How to Open a Hobby Shop? Turn your passion into a profitable business.
Are you thinking about sharing your passion with other people who share your interests? But is it possible to make a living from your passion?
It’s a resounding “yes.”
If you have a passion for anything, you could establish a hobby shop and develop it into a profitable business.
But first, What is a hobby shop?
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 common as listening to music can be called a hobby.
Another example is being a stamp collector. Some stamps are difficult to find. So when you go the extra mile to get rare stamps, 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.
Can a hobby become a profitable business? Yes, a hobby shop is an answer. If you want to know how to open a hobby shop, we’d love to give you some guidance.
How to Open a Hobby Shop
1. Review the competition
Every decision you make will 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 fishing supplies, 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 centers. 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 also benefit from it in the long run. There are a few criteria for a good location.
For example, there should be plenty of cars and pedestrian traffic there. In other words, it needs to be a busy place where the locals go daily. Visibility plays a big 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.
In addition to a brick-and-mortar store, you can establish an online presence by opening an online hobby store like hobbiestly.com. You’ll be able to reach a wider range of customers this way, even if they don’t live near your physical store location.
3. Come up with a business plan
A business plan should be realistic and well-suited to your goals. 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 catalog 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, just 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, there is a rule which dictates that commercial activity should be done 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. For more information about sales tax permits, please visit the local department of revenue.
6. Estimate the startup costs
No business runs for free. In fact, expenses grow as your shop does. It’s not just a matter of where you’ll get the funding from, but also how money 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 important to fully comprehend your financial position to thrive. 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 would be sufficient. But if you’re going to diversify your inventory and sell more expensive goods, you probably need around $50,000 of total funding.
Let’s say you want to sell RC drones; know what type of drones to sell. They come in many different styles, including quadcopters and octocopters, and each one has its own unique physical characteristics. Drones are also classified by size, with some being significantly smaller than others. You can even find drones that are not bigger than your hands.
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 make an agreement 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 favor 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. Large or not, some people don’t really 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 catalog. 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.
Hopefully, this article can give you an understanding of how to open a hobby shop. 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 just buy a franchise? It’s indeed more tempting for the obvious reason that you don’t have to start from scratch. All you have to do is take advantage of an already established brand in the industry.
However, you may feel like creating your own shop for one reason or another as you can enjoy the whole process. The lessons learned from it will also be useful when you want to run another business in the future.