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Old 08-24-2006, 09:19 PM   #16
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Also, if one Special new item comes in to the store, do you sell it, or keep it for yourself so you can smoke all your buddies at the next race?



If you said keep it for yourself, you will fail at any R/C related business! At this point it will have become obvious that it isn't about business at all. At the point where you keep anything, rather then sell it, seperates a racer from a businessman.
A smart business man brings the item to the attention of a customer so HE can beat HIS freinds! That is the difference between success(business) and failure(racer)!


Think of this, if you take anything for yourself, say a battery that retails for $139, it costs you $57 to get into the store, they sell in your store for $69.99. Keeping it means you need to sell 5 batteries just to break even now!

$12 profit, $57 cost = 5 packs or $60 dollars.

Good luck paying the $2500 rent, $300 electric, $200 accountant, $200 a month insurance, $4000 payroll, $2000+ in monthly taxes with those habits!

Also, for example, you would need to sell "156" T maxx's every month to break even. Using my figures above, most stores sell "10 or 15", if they are doing good. Take one of those for yourself and you are in deep! $400 truck, 7 to break even at $60 of margin in each(about normal). LOL


Can you tell I HAD a hobby shop once?
, Jim
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Old 08-24-2006, 09:48 PM   #17
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As the old saying goes If u want make a lil money in racing then u spend alot of money ... I m with Jim if you want to pay rent can u sell over 100 tmaxx month? I have started my own online /track support type business and have been in search of place with rent that will fall into a budget that i can actually pay eachmonth, the business is tuf , Im working a full time job also. its almost 24/7 . most rest i get is when im driving home from full time job to the hobby biz wich is a second full time job, im on the computer updating website, ck prices, reading up on new things to stay up to date , oh and that also means people always want you to have the latest stuff on hand but not necassarily will buy it , , evryone thinks its easy to do just pop open a shop and track , ( i also Thought that) and was told by people i know that were in the biz to be very careful and i now know what they meant, If u dont have alot of money then get ready to spend it in blood ,sweatand tears ,take this info how u like , not telling u to discourage u but just a 1/1,000,000.00th of what is involved best of luck ,
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Old 08-24-2006, 10:06 PM   #18
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Quote:
Originally Posted by W.E.D.Jim
Also, if one Special new item comes in to the store, do you sell it, or keep it for yourself so you can smoke all your buddies at the next race?



If you said keep it for yourself, you will fail at any R/C related business! At this point it will have become obvious that it isn't about business at all. At the point where you keep anything, rather then sell it, seperates a racer from a businessman.
A smart business man brings the item to the attention of a customer so HE can beat HIS freinds! That is the difference between success(business) and failure(racer)!


Think of this, if you take anything for yourself, say a battery that retails for $139, it costs you $57 to get into the store, they sell in your store for $69.99. Keeping it means you need to sell 5 batteries just to break even now!

$12 profit, $57 cost = 5 packs or $60 dollars.

Good luck paying the $2500 rent, $300 electric, $200 accountant, $200 a month insurance, $4000 payroll, $2000+ in monthly taxes with those habits!

Also, for example, you would need to sell "156" T maxx's every month to break even. Using my figures above, most stores sell "10 or 15", if they are doing good. Take one of those for yourself and you are in deep! $400 truck, 7 to break even at $60 of margin in each(about normal). LOL


Can you tell I HAD a hobby shop once?
, Jim

Being an RC Business owner I can tell you that this post is 1000000000% correct!!

When I started my business it was started just as a side thing to pay for my racing while I still worked a full time job to pay the normal bills. While in the process of paying for my racing it got to be a 2nd full time job and my accountant finally told me I was going to have to quit either my normal day job, my RC job or the IRS was going to LOVE ME forever!!

Best advice I can give is to get your RC business up and going on its on and PAID for before leaving your real job....This is where 98% of all small businesses fail. They borrow money to get going and never get out of that habit!!

EA
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Old 08-25-2006, 09:22 AM   #19
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Wow $2500 in rent? That'll kill most small hobby shops I think.

When i have spoken with other hobby shops and distributors they have been telling us that if you spend over $1K in rent you'll never make it.

Granted I'm in the mountains, so property is cheaper then say east coast or west coast. But crap! That's a lot in rent! heh

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Old 08-25-2006, 10:13 AM   #20
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Depending on the location you can pay a lot! In a new stripmall you can expect to pay anywhere from $15-20 per square ft in my area. If the shopping center has a big store that draws people into the area you can expect to pay even more. Most hobby shops start with a small store and have no room to grow. thats a good way to make money low rent lots of inventory. Problem with that is low rent typically means crappy location. And you might have heard the term: "The three biggest things to think of in opening a store is Location, Location, Location" This is very true. I looked at a lot of buildings that were low rent lots but in the middle of nowhere.

I lucked out and found an slightly older stripmall with some great stores in it and a great BBQ place opening up right next door. In the end I got twice the space at the same cost as it was going to be in a newer shopping center with worse access.

The best thing that I got was the ability to run races in the parking lot in front of my store. We race right next to the main road for the city. On average we have 30-40 people watching us race. The people are not racers or related to racers, just people that drive by and wonder wth is going on. I have started putting up signs about racing when we are. It bings a lot of people into the store.

Bottom line I have lots of $$$ into this right now and people walk into the store and still ask for things I dont have yet. A big hobby shop is not cheap.

Corey
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Old 08-25-2006, 10:33 AM   #21
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There is a semi-old saying in the RC industry, you have to spend $2million to make $1million...

Every time I think about wanting a hobby shop in the future, I just think about that and it instantly grounds me and all my r/c related business aspirations, haha!
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Old 08-25-2006, 03:42 PM   #22
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Check out this place and tell me how much you think the overhead is?

http://www.cumberlandrc.com/

Now check out the inside

http://cork.forest.net/ics/general/r...=33360&-search


Notice what is different? This shop is not just for rc cars. Diversity is a big part of what makes this place different. There is a huge clientel for airplanes, cars, boats, rockets, plastic models, stuff for kids, doll houses.

We get people in here for pinewood cars, school projects where they have to build a model wooden airplane from scratch.
Point is it serves many differnet customers looking for hobby related items.
It would be very hard to survive in our area on rc cars alone.
The owners are smart, they are predominantly airplane guys but have hired other people who are experienced in cars as well. I never realized how much work goes into running a shop until I worked there. The novelty has worn off and now I do it to get my rc stuff cheaper and actually do enjoy helping people.

Now I understand that this is not the answer for everyone who wants in to the rc business world, but it goes to show what it can take to be sucessful.
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Old 08-25-2006, 06:37 PM   #23
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Quote:
Originally Posted by EAMotorsports
Being an RC Business owner I can tell you that this post is 1000000000% correct!!

When I started my business it was started just as a side thing to pay for my racing while I still worked a full time job to pay the normal bills. While in the process of paying for my racing it got to be a 2nd full time job and my accountant finally told me I was going to have to quit either my normal day job, my RC job or the IRS was going to LOVE ME forever!!

Best advice I can give is to get your RC business up and going on its on and PAID for before leaving your real job....This is where 98% of all small businesses fail. They borrow money to get going and never get out of that habit!!

EA
True, you missed one thing however, To get to the point where you can think about quitting the "day job" takes many years. It is NOT a year or two thing. I've watched Protoform, SMC, Jaco & Putnam all start from scratch. It took all of them minimum 6 - 8 years to get to any kind of large scale operation.

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Old 08-25-2006, 09:28 PM   #24
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Hobby business is a way to not have a hobby anymore. I went from hobbyshops with a lousy 10-15% margin if you want to keep up with the internet boys(not to metion that all your distributors sell direct now )to full retail in major mall outlets(not hobby products)
Average kit is marked up 40 % from dist. cost and that is at the retail price. WHO pays the retail price? ever look at the retail price of a tc4 699.99
most shops make 10-30 off a kit. That is a STUPID amount of money since you had to lay out a few hundred to get it. Can you say DEE DEE DEE . I went to malls into womens shoes. BTY the average mark up in ANY product in malls averages 200 -400 percent. Now that is the kind of money you need to make to run a business and have room for expansion. I will never go back to the shit margin hobby buisness. I cannot beleive horizon and Greatplanes(tower hobbies ) can get away with it, Not that i blame them They need to meet their yearly revenew groth projections somehow.. The best business you can have is a service business. I made 40% of my rev. just having a repair shop on premisis and it was all for nitro. (which i could not stand BTY), i am a die hard elec guy...but it paid the bills , so i hired some nitro guys to fill the void. AND average rent is 3000-6000 in sunny south florida strip malls...YUCK.... but whos complaining i now pay 6500 for one and 14500 rent for another in Major malls , But at 60000 a month rev. i have no complants....and when the holidays roll around.... lets just say mid 6 figs is giving my son great christmas's 5 years running now. AND unlike the hobby business I get to keep WAAAY more than half of what I bring in. # 1 rule in Retail . YOU need to make 3-9 dollars for every dollar you spend. Everyone in the mall is doing it. hobby shops make pennys. You do it because you love it.
not to make a living at it. I tried it and figured it out VERY fast. Now it is just my hobby and i love it. Focus your energy on full retail durable goods and you will be smiling all the way to the bank. JUst so you know how easy it is..... When your are young...focus on building good credit.... get a CC and ask for higher limits every 6 months....But do NOT use the card. I built up a mbna to 45000+ in 2 years . Walked into wachovia and out with 250000 in 6 hours. OPened up my first shoe store and 9 months later my second. Wachovia was paid 1.54 yrs ago and i will sell em in another 2 and be retired at 39. You just have write down what you want to do on a sheet of paper and follow it like a manual. It really is that easy. I did it. PS all my neighbors hate me because i am so happy...I am the guy most people get mad at driving down the road ....2003 Modena...Sure i brag ,but i earned it and so can you...YOU ALL CAN DO iT.... AND for the life of me i cannot figure out why more people do not. Then you will have ALL the time in the world to play just focus and do it. good luck BTY I had 1 success and 3 business failures before i hit it. Hobby being 1 of the failures. So do not give up. If you want it it will happen. just keep trying and thinking(outside of the box)
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Old 08-26-2006, 07:03 AM   #25
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well i forgot to mention when i first went into malls i put is 12 hour days easy and 16-18 nov -jan because of the extended hours.This went on for 3.5 years until got to the point i could hire a good mgr. SO it was a lot of work but the pay off is bigger. If you venture down the hobby route...do it because you love it....be passionate about it .....be patient.....and do not expect a lot out of it...... Do not borow to get it going.....it will take you forever to get out......Have a VERY good exit stragety (helps you sleep at night)and a sound business plan and you may make it. Dont count on the front of the store to pay your bils, think of it as a showroom/funroom and focus on how you can grow the back room....mostly profit back their..a good repair operation can easily pay the rent....good luck.....can you tell the hobby business put a bad taste in my mouth It was fun doing it i will say...MotorMouth out..........
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Old 08-26-2006, 08:06 AM   #26
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To start with, I do not own a hobby store and have never had a hobby related business, but I have been in the hobby for a long time.

Setting up an operation to compete with already established players (tuning motors and matching batteries,) in which the barriers to entry are small (not a lot of startup money needed to get into it (turbomatchers and motor dyno's and parts/supplies, let's say $5k-$10k) is a great way to lose money. The problem is that the established players already have a base of clients and economies of scale that you don't, and frankly, unless you are a great engineer, you will only be doing the exact same thing your competitors are doing.

Setting up an operation to design and manufacture hop-ups is probably better, only because you have less competition, but if you develop a truly innovative product, how long will it take for competitors to copy it (patents are great, except for 2 things- it costs thousands to properly set up a patent, you don't know if the idea will be successful, and by changing a product slightly, the patent can be gotten around. Your only remedy is to sue, but that costs much more money.) Not to mention the cost of computer controlled cnc machines, materials and time.

Rc cars are a great hobby, but as a business, unless you are in select locations, the number of rc racers simply does not support the costs of running an rc business. With the internet, geographical locations are not an issue because you can sell worldwide (could promatch make money selling to local racers only?)

I agree with all of the diversification points mentioned. In the md/va/dc area there is a chain of 3 (soon to be 4) hobby stores called Hobbyworks. This is the first or second largest non-franchised chain in the country. They do sell rc (mostly tamiya and traxxas with a lot of rtr's,) but in their stores, about 1/8 or less of the store footage is devoted to rc cars, about 1/6 is devoted to all rc including airplanes, boats, etc. The rest of the store sells models, wooden kits, trains, kids toys (thomas trains), hobby building materials, paints, etc. They also have on site rc repair services. They are now having airplane and gear bags being made for them in china. They make money by selling everything they can. Over the summer, they also run rc parking lot races. The racing has died down in the last few years with about 15-20 guys showing up on sundays. (There is competition from 2-3 other tracks in the area.)

The owners don't race and don't keep the good parts for themselves. In this area there have been many hobby shops that have closed because they couldn't pay the bills, and most if not all of the shops were geared toward racing (most also had tracks.) Hobbyworks hires people with diverse interests in rc and hobbies in general, but they almost never hire hardcore racers.

In my opinion, a hobby shop can be successful if it is located in a high traffic area, sells many different product lines, and sets up ways to make money anyway it can. I also don't think anyone has gotten wealthy running a hobby store.

I think the only marketable r/c idea I have had is to have graphite chassis protectors (like the associated plastic sheet) cut to fit different chassis, with the screw holes already cut out. I figure it would cost at most $1 to purchase the sheet, and then time on a die cut machine to cut out the chassis. I asked local racers racing on parking lots (many with graphite main plates) what they would pay to protect their chassis and the answer was nothing. They figured they would get a new car by the time the chassis is worn or damaged. Now this might not be the best idea, but it helps to show the problems of creating model specific parts (especially if a new car comes out every year).

If you have a well paying job, don't leave it and create headaches for yourself.

By the way, I own a technology business, so I at least know a little about what I am talking about.

My 2 cents.
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Old 08-26-2006, 02:36 PM   #27
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Fat500, after reading that, why would anybody want to open a hobby shop?
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Old 08-26-2006, 06:19 PM   #28
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So guys, starting a hobby shop sounds like a harsh life. I am leaning towards "service" side of the industry - for now. OTOH, I may come across an already established store that wants to expand to another location. That would be a cool investment for me. In either case, I need to ponder "an edge" to what I'd offer to the enthusiast (BTW, that's enthusiast not hobbies). Something to market that is n offered anywhere regionally.

Victor
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