So, you’re a fan of model cars, and you’re considering opening your hobby shop?


If that sounds like you, then this article is for you.

But first

What is a hobby shop?

As you know, a hobby shop has two words, hobby and shop. We all know what a shop is, but what about a hobby?

While you may have heard of it countless times already, the literal meaning is probably something you’re curious about.

In layman’s terms, a hobby means a recreational activity done for enjoyment. Anything that can bring you the excitement you always do in your leisure time can be considered one. Even something as familiar as listening to music can be called a hobby.

And of course, collecting model cars (just like a thing you love) would be considered a hobby. If you are making efforts to acquire rare miniature car collections, there’s no denying that you have dived deep into that hobby.

Someone who doesn’t share the same interest will struggle to comprehend your effort in getting those rare items.

How much does it take to open a hobby shop?

We’ll get into the details below. But if you want a fast answer, according to the team at Hobbiestly, the typical cost to establish a hobby business is between $10,000 and $50,000.

Interested? Read further for more details.

How to Open a Hobby Shop

1. Review the competition

Your decisions have an impact on the future of your business. The first one that matters is competition.

Setting up a shop in a crowded area isn’t a bad thing, but it could be if you face competition from stores that sell similar stuff.

Hobby shop is a broad term, so the level of competition will depend on the niche you tap into.

If you want to sell model cars/RC vehicles, then you must look around if such stores already exist or not. If not, then you have a chance to survive or even succeed.

Conversely, if there’s a similar store around, your success chance will likely decrease. The good news is you can still open it in another area.

2. Find a strategic location.

What determines viability isn’t just competition. The amount of people visiting the area also matters. There’s a reason why lease costs are high at shopping centres. That’s because many people are passing by, and they’re often located close to busy highways.

If you have the budget, don’t hesitate to rent a space in this area because it’s profitable for business. Even if you end up spending more in advance, this shouldn’t be a big deal knowing you’ll ultimately benefit. There are a few criteria for a good location.

For example, there should be plenty of cars and pedestrian traffic there. This means that it should be a popular place where the locals go daily.

Visibility plays a significant role in determining the success of a business. The more people see it every day, the more they know that you have a shop in the area. Thus, those who want to get something will come over and check out your collection.

3. Come up with a business plan.

A business plan should be realistic and well-suited to your goals. According to the Journal of Business Venturing, New businesses are often familiar with business plans. They are supported by universities, government assistance agencies, management consults, and other literature. Many business plans are taken for granted and should be regularly updated.

Keep in mind that it will guide you through running the business properly. There are a few things to be addressed.

First, explain what makes your company profitable and provide an overview of the current state of the market. And if new trends are popping up recently which would positively contribute to the growth of your business, feel free to write them down on the document.

Next, specify things that attract customers, like what it will do if similar shops are around. It’s also imperative to describe your target audience.

Hobby shops can cater to a broad range of demographics because there are many hobbies. The next essential step is to map out the products that will be sold at the store. You can either sell a specific collection of items or a vast catalogue of supplies.

Not every store has the resources to be a one-stop shopping place. If your shop is small, then be more specific with the offerings. There’s no need to appeal to all hobbies because there are hundreds of them, if not more.

4. Register your business name

This allows the local government to recognize the name used for operating the business. However, it’s not to be mistaken for trademark protection because they’re different.

This one is mainly for branding purposes. Skipping it will lead to your real name being picked as the default business name.

Is this mandatory? Nope.

If you want to do business under your name and don’t see any problem, go ahead. But if it’s supposed to operate as an LLC, you may need one.

5. Get necessary permits and licenses.

Your hobby shop needs to abide by the local laws. You can’t just randomly build a shop without taking care of the legal aspect beforehand.

Laws vary from place to place. In some cities, a rule dictates that commercial activity must occur within the specified limits.

This information is available in the local county. With permits and licenses in hand, you can ensure that you don’t violate any rules before launching the shop.

Next, apply for a sales tax permit. Anyone who wants to run a business that involves trading tangible items needs to obtain one.

Regardless of the type, Hobby supplies are considered tangible as we can see them through the naked eye. For this reason, get one so you won’t get into trouble from failure to pay taxes. To learn more about sales tax permits, please visit the local department of revenue.

6. Estimate the startup costs

No business runs for free. Expenses grow as your shop does. It’s not just a matter of where you’ll get the funding from, but also how it should be allocated. Having an estimate is better than having none since you never know what will happen in the future.

As a responsible owner, it’s vital to comprehend your financial position to thrive fully. There should be a good cash flow to balance things out and make you prepared for unforeseen events.

How much does it take to open a hobby shop?

It largely depends on the scale of the business. If you want to start small, the capital of $10,000 or less would be sufficient.

But suppose you’re going to diversify your inventory and sell more expensive goods. In that case, you probably need up to $50,000 of total funding.

Let’s take an example that you wish to sell diecast vehicles.

Things to consider while beginning a collection for your business include the following.

Car Size – the most common diecast models are 1:12, 1:36, and 1/43 in size (Dinky Toys).

Choose your brand:

Do you wish to specialize in Dinky Toys, Mattel, or others? Dinky Toys were die-cast zamac zinc alloy miniature vehicles produced by Meccano Ltd. Do you want to collect Lamborghinis, or do you want to collect supercars as a whole?

Period: Are you a lover of vehicles from the 1960s or 1970s or another era? Focusing on specific periods is an excellent approach to record the history of your models. It is also a perfect way to stand out from the crowds by concentrating on a specific niche among other hobby products.

The option you select will represent the cost of your startup.

Aside from that, you may also need to consider the demand. Correctly predict/analyze your future customers’ needs and desires.

In your location, how many of them would be interested in the products?

Choose items based on what your consumers want, not what you like. That’s the only way to make it in this business.

7. Find a supplier

Partner with a supplier you can trust, especially if you want to build a long-term relationship with them. Don’t limit yourself to one supplier if the shop needs a variety of products.

You can ask a few more to agree with. By having a supplier, you can stock up the shelves anytime you run out of items.

It’s also easier to get information about new arrivals when you work with a supplier to fill the store.

Another advantage is you could be offered discounts regularly. As we know, discounts are an effective method to foster a loyal clientele.

The supplier would be more than happy to keep receiving orders from you, so they return the favour by offering discounts.

Additionally, having a supplier eliminates the need for a warehouse. You can keep some of the goods in their warehouse and ship them to you when needed.

8. Step up the marketing game

A new shop needs to be marketed for people to notice it. You can spread out the message online and offline. For offline marketing, try ads in newspapers, magazines, printing brochures, etc. Online, you can set up a professional website and social media accounts.

Building social media presence helps people find you. Significant or not, some people don’t care about your offline shop as long as you have a good reputation as a seller.

Creating social media profiles is easy. All it takes is an email to register and some personal information. As for the website, design it like e-commerce or make one section for listing the whole catalogue.

Once the site is ready, the next step is promoting. It’s an uphill battle to appear on the first results page of Google because competition is high.

It takes effort to get there, but you can work with an SEO company to do it the right way. They can ensure that all tricks they pull out are compliant with the rules so that your site is safe from penalty.

Wrap Up

You should be able to get an understanding from this article of how to open a hobby shop.

Yes, it’s a tough decision to make, especially for someone who’s never got his feet wet in this business.

Wouldn’t it be easier to buy a franchise?

It’s indeed more tempting for an apparent reason. You don’t have to start from scratch. Utilizing a brand that already exists in the industry is all you need to do.

However, you may feel like creating your shop for one reason or another as you can enjoy the whole process.

The lessons learned from it will also be helpful when you want to run another business in the future.


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