Advice on opening a train store

in my opinion you can't pay rent and salaries and make a living selling just trains. there has to be more. trains would be nice to sell, but there has to be a regular business such as a hobby store, or a hardware store, or supermarket (Wegmans) for example. now selling online with out all the overhead of a store might make you a living.

What with all of the so-called brick & mortar "Train Stores" going out of business & closing up, you just might want to rethink that.

Yes.    Well, you asked.

 

Best, SZ

DON'T

 "I would open it in my community which is a VERY affluent area in Southern CA. The area straddles the LA and Ventura County boarder and while affluent the problem I see is that SO CAL isn't exactly the most happening toy train mecca in the US."

 

    I'd look for something that all those well to do folks want , not just the ones interested in trains. Probably something gourmet or otherwise overpriced, they seem to eat that stuff up.......DaveB

I have no business background...but i am a customer...

 

I have no idea what the O gauge market or competition is in southern Cali....but I would also think having a comprehensive model/hobby shop makes sense.

 

I live in south Florida and I know of only 2 stand alone o gauge shops I am aware of in our metro area of 6 million.  1 in Miami Dade and 1 in Palm Beach.  (EDIT: actually the Palm Beach one has a fair share of O, but also some G, ho & N.  it also does some slot cars and modeling kits I think...i just go for the O so I forgot that it had other stuff there I may have missed in my original reply)

 

I see a few local RC shops so maybe adding that 2 the mix might help along with internet sales.

 

Straddling the LA/Ventura area I'm thinking Agoura/Thousand Oaks/Simi Valley/Carpenteria and there is lotsa money in that area.

 

I not a business mogul and unfortunately have no advice but if it happens for you I wish you all the luck. I drive that area a lot from the Pismo Beach area to family in SoCal and this area is STARVED for model train shops as is most of SoCal. My usual stop is the Train Shack in Burbank.

The famous HO modeler, Howard Zane, wrote an excellent book - "My Life with Model Trains".  You might be able to find it on Amazon.  Part of the book discusses his adventures as a train store owner and why he no longer owns a store.

 

I think you should visit as many of the SOCAL train stores as possible and speak to their owners about the business.   It isn't an easy business.  It requires capital and a huge time commitment from a sole owner.  You need to decide if you really want to make the commitment and take the risk.

 

Joe

 

 

I tend to agree with scrapiron.  The overhead can kill a train store.  Unfortunately, there's a lot of overhead if you want to keep an attractive stock.  You've got to compete with internet sales, and the margin will get cut to the bone.  Now if you became a very skilled tech and worked from home, you might make it.

Dont do it!

RESEARCH! RESEARCH, & RESEARCH!  Before you outlay ANY capital. IT will be a tough hill to climb. Remember with a Brick and Mortar, you can't always rely on walk- ins. Internet - pics, up to date inventory, and POI is a must! Also note costs of expenses from rent, utilities [ they are NOT the same as residential- or even close], taxes and tax forms to file- any pollution fees from the state?

 

Can you flip your stock by the end of the year? IF not the feds tax that!

Are there any train shows you can attend to sell to "test the waters" first?

 

Check with your accountant re paperwork and forms to file for this. Also you need to research your demographic... a la John Taffer in Bar rescue. You will need to be nearby an area with high disposable income and families/retirees.

 

Good Luck!

Roy,

Go talk to Jerry at Mile Post 38 Trains in Anaheim/Yorba Linda off the 91. A fine store and a genuine first class guy. Heck, ask him for a job before you jump in the deep end.

Tim

 

First, I know nothing about running a retail store, but...several in large cities within

a hundred miles here in the midwest, have closed.  There are "my LHS just closed"

postings on here all the time.   I used to hear storefront dealers complain, "There is

too much product".  (I didn't agree, there was too much duplication of the same old

prototypes.) Two of the closed ones I am aware of, had empty shelves, and backordered product=nothing to sell.  The only thing that passes for a hobby shop

nearby is mostly radio control auto models, with planes, and, unusually, little HO,

and more, but little, Lionel.  (catalogs there you can order from).

Do Greenberg or Great American Train Shows have big shows in your area that draw

crowds?   Are those affluent moms pushing lots of strollers with tag along kids through those shows?   I know that TTOS was HQ'd in that area and had leadership there.

Are there other shops nearby?  The one famous Lionel store in L.A., which I visited

once, is closed.  When I have run around Calif. visiting train shops, the one up

above Sacramento had the most "tinplate".  I didn't FIND, maybe I missed, that many..

one down toward Monterey from SF had no O gauge, as one or two others in central

Calif.  I would think you'd have to be a full line hobby shop with a lot of HO to make

it as a storefront.  The several in the east are in high density population areas with

a long history of interest in trains. A number of those have a lot of mail order business.  Near Silicon Valley there, the kids may all be computer game geeks.

In an affluent area, cheap real estate for a store, may be hard to find.  I hope you

have attended a lot of local train shows to get a feel for how much traffic and interest

there might be.  If I was going to get into model/toy trains as a business, I would

manufacture something not made (there is a LOT in tinplate), but that would be a more

expensive start-up than a retail store.  The one O scale store up north of Detroit is

into the mfg. end, with diesel models.

Also, if O gauge only, it is going to be seasonal....boom in fall before Christmas, bust

through the summer while the overhead bills keep coming in.

This is all from the outside looking in, and may be too negative, but that is what I see.

If you want to make a small fortune selling trains, start with a large fortune. 

 

Imo come up with another idea.

Just do it!

 

But before you do.... do your homework!

Location, Location, Location... Lease, advertisement, Host an event.

Have a STRONG web site to support your store

You may want to EBay as well

Provide repairs!

Diversify... Lego's, RC, models, Kids learning games... its a must.

Make an operating Layout.

Host train shows and a public event.

Holidays are your bread and butter, prepare for longer hours... summer will trail off so hopefully the web site and other kids toys will sustain your business.Buy collections repair/restore and sell.

Specialize in something only you can provide:

Custom cars,

Custom molds,

Electronic upgrades

Layout survices

 

Just some ideas.

 

 

Remember no risk no reward!

 

Good luck and have fun.

 

 

 

Tim, MP38 aint there no more. He sold it off to another shop that combine MP38 with their store. Jerry pulled the pin.

Roy,

 

There is no replacement for doing the math.

 

Get your pencil or spreadsheet out start listing all the debits and credits.

 

Find out what rent costs, find out what train distributors charge, for out what advertising costs, etc...

 

Then the fun part, estimate your sales volume.

 

It aint Quantum Mechanics just My Dear Aunt Sally.

 

 

 

 

 

Arnies Trains in Westminster. They moved MP38 into a building next to Arnies and called it MP38 Toy Trains, specializing in O and G..... ehhhh not so much.

My degree was in electrical engineering and some how managed to get into test instead of design. In 1998 I thought I really had a good setup, a company that made custom test equipment solutions, ran by three former employees of Motorola. The first of three owners was a whiz bang at RF, the second with baseband, Matlab, printed circuit board design. The third was good with programming and business management. In 2003 the company went out of business. All employees went on to something else, the last owner now runs (successfully) his father's auto body repair shop. For the life of me, I can't figure out why the company went out of business, other than some general thought of "You can't just do contracting, you have to have a product." The other blame is/was the economy; so many other businesses went out, but others stayed.

 

My point is? Until I can explain why that company went out of business, I have no business going into business.

 

Personally, if I was to go into anything related to model trains, it would be buying somebody else's existing business, to include some hand holding. For example, the way how MegaSteam changed owners.

 

Ain't no way I would like to try to compete with the likes of Charles Ro, Nassau, Delaware Trains.

Intriguing topic.

 

In just a handful of replies you've probably already received most of the suggestions that I would make but what the heck:

 

1. Talk to some existing brick and mortar train dealers in your area or close by. Not any of the big boys but more of a local dealer. Somebody that's been doing this already is going to be a fountain of knowledge.

2. Diversify. Not sure any "hobby" store dealing in one area can make it anymore.

3. If you do go forward with this, you're going to need an excellent, well-designed, & easy to use web site. Online presence is mandatory. That's your front door as much as the one off the sidewalk.

 

 

Roy first off i would not ask for advice on this forum or any other forum as you have too many people who have never been in business telling you what they would do. starting a business is something that takes time and planning to do and should not be approached lightly.

a business' success is based on demographics for a brick and mortar store if you are looking for walkin clients, if there are no train clubs in the area you may be in an area that might not support your store. when i opened a quick lube the oil company did a study to see if there would be enough business to support it i actually doubled what they said i would do on a daily basis.  you can't base success on young moms and thomas trains young people use the internet and look for the best price. read this forum and see how everyone looks for the best price, for a storefront with overhead its hard to be a price leader.  plus the hobby business is a tough business to succeed in you need to have a large mix of hobby items not just trains to draw customers.

i have a lot of business experience been self employed since i was 29 after running the 3rd largest Motorcraft warehouse in the world. and i tell everyone that being in business for yourself is very fulfilling, but you have to remember your customers and suppliers are really in charge of your success. you can only guide the business in a way to make them happy.

if you have been in corporate America you may want to look at a franchise business as that is more structured to aid in success, but approach that carefully.

lastly if you make your hobby a business you more than likely will lose the love for the hobby. make decisions wisely after thinking carefully as you can lose an investment quickly. best of luck to you.

  

 

The expense involved in Southern California, and the fact that most of them that we did have are gone..... unless you have a ton of disposable income, it would be a money losing venture for sure. Most of us that live here buy online at discounted prices. I wouldn't even consider buying Legacy or Vision Line locomotives at full retail. CA is just NOT a good place to do it, but is there a good place any more?

Hi Roy

 

Your first post and a question since you joined the site in 2007.

 

 

56 years young (nice)

 

VERY affluent area in Southern CA

 

Roy!

 

I hate to give advice on someones MAJOR life decision. Personally I think you would make more money for your family if you joined the Marine Corp.

 

I'm just trying to be funny and realistic at 67 + not a A hole.

 

Don't do it now days.

 

I sure wish you wanted to in East TN.

 

Larry

 

PS Semper Fidelis.

 

 

 

Maybe it has been said and I missed it, but I think really understanding the demand side of the equation is also key. I agree with the comments that suggest having a specialty is important. But if your main business is moving merchandise, I would invest significant time in understanding every aspect of supply and demand for trains and the retail industry in general. Trains may have a smaller following, but a lot of the issues store operators are facing are the same as those faced by other retail businesses. Get to understand what is selling, why, how do people want to buy it, where are trends heading and how might technology or other factors change behaviors in the future. The big toy shows, retail shows, even the Consumer Electronics Show, etc, all might be good places to meet people and gather some of these insights.

 

Good luck to you.

Years and years and years ago I bought trains from the big mfgs and tried to sell them at train shows  and flea marts.  I did ok but couldn't make a living at it.

 

I often considered doing it again when I retired (retired now) but I would only do it if I owned the building or had it in my basement.  If I owned the building I would also have some other tenants to help pay the mortgage and utilities on it or had some other business along with it like maybe a pizza shop.  Hmmmm pizza and trains.

 

Rick

Well I asked my wife the shrink to read your post, when she stops laughing I will give you her thoughts.

Me, I say go for it!

 

ps, you may want to wait for a more friendly business administration to take office.

Which may give you some time to rethink it.

Don't.  

 

Just don't.

I applaud your guts and ambition, but wouldn't you rather enjoy your hobby?

 

How often can you hear "I can get that $X cheaper online" before you go bananas?

 

My LHS can survive because of a unique business model.  The ones that are doing OK seem to do so with a low-rent location and strong web sales.  Most are struggling.

Too much is being sold by the big advertisers on OGR and other mainstream advertisers over the internet.  You cannot compete on price. A local train shop cannot offer the same discounts. Too much overhead.

 

Just 3 full time train stores in the greater Kansas City area that carry a good stock.  One store is strictly N and HO and has a very large inventory.

 

Another store carries all scales and has a very heavy investment in inventory including O.

 

Selling on Ebay and the OGR forum is a good place to start a business on a part time basis.

 

Best not to give up your daytime job.

 

Before you make a move, go to a smaller, local train show (not York).  Look at all the guys who are dealers trying to eke out a few bucks competing with each other.

Roy,

 

My advice don't do it,  consider your investment in inventory for different modeler age groups and scales, estimated profits from sales and monthly store rental, utilities and insurance costs. My career was not in marketing/sales but an educated guess is that you would have to move allot of train inventory per month to cover operating costs and a reasonable profit.

I know of one hobby shop in Lake County,Indiana that sells to a local consumer market and had been in business a number of years they sell plastic model kits, HO engines and cars and RC model air planes and helicopters  in kit form and assembled plus RC supplies and a very limited supply of 3 Rail cars,   

 

John 

Forum member Jimmy Sutter ran one of the most successful brick and mortar train stores on the east coast. If it where me, I'd contact Jim and pay him for a few hours of consultation.

The key take-a-way with Jim is he retired on his own terms, he did not close because of bankruptcy or other financial difficulties.

just a thought,it is easy for me to spend your money. Good luck.

 

Brad

BradF,

   I agree totally.

PCRR/Dave

Been in business all my life, It's tough.

 

If you decide to go for it, I wish you all the best in the world.

 

Casey.

A few things that I have learned in my short time of owning a business.  First I want to mention I opened my store to have fun and not for income although I would like not to loose, breaking even would be just fine for me so there is no pressure here.  Start up costs are high.  A lease, signs, shelving and fixtures, insurance, accounting, computer, printer, credit card terminal and service,  website, etc.  All of that has to be covered before you will make a dime.   Then comes your inventory, big $$$$ and advertising.  Get in touch with Lionel to see if they will allow a retailer in your zip code area before you do anything.  Competing with internet pricing I find to be the hardest part of the business.  Now knowing what my costs are for the same products, it's hard to believe some of the pieces out there.  If you want to hear more of what I have done, feel free to e-mail, my profile has the address.

 

Bum

If you insisted on selling trains, I'd forget about a brick and mortar store. I'd fill your garage with stock and design/ advertise a really good website and concentrate on mail order.

 

I'll hazard a guess that most of the 'big players" selling trains sell the majority of items online.

 

Having said that, you'll have to be able to under cut them by a few dollars and still provide solid service.

 

Theres only a few " smaller" dealers that have been able to do that. Marios Trains and Mr. Muffin come to mind. Maybe they would be willing to give you advice, of course, your their competition.... maybe not

It's funny most are saying "don't". Honestly we need more friendly and well ran train stores.  If you do it remember that all it takes is one bad transaction and the word will get out.  Some shops have lost thousands of my dollars because of this

The thought of opening a store has crossed the minds, at one time or another, of possibly close to 50% of model railroaders.  I would suggest starting with a virtual store (e.g., eBay) to gauge your sustained interest before deciding to open a brick-and-mortar store.  Maybe initially enter a co-location arrangement with an established entrepreneur if you have a psychic need for face-to-face contact with customers.

 

You may be on the right track (no pun intended) in one respect.  I read one pundit's thoughts elsewhere today (see link below) that people don't want to spend money on stuff anymore, they want experiences.  However, we had a recently former store owner here last week who said experiences alone won't pay the rent.

 

Good luck whatever you decide to do.

 

http://finance.yahoo.com/news/...gling-143624443.html

 

 

 

 

What, me worry?