BumbleBeeDave
07-24-2007, 10:56 AM
This was on the AP wire today. I just thought it was refreshing to see when I have heard so much about how difficult the bike biz is . . .
BBD
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Bike enthusiast parlays passion into thriving business
Scripps Howard News Service
Must credit Minneapolis-St. Paul Star Tribune
By **** YOUNGBLOOD
Minneapolis-St. Paul Star Tribune
When Erik Saltvold was a high school senior, his bicycle sales and repair business was grossing nearly double the salary I collected at the peak of my long and undistinguished career.
But give me a break -- the kid was already an entrepreneurial veteran by that time, having started at age 13 in a barn out back of his parents’ Richfield, Minn. home.
Saltvold, now 43, has not abandoned his precocious ways. His chain of Erik’s Bike Shops has grown to 13 stores in Minnesota and Wisconsin, with one more outlet set to open this summer.
The company’s sales, which stood at $4 million in 1995, approached $18 million in 2006, when 11 stores were open. That total is expected to reach $21 million this year.
I’ll do the math for you: The numbers work out to a compound annual growth rate of 13.3 percent, a level achieved despite the fact that 95 percent of the expansion has been financed out of cash flow, the result of what Saltvold calls “my Norwegian conservatism.”
Indeed, the company has no long-term debt, and aside from a credit line needed to carry inventory, the most Saltvold has ever borrowed was a $200,000 Small Business Association loan he obtained to finance some early expansion.
Not bad for a college dropout who concedes that he might also have abandoned high school if it hadn’t been for a distributive education program that allowed him to spend half days attending to his business.
This doesn’t mean he was a poor student, however: Despite the business and his position as goalie on Richfield’s varsity hockey team, Saltvold maintained an A-minus average through high school and was named to the National Honor Society his junior year.
He was just as successful academically in his one semester in college, before such matters as personnel, inventory and finances intruded at the Richfield retail store he opened as a teenager.
Add it all up and you have the reason behind Saltvold’s 2006 selection for one of Ernst & Young’s Minnesota Entrepreneur of the Year awards.
His business is built on broad line of high-quality, higher-priced equipment that you can’t find in your local Target or Wal-Mart. His average sale runs about $450, although prices can range from less than $150 for a kid’s bike all the way up to $7,000 for a model that offers super-light weight, shock-absorbent construction and ergonomic design, not to mention the smoothest shifting this side of a Mercedes.
Despite what some might regard as sticker shock, however, Saltvold has become the nation’s No. 1 dealer for both the Raleigh and Specialized bicycle brands, and one of the top three sellers of Cannondales.
What’s the secret? Saltvold credits a knowledgeable sales and service staff, the product of an intensive week of matriculation at “Erik’s University,” where full-time trainers preach the mantra of personalized service, passion for the sport and attention to fitting the bike to a customer’s specific needs.
Is the customer a would-be racer requiring a deep, aerodynamic position? Or a recreational rider who prefers a more upright, ergonomic style? Once that’s decided, there are the measurements of inseam, upper body length, arm span and flexibility, which are plugged into the computer to produce the precise fit.
To support this effort, Saltvold stocks more than 100 different types and sizes of bicycles. That’s the difference between a specialty shop like his and the limited array of product offered by big-box retailers, he said.
As for the cost of his bikes, Saltvold prefers to think of it as “value pricing,” the product of the company’s tough negotiations with vendors and a willingness to invest in end-of-season purchases that promise bargain prices next season.
To support this strategy, he spends about $800,000 a year on radio, TV and billboard ads featuring an “Erik the Bike Man” persona that has made his a familiar face in the Twin Cities.
Saltvold’s saga began in seventh grade, when he heard of a bicycle repair shop that was going out of business and offering a collection of “junkers” for $350. He dug into his paper-route savings and began repairing and reselling used bikes.
Within a year, however, he was selling new bicycles bought from the wholesaler who supplied him with repair parts. He used a simple formula: He’d show catalogs to prospective customers, collect a down payment and bum a ride downtown from his mom to pick up the order. Then came his senior year and the chance to take over a defunct bicycle shop on Chicago Avenue in Richfield.
“I was 17 when I signed the lease, so it was certainly a big risk (for the landlord),” Saltvold said. No matter: He still has that Richfield store.
Except it’s at a nearby location eight times larger than the original.
BBD
=============================
Bike enthusiast parlays passion into thriving business
Scripps Howard News Service
Must credit Minneapolis-St. Paul Star Tribune
By **** YOUNGBLOOD
Minneapolis-St. Paul Star Tribune
When Erik Saltvold was a high school senior, his bicycle sales and repair business was grossing nearly double the salary I collected at the peak of my long and undistinguished career.
But give me a break -- the kid was already an entrepreneurial veteran by that time, having started at age 13 in a barn out back of his parents’ Richfield, Minn. home.
Saltvold, now 43, has not abandoned his precocious ways. His chain of Erik’s Bike Shops has grown to 13 stores in Minnesota and Wisconsin, with one more outlet set to open this summer.
The company’s sales, which stood at $4 million in 1995, approached $18 million in 2006, when 11 stores were open. That total is expected to reach $21 million this year.
I’ll do the math for you: The numbers work out to a compound annual growth rate of 13.3 percent, a level achieved despite the fact that 95 percent of the expansion has been financed out of cash flow, the result of what Saltvold calls “my Norwegian conservatism.”
Indeed, the company has no long-term debt, and aside from a credit line needed to carry inventory, the most Saltvold has ever borrowed was a $200,000 Small Business Association loan he obtained to finance some early expansion.
Not bad for a college dropout who concedes that he might also have abandoned high school if it hadn’t been for a distributive education program that allowed him to spend half days attending to his business.
This doesn’t mean he was a poor student, however: Despite the business and his position as goalie on Richfield’s varsity hockey team, Saltvold maintained an A-minus average through high school and was named to the National Honor Society his junior year.
He was just as successful academically in his one semester in college, before such matters as personnel, inventory and finances intruded at the Richfield retail store he opened as a teenager.
Add it all up and you have the reason behind Saltvold’s 2006 selection for one of Ernst & Young’s Minnesota Entrepreneur of the Year awards.
His business is built on broad line of high-quality, higher-priced equipment that you can’t find in your local Target or Wal-Mart. His average sale runs about $450, although prices can range from less than $150 for a kid’s bike all the way up to $7,000 for a model that offers super-light weight, shock-absorbent construction and ergonomic design, not to mention the smoothest shifting this side of a Mercedes.
Despite what some might regard as sticker shock, however, Saltvold has become the nation’s No. 1 dealer for both the Raleigh and Specialized bicycle brands, and one of the top three sellers of Cannondales.
What’s the secret? Saltvold credits a knowledgeable sales and service staff, the product of an intensive week of matriculation at “Erik’s University,” where full-time trainers preach the mantra of personalized service, passion for the sport and attention to fitting the bike to a customer’s specific needs.
Is the customer a would-be racer requiring a deep, aerodynamic position? Or a recreational rider who prefers a more upright, ergonomic style? Once that’s decided, there are the measurements of inseam, upper body length, arm span and flexibility, which are plugged into the computer to produce the precise fit.
To support this effort, Saltvold stocks more than 100 different types and sizes of bicycles. That’s the difference between a specialty shop like his and the limited array of product offered by big-box retailers, he said.
As for the cost of his bikes, Saltvold prefers to think of it as “value pricing,” the product of the company’s tough negotiations with vendors and a willingness to invest in end-of-season purchases that promise bargain prices next season.
To support this strategy, he spends about $800,000 a year on radio, TV and billboard ads featuring an “Erik the Bike Man” persona that has made his a familiar face in the Twin Cities.
Saltvold’s saga began in seventh grade, when he heard of a bicycle repair shop that was going out of business and offering a collection of “junkers” for $350. He dug into his paper-route savings and began repairing and reselling used bikes.
Within a year, however, he was selling new bicycles bought from the wholesaler who supplied him with repair parts. He used a simple formula: He’d show catalogs to prospective customers, collect a down payment and bum a ride downtown from his mom to pick up the order. Then came his senior year and the chance to take over a defunct bicycle shop on Chicago Avenue in Richfield.
“I was 17 when I signed the lease, so it was certainly a big risk (for the landlord),” Saltvold said. No matter: He still has that Richfield store.
Except it’s at a nearby location eight times larger than the original.