What makes a LBS successful?

[Keith A]

I know the subject of LBS's come up often, but what I wanted to find out (especially from those in the biz) is what makes a LBS successful? Obviously, success can be measured in a number of ways...but being able to make a decent living as the manager/owner of a store would be a good thing.

With so many people using the Internet for their purchases, could a LBS make it by primarily focusing on service? It seems that many stores don't want to install parts that you bring in...what if the store specialized in installing, repairing and building whatever you bring in? Would this model for a LBS work?

[MattTuck]

Define "success".

There are all sorts of things that contribute to a good in-store experience including selection of product, fair pricing, know how, enthusiasm for cycling, pleasant store design, etc.

I don't know if those things by themselves are enough.

You could have all those things but be in a crappy location, or be in a city where biking isn't popular, or be going up against another shop in town that already has a well known name.


I remember a shop owner say something to the effect of, "the way I make my money is by selling $400 bikes to fatties on Saturdays."

So, I think it really depends on how you define success. Experience? Volume? financial?


I've been thinking for a while about trying to start a repair only shop. (get some start-up capital and supply some business expertise, and go 50/50 with a good mechanic).

[eddief]

margins are marginal, inventories are never enough, many people want your time donated.

i did it once. in some ways, i can't imagine a tougher biz to be in.

watch out for turning a lovely hobby into a labor of love.

[Keith A]

...I've been thinking for a while about trying to start a repair only shop. (get some start-up capital and supply some business expertise, and go 50/50 with a good mechanic).This is basically what a good friend of mine is considering doing, except he is the "good mechanic". He's not looking to compete with other shops on bike sales, but to focus on servicing bikes.

[endosch2]

I worlked as a rep in the bike industry for 7 years in two different geographies calling on mom and pop LBS's to publicly traded multisport national retailers.

In general my conclusion was that human nature is equally distributed over professions, and as far as LBS owners go 15% are super successful, 70% make up the average, ad 15% could not get out of their own way fast enough. Today I work in a much more sophisticated business and the same holds true.

There are some really good models in the whole spectrum of stores, but in general the things I would put my finger on were very good inventory management, steady capitalization and financial skills, long hours, good location, time in business, willing to advertise and promote heavily, not being small minded to get the business. There were some stores out there where a hard working owner operator could pay themselves a six figure income with a 400-500K gross, but it took mastery of a lot of skills. Those were the people I was impressed by. There are some very large independent bike shops that have revenues in the 5-10M range where hopefully people do better

[Ken Robb]

I think a big problem for shops is the huge bicycle inventory they have to carry. Just think about a Specialized or Trek dealer's need to carry a full line of road bikes. How many models are there? Start with the entry level near-comfort bike and move up through Sora, Tiagra, 105, Ultegra, DA and maybe a model or two with SRAM or Campy. Throw in a couple of "real" race bikes. Now multiply all of those models by 5 or6 sizes. Oh yeah, don't forget the woman-specific models. How many of each do you have to stock?

Now let's add comfort bikes, hard tails, FS bikes, 29ers, beach cruisers, kid's bikes, tri bike, ---I probably missed some but you get the idea.

Now every year Trek/Specialized introduces NEW/IMPROVED models so last years wonder bikes have to be discounted to get rid of them at little or no profit. I have to believe that some of the buyers of these sale bikes would have paid full price if there was no annual blowout sale. This system may stimulate sales for the manufacturers (planned obsolescence) but I don't think it does any favors for the retailers.

Giant was the first brand I remember offering compact sizing where a full range of sizes was reduced to 4 or 5 :xs-xl. This certainly helped retailers reduce inventory required: stock more stems and fewer frames and have less $$$ invested.

It's got to be a tough business.

[eddief]

and a zillion nuts, bolts, screws and small parts.

not sayin one should not consider this as biz, just consider all the variables very carefully.

then read the book E-myth.

[William]

.... consider all the variables very carefully.

then read the book E-myth.


+1




William

[Keith A]

<snip>then read the book E-myth.Any particular version? There are several by this author that seem to apply to this situation.

[TAW]

The shop I work at part time as a mechanic was given an award for the best bike shop in Kansas City by a local paper. The reasons cited were: 1. Friendly customer service and ride opportunities for new riders without a condescending attitude. (We have rides for a variety of levels). 2. Good repair work. The service manager at the shop is a perfectionist in a good way, and repairs and new bikes that roll out of the shop are fixed the best they can be.

I would say that our shop is profitable, sells quite a few bikes and seems to be doing a good business. Part of it may be that we are located in a good residential spot as well.

[eddief]

anything by Michael Gerber in that category.

[caleb]

but being able to make a decent living as the manager/owner of a store would be a good thing.


If you average the "standard" margin, you have to do huge volume to do "well".

If you can find ways to average 10-15% above average you can get by with lower volume.

My observation from both inside and outside of the business is that problems happen when the model becomes small volume and thin margin. That might seem like a business truism, but it's pretty common in shops that really want to be "pro".

[dekindy]

The right combination of location, products, services, pricing, and especially knowledgeable, friendly staff. Piece of cake! Or is that pie?

[veloduffer]

On RBR, there's a thread in the Lounge section that is essentially a diary of someone who has opened a bike shop in Indiana (near DePauw Univ.) in October 2009. It's quite interesting and has photos of the shop beforehand and after his own workspace improvements. Here's the link:
Opening a Bike Shop (http://forums.roadbikereview.com/showthread.php?t=191264)

The trials and tribulations are similar to what Grant Petersen used to convey in the early Rivendell Readers - getting suppliers, obtaining terms and credit, managing cash flow, paying yourself.

FWIW, I've donated some of my old parts (used and NOS) to his shop, as he does a fair amount of rebuilding and selling old bikes. It's better than me throwing it out and fun to see how he uses the parts.

[Keith A]

veloduffer -- Thanks for the link...that looks like a good read for later on!

[David Kirk]

I see it boiling down to something simple - charge enough to make a solid profit and make it more than worth it for the customer.

Everyone wins. Once they get into the price war they are toast.

dave

[Keith A]

Dave -- Thanks for the input. One of the things he has going for him is that he is a really good mechanic and is known for making sure things are done right. He has managed a shop for others before, so he isn't naive of what it takes to make it happen.

[Climb01742]

one bike shop that intrigues me is above category. at least from afar, that is a shop i'd love to visit/have as my LBS. i wonder how it is as a business?

http://www.abovecategorycycling.com/

[David Kirk]

Dave -- Thanks for the input. One of the things he has going for him is that he is a really good mechanic and is known for making sure things are done right. He has managed a shop for others before, so he isn't naive of what it takes to make it happen.

Long before I started heating up pipe for a living I worked in all aspects of bike and ski retail. I worked in very good shops and one particularly bad one. The good ones make money and the bad ones don't. Funny thing is that it's a feedback loop. Do your best work everyday and do not be afraid to charge for it and then you will have money in your pocket so that when the time comes to take care of a customer above and beyond the call of duty you will have the money to pay for it. The shops that do poorly watch every dime and feel they have a combative relationship with the customer and their money. When the shop and customer goals are the same the money flows with ease and everyone is happy.

There is of course nothing unique about this in terms of a bike business. I've been in the bike biz now for over 30 years and that entire time I've had people tell me that 'the bike biz is different and plays by different rules' compared other businesses. In retrospect the only ones that held this line for long were the ones who weren't making money. They are just poor businessmen and they would fail selling hardware or insurance or a lawn care biz. The good ones know that they need to know their product/service in and out but beyond that all the basic rules of business apply and that saying that the bike biz doesn't follow the rules is a cop out.

Dave

[Brian Smith]

I know the subject of LBS's come up often, but what I wanted to find out (especially from those in the biz) is what makes a LBS successful? Obviously, success can be measured in a number of ways...but being able to make a decent living as the manager/owner of a store would be a good thing.

With so many people using the Internet for their purchases, could a LBS make it by primarily focusing on service? It seems that many stores don't want to install parts that you bring in...what if the store specialized in installing, repairing and building whatever you bring in? Would this model for a LBS work?

Would you turn away from the current LBS he works under to steer your business his way?

Your answer is probably also the answer to whether or not his plan would work.

[JohnHemlock]

I would love to own a snooty bike shop full of Belgian race memorabilia and a nice espresso maker. The back would be a gathering place where the "steel wools" and the "fixie hipsters" could argue about doping and organic chain lubes. Unsuspecting consumers would come in on a Specialized Dolce budget but I would try to sell them high end Italian frames draped with SuperRecord and wheels handbilt by a midget who once worked for Fausto Coppi. I would keep erratic hours and spend most of my non shop time lying in bed drinking dessert wines with my German mistress.

[whforrest]

i live in the Bay Area and love Above Category. Chad and his crew are amazing. You walk in and everything is Pro, custom bikes, Parlee, etc. Enough Assos gear to launch a Pro Team.

One Saturday when i needed to get away for a few hours I went there for the first time and it was amazing. I think most of his patrons appreciate the passion there, and most of his clients don't mind paying full retail.

happy cycling, Bill

[oldpotatoe]

I know the subject of LBS's come up often, but what I wanted to find out (especially from those in the biz) is what makes a LBS successful? Obviously, success can be measured in a number of ways...but being able to make a decent living as the manager/owner of a store would be a good thing.

With so many people using the Internet for their purchases, could a LBS make it by primarily focusing on service? It seems that many stores don't want to install parts that you bring in...what if the store specialized in installing, repairing and building whatever you bring in? Would this model for a LBS work?

We do, plus sell metal bikes, Moots, Waterford and Gunnar. All start with a fit, then the frame is purchased, bike built at the shop. We buy No complete bikes or wheelsouttaboxes.

We recognize the market, don't whine when somebody brings in some frame and box of parts. We do everything from Di2 install on a Cervelo(all brought to us) to a 70's Gitane, brush painted brown, installed a triple crank, new ders, new wheels(27inch), tires, etc.

Our business model is that in this town, there are about 5 car dealers but about 30 car repair places. We have only 3 workers, all have over 25 years of experience in bicycles EACH, our main focus is service, custom wheels, plus custom bike packages. Works just fine in a town that has 6 bike shops w/i 20 blocks of me but those are 'bike delivery centers', not bike shops.

Find a niche, define and refine your target market, do one thing, do it well. Don't try to be like 'them', make them try to be like you. Buy what sells, what fits into your target market. There are plenty of things we don't sell, like shoes and helmets. We sell only our shop branded clothes. We let the 10,000+ sq foot stores deliver shoes, helmets, trekspecializedgiantkonafelt, etc...We are a bicycle version of Evan the tailor. We want to become better, not bigger. We tell the truth, we don't sell something just cuz we can, like the latest, hyped to the gills, whidget, gizmo or gadget.

I have a Campagnolo tattoo.

[Keith A]

Would you turn away from the current LBS he works under to steer your business his way?

Your answer is probably also the answer to whether or not his plan would work.Good point, and yes I would certainly give him my business at his new shop.

[Vancouverdave]

When choosing a bike line to sell, have the wisdom to NOT go with a "major" like Trek or Specialized--they will want to treat you like a sharecropper, not like a partner in their enterprise. There are a whole lot of excellent bike lines out there now. If they know what they're looking at, a dealer can be in the drivers' seat.

[MattTuck]

When choosing a bike line to sell, have the wisdom to NOT go with a "major" like Trek or Specialized--they will want to treat you like a sharecropper, not like a partner in their enterprise. There are a whole lot of excellent bike lines out there now. If they know what they're looking at, a dealer can be in the drivers' seat.

Better than being a "share cropper in a rock garden."

Something my dad always said to me when I was a kid, and it just went over my head... seems funnier now, your post just made me think of it.

[Jeff N.]

A successful shop, IMO, is one that speaks "high-end", and has a wrench that can do it all and not charge an arm and a leg for services. Also, a shop that keeps a good inventory of frequently needed parts is a real plus. "We don't carry that in stock but we can order it for you" is something I don't care to hear. Jeff N.

[csm]

I think having an "anchor" brand like Trek or Specialized is a good thing. they have name recognition and do actually make quality products.

[Ken Robb]

I think having an "anchor" brand like Trek or Specialized is a good thing. they have name recognition and do actually make quality products.

They are becoming more demanding as to how one of "their" retailers runs his shop. That seems to include discouraging.prohibiting carrying competing brands.

[harryschwartzma]

They will also shove a huge buy-in down your throat.

[Climb01742]

They are becoming more demanding as to how one of "their" retailers runs his shop. That seems to include discouraging.prohibiting carrying competing brands.

i've heard this, too, directed toward ousting cannondale.

[csm]

i've heard this, too, directed toward ousting cannondale.
I think Cannondale will take care of their own ousting.