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Old 07-29-2010, 07:50 PM   #1
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Smile Looking to open up a LHS

So I am currently working in the corporate world and have been considering opening up a really nice indoor shop/track in my area along with an online store (A Main seems to have the market cornered and a little competition would not hurt). I would love to hear from any current owners/former owners on some of the pro's/cons of being in the business.

I am also curious on how to get manufacturer support with product lines.

Feel free to contact me via e-mail as well.

djculver34@yahoo.com

Looking forward to hearing from you!
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Old 07-29-2010, 08:07 PM   #2
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I can only comment on one thing. Hope u got alot of mula to compete with the supply, stock, and customer service of amain lol. They have such a massive inventory its crazy. Good luck though!!
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Old 07-29-2010, 08:12 PM   #3
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You would have to have a TON of money if you want to purchase/get manufacturer support.

Or you will just be buying from Distributors.

But, thumbs up to you! We can always use more places to buy stuff from!
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Old 07-29-2010, 08:15 PM   #4
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I just recently opened a shop and you do it for the love of it, not to make money. It is fun to be around the racers and bashers and talk RC all day as well as the rush of getting new product and being able to see it first hand. You can forget about taking any business from A main, and keep in mind that most of the major vendors sell directly to the public for less than they sell it to dealers. There are also about 1000 people on ebay who buy parts and sell it off in pieces. There is no way to stop them or control it because they pay retail for the kits and sell most of the items for about 50% less than dealer cost. Its a losing battle unless you are the only hobby shop and track within a 50 mile radius and there are 100 RC guys ready to support you. Chances are you are going to do this regardless of what people tell you so best of luck to you.
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Old 07-29-2010, 08:40 PM   #5
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You would have to have a TON of money if you want to purchase/get manufacturer support.

Or you will just be buying from Distributors.

But, thumbs up to you! We can always use more places to buy stuff from!
Well I do have some considerable amount of cash along with a couple well healed investors (always looking for more ).

A Main really is my inspiration. Their customer service is top notch. I don't see why we can't have options that are as good or better than what we currently are seeing. I just feel that the industry here in the States really is lacking in top notch facilities. My experiences with many shops is that they tend to be a very mom and pop operation (not always a bad thing) without much direction or vision for something more grand.

My love for the hobby is what is pushing me in this direction but I fully intend on making a nice profit but not at the expense of service, quality of product or friendliness. I just think it is dangerous when large companies have a monopolistic advantage over everone else, thus removing competition and not benefiting the most important segment in this hobby.....the customer!
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Old 07-29-2010, 09:10 PM   #6
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I think where you would make your money is in the facility. There arent to many top notch tracks around. You could then stock a full parts supply for what ever brand your area runs. Not gonna make money off the parts but you would keep people coming back if what ever they broke they could fix on the spot and keep racing. Trying to compete with Amain is going to cost you a lot of money just in warehouse space to be able to be competitive. Just my thoughts.
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Old 07-29-2010, 09:31 PM   #7
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Well, I have looked at this myself as well as had a chance to be involved with the local shop and track here. The big problem is that all the mark up is from the manufacturer to the distributor, and not so much from dist. to retail. It looks good on paper but nothing sells for retail. You have to mark it down to compete with all the online deals. A guy can come in the shop and buy a new kit, a motor, a radio, and a couple servos for well over a thousand dollars and the shop probably won't threaten 200 profit.

There is some to be made in replacement parts as they sell for closer to retail price. But you need the onsite track to supply a steady stream of racers with broken parts. And there is still the ebay stores with super cheap parts to stock up on.

Now for the track. Your gonna be looking at breaking even most of the time on a club night or practice night. By the time you pay for water, elec, maintenance, etc, its gonna take more than a few entries at 15 a head to cover the bill. A good facility can do this but any drama can push racers away and put you in the red. Big races make money if you get a good turnout, but take a ton of time and effort to promote and plan. Plus you can only get in so many a year with the busy schedule around the country.

So with all that said I will echo the rest. You have to do it for the love of the hobby. Not the money. If you are retired and have alot of financial backing you can most likely run a break even business and enjoy it. But if you need to make a big profit its not highly likely. I have seen too many get sold on big dreams only to quickly find out this is a hard business to be in. I personally am glad that I am the consumer. So much to choose from and so much competition to keep the prices down. Realize that a kit today is about the same price it was almost 10 years ago, but look at all the advancements that have been made with no added cost.
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Old 07-30-2010, 07:02 AM   #8
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Originally Posted by camocowboy View Post
Well, I have looked at this myself as well as had a chance to be involved with the local shop and track here. The big problem is that all the mark up is from the manufacturer to the distributor, and not so much from dist. to retail. It looks good on paper but nothing sells for retail. You have to mark it down to compete with all the online deals. A guy can come in the shop and buy a new kit, a motor, a radio, and a couple servos for well over a thousand dollars and the shop probably won't threaten 200 profit.

There is some to be made in replacement parts as they sell for closer to retail price. But you need the onsite track to supply a steady stream of racers with broken parts. And there is still the ebay stores with super cheap parts to stock up on.

Now for the track. Your gonna be looking at breaking even most of the time on a club night or practice night. By the time you pay for water, elec, maintenance, etc, its gonna take more than a few entries at 15 a head to cover the bill. A good facility can do this but any drama can push racers away and put you in the red. Big races make money if you get a good turnout, but take a ton of time and effort to promote and plan. Plus you can only get in so many a year with the busy schedule around the country.

So with all that said I will echo the rest. You have to do it for the love of the hobby. Not the money. If you are retired and have alot of financial backing you can most likely run a break even business and enjoy it. But if you need to make a big profit its not highly likely. I have seen too many get sold on big dreams only to quickly find out this is a hard business to be in. I personally am glad that I am the consumer. So much to choose from and so much competition to keep the prices down. Realize that a kit today is about the same price it was almost 10 years ago, but look at all the advancements that have been made with no added cost.
You are spot on, could not of said it better myself.
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Old 07-30-2010, 07:45 AM   #9
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surefire way to make a small fortune in rc......







start with a large one
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Old 07-30-2010, 08:48 AM   #10
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You are spot on, could not of said it better myself.
+1 it has to be a labor of love, as there is little to no profit in it.
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Old 07-30-2010, 09:38 AM   #11
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The only way to make money at it (enough to sustain the business) is to go mail order and/or multiple category, ie. planes, trains, static models, etc. Margins are very small so volume must be large. R/C cars are a dismal busniess model which is why you don't see more top level businesses in operation, the guys that can do it are in the pits racing and apply their business skills elsewhere on something more lucrative.
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Old 07-30-2010, 09:42 AM   #12
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surefire way to make a small fortune in rc......







start with a large one
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Old 07-30-2010, 09:56 AM   #13
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Quote:
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surefire way to make a small fortune in rc......







start with a large one

That is a good one!
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Old 07-30-2010, 10:37 AM   #14
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Do a track first then supply the parts your racers need and grow from there. Have you made it to The Clay Pit in Austin yet? They are the perfect example of what I'm talking about and sounds really similar to what you want.
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Old 07-30-2010, 10:40 AM   #15
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LOL...I love all the pesimistic optimism guys. Would you say that the profit margins on the business are less than 5-10%? Is there really not a way to devlop relationships with manufacturer reps to obtain product directly from them?

I certainly am not looking to lose my small fortune() on this or my investors money for that matter. I am thankful for all the feedback thus far. I love talking business, especially the business of a hobby I enjoy so much.

-Dan
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