Any bike shop owners here?

[gman]

What advice or experiences could you share with someone contemplating starting up a shop from scratch?

[Ken Robb]

see a psychiatrist just before you see your financial advisor.

[Ti Designs]

There is a secret to making a small fortune in the bike business...

[rwsaunders]

There is a secret to making a small fortune in the bike business...

....and if Ti tells you the secret, he'll have to kill you. I know....it's ok for Ti to then tell the secret to your wife. :cool:

[gman]

There is a secret to making a small fortune in the bike business...

Feel free to proceed at any time...

[Louis]

Feel free to proceed at any time...

... you start with a BIG fortune. ;)

[jbl]

There is a secret to making a small fortune in the bike business...

Start out with a large fortune?

[endosch2]

I worked in the previously bike business for 10 years - it is a fun product but the business is one of the most lousy, low margin, poorly returning things you could ever choose to do with your life. Try to sell a highly seasonal, inventory dollar intensive, low margin, consumer durable good that the customer only buys every 5-10 years. It stinks...

Some of the retailers are succesful (like 10-15% of them), finding a value proposition for your store is nearly impossible, especially if someone else in town has already figured out the model and is doing well with it. The companies for the most part are not very profitable, which has led to the massive amount of bankruptcies and private equity deals in the business. Consumer durable hard goods companies are cannon fodder for private equity deals that usually go south. Firm does LBO, installs brilliant MBA Team, team makes predicatable, stupid decisions like trying to grow in strange directions, company goes bankrupt, repeat..... The traditional family bike shops are getting hammered by the likes of the big boxes, destroying what used to be a regular stream of $200-500 dollar bike sales, and the high end gets hammered by mail order, and now mail order from europe.

There were so many "enthusiasts" who wanted to start "high end" shops, who after about a year of dealing with their "friends" who wasted three hours of their time to make up their mind as to whether to buy a titanium fixation bolt for their 1988 record front derailuer, just decide to go away.

Like anything, there is a bell curve of success - but if you end up in the middle of the curve you will not be happy.

[Ray]

There's a LOT more money in selling re-formulated mortgage "backed" securities to foreign investors. And when they break, there's nothing to fix!

-Ray

[ald]

Not trying to steal Ti Design's thunder, but the old joke in the industry goes:
How do you make a million dollars in the bike industry? You start with two million!

Seriously, if you are passionately motivated to get into retail, then go for it.

Do you have a vision for what your shop will be? My observation is that the shops (in mid to large markets) that focus on one niche (road, tri, mtb, bmx, family etc) have an easier time staying small (less than 1 million gross annual sales) and profitable. The more your business generalizes, the larger the overall sales volume and scope of the business will need to be to be sustainable.

If you are starting from scratch, then all of your customers will be new customers. New customers are going to come from one of two places: 1. people who are new to cycling or 2. You are going to take market share from a competitor.

If you believe there is an unmet demand in your market place for a particular niche, make sure you understand where your potential customers are shopping now. If they are Internet Buyers, for example, it may be a tough crowd. Most IB's automatically assume that buying over the internet is saving them money. Customers who are strictly price driven are hard to win over. You will have to find a way to gain credibility with your customers. All successful sales relationships are based on mutual trust.

Tough times for a start up now, but keep your eyes open for opportunities. There will be shops that are going to go under in the next six months, I can't speak specifically for your area but in general, the consensus opinion inside the industry is that there are a lot of retailers that have poor cash flow or no access to credit. These shops will in a lot of trouble. Opportunities will exist for you to take over an existing business, buy the assets from an existing business, or going after the customers from an existing business.

So my suggestion to start: 1. develop a vision 2. identify your customer 3. research your market

best of luck,
david

[William]

Not trying to steal Ti Design's thunder, but the old joke in the industry goes:
How do you make a million dollars in the bike industry? You start with two million!

Seriously, if you are passionately motivated to get into retail, then go for it.

Do you have a vision for what your shop will be? My observation is that the shops (in mid to large markets) that focus on one niche (road, tri, mtb, bmx, family etc) have an easier time staying small (less than 1 million gross annual sales) and profitable. The more your business generalizes, the larger the overall sales volume and scope of the business will need to be to be sustainable.

If you are starting from scratch, then all of your customers will be new customers. New customers are going to come from one of two places: 1. people who are new to cycling or 2. You are going to take market share from a competitor.

If you believe there is an unmet demand in your market place for a particular niche, make sure you understand where your potential customers are shopping now. If they are Internet Buyers, for example, it may be a tough crowd. Most IB's automatically assume that buying over the internet is saving them money. Customers who are strictly price driven are hard to win over. You will have to find a way to gain credibility with your customers. All successful sales relationships are based on mutual trust.

Tough times for a start up now, but keep your eyes open for opportunities. There will be shops that are going to go under in the next six months, I can't speak specifically for your area but in general, the consensus opinion inside the industry is that there are a lot of retailers that have poor cash flow or no access to credit. These shops will in a lot of trouble. Opportunities will exist for you to take over an existing business, buy the assets from an existing business, or going after the customers from an existing business.

So my suggestion to start: 1. develop a vision 2. identify your customer 3. research your market

best of luck,
david

That was probably the best advice you're going to get. :beer:



William

[JohnHemlock]

Great thread, just the proper mix of cynical humor and useful advice! This place rocks.

[victoryfactory]

If you want to really compete with the internet stores, you will
need to maintain a large enough inventory to match their prices.
That takes a big investment.
You will probably have to have a competitively priced web sales presence as well.
(That is a crowded market already)

Then you can make the argument to your customer that you are
providing pro service and price as well as saving them the shipping.

Otherwise you will probably be stuck putting baskets and bells on kids
bikes, fixing flats and trying to convince people that their mashed up
$100. walmart bike is not really worth repairing (and getting suspicious looks
from the customer who thinks you are trying to bait and switch them)

Or you could go boutique and cast your hook out for the dentists and
lawyers who want to spend 7K each.

Good Luck

VF

[fourflys]

While I'm not in the bike business, I am military and move a LOT and have to find a new shop everytime....

I agree with the above statement that you HAVE to have a viable web presence to be competitive. When I move to a new town, I get on the web and do a search for "San Diego bike shops" or whereever I'm at. Those are the first ones I go to...

After that, it's all about customer service! I'll also add that I feel it's important to somehow be linked with group rides. Even if it's a monthly ride, it gets people to your store. Maybe you can hook with a local club and offer 10% or something like that... Just be careful and don't be seen as a "racers only" shop, be accomadating all levels of riders.

Anyway, that's what I look for in shop! I have somewhat the same aspirations when I retire from the military...I just think I want to manage someone else's shop instead of having my own. :)

Good Luck!

[gemship]

a main st. shop recently went out of business this past fall. I bought a new mtn. bike a year ago over there as well as did some service and a few odds and ends. I asked the owner about business when he was still open but had the shop for sale. Of course business was slow however and for whatever reason he stated that business was good because of high gas prices. I figured his business was going downhill for a long time before the economy woes because he didn't do enough online to promote it and the town we live in is largely populated with lazy people that would rather drive their cars and think bikes from wall mart are expensive. If you love bicycles then you should be able to respect/appreciate all kinds of bikes from the low end to the high end purpose built. But to get the commoner, your bread and butter to respect a well made, set up and tuned bicycle as they would their shoes or car, that is a neat trick. It's funny because I sort of see a bicycle shop as more of a hobby than a viable business as far as a start up co. goes. All one really needs to offer a repair service is the know how,tools a little bit of space for say 10 bikes inside and room to work and walk thru and most importantly the will and time to do the service. Start up a local repair service out of your home and use craigslist as your means of getting the word out.

[victoryfactory]

All one really needs to offer a repair service is the know how,tools a little bit of space for say 10 bikes inside and room to work and walk thru and most importantly the will and time to do the service. Start up a local repair service out of your home and use craigslist as your means of getting the word out.

Interesting comment. I've often thought it would be a cool way for a semi-
retired nere-do-well (as I hope to be someday soon) To make a few bucks
by having a rolling bike repair setup, sort of like an ice cream vendor.
You could visit popular bike routes / venues on a regular schedule, put out
your sign and repair stand and viola'
Brake pads, flats, wheel truing, cables, clean, lube, bar taping etc.

VF

[DfCas]

The problem is getting wholesalers to sell to you. Most require a retail location, regular retail hours, photos, a business (non cell) phone, etc, etc.

I've had this type of part time business for a few years and can tell you that cycling makes a much better hobby than business, but I never expected to make much off of it.

[gemship]

Interesting comment. I've often thought it would be a cool way for a semi-
retired nere-do-well (as I hope to be someday soon) To make a few bucks
by having a rolling bike repair setup, sort of like an ice cream vendor.
You could visit popular bike routes / venues on a regular schedule, put out
your sign and repair stand and viola'
Brake pads, flats, wheel truing, cables, clean, lube, bar taping etc.

VF


That's a great idea VF. If one doesn't go into to the effort with the hopes to be lucrative but rather a fun experience then how can it fail? I talked to the former local bike shop owner after hearing from an acquaintance of his plans to sell out. I was actually a bit surprised, when he coyly asked me if I would want to buy the business. I was so tempted as I was in between jobs and I really love bikes. Then as I talked with friends I couldn't help but wonder what am I really buying here? The high rent aspect of the the commercial store front seemed a sure profit killer so I guess all that was left is the tools, inventory and business name. I never did ask him outright what the price of the business was, mostly out of respect of the fact that I wasn't a serious buyer. I'm sure that figure would of made Park Tool's flagship toolset seem like a bargain.

[DfCas]

Unless the owner was the only one to use the tools, you can bet they are hammered.

Cutters used without oil, stored dry, dropped on concrete, overheated. Small attachments to adapt sizes and various other stuff missing or incomplete.A lot of stuff just worn out. Be very careful buying tools from a bike shop....

[Climb01742]

here's a service i'd pay for: a really good wrench who'd come to my house to service/tune-up my bikes. a talented wrench in a well-equipped van could make i go if it, i'd bet.

[victoryfactory]

Climb;

Look out your window, I just pulled up in my new bike repair van.
But I didn't say anything about wrenches.....


VF

[William]

here's a service i'd pay for: a really good wrench who'd come to my house to service/tune-up my bikes. a talented wrench in a well-equipped van could make i go if it, i'd bet.


Some folks already making a go of it...

http://www.cycologymbr.com/

http://www.ontheflychicago.com/

http://www.midwestbicycleworks.com/

http://www.spinnersbikerepair.com/

http://www.thebikedoctor.net/


William

[victoryfactory]

Thanks
That's just another example of how I've spent my life,
coming up with new ideas that somebody else already had...LOL

VF

[William]

Thanks
That's just another example of how I've spent my life,
coming up with new ideas that somebody else already had...

VF

So think of how to do it better. :beer:



William

[jvp]

Have hot girl mechanics do the work, it works for hooters and some car washes...

[William]

Have hot girl mechanics do the work, it works for hooters and some car washes...

Or wash the bikes after and/or make espresso for the customers while they wait.



William :beer:

[jvp]

Actually my favorite LBS in town has only one employee, and that is seasonal, and it's almost always a college age girl. He says that doing that helps put like-age customers more at ease and more likely to buy something...yeah, that's the ticket....