I seriously considered opening an LHBS. I live on an island with heavy tolls on every bridge. Our only close-by LHBS' are in Brooklyn or NJ. The ones in BK are great, and I work in Brooklyn so the tolls are a wash, but there is certainly a market here for an LHBS. NYC is much more mom and pop oriented than many people would realize. Chain restaurants and stores are the exception here (restaurants especially). Local is good and it works. In a place where driving 5 miles can easily take 45 min, having a store nearby is very important.
Some light research led me to a few points:
1. It's a low start up cost business. Basically just location and some inventory. If you go light on the equipment at first, start-up costs are nothing compared to other businesses. As for location, you really just need a storefront and some shelves and a table, both of which can be built cheaply. The only necessary "expensive" equipment is a computer or two, a fridge, and a mill.
2. There is very little, if any, permitting involved. NYC requires some stuff, but I bet many other locations require nothing beyond the basic business paperwork and a little insurance.
3. Employees? Maybe one? Hours? Doesn't even have to be open for the entire day. Being that an LHBS is a narrowly targeted business, limited hours are acceptable. This is huge because it means an LHBS can be run as a side job. My LHBS of choice started out with very limited hours and prospered to the point that they now have a great store in a high rent neighborhood with multiple employees and full hours. Better to test the waters to see what the market requires before jumping in full-bore.
Handled correctly, I feel that running an LHBS is much more desirable than being involved in actual brewing. I know that some people just have that passion for putting their beer into other people's hands, and good on them, but I don't. To me, it's about bottom line, and an LHBS seems like a much more practical brewing-related business to get involved in.