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Old Jun 16, 2011, 10:34 AM
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Considering Opening a New Store

A bit of history and then I'll ask the hard hitting questions.

The area I'm looking at doesn't have a Hobby Town USA(closed due to the owner passing away, but I've heard they were doing well) nor does it have any other true hobby ,toy or gaming store in the area. The population is roughly 143,000 people(This includes neighboring/connected cities, which don't have any hobby stores that I'm aware of.)

Economically, it doesn't appear that the main city is in any trouble, and the college in the area actually just voted to move to Division 1, which means they expect the students to pay more in tuition and fees.

Hobby Town USA was the last store in this genre to remain open, and it closed more than a year ago.

Personally, I hold a MBA, meaning I should have a pretty easy time finding a job outside of the hobby industry if things go south. My father has owned some sort of store for the majority of his life. I've grown up with the background to make it work, and also realize the extreme amount of time that would be required to make it a success.


Now for the questions:

With the limited information posted here, would this be worth really considering?

Would I be able to support a family on the income from a store in this area?

Should I consider a franchise like Hobby Town USA, or do the work of getting a license and establishing vendor accounts?

Would an owner of a hobby store be able to take a vacation or have any time away, considering the effort required to establish the business?
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Old Aug 30, 2011, 05:25 PM
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Originally Posted by aerosheik View Post
a bit of history and then i'll ask the hard hitting questions.

The area i'm looking at doesn't have a hobby town usa(closed due to the owner passing away, but i've heard they were doing well) nor does it have any other true hobby ,toy or gaming store in the area. The population is roughly 143,000 people(this includes neighboring/connected cities, which don't have any hobby stores that i'm aware of.)

economically, it doesn't appear that the main city is in any trouble, and the college in the area actually just voted to move to division 1, which means they expect the students to pay more in tuition and fees.

Hobby town usa was the last store in this genre to remain open, and it closed more than a year ago.

Personally, i hold a mba, meaning i should have a pretty easy time finding a job outside of the hobby industry if things go south. My father has owned some sort of store for the majority of his life. I've grown up with the background to make it work, and also realize the extreme amount of time that would be required to make it a success.


Now for the questions:

With the limited information posted here, would this be worth really considering?

Would i be able to support a family on the income from a store in this area?

Should i consider a franchise like hobby town usa, or do the work of getting a license and establishing vendor accounts?

Would an owner of a hobby store be able to take a vacation or have any time away, considering the effort required to establish the business?
Try a different business!!!
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Old Sep 08, 2011, 04:16 PM
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You are going to need a LOT of start up cash...just for inventory... Then there's overhead for everything else. Don't forget building and maintaining a website, complete with a shopping cart cart function. Those aren't cheap, either, but pretty much a necessity if you want to stay viable and have even a chance at competing with the E-tailers, who have virtually zero overhead because they don't maintain a brick and mortar store(s).
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Old Sep 17, 2011, 06:48 PM
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You are going to need a LOT of start up cash...just for inventory... Then there's overhead for everything else. Don't forget building and maintaining a website, complete with a shopping cart cart function. Those aren't cheap, either, but pretty much a necessity if you want to stay viable and have even a chance at competing with the E-tailers, who have virtually zero overhead because they don't maintain a brick and mortar store(s).
Electronic retailers that actually warehouse and ship products directly still have overhead , probably much higher then the overhead of a small private owned hobby shop. The same things like rent, Employees, Utilities, etc. all still apply.

Online retailers that only use dropshipping may have little to no overhead, but hobby dropshippers cannot match the prices of the big online retailers. Actually, I have seen wholesale prices from a RC dropshipper that were on average a few dollars more then the lowest retail price . So only using drop-shipping is definitely not a get rich quick plan.
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Old Sep 18, 2011, 09:20 PM
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I think it takes 200,000 to open a hobbytown
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Old Oct 20, 2011, 09:28 AM
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United States, MI, East Tawas
Joined Aug 2011
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Quote:
Originally Posted by Aerosheik View Post
A bit of history and then I'll ask the hard hitting questions.

The area I'm looking at doesn't have a Hobby Town USA(closed due to the owner passing away, but I've heard they were doing well) nor does it have any other true hobby ,toy or gaming store in the area. The population is roughly 143,000 people(This includes neighboring/connected cities, which don't have any hobby stores that I'm aware of.)

Economically, it doesn't appear that the main city is in any trouble, and the college in the area actually just voted to move to Division 1, which means they expect the students to pay more in tuition and fees.

Hobby Town USA was the last store in this genre to remain open, and it closed more than a year ago.

Personally, I hold a MBA, meaning I should have a pretty easy time finding a job outside of the hobby industry if things go south. My father has owned some sort of store for the majority of his life. I've grown up with the background to make it work, and also realize the extreme amount of time that would be required to make it a success.


Now for the questions:

With the limited information posted here, would this be worth really considering?

Would I be able to support a family on the income from a store in this area?

Should I consider a franchise like Hobby Town USA, or do the work of getting a license and establishing vendor accounts?

Would an owner of a hobby store be able to take a vacation or have any time away, considering the effort required to establish the business?
I am also considering a store, only I want to focus on online distribution only. So far I can't see how this is possible. Everyone I talk to online wants you to have 30k of inventory and a brick and mortar storefront. I can't see how they expect anyone to do open up a store when the economy is so poor.

I have alot of IT experience and I've created shopping cart stores using open source e-commerce solutions before so I know that I could get this off the ground with almost no costs except for some inventory.

Does anyone know of any retailers willing to do this sort of thing or drop ship or something?

I guess it takes money to make money.
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Old Oct 20, 2011, 12:33 PM
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I'm surprised the amount of initial inventory is so low. $30K is nothing in this hobby, especially if you want to sell mid to high end helicopters and all the appropriate level radio systems, motors/engines, gear, etc.
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Old Oct 22, 2011, 11:44 AM
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he is talking open order

30k is what horizon or great planes wants as a opening order to become a dealer. to me after owning a hobby shop for 20 years the number was 150k to have what most people wanted most of the time,i would say the guy that can make it in a hobby shop, has retired from a real job, kids are raised, or close to it, house is almost or is paid for, and has the start up money,150k if not i would say the deck is stacked very heavy against you, we made it, but its tougher now, and the only reason we where able to do it, was because me and my wife put in 70-80 hr weeks,so we did not have to make a lot of money, becuase we where at work all the time,looking back it was not bad, but it was not a good business,it was good because we loved the hobby, today there is no love for it, nobody needs your info or help, and if they do they are not willing to pay for it, 15 percent of a sale is overhead, rule of thumb, today the product do not have 15 percent mark up,glue and paint yes, but not much else,i do not think distributors have 20 more years left before they are gone, basics of business is buy low sell high anything, if it was me i would take my start up money and buy and sell used, and let the distributors fend for themselves,im dumping inventory at 50-70 percent off, how can a guy at a shop compete with that, and when im done there will be someone else
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Old Oct 23, 2011, 10:34 AM
Lou
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United States, VA, Waynesboro
Joined Dec 2005
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Quote:
Originally Posted by j35u5fr34k View Post
Everyone I talk to online wants you to have 30k of inventory and a brick and mortar storefront. I can't see how they expect anyone to do open up a store when the economy is so poor.
Distributors do that to keep people out who only want to sell in order to support their personal hobby use. Often these small sellers end up under selling the local hobby shops by selling to their club members/friends at pennies above the cost.

Quote:
Originally Posted by j35u5fr34k View Post
I have alot of IT experience and I've created shopping cart stores using open source e-commerce solutions before so I know that I could get this off the ground with almost no costs except for some inventory.
Good experience to have, you will need this to save money. Maintaining your website with up to date product information and prices will take a lot of time.

Quote:
Originally Posted by j35u5fr34k View Post
Does anyone know of any retailers willing to do this sort of thing or drop ship or something?
None that are reputable. I recently steered my brick and mortar LHS to a very large distributor (not HH or Towers), you would be surprised at the amount of personal and financial paperwork that is needed to get on board with the reputable distributors. It took him about 30 days. They don't move fast and they check into all your finances.

Quote:
Originally Posted by j35u5fr34k View Post
I guess it takes money to make money.
Yes, that is true unfortunantly. Many that get into the business are using their retirement money or other nest egg money. They do 'kitchen table math' and see big money based on possibilities. The truth is, you won't get breaks from any of the big, national distributor until you have been in business for a good while, meet their sales goals and push their product line. It takes a number of years as a rule to get to that point.

Then on top of that, you have to compete with everyone else on the web and with those that have no problems with selling below MAP.
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Old Oct 23, 2011, 10:42 AM
Lou
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Originally Posted by Expresscraft View Post
i do not think distributors have 20 more years left before they are gone, basics of business is buy low sell high anything,
I have thought the same as well. With the new world market/economy coming into play, the need for the middle man will be legislated out.

We already see the 'clones' of the HH being sold by Asian manufacturers. The planes, transmitters, motors, esc and plenty more that are sold now by HH and Towers are being matched in quality and design and sold from the manufacturers retail division.
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Old Oct 30, 2011, 03:15 AM
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just food for thought

i had 150,000 in inventory, did over 500,000 in 04-05 and had been playing for almost 18 years, sold millions over that time most for great planes and horizon, they where good, but there was never any margin it the products, and to day its worse, i dont think anyone with a storefront business will come on here and say they are making money, remember if you had nothing invested and worked as a manager for a fast food restrant and put in 40-50 hrs a week you would make 40-50 k maybe more, so im not saying there is NO profit, im saying i bet nobody that owens a hobby shop is making a dime for being the owner, and he is probably doing pretty bad as just being the manager, not to mention the risk,no way would i do it again.i would not touch any retail today,not on the level of starting something,
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Old Nov 08, 2011, 05:23 AM
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How to amass a small fortune

As the old saying goes, do you know how to amass a small fortune? Start with a big fortune and open a hobby shop. But in this case, it may just turn into no fortune. It's not the economic climate as much, rather the lack of interest of the target market. Given the internet, and near cost prices, there is no margin in these things anymore. So how can you make any money? Even the most modest of stores will eat into your capital reserves in no time. Model kit have a 100% mark up, but even with that, the demand is so low, you will not make it. Seems that the only mom and pop stores still open are ones that own their properties outright and have no mortgage. And I can tell you, thay aren't making any money either. Do yourself a favor, just move along.
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Old Nov 30, 2011, 11:48 PM
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Aerosheik,

I don't have an MBA but my first thought would be to check out a turnkey operation franchise such as Hobby Town. Go to their website and they have tutorials and videos on how to open a Hobby Town store. They even post franchise prices which differ depending on area. If your serious they will show you their number crunching and all their stats to provide you with the number of potential customers in your area, how many hobby stores in your area, potential for sales, etc. They provide training, store setup, everything.

Check out the interactive franchise page. The office has prices. HobbyTown Franchise Info
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Old Dec 05, 2011, 09:24 AM
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yes this is true but remember they are still trying to sell you something, the fact of the matter is most hobbytown stores are owned by people who started with money.and this is what they wanted to do, i dont think ANY hobby shop owner is going to come on here and say he is making a ok living out of his hobby shop,maybe its a fun thing to do on top of whatever else you have coming in, but i would not put all my eggs in the hobby business basket. and it is only going to get harder from here, there is still interest in the hobby just no profit,and people will no longer pay for your service, not enough to get bye on anyways. the only way for things to change is if we get with the times and a distributor will do floor planning, like auto parts stores and grocery stores do, and its not going to happen because we do not have business people wanting to open hobby shops, they know better, and hobbyist, well are hobbyist, and no one is going to floor plan them, so the the plan will be get a store in a reasonable location, write a ck for 100,000.00 staff your shop with people how know something about what you are selling and wont steal it, in spit of there minimum wage job,and sell it at cost, of course we have not said anything about fixtures, lighting,a/c ect that has to also come out of that no profit sale you just made, i would like any distributor with there educated staff to come on here, and give us a business plan that will work, and not be vague,after all as a distributor would'nt this question fall under customer service? its simply not going to happen
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Old Dec 30, 2011, 10:09 AM
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See: http://www.rcgroups.com/forums/showp...1&postcount=12
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