Starting my own business : A bike shop!- Mtbr.com
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  1. #1
    Body Shot Specialist
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    Thinking of starting my own business : A bike shop!

    My wife and I are thinking about getting out of the corporate rate race to finally do something we really enjoy. We both are quite passionate about cycling, soooo...

    Does anyone know how many bikes an average bike shop would sell in 1 year?
    Of this number, what mix of low, mid & high end bikes are sold?

    What approximate ratio of revenue is from;
    1. Bike sales
    2. Service
    3. Parts
    4. Accessories
    5. Rentals
    6. ???

    In your opinion, are the internet retailers killing the LBS?
    (There were a few LBS's in my town that went belly up last year)

    We are currently developing a business case to see if this could be a viable business.
    Any advice anyone may have would be appreciated
    Last edited by tequila joe; 03-20-2004 at 12:58 PM.

  2. #2
    mtbr member
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    Cool-blue Rhythm too many unknowns

    Quote Originally Posted by tequila joe
    My wife and I are thinking about getting out of the corporate rate race to finally do something we really enjoy. We both are quite passionate about cycling, soooo...

    Does anyone know how many bikes an average bike shop would sell in 1 year?
    Of this number, what mix of low, mid & high end bikes are sold?

    What approximate ratio of revenue is from;
    1. Bike sales
    2. Service
    3. Parts
    4. Accessories
    5. Rentals
    6. ???

    In your opinion, are the internet retailers killing the LBS?
    (There were a few LBS's in my town that went belly up last year)

    We are currently developing a business case to see if this could be a viable business.
    Any advice anyone may have would be appreciated
    Are you doing it for money? Or love?
    Did the shops go TU because of the net or 'cuz they were in BFE or??
    Do you want to compete with other shops? Or wallymart?
    Do you want to sell HIGH end or low end?
    Who sells HIGH end and low end?
    YOu could sell a 5k+ bike and make about $1500-2k.
    You could sell a $300 bike and make about$150.
    Can you make the industry better?
    Buy someones established shop or start your own?
    I almost bought a shop for $40k plus inventory. Didn't. Should have.It is still doing well.
    The original owner was clearing about $50k. He was spending $600,000 to get it.
    One owner/machanic, one mechanic and a part timer.

  3. #3
    Start slow and taper off
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    Location location location

    Quote Originally Posted by tequila joe
    My wife and I are thinking about getting out of the corporate rate race to finally do something we really enjoy. We both are quite passionate about cycling, soooo...

    Does anyone know how many bikes an average bike shop would sell in 1 year?
    Of this number, what mix of low, mid & high end bikes are sold?

    What approximate ratio of revenue is from;
    1. Bike sales
    2. Service
    3. Parts
    4. Accessories
    5. Rentals
    6. ???

    In your opinion, are the internet retailers killing the LBS?
    (There were a few LBS's in my town that went belly up last year)

    We are currently developing a business case to see if this could be a viable business.
    Any advice anyone may have would be appreciated
    There are several key things to having a successful shop. The first 3 are location. Then great customer service and excellent selection. Then CAREFUL managing of ordering and inventory. Its easy for reps to sell you the HOT items and then you get stuck with it after it doesn't sell. After that, you need to think about things like quality employees (and the only way to get quality employees is to treat them right and remember that most of them got in to the business because they love bikes and not because they love being employed).

    These things said, very few people get rich in the bike industry. Many shop owners do well. Many do well and then burn out. Many don't make it. Check out the website www.bicycleretailer.com, subscribe to the mag, see what's happening in the business side of bicycles. Hang out at as many shops as possible and see what seems to work and what doesn't. Talk to the owners, managers, employees, but don't be nag. Don't talk to these people if you plan on opening a shop next door, or even in the same town, that's starting out on the wrong foot right away.

    By visiting a lot of shops (and this doesn't mean going to the three closest to you--think about where you might want a shop (city, town, suburb, highway, the sticks) and what type of customer base you might have. College towns are the best, but you won't necessarily being selling 2 or 3 thousand dollar bikes regularly. Maybe you'll never even have one of these in the store, and 99% of your business will be repairs (which have a significantly higher margin than bike sales, as do accessories sales --bikes 12% to 32%, sometimes 35% but not often, whereas repair can be 80 to 100% margins without even gouging). Is the area you're thinking about touristy? Maybe rentals will be a big percentage.

    Be prepared for few days off and long hours early on. Be prepared for losing customers you really like and being forced to constantly deal with customers you can't stand, who are in the shop every day taking up mechanics or salepeoples time yet never managing to spend any money.

    I worked in a bike shop from age 14 to age 30, and managed (and service managed) several in that time. Some shops I look back on fondness with (and only left due to monetary factors--often owners forget that yes even 25 year old mechanics have wives and someday would've liked to own a home instead of rent) and a couple wouldn't drive past if I could help it. Like any place of business, if you've got happy employees they will (usually) be loyal and be better for your business. Pay them as well as possible. Knowledge might be cheap but knowledgable people aren't.

    Now I'm an artist and assistant professor, but if the time and place are right, I wouldn't mind opening my own shop and running it the way I've seen some to the best run. But I think working at shops is key to seeing how they run (for better or worse). If you've got the chance of working or volunteering at a shop, try and do so. Believe me, there is an UNBELIEVABLE difference between one side of the counter and the other. I think I've seen more people jaded by the bicycle retail profession (myself included, though it took 16 years to do so, and really it was only the last 4 that did it) than persuaded that it's such a fabulous place to be.

    If you're serious, use the strength of having your wife be a key fixture. Let her get mechanically certified, as there is an enormous hole in the womens side of the cycling market. I'd be interested to see the stats of how many bike a woman could sell to a woman vs man to woman. Bike stores are unfortunely yet all too often elitist and a boys club. Your best customers are the recreational riders. Target them as much or more than the hardcores, who tend to price shop. Bike shops are as much about service as product. Why do people come back every year for tune ups to your store? Great service and convenience, flat out. Give them both and you'll have customers for life. And this (again) goes back to good employees. Consider things like 4 10 hour work days, rather than 5 8 hour. Respect things like lunch hours. Be firm but be fair. Make employees want to come back day after day and they'll help you grow the business.

    Look into what is lacking in shops in the area. Maybe there are no high end stores, yet there is a market. Maybe no shop is geared towards commuters. Auto racks are an often forgotten area of the store. Don't try to sell what you think is cool--try to sell the best for the customers needs (I am specifically thinking of how often sales people will push the kind of rack they might use--often roof racks--when the hitch rack is optimum or because a person is only going to the rack once a year, $50 rear hanging rack is sufficient.) Is it better to sell a $600 roof rack to a customer that always has problems getting them way up onto the roof, or a $160 hitch rack that every time the customer uses it they'll think about how easy it is for them and what a great salesman at so and so shop was. And think about hitch racks...installing the actual hitch onto a vehical is significantly easier than you would think. Hitch rack sales increased 90% for the last shop I was at when we started offering hitch installs. Most hitches (the towing part, not the actual bike rack) bolt onto preexisting holes these days. Drawtite is a great source. Perhaps this could be an untapped market in your area.

    Anyway, these are some things to think about. The actual percentage of revenues is extremely variable--some shops make all their money in service, some in rental, etc. You won't necessarily succeed because shop A or B did. It's about destination that people want to go to. Research those needs.

    Good luck and I hope you build (or buy) yourself a great business, and that at least something in this rant will be of use to you.

  4. #4
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    Quote Originally Posted by tequila joe
    My wife and I are thinking about getting out of the corporate rate race to finally do something we really enjoy. We both are quite passionate about cycling, soooo...

    Does anyone know how many bikes an average bike shop would sell in 1 year?
    Of this number, what mix of low, mid & high end bikes are sold?

    What approximate ratio of revenue is from;
    1. Bike sales
    2. Service
    3. Parts
    4. Accessories
    5. Rentals
    6. ???

    In your opinion, are the internet retailers killing the LBS?
    (There were a few LBS's in my town that went belly up last year)

    We are currently developing a business case to see if this could be a viable business.
    Any advice anyone may have would be appreciated

    No offense, but if your asking for this advice on a forum, you should not be opening a store.
    You obviously have no idea what it takes to keep a shop running.
    Work part or full time at a shop for a year and see the ins and outs. It'll scare the crap out of you...
    this space left intentionally blank

  5. #5
    jcw
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    Quote Originally Posted by tequila joe
    My wife and I are thinking about getting out of the corporate rate race to finally do something we really enjoy. We both are quite passionate about cycling, soooo...

    Does anyone know how many bikes an average bike shop would sell in 1 year?
    Of this number, what mix of low, mid & high end bikes are sold?

    What approximate ratio of revenue is from;
    1. Bike sales
    2. Service
    3. Parts
    4. Accessories
    5. Rentals
    6. ???

    In your opinion, are the internet retailers killing the LBS?
    (There were a few LBS's in my town that went belly up last year)

    We are currently developing a business case to see if this could be a viable business.
    Any advice anyone may have would be appreciated
    2 really good publications that will answer most of your questions are "The Cost of Doing Business for Specialty Bicycle Retailers" and "US Bicycle Market 2002" both put out by the National Bicycle Dealers Association. You can find them at www.nbda.com.
    They're pricey, but a really good investment if your serious - and will be very helpful in drafting your business plan.

  6. #6
    Body Shot Specialist
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    Thanks all...

    Thanks to all who've shared thier thoughts

    noslogan
    Money or Love? Good question. How 'bout both? We do not intend to get rich by doing this but do not want to loose our shirts either. If this shop stays in the black and we can draw a bit of an income from it, we would be alright with that. We have both been grinding in the corporate world for quite some time and would say that we are financially secure. If money the sole motivator, I would keep my high paying corporate job. I would make 3 times the income a bike shop would bring. We are looking at switching to a lower gear, make more time for family and save ourselves from burning out. The love part for the sport goes without saying.

    The few shops that went out of business were for various reasons. (I took advantage of thier closeout sales, spoke to the owners and got some really good deals!) One shop was in a very poor location and they were selling very high end product with a smatter of very low end product. The other was only a few blocks from another shop and thier customer service & salemanship really sucked. Perhaps it was why they were going out of business?

    High end or low end? I've been to every bike shop in town and have had the pleasure (and some no pleasure) of thier customer service. Everyone seems to be selling Specialized, Giant, Fisher, Jamis, Trek & Norco. We want to offer manufacturers outside of these otherwise, this shop would be no different.

    We have a location in mind that has huge potential so buying an existing shop was not in our mind. Thanks for the numbers. It confirms what we were thinking. Two owners/mechanic & one full time mechanic (hired gun) was our plan. The $50K/annual was about what we hoped to be clearing.

    neveride
    As Dorthey said to the Scare crow, of all, you are our favorite.

    Thank you, thank you and thank you for sharing your 16 years of experience, wisdom and insight. We've both really enjoyed reading your reply and have taken it to heart. Everything you've said makes so much sense. One thing that amazed me was that you are so right about my wife. Aside having the key to my heart, I think she will be the key to the shop. We've spoken to many women from our local riding club and they all say that are very intimidated by male sales clerks. They feel that they are talked down to and are bullied them into making purchases of high end equipment that they do not need. A few of them even complained about getting "hit on" by the staff. I believe a womens touch is what that market segment needs.

    Thanks for the well wishes and we hope you get your shop in the future too if that is what you wish for.

    ssteel
    You're right. We have never operated a bike shop before and would probably be quite lost in the beginning. All the love/passion for the sport does not make up for the lack of industry knowledge & wisdom. However, I have ran a retail business in the past with its main revenue stream generated from service. Hopefully this experience can be applied it to a bike shop. Perhaps hiring a guru like neveride to help set it up and run it would be the ticket. We are just starting to create our business case and realize that there is so much more to learn. We do not expect to open a shop unless our research proves viable. Thanks for the shot of reality.

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