Originally Posted by
hookem34
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
I have owned several very sucessful businesses for 22 years.
Its not pessimistic optimism, its reality
The hobby business is VERY tough, which is why the vast majority fail.
If I didnt have a spare office suite not in use (low overhead), there would be no way I could afford to have a hobby store, and sell at prices lower than amain.
Yes we can and do buy direct from Manufacturers.
However to get decent pricing we have to place a LARGE order. So generally we prefer to buy from Distributors, so they can make the LARGE purchases necessary to get decent pricing from the Manufacturer, and pass it on to us.
If you do the math, and examine distributor pricing for dealers, and then look at the markup that you can sell it for, and then the added cost of data entry, website, store, staff, overhead, etc. It will answer your questions about how lucrative/profitable a business venture it is.
The Local Hobby shop that sells for near MSRP on stuff is almost non existant with the coming of the internet age, and the capability to see online prices from large discount hobby stores.
All you have to do is look and see how many relatively strong hobby stores folded in the last 2 years.
There are almost no more LHS to support anymore!