How to Start a Hobby Shop

It may seem like an unrealistic and unachievable dream, but once you follow the right guidelines and implement them, this far-fetched dream will become a reality. Read on to acquaint yourself with an expert-compiled guide on how to start a hobby shop. And if you are wondering how much it will cost you to open a hobby store and the retail insurance you will need to purchase, then worry not as we got you covered through this article.

How Much Does It Cost to Open a Hobby Shop

Before you learn how to start your own hobby shop, it’s crucial that you know how much it will cost you to open and run a self-sufficient hobby store. Below is a breakdown of the startup costs you should expect to incur:

Employee Payroll

New enterprise owners should set aside 25% to 50% of their total budget for payroll costs. For example, if your total budget is 300,000, then you will likely spend $75,000 to $150,000 as the startup cost of your employee’s payroll.

Hobby Shop Inventory

You should allocate between 17% to 25% of your hobby store budget to inventory. For instance, if your total budget is $100,000, you need to set aside at least $1,700 to $25,000. It’s important that you calculate the quantity of inventory you will need to sustain your hobby store. You can do this by gauging the total sales you make in a day, week, or month and the frequency and return purchases of your customers.

Hobby Store Equipment

For you to start and run a successful hobby store business you have to invest in the necessary equipment. You are likely to incur $10,000 to $125,000 as the startup cost of purchasing and installing equipment in your hobby store. Below is a table showing the use and average cost of the must-have hobby store equipment.

Cash registerReceiving payments, calculating the due change and printing out receipts for your customers$100 to $1000
ComputersData storage$600 to $1000
Cleaning tools and supplies (mops, buckets, detergents, vacuum cleaners)Cleaning your store$100 to $680 per year
Landline telephonesReceiving customers’ orders and communicating with employees in different departmentsFrom $20
Pricing and tagging gunsLabeling prices of your merchandiseFrom $100
Barcode scannerScanning the price of your hobby shop merchandize$50 to $500
Shelving racksDisplaying your productsFrom $19.60 to $28.98 per foot
Security camerasAids in monitoring the activities happening in and outside of your hobby store$75 to $150. Installation cost is approximately $150 to $200 per camera
ShredderHelps you to destroy your shops confidential details that are written on paperFrom $200
Shopping cartsHelps your customers to conveniently carry products before they make a purchase$125 to $200
Trash cansThrowing waste produced in your hobby store$0.03 to $1,729

Incorporation Fees

It's possible to operate your hobby store as a sole proprietorship business. However, we recommend that you incorporate it into a legal entity. Below are the fees you are to incur when you incorporate your business into an S corporation, C corporation, or LLC (limited liability company). 

  • You will pay approximately a fee of $100 to $250 to file the articles of incorporation with the secretary of your state.

  • You will pay an average fee of $800 as a first-year franchise tax prepayment.

  • You are likely to pay approximately $500 to $700 as the attorney’s fees.

  • You will pay between $50 to $200 as fees for various government filling when incorporating your hobby store business.


There are many business-related risks that can cause your hobby store to shut down suddenly and permanently. Fortunately, you can prevent this by purchasing insurance policies that will cover you against insurable perils. The cost of purchasing the necessary insurance policies for a hobby store is approximately $1,200 per year. Please note this cost may go up or down depending on the level of risks your business is exposed to and its size.

Marketing and Advertising Costs

For your potential customers to know about your existence as a hobby store retailer, you ought to market and advertise your company effectively. You can either advertise and market your hobby store through:

  • Business cards–This will cost you at least $50 and above

  • Direct campaigns, printing, and mailing–This will cost you approximately $300

  • Google ads–You are likely to spend $300 on this marketing strategies

Website Costs

Through your business website, potential customers across the world will have an insight into what type of hobby products you sell as a company. Hence it's vital that you invest in a professionally designed website. It will cost you approximately $12 to $200 to obtain your website’s domain name. A professional web designer may charge you approximately $200 to $6,000. Website hosting services cost, on average, $300.

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How to Start a Hobby Shop

Embarking on the journey of establishing how to start a hobby shop opens doors to a world where passion and commerce converge. As a curator of interests, a hobby shop allows enthusiasts to explore, discover, and acquire the tools of their chosen pastime. 

Whether it's scale models, crafting materials, collectibles, or niche items, a well-crafted hobby shop not only provides a retail experience but also fosters a community where like-minded individuals can connect and indulge in their shared passions. 

This venture requires a careful blend of market insight, curation prowess, and a dedication to kindling the flames of hobbies for individuals of all ages and inclinations. Below are the key steps to transform this vision into a thriving reality:

Identify Your Target Market

Identifying your target market is paramount when launching a hobby store business. This involves delving into comprehensive research on your competitors, understanding their operations, peak seasons, suppliers, marketing strategies, and employee compensation. 

Equally vital is studying the demographic composition of your chosen business location, considering factors such as age, gender, education level, and income status. This thorough assessment enables you to align your offerings with the preferences and purchasing capacity of your potential customers, ensuring a seamless connection between your products and the enthusiastic individuals seeking to embrace their hobbies.

Identify a Niche in the Market

After identifying your target market, you need to identify a niche in the market and develop ways to use the niche to your advantage. By identifying a niche, you can minimize competition, reduce your marketing and advertising costs and exercise monopoly. 

You can identify a niche in the market by conducting surveys or asking your potential customers what they would want to find or purchase in the available local hobby stores. You can also have a look at the reviews left on your competitors’ website and see what it is the customers want.

Select a Sustainable Business Location

For your business to thrive you must set up your hobby store in a sustainable location. A sustainable location is accessible to suppliers and customers. It also has to attract potential employees, and not limit the expansion of your business. 

The governing laws and taxes must also be accommodative in that they are not stringent to make you lose profit or spend so much on production cost. Please note that your business location can either make or break your business, so take your time and choose it wisely.

Give Your Business a Name

You must give your business a name that is professional and easy to remember, spell and pronounce. Your business name must be relevant to your hobby store business. For instance, you don’t expect to name your hobby store ‘quick fries’ and expect your potential clients not to confuse your business with a fast-food shop. We recommend that you choose a business name that directly tells your customer what you sell.

For instance, if you choose to sell games in your hobby store, you may name your business according to the games you sell the most. And if you choose to specialize in selling dolls, you may name your business according to the dolls you sell. 

Also, make sure that you don’t choose a business name that’s already being used by another legal business entity. You will not only confuse your customers, but your business is likely to receive a lawsuit for copyright infringement.

Get Your Funds in Order

Securing adequate funding is a pivotal step in launching and sustaining a physical hobby store. While self-funding is an option, alternative avenues can also be explored. One approach involves seeking venture capital from credible investors whose interests align with your business concept; this may entail relinquishing partial ownership or involving them in decision-making. 

Crowdfunding offers an alternative route, where contributions from a diverse group of individuals can help fund your venture, without the need for relinquishing ownership. Platforms like GoFundMe, Indiegogo, and Kickstarter facilitate this method. Additionally, acquiring a small business loan from financial institutions is viable, provided you outline a solid repayment strategy. Safeguarding personal assets can be achieved by structuring your hobby store as an S corp, C corp, or limited liability company.

Meet All Your States and Local Hobby Store Licensing and Permits Requirements

Compliance with state and local regulations is essential to legally establish and operate your hobby store, necessitating the acquisition of specific licenses and permits. Depending on your location, you may need a fire department permit if your inventory includes highly flammable items. Erecting signs or signage requires sign permits, while a seller's permit enables you to sell taxable products and collect corresponding taxes. If operating from home, a home occupation permit might be necessary. For businesses operating under a fictitious name, a Doing Business As (DBA) license is required. Before launching, secure a business operation permit, with associated fees varying by state.

Obtain the Necessary Hobby Store Insurance Requirements

Neglecting necessary hobby store insurance requirements can lead to business closure, legal trouble, and fines. To ensure compliance and protect your venture, secure the following insurance policies from a state-certified provider: general liability insurance for product manufacturing and distribution, professional liability insurance for advice provision, commercial property insurance for valuable inventory or risk-prone locations, commercial auto insurance for business vehicle use, workers compensation insurance for employee coverage, and a business owner's policy for comprehensive coverage, particularly suitable for smaller enterprises.

Market and Advertise Your Business

Effective marketing and advertising are instrumental in attracting new customers, fostering return purchases, and even capturing potential investors. These strategies uphold your business reputation and relevance. Thus, devising cost-effective and efficient methods for promoting your hobby store is crucial. Consider crafting and sharing high-quality blog content on your business website, participating in local events, and utilizing social media platforms like Instagram, TikTok, Facebook, and Twitter to showcase your products. Additionally, tapping into Google Ads can further bolster your visibility and engagement.

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Insurance Requirements for Boosting Income

Once you've grasped the essentials of how to launch a hobby store, it's prudent to delve into insurance requirements as a means of enhancing your income potential. Adequate insurance coverage not only safeguards your business but also contributes to its financial growth and stability. By comprehensively protecting against various risks, you can confidently focus on expanding your hobby store's offerings, engaging with customers, and exploring innovative avenues for revenue generation.

Business Owner’s Policy

A Business Owner's Policy (BOP) is a vital insurance consideration for small hobby shop enterprises with less than 100 employees, combining general liability and commercial property insurance coverage. 

This comprehensive policy protects a range of scenarios, including client lawsuits due to property damage or bodily injuries from your merchandise, destruction caused by fire, theft, vandalism, hailstorms, and windstorms to your commercial buildings and contents, and third-party claims for copyright infringement, advertising injury, or personal harm. 

NEXT offers tailored and affordable BOPs to small business owners across all 50 states, ensuring comprehensive coverage for your hobby shop venture.

General Liability Insurance

It's also known as commercial general liability insurance and business liability insurance. This policy exempts you from financial liability and claims in case the services and the products you sell, distribute, or manufacture causes unintentional third-party bodily injuries or property damages. It also covers your business against the following lawsuits: copyright infringement, advertising injury, and personal harm. Thimble is among the best short-term general liability insurance providers in the US.

Professional Liability Insurance

Professional Liability Insurance (PLI), also referred to as errors and omissions insurance, is a vital consideration for a hobby shop. This commercial policy safeguards both you and your employees against claims from third parties asserting errors, oversights, or mistakes in your professional service provision. 

If a client alleges breaches of contract, professional misconduct, missed deadlines, or violations of good faith, this insurance covers legal expenses. Hiscox, an A-grade insurer, offers worldwide coverage for PLI, making it a recommended choice.

Commercial Property Insurance

Commercial Property Insurance is a critical consideration for safeguarding your hobby shop. This policy shields you from the financial burden of repairing or replacing commercial buildings and their contents in the event of fire, vandalism, theft, windstorms, and hailstorms. It's important to note that certain events like floods, earthquakes, commercial auto accidents, acts of war, and terrorism are typically excluded from coverage. 

To manage this risk, CoverWallet stands out as a reliable insurance provider for acquiring and managing your commercial property insurance policy, ensuring your hobby shop's physical assets are well-protected.

Commercial Auto Insurance

Commercial Auto Insurance is a crucial consideration for hobby shop owners, with the exception of New Hampshire and Virginia. This policy relieves you from financial burdens and claims under various circumstances, including being at fault in causing bodily injuries, property damage, or death to a third party. 

It also covers damages due to fire, vandalism, theft, hailstorms, windstorms, landslides, hurricanes, earthquakes, collisions, and bodily injuries sustained by you and your passengers. Additionally, in cases where an uninsured or underinsured motorist is involved, Tivly offers customizable and user-friendly commercial auto insurance tailored to small hobby shop businesses across the US.

Workers Compensation Insurance

Also known as workers comp insurance. It's only in Texas and Wyoming where employers do not have to pay/purchase this insurance policy. Through this policy, your insurer caters for your employees’ medical expenses following a work-related injury or illness. Your insurer will also compensate your employees for lost wages through this policy. 

And in case of partial or total disability and dismemberment, your employees will receive compensation through this state-regulated scheme. Survivors of a deceased employee will also receive death benefits via this policy. 

The Hartford offers unmatchable, discountable, and adjustable workers comp insurance policies to enterprises of all sizes in the US.

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