Greetings All, Apologies if this is off-topic for this forum. Moderators, feel free to move it if necessary. I've been mulling over the feasability of attempting to start a small (but distinguished!) model railroad shop out in my area and I'm seeking the advice of those who run, or have been involved with, model railroad retail business. I'd be interested in hearing about the ups and downs of running such a business. Thanks! Mike C
Well, it is still about selling N Scale so I see no problem with it being here. I have never owned a shop but worked for one in the past and have a few good friends who are managing to hang on in the business. As the old saying goes "To make a small fortune in model railroading you need to start with a big one." The shop I worked for doing repairs and DCC decoder installations eventually went bankrupt. He had a huge stock of N scale and a large loyal customer base. He just took on way too much debt and was never able to climb out of it. Another friend of mine bought him out and merged two stores, moving into a portion of the failed storefront. He cut way back on space but still manages to keep a good stock on hand. I have never looked at his books so don't know how well he is doing. A third friend started with the "Big Fortune" and seems to be doing well. He seems to be doing it more as a labor of love and just paying the bills than trying to make a lot of money out of it. But he seems happy and the atmosphere among his employees is great. I buy most of my N scale supplies there, not because of any great deals, but because I like to go in and chat. I end up putting stuff on the counter some how.
I am not involved in the hobbyshop business, but I am the chapter chair of the SCORE (Service Corps of Retired Executives) chapter in the Florida panhandle, so can give you some advice about starting up a business. First, what is your market - how many and how much do they spend? Second, what is your competition? How are you going to compete with them - price or service or what? How much spare cash do you have to sink into the business? Inventory for a well-stocked shop will be into the six figures. Have you written a business plan? How long before you break even? What will you live on until you make enough profit to support yourself and family, if any? Suggest you go to www.score.org where you can select an e-mail counselor that may be familar with the hobbyshop business, or contact the local chapter of SCORE in Phoenix. Our services are always free.
Our typical day starts @ 0530 and we rarely leave the shop before 2300. We work 7 days and last year we took off a total of 8hrs on 4th of July and 6hrs on Christmas. On both of those days we also put in an additional 8hrs in the business. We being both of us. Debra has a full-time position here in the city and comes in after that to work in the shop.
Our typical day starts @ 0530 and we rarely leave the shop before 2300. We work 7 days and last year we took off a total of 8hrs on 4th of July and 6hrs on Christmas. On both of those days we also put in an additional 8hrs in the business. We being both of us. Debra has a full-time position here in the city and comes in after that to work in the shop. </font>[/QUOTE]Ah, the glamorous life of a hobby shop owner.....Too bad the wife works with you, as I suspect you would have more groupies than you could count, right George? (insert wink here) Seriously, on the Atlas board I started a different LHS thread, but Charlie Valk replied to it, saying the best shops were owned bythose with both a love of the hobby and some business sense from other areas of life. Being in the hobby should, but doesn't necessarily, give you a sixth sense about what and how many of anything will sell. An example would be a Pennsy modeler stocking too much Pennsy, thinking everyone is just like him, etc. I recall one store owner saying that he initially refused to sell life like grass mats, since they weren't for real modelers. However, he wised up to the fact that the once a year Xmas tree guys always wanted that simple way to provide some landscaping, and at least grudgingly took their money to help the bottom line. I suppose the next step is to not grimmace when he sells it, and try not to make the guy feel inferior for not using more spphisticated materials. BTW, Kalmbach produces a LHS Owner's guide - mostly reprints of articles from their magazine aimed at the retail hobby business. I have read it, but have no idea about how useful it is in opening a hobby shop successfully. I suspect its good background, but has little application to the what and how much to order question. Also, have you considered the hokey pokey method of the LHS biz - one foot in and one out - by keeping your day job and starting at train shows? [ April 02, 2005, 04:10 PM: Message edited by: Rossford Yard ]
Have you thought of trying to work something through the internet first to see how it goes down. I think that's how Trainquest here in Moreno Valley got started. They have a nice store but I think do much of their business on the net.
Thanks for the replies everyone. At this point it's more of a distant dream than anything else. If I were lucky enough to be able to seriously think about doing this I'd definitely want to work into it such that I didn't have to quit my day job. In fact, I wouldn't really WANT to quit my day job since I really love what I do for a living. It'd be something I'd want to do more for the love of trains and the hobby vs. wanting to make real money. (But, making real money wouldn't be all bad either. ) One thought was it might be something I could start up small and build to have something to do in 20-25 years when I retire. Don't know if it'll ever happen but it's fun to think and talk about. Thanks for the input everyone! Mike C Phoenix
One more comment about business plans: our local library (main branch) has two large bookcases of prewritten business plans for many types of businesses. That could be a resource.
I'm starting out small. This is a buisiness where you can get in way over your head if your are not careful. My shop is currently run over the internet and out of my residence "warehouse" aka the room off the basement. I'm searching for retail space for a brick and mortar shop, but need to build the customer base first. It has been fun so far. I love talking to all sorts of people about products and helping them find what they need.
