Pros & Cons of Owning a bike Shop
*Disclaimer: I apologize if this topic is redundant to the point of being beaten to death*
In my seven years since university I don't think I've found my true niche. I presently work as a Supervisor in a car plant, and make better than average dough for a guy my age I suppose. I have some job satisfaction, the remuneration is great, and I work pretty close to home, but all I think about is Bikes!
Quiting a job where I support my small family(wife + 2 l'il kids) well to make 1/4 of what I make presently(per hour) seems selfish. However, I've gotta hunch that doing something I'm passionate about will make me a better, man, father, husband, etc.
Additionally, I've still got student debt. Do you need to have money to make money in this industry.
I would greatly appreciate any and all input. Thank you.
Originally Posted by Biggie
You may not have found your niche (it was in my mid-30's for me), but you have a scenario where you can save money and retire debt. I have my own business, but there is no way I could have started it with any significant debt, and without a lot of family stability.
If your passion is bikes and a bike shop do not discount the importance of book keeping, budgeting, sales skills and _always_ being willing to do the right thing. A successful business gets everything right not just the reason for opening up the door.
Before I had my own business I spent weeks to months each year biking, skiing, river running and fishing. Now that my business is actually making money and supporting my family I'm lucky if I can be away for more than a few days once or twice a year.
You have a lot of weight on your shoulders, and it's not the same as just being a supervisor - I've owned a business twice, and also been a supervisor in both union and non-union places. I do get short-term flexibility and satisfaction that comes with making it on my own.
I know bike shop owners who are successful, not so successful and downright failures. The successful ones are good at MUCH more than knowing bikes or having a passion for them.
Good luck, but get rid of debt one way or another and save money early in your life no matter what I do.
P.S. Also be prepared for very little bike riding in prime season if you're getting others on bikes and fixing bikes.
Last edited by bitflogger; 02-12-2006 at 06:26 PM.
I know nothing about starting a business, but I would imagine a bike shop would be a risky venture. Depending on where you are located, you would have to consider the seasonal variances in sales (eg. winter time). Also you would be spending a serious chunk of time running your shop, meaning less time on your bike (and time with your family). Having said that, in the right location and with the right community it could be successful. But wouldn't it be nice to wake up everyday surrounded by bikes!
Thank you kindly.
Thank you guys. Bitflogger thank you especially for an excellent reply. I think your first paragraph was eloquent and right on the money. I'm 34 yrs old & still mired under 30k personal debt. I think I will set the goal of being in the position of starting a bike shop at 40 years of age. Hopefully, I can pay off my house, pay off my debt and contribute to my retirement by then.
Originally Posted by bitflogger
My Major was Economics and my Minor was Business so I really think I have the skill set necessary for this most noble of endeavors.
I'm new at my present job so I only get two weeks vacation/year. Also, I usually only take Sundays off - so I'll be ready for the long hours. I'm planning to actually stay there, God willing on night shift, for the first few months so I wouldn't have to pay myself right out of the blocks.
Capun_Canuck - you're correct, one of the bike shops in my town doesn't even open in the winter...so it certainly is seasonal business in Canada. Maybe I'll sharpen skates as well.
I am all for it but I love this quote
"The best way to make a million dollars in a bike shop is to start with two million"
I work for a shop right now that is just myself and the owner. He knows the road stuff really well and I know my fair share about mountain biking. There are two other shops in the city (Concord, NH) and I feel (and so do our customers) that we are the most knowledgeable. We know a lot about other manufacuers that we don't carry and its super helpful when you compare apples to apples for people. Show and Tell them that you are carrying the best. But the winter has been super hard for us. It snows a lot and he didn't have the capitol to get into ski tuning this year so we have been scraping by but from everything we have seen and heard around town, the summer will be good to us. I went to UBI and learned a lot about running a shop and the owner has worked in shops around town for 5+ years so we both know how it goes. Its a tough venture and only a small percentage make it past 3 years but if it works for you, the future is very rewarding! Just remember that the customer is always right (you are going to HAVE to pricematch to on-lin mail order, no way around it) and people will respect you and realize you have to make a buck. Best of luck to you if you go down that path!
Pro - You can get big discounts on bikes and stuff
Con - Generally, as a small business owner you have to work long hours to make the
numbers work, this leaves you little time to enjoy all that discounted stuff .
It usually takes a few years to get your shop going, so be prepared to wark hard for not so much money in the start.
As was said before me, if you're thinking about starting a bike shop, you have to be prepared to do some sacrifices in your riding schedule.I found I have no time at all for biking during the week in the season.I start working at 9am (sooner if there are lot of bikes to repair) and close the shop at 6pm, but usually stay in the shop untill 8-9pm to do some more repairing.I work alone, and at this point cannot afford to somebody to help because of the extremely short season last year (due to the bad weather and cold that came sooner than usual).
On the other hand, if you do good during the season, you can have lots of time for doing stuff you want during the off-season But it's still a bit irritating not being able to go biking when all your friends go
Pro - You will have lots of friends.
Con - All your friends will want free stuff and expect discounts.
Been there done that. Sometimes when you make your passion your business you lose your passion.
Extremely risky venture, long hours, competition is fierce, overhead can kill you. If you think you have debt now wait untill you have to start stocking a store.
I would never own a business without owning the real estate. If you are one of the rare ones and start doing well your landlord will notice and bump up your rent once your lease expires. If you own the real estate, even if the bike shop doesn't do well, at least you can fall back on that and either sell or lease it out to another business.
Thats why you work at an existing bike shop. Wholesale, + not crazy hours = sweet.
Originally Posted by Ricko
Well, except that you don't get paid anything..... J/K
I work at a shop started by a guy who does it b/c he loves biking. He has a day job as a machinist, and runs the shop, in his house, on evenings. Well, the shp isn't really IN his house, more in an addition on the side.... Anyway, everything is cheap, since he is more into promoting cycling than making money. He also has a frame shop, and makes custom frames for people. He has lots of trails on his property, and leads MTB rides one night a week. Having your own shpo would be reawrding, but a lot of work....
The Grass is always greener
The grass is always greener on the other side. When you look at where you are know" all you do is thinks about bikes", but what happens when all your allowed do is think about bikes. It seems to me you have a good job and a supporting family as well as the time and ability to ride. Why change that?
Getting a job or owning a bike store will not make you a better man.... You will be a better man when you realized that what you have right now is everything you've ever wanted.
just my thoughts
In my limited experience, turning your hobby/interest into your work makes your hobby not look as appealing anymore. I'm late 20's, and I work for a large orginization doing stuff that SHOULD be very exciting, but it has definitely lost its luster somewhat since it became my job. I wind up thinking about bikes all day, too.
Plus, bike shops tend to be high-risk, low-margin. Furthermore, ANY kind of small shop owner tends to have to work long, crappy hours. I've thought about gaining my independence by starting my own business, but I've already decided that I won't start any kind of shop (or B&B) because the hours suck. I want something that I can just drop every now and then for a weeks vacation. Still Looking Most businesses need to get pretty big, with good managers working for you, before you can do something like that.
On the pro side, you'll get to work around bikes all day, and talk bikes all day (although a good chunk of them will be fixing derailers and replacing tubes on Wal-Mart specials). You'll also get everything at wholesale.
I'll add my 2 cents to this - I'm a photographer - that's one of those jobs that everyone thinks would be just fantastic to do. To me, meh...it's a job. Don't get me wrong, I love my work, and I'm very passionate about it - but it's still my job.
Now, on my down time, I think about bikes, riding, trails, etc... and I'm glad it's my hobby.
The way I see it, if you have a job that earns you some good $$, you don't dread going into every morning, and leaves you time for the family, and more importantly - riding
stick with it, it could be a whole lot worse.
LOL- Photographer is one of the things I've considered. The only reason I haven't prusued it is because I don't have the skills (yet). Same Same But Different, it seems.
Gotta ditto some of these thoughts...
Here's how the conversation basically went when I was in your shoes:
"OK, here's how to look at it."
*be sure to repeat some of these twice, just to be sure you're clear on them.
1. You set your own hours.
2. You set your days off.
3. You stock your own product.
4. You hire your own people.
5. You make your own decisions.
6. You own your business.
7. Your friends/family will love you being involved in bikes
8. You'll meet new people and sell bikes
9. You can always succeed.
10 You'll become stronger for doing it.
1. Those hours equate to about 65-70 a week.
2. You get about 1 REAL day off a year.
3. You also receive, stock, invoice, and inventory that product.
4. They end up being 1 adult, and IF YOU CAN AFFORD IT, 2-3 teenagers, who goof off and act
like, well teenagers, in fact they may end up dating your kid(s).
5. You deal with the results of those decisions.
6. You own your business.
7. You initially won't be able to afford to get them bikes, or deals.
8. Those people come back, and not always happy and pleasant to deal with it, and no matter what,
even when it's "not your fault", "it is".
9. You can always fail.
10. You will/might sacrifice/give-up a lot.
You'll need around $250-300k to get started. Expect to only take 10% for your pay, and 2-5% for staff payroll. If you're one of the lucky 12-20%, you'll still be in business in 2 years. You mentioned you're economics background, run some demographic reports and be sure that the market will support you. If the average median household income is below $70k, beware. If you really want to know more, see if you can make it to Interbike 2006, and attend the meetings. You'll not only need a strong business background, but also strong marketing, mechanical, and interpersonal skills.
Hope this helps.
Last edited by Obi; 02-13-2006 at 11:45 AM.
Don't own a shop...
...but I do own a frame manufacturing company.
Everything that everyone else has said is totally true.
The two main reasons that businesses go under are:
1) poor management
2) lack of working capital
So, you need a solid plan and you need access to cash - lots and lots of money, cheap credit, bank loans - way more than you'll ever think that you'll need. Your first years will be rough as you build up a client base. Those 65-70 hrs / week quoted is about right - ON AVERAGE. There will be many weeks where you work more than that. Prior to Interbike 2004, I worked about 100 hrs a week for four weeks. People talk about how they all work 16 hrs / day and such - blah, blah, blah. Most people have no clue. Those four weeks of work are still to this day the hardest I have ever worked and they messed me up badly for a couple of weeks afterwards. Now, It's about 65-70 with the occasional 80+ hour week.
This past weekend was the first time in about 2-3 months where I actually was able to ride both days. I'm over weight and out of shape because of not riding. As others have said, you will work very hard and not spend a huge amount of time on your bike.
Think this through really seriously - go pick up a copy of the book "The E-myth", read it, and see if it really is for you.
Last edited by knollybikes.com; 02-13-2006 at 03:51 PM.
Great advice here.
To add to it, be sure you want to take your passion through it's complete cycle (pun! yay.).
Like the photographer posted above, my passion used to be photography then it became a job. Now I am no longer a professional photog and now almost never take photos. It's not burn out, just that I had fully explored what I wanted leaving me "satisfied". And for me satisfaction breed discontent, so off to the next thing.
So I approach my cycling differently. It stays my hobby so I can continue to have fun, velo bits to explore.
funny, the owner of a restaurant I worked at used to say the same thing about the restaurant biz...but it probably relates to any small biz.
Originally Posted by ekoostick
I've thought about it myself for about 2 secs, then remembered my days manageing that restaurant...50-70 hour weeks were not uncommon. No thanks, I enjoy my family and ride time too much.
One more thing to consider
I've run a small wholesale business for the past 20 years and think I know a thing or two about this subject. The other posters have been great with covering the nuts & bolts stuff, Knolly was spot on with his comments. The one difficulty I am having now, and this should be a consideration for you too, is having enough time for my family. I have a 5 month old Son that I hardly see awake. I'll see him in the morning before I drop him off at the sitter (wife picks him up). By the time I get home around 7pm he's sound asleep. So on the average I see him for 45 minutes a day, and only a half day on Saturday plus Sunday. It worries me that I am not giving him enough of my time (not to mention the burden this is putting on my wife). Since my business is pretty well established I can do some things like take more time off here and there, but the nature of the business, our living arraingement, commuting, and income limitations keeps my options somewhat limited.
Originally Posted by Biggie
So with all that said...consider these questions:
Is my Wife willing to increase her family responsibilities so I can pursue this business?
Does she endorse and have GREAT enthusiasim for the business idea?
Will you be able to maintain adiquate time with your children?
Some food for thought, best of luck with your decision no matter which it is.
Got a PBS mind in an MTV world-Jimmy Buffett
Just a Few Random Jottings
Opened a bike shop 5 years ago. So far so good, infact really good. Just going to give you a brain dump of everything that springs to mind. I'll try to keep the language non-business but excuse me if I slip into jargon. This figures are all based on my business but I believe they are pretty close to average.
You will get to take home about 10% of the dollar value of what you sell. Say you sell $200,000 worth of stuff, you'll pay yourself approx $20,000. If you want to grow, you'll have to plough some of that pay back into the business.
You'll need 1/3 of your target sales per year in stock, stuff actually in the shop available to sell. So, working backwards, you hope to pay yourself $50,000 per year you will have to sell $500,000 worth of stuff a year so you'll need to have around $170,000 of bike stuff to sell. Where that $170,000 comes from is the big problem. You can start small and hope to build, or you can jump in both feet and blow your savings and morgage the house. I personally started my business with my savings and by maxing out my credit cards. Took 4 years to get enough background for a bank to loan me enough to gather all the debt in one pile. Now I am nice and stable but for a while there it was scary.
Work out what you'll need to sell in order to be financially comfortable, then work out if that is even possible in your area. If not, don't open the shop. Don't find out by opening the shop and waiting to see what happens.
Buy an existing shop. You get a base to predict from and most likely bike lines you would not get otherwise.
For a couple of years you'll owe more than you own. If all hell broke loose and you had to sell everything at cost and bail you'd still owe money. If you do well eventually the value of your inventory (and selling at cost is hopeful at best) will exceed what you owe and then you can breathe a little easier. Your business itself will have no value, just the stuff you can sell when you call it quits.
You will put your relationships at great risk. The bike shop is a hard mistress. Set some rules BEFORE you open the shop, and be prepared to revisit them when your spouse or kids ask you to. Personally I never work evenings and never work on Sundays. I also close 2 days a week which is very unusual in my town of San Francisco. Right now I average 50 to 60 hrs a week but the shop is stable and I have good staff. For the first couple of days count on more hours than that.
Dealing with the general public is really really REALLY hard. If you have not worked retail, maybe take a part time job to see what it is like. You'll have a good share of amazing people that you'll have never met if you had not opened a bike shop, but there will also be people that are simply too strange/rude/smelly/loud/grumpy/tight/presumptious/foul to even begin to understand. Fortunately there are just enough of the former to balance out the latter.
You will struggle to find good staff, and right when you think you have finally hired and trained the ideal person they will leave. Folks last on average 18 months.
To succeed you need to be actually in the shop whenever it is open. No one is going to as good job as you no matter how well motivated or trained. Think of it as a practice as opposed to a shop.
You will clean toilets, mop vomit off your steps, throw drunks out the door, answer burglar alarms at 3am, advise really smelly people on saddle sores, pick up garbage pulled by the homeless from your garbage can, run your business from a wheelchair (broke my femur the first year in!), spend more time with your mechanics than your wife, be threatened by your business nieghbors and you will smile through it all.
You will allow yourself to tell someone to 'F*ck off' twice a year. You will enjoy it.
Suppliers and manufacturers become your bosses. Pick good ones and let go of those that don't come up to par.
Manufacturers reps are a blessing and a curse. Some will be close friends, some second cousin to Satan.
Join the National Bicycle Dealers Association and buy the two books they offer that give costs of doing business. You cannot escape the averages given in these books so don't think you can cheat the system and be special.
Hire folks that you would date. I mean that seriously. Not that I advocate chasing your staff around the work bench... just choose folks that you enjoy being around.
Get a really good alarm and install security gates.
Build a damn good website. Update it. Don't base it around a stock web site builder.
Folks will buy you beer, bake you cookies, bake you pot brownies, paint you pictures, and buy you bottles shaped like Russian assault rifles full of bad Polish Vodka.
Start a team. There is nothing crossing paths with a dozen roadies in your colors on a Sunday afternoon.
OK, gotta go, wife just called and is on her way back from yoga. Forgive the rambling nature of the above. Got the mother of all colds right now and feel like something crawled up my nose and died. I'm all dosed up on meds and Guinness so who knows what I just typed.
Good luck, and call / email of wanting more detailed or focused stuff.
The Bike Shop That Dare Not Speak Its Name
Questions to ask yourself before starting any business:
What relative business experience do you have in your market? Try a part time job if you have no experience.
How do you feel about selling and asking people for money and saying no to people asking you for money? Business is all about getting paid quickly, paying suppliers and employees less than they want, etc.
Is your family supportive? This isn't going to work if you wife isn't in to it.
Are you creatively cheap or good with money? if not, can you learn?
Do you take rejection easily? you have got to sell customers, vendors, and bankers. all of these people will initially say no. if it takes 20 no's for every yes, are you prepared to keep asking?
Can you articulate your expectations in a business plan? explaining your business on paper both verbally and financially can help convince youself and others that you have a sound plan.
Can you handle the stress and hours and the lack of riding time? when i used to work out of my home, i'd wake up in the middle of the night thinking about a task left undone. i never had this problem working for someone else. when i ride now, i often don't tell anyone where i'm. i have to keep my bike ready to go when it gets a little slow. i also have to turn the phone off to enjoy the ride or else it can ring ten times between work and family.
Do you have advisors or mentors that can help guide you in a business sense? You need a lawyer and a CPA that specializes in small business startups. Find the people and books that can explain the process, supplement your weaknesses, and provide encouragement. My first accountant really helped me get my mind straight about taxes, incorporation, etc at a time when i was extremely worried about how i was going about my business.
Just wanted to add a few things here...
...as more topics were added on. These last few posts are all excellent:
First off - regurgitating some things: Make sure that your spouse / family is OK with this!
Second: Money: You will need to provide security to get ANY kind of loan. This is going to be based on several things:
-How much money you're personally put into the company (share holder's loans), so if you're currently in debt, this may be difficult to do. It will depend upon your personal net worth.
-How much revenue the business is making (yes, you need to MAKE money before someone will lend it to you - nice eh?).
-Your business plan and how well researched it is.
-Your Pro-forma cash flow projections and the ability to survive all of the worst case cash flow scenarios.
In fact, this was something that every business person gets to learn: cash is king. Cash flow is more important than ANYTHING - PERIOD.
Finally - you have a new set of best friends (no, this is not your best man or the college buddy who pulled you out of the fountain after you drank a 26 of Cuervo Gold). These people are:
-Your bank manager
-Your book keeper
-Your insurance agent
-And, if you ship cross border, your custom's broker.
The final piece of advice: start doing your bookkeeping right at the start and budget for it immediately. It will save you a LOT of greif!
Oh ya - one more thing!
Don't get bogged down by all the negative comments.
It's tough - really, really freaken tough sometimes. However, if you want to succeed and everything makes financial sense, then don't hold back. You will have to jump "into the deep end" right off the bat!
And, somethings are just cool. If your shop succeeds and/or the product is excellent it will be very rewarding and no one can take that away from you. Here's my own personal example:
C'mon. As a teenage bike shop employee, that seemed awfully harsh. I understand that SOME teenagers are irresponsable, lazy, and won't make a decent employee, but the same holds true for any age bracket.
Originally Posted by obi.one.speed.only
I read this thread in the morning when I first came to work and was thinking about it throughout the day. In terms of pros and cons I leave that to those who have been there before. One thing really stuck in my mind though and I wanted to come back and share the thought. That was the comment about working with the public, the poster that mentioned to try retail sales if only for a little bit hit it right on the head. From the sound of it owning a bike shop is hard enough work as it is without finding out 6 months in that you hate dealing with the public. If it comes to that you might as well pack it all in, loans and all right then and there. Reason being, if you dont like this aspect - none of the other matter. You can have all the money/loans needed, good help, great location, etc. BUT if you dont really like the idea of talking to every person that comes through your door than you need to go back to whatever you were doing before.
What I was thinking about all afternoon were all the shops that I have been to that I liked, that I would go back to and spend money. The one thing they all had in common? Not the lowest prices, not the best selection or brand I was looking for but rather they all had a great owner/employee that took the time to listen. They were interested in talking about bikes, interested in what I needed and genuinely wanted to help if they could. In these cases I found myself buying something little, maybe just a couple of tubes even if the shop didnt have what I wanted, because the guy had taken the time and did what he could to try and get my business.
If you dont really want to try and help people out, and do right by them (even those ignorant ones that want you to price match a close-out from last year with the new model you have on the floor) to try and try to find a solution for every single person - you might as well not bother.
To try and give an example of what I mean - look at Noel's comment about the positive feedback making it worthwile. He is taking great pride in that (and in the bikes he makes, I understand) and his reward is a few nice notes about what a great product he makes. Not much by a lot of peoples standards but it makes the difference to him.