Most people I know that are not into model railroading couldn't change sparkplugs in their car, nor do they have any tools to do it. Building a model railroad requires skills in planning, engineering, electronics/electrical, carpentry, artistic talent, and eye for detail and a hand for the exact. It engages the very soul of a person and challanges them to grow in all areas of human endevor. That is scary to many. "I gotta do what?!"
Divorce. Dad/Mom isn't as likely to be able to build a railroad when supporting kids, nor have the money after alimony & child support is paid.
These are only my opinions.
Enough writing and talking about it! LET'S PLAY TRAINS!
Thanks again. I've been looking at trains online and it seems several brands have two classes. Bachmann has "Standard" and "Spectrum," Athearn has their "Genesis" line.
Think I will make the time to go see Papa Ben. I'm on the North Loop at Shepherd so that's not a trip. There is also a shop called the "Train Store" on University in the Village. I was in there right after Xmas and his place looked like it had been picked clean.
The Train Store is mostly toy trains (Lionel, and G scale, IIRC); very little to no HO or N (again, IIRC). HTH
As long as you're in the Village, stop by G&G on Times Blvd and see Gus. Tell him I sent you. I've been dealing with him for well nigh 40 years (I used to live in Houston on Sunset Blvd across the street from Rice University).
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