How to Start a Sporting Goods Store

Part 1 - How to start a Sporting Goods Store business - Background

Just about everyone who engages in athletics requires sports equipment of some sort. From little league baseball to street hockey, junior varsity teams, and the weekend golfer, there is ample demand for sports equipment. Sporting goods stores stock the necessities for sports participants, whether it is baseball bats, hockey sticks, basketballs, golf clubs, ice skates, footballs, or hockey pucks.

Our guide is in 3 parts:

• Part 1 - How to start a Sporting Goods business - Background
• Part 2 - Our planner tool to see if this idea is the right fit for you
• Part 3 - Action plan to get started

What are the costs involved in opening a sporting goods store?

The entrepreneur must rent a retail space for his sporting goods store. Alternatively, he could purchase a website for his store. Additional costs include purchasing the initial inventory, paying employees to man the registers and stock the shelves, obtaining a business license and insurance, and connecting/running the utilities. A computer and high-speed Internet connection will also be necessary for inventory research purposes.

What are the ongoing expenses for a sporting goods store?

Ongoing expenses include the cost of employee wages, workers’ compensation insurance, utilities, rent, and inventory. The typical sporting goods store clerk makes around $8 to $10 per hour. If you do not want to manage the business, a sporting goods store manager will require a salary in the range of $25,000 to $35,000 per year. The monthly Internet connection will likely run between $40 and $60. If you do not want to clean the store yourself, a cleaning service will be necessary. Such a service typically costs about $120 for 1,000 square feet and upwards of $175 for a 3,000 foot space. Monthly utilities will likely run between $100 and $200 per month depending on the time of year. If you decide to rent your retail space instead of purchasing, monthly rent will likely cost between $700 and $2,000 per month depending on the size of the space and the specific location.

Who is the target market?

Sporting goods store business owners typically prefer selling to coaches of youth sports teams, junior high school teams, and high school teams. These coaches buy sports equipment in bulk so each player on the team has enough gear to make it through the year. Customers who prefer high-end sports equipment are also coveted as they are willing to pay a premium for high-quality items. Such items usually carry a larger profit margin for the business owner.

How does a sporting goods store make money?

Sporting goods stores make money by selling sports equipment at a profit. Once inventory is ordered, the price of these goods is then marked up so the business can make enough profit to cover overhead expenses and continue operations.

How much can you charge customers?

Sporting goods have a wide price range. As an example, shock absorbers for tennis rackets will sell at $5 for a pack of two. A baseball mitt can sell for upwards of $150 or more. A set of golf clubs will retail for several hundred dollars. Sports drinks will sell for $1 to $3. Keep your prices in line with the competition and your customers will remain loyal.

How much profit can a sporting goods store make?

The profit ceiling hinges on the size of your sporting goods store as well as the size of your market. If your business is operating like a well-oiled machine, it is possible to make a profit of several thousand dollars per month. If you grow at a rapid pace and reach the level of success achieved by sporting goods chains like Dick’s Sporting Goods, it is possible to make several hundred millions or more in profit each year.

How can you make your business more profitable?

One of the best ways to make money as a sporting goods store owner is to purchase used sports equipment from customers and re-sell it for a profit. Accept items in decent shape, clean them up and you will eventually sell them for more than you paid. If you are particularly knowledgeable or skilled as an athlete, you can pitch your services as a sports instructor to clients. Another idea for a related side business is to set up batting cages, an electronic golf simulator or sports-related arcade games in or near your sporting goods store.

Day-to-Day and Growth

What happens during a typical day at a sporting goods store?

Sporting goods store business owners perform varied activities throughout the day. The morning is spent preparing inventory for the day’s sales, opening the store, and preparing cash register drawers. Mid-day activities include assisting customers, fielding phone inquiries from prospective customers, researching potential purchases, and placing orders for new inventory.

What are some skills and experiences that will help you build a successful sporting goods store?

The entrepreneur must have knowledge of sports, excellent people skills, and they must enjoy the presence of youngsters. If the sporting goods store owner is unable to discuss the nuances of particular sports equipment, customers might opt to do business with a businessman who understands the intricacies of his inventory. The entrepreneur should also be a savvy marketer. He should understand marketing strategies that will connect him to target customers, with a special focus on developing a rapport with coaches and players of local youth leagues. As noted above, young athletes purchase a larger portion of sports equipment in comparison to other types of customers.

What is the growth potential for a sporting goods store?

Sports have never been more popular. An entrepreneur who sets up shop in a bustling suburb or urban environment will undoubtedly enjoy a steady stream of customers. This business has fantastic growth potential, especially if it is located in an area where families reside. A large portion of sporting goods are sold to youth sports participants.

What are some insider tips for jump starting a sporting goods store?

It is prudent to load up on youth sports equipment as many of those who visit sporting goods stores participate in little league baseball, pee wee football, youth tennis and other sports leagues. Inventory should be wide-ranging in terms of price, style and utility. Your inventory should also cater to the sports seasons. For example, displays in early spring should cater to baseball and softball plays, and football equipment should be your main concern as fall approaches.

How and when to build a team

You can’t operate an entire sporting goods store on your own. You will need help from at least one other employee when the business launches. This individual will assist with customer service, sales, stocking the shelves, ordering inventory, and even some marketing efforts. Once the business receives a steady flow of customers and you begin to make money it is time to add more employees. Add new employees on a gradual basis as there is no guarantee the business will continue to attract new customers on a consistent basis in the months and years ahead. However, it is prudent to keep enough people on board so you don’t have to work an employee more than 40 hours per week. The goal is to avoid potentially crippling overtime pay by balancing out the hours across several employees.

Part 2 - Is a Sporting Goods Store business the right fit for you?

Part 3 - Action plan to launch your Sporting Goods Store business in 90 days