I see it every now and then on the forums–"Since there are no hobby shops/no good hobby shops/no hobby shops that carry what I want in my area, I'm thinking of opening one myself." To which I say, "Congratulations and good luck. I hope you make a year."
There's a saying among small business owners–"If you want to make a small fortune doing this, start with a large fortune." And that's not too far from the truth, at least when a small business first starts up. Many people forget that in addition to renting a space, paying the electric and water companies, and getting the Business license, you have to outlay more cash for store fixtures, display cases, cash registers/computerized POS systems, alarms, phones, waste disposal, high-speed Internet services, and that's all before you've spent one cent on product. You'll have to pass several inspections–one for the local Fire Marshall, and usually one by the Insurance company. Next comes the issue of finding people to work for you who have knowledge of your product. This is especially important in the case of a technical product like RC cars, trucks, airplanes, and helicopters–of the people who buy these products, only a fraction can or will effect repairs themselves, everyone else brings them to the shop and pays you to fix them. Time is money, as the saying goes, and the quicker you can cycle repairs through the store, the more repairs you can do in a day, the more money you can make. A conservative estimate to open a small business these days is in the neighborhood of $500K–if you want to do it right. You can do it on a shoestring, but your chances of success decline drastically.
Now, I have never owned or started a small business–my experience comes from years working in the retail hobby industry as a worker bee/manager. Here's a few things I'd do long before I made plans on what yacht to buy from the proceeds of my hobby shop (or other small, niche business):
Location, location, location. If you've lived in an area for any length of time, you know where the people shop–and if you do your research correctly, you should know where the kind of people you're looking to attract shop. Once you've figured that out, start looking for stores for rent. While you're doing so, make a mental note of how easy it is to get into and out of the store's parking lot. Is the store in question tucked away in the back of the center? If so, is the center equipped with clear signage directing traffic? I've fielded many a phone call asking "Where are you?" because one of the shops I worked at was tucked behind a large restaurant among a few smaller shops.
Speaking of restaurants, don't assume that the dinner crowd draw will net you big money. Sure, you'll get some business, but when dinner hour comes, people are window shopping while they wait for a table to open up or walking off that meal they just ate. I've had customers break off a conversation in mid-word when that "Your Table is Ready" beeper went off. Seriously.
Are there similar stores in the area? Unless you are 100% certain that you can outsell the established competition (not bloody likely), opening a store that's a block down the road from a similar store is financial suicide. If you want to go ahead anyway and spend the money, write me a check for $500K you'll spend to start up your shop. Either way, you'll be out the money, but by just giving it to me it will save you the stress, frustration, and anguish that you will be sure to suffer through that first year.
So, you've found a location. Good. Now, think about what you want to stock. A good hobby shop would normally stock plastic models, radio control, and model railroading, plus the tools and finishing supplies (read as paint, glue, coverings–all the stuff a hobbyist needs in addition to their kits/models/train sets). Are there Boy Scouts or Awana and other Youth groups in the area? You might want to find out when they hold their Pinewood Derbies and Raingutter Regattas, and stock the products they'll need. Model rockets and kites are good bets, too. Remember, though, for each product line, there are incidentals you'll need. Take model rockets–you'll need to stock the starter sets, kits, launch pads and controllers, additional engines, wadding, igniters, plus the glues and paints one would need to complete the kits. Remember also that the rocket engines qualify as Hazardous Materials when it comes to getting them shipped in. Sometimes, the igniters and paints also qualify as HAZMAT, so be prepared for a higher than normal shipping charge. Same goes for RC fuel, by the way–since the stuff is basically nitromethane fuel, the cheapest freight is by truck. That will affect the when and why you order those items, too.
In addition to the broad categories, you have to think about the items within those lines. If there are no RC flying fields in the area, you can do one of two things–talk to the local RC pilots and see if you can assist in starting one, or carry a basic assortment of RC air products. If the local plastic modelers all build cars with only a few airplanes, why stock up on all the 1/350 scale ship kits you can get? Ask around, find out what the locals–the people you've decided you want as customers–are looking for.
Oh, and let's not forget books and magazines. Or maybe a smattering of toys if there isn't a good local toy shop. Educational products–chemistry sets, microscopes, metal detectors? Why not–you'd be surprised at the number of parents who choose to home-school their kids these days. Then again, don't go overboard–getting a total restock of educational products in May might not be the best idea–wait until July, when the regular school year is about to begin. Same goes for other products–why do a total restock on kites and rockets during the traditional rainy seasons? Wait until just before the Spring and again in late summer…
And finally, let's talk about the intangibles. What do you mean? Well, here are a few:
1. Discounts. Will you offer discounts to loyal customers? To local clubs? To national organization members? If so, how much? If not, will you adopt some sort of perks plan, i.e., spend $100 and we'll give you $5 off your next purchase of $25 or over? What about discounts to fellow merchants working in the same shopping center? Military discounts? It has been said that giving a discount is like taking that money right out of your pocket and giving it away. Sure, that's one way to look at it. But the other way to look at it is that if you don't give your loyal customers a discount, the other guys will. And you'll lose that battle.
2. Community service. If the local Boy Scout Troop wants to hold a class for their Model Rocketry merit badge, can you help them by supplying kits and manpower? Will you work with the local schools? Are you willing to work with the local RC clubs to host a Fly-In or Race night? Will you sponsor an awards package for the local plastic modeler's clubs? Again, it might seem like you're pissing away money–but you are also building goodwill among the local groups, goodwill that should bring their smiling faces into you store more often.
3. The intangible intangibles. Are you going to be one of those shop owners who is only interested in a customer if said customer buys something? Or will you welcome people in whether they spend money or not. That half hour you spend taking RC trucks with that couple might not yield a sale right then and there, but if you treat them right and know what you're talking about, you stand a good chance of making a sale in the future–and it might be in the not-too-distant future. I've done it–I spent a half hour on the phone and another hour in person with a potential buyer of one of the more popular entry-level nitro RC buggies. I went through the pros and cons, not only of that buggy compared to another brand, but also the pros and cons of nitro over electric. Two days later, I spent another hour with him. And, that Friday, he bought an electric RC truck that was one step down from top-of-the-line, far more than he was originally going to spend. I could have spread the bullshit–"Sure, buddy, the buggy you want is the absolute best at what it says it will do, and you need to buy it today since they're in short supply." I may have even sold him on that first day. But sooner or later, he would have been back, an unhappy camper. See, hobbyists talk to one another, and sooner or later this guy would have found out that he bought what was an above average starter buggy but not one that would do what he wanted to, and that met his level of experience and desire.
I've had another experience where I sold the customer exactly what he asked for–had to special order it–after giving the customer the full disclosure spiel about how we didn't;t normally stock and sell that particular brand, and therefore stocked none of the spare parts for it, since that brand had a reputation in the industry of being rather difficult to maintain. Sure, it costs less than the brand we recommend, but if you can't gte parts in a timely fashion from the manufacturer, what good is it? Nope, I want that one, says Mr. Customer. After it broke on the first run, he called about parts. "We'll have to order them, as I told you when you bought it." How long will it take? Well, try two weeks. I don't believe he's been in the store since…
That being said, remember too that some customers are never happy, no matter what. Guess what? That's part of doing business, too. You just have to make sure that those who spread the good work outnumber those who badmouth you. Also remember it takes one "Awwww, shit!" to erase twenty atta boys…and it will take another hundred atta boys to erase that one "Awwww, shit!".
Will you mind if the locals use your store as a hangout? You know, stop by, look at what's new, shoot the shit with you and their buddies? If so, will you offer a coffee pot or sodas, either gratis or for a small contribution? That goes a long way towards that all important goodwill. If they ask and you have space, will you allow clubs to hols their meetings in the store without pulling some bullshit "I'll let you meet here but you have to buy all of your hobby stuff from me" attitude?
Finally, here's my idea of what I'd do if I owned a shop. First, I would open a true full line hobby shop, one that caters to the RC crowd–both air and surface, the model railroaders, the plastic modelers, and perhaps the gamers. I'd let the locals know that I appreciated their business, and that I'm willing to work with them to get in the products they want. Some of it might have to be on a special order basis–some of the pricier stuff where I think I'm likely to ever sell exactly one of something–and that is to the guy or gal asking me to get that product in the store. Otherwise, my feeling is that I can sell one of anything. I'd offer as comprehensive a selection of finishing materials as I was able. I'd offer a "Good Customer" discount that would cover the clubs as well as those folks who came in frequently buy didn't do the club scene. I'd support all the local hobby organizations, school, and youth groups, in the area as I was able. There would be a small classroom where the staff could offer demonstrations and classes on the products we sold. I'd hire the best people I could, and train them that attitude is what brings customers in, but knowledge and ability is what keeps them coming in. Of course, the coffee pot would always be full and I'd do my best to offer sodas as close to free as I could. I'd welcome people to come in, stay a while, and chat. I'd try to cater to the locals the best I could as well as try to get the new products in as soon as they became available. I'd have Customer Appreciation events from time to time. Price matching? That's kind of tough to do, but I'd stay competitive.
And I'd be broke and out of business in a year. Which is why I don't own a small business.
Thanks for reading. Be good to one another, and I bid you Peace.