justinschulz9

looking to run my own bike shop one day. what is the most common issues that you have run into? and what are the most vital products to sell in a bike shop?

Mad Honk 

Justin,
The most common problem is a lack of a business plan. Are you going to sell complete bikes, repair bikes, a combination of those two ? Then there are logistics to the plan and putting all in place. Is there a market for the bike shop, or is the area overloaded? Will you have enough money to start and maintain the shop? Do you have an idea of all of the costs? What about rent, utilities, tax numbers and registration for a business licence? Do you have a plan for employee pay, and monthly tax issues for their income tax? Liability insurance? Are you going to operate as a sole proprietorship, or an LLC? Then there is a need for an accountant or CPA to handle your tax filings properly. Do you have a plan for the accounting process, and how are you planning to manage your inventory? Use of SKU's will require label printers and scanners. Credit card need to processed and bank transfers in today's pay by phone app.
You will also have to learn how to price things like labor, and know what all goes into running your shop for an hour, or the number of hours you are open in a day and then weekly, and monthly. There are not really any manuals that teach this stuff, and help can be found in groups like SCORE. But eventually you will need both accounting and legal help to get started on the right foot. HTH, MH

3alarmer 

.
...*******s. You end up dealing with *******s. Not the majority, who are fairly pleasant, but definitely a small community of *******s.

Mad Honk 

triple alarmer,
I think that is a component of almost any retail atmosphere. I almost bought a Play It Again sports store about fifteen years back. Had a manager and staff in place but realized that when in the store I would be at the mercy of those you mention. I couldn't stand the thought of it, and passed on the deal. I now operate my bizniz as an appointment only shop, with my being able to schedule at my discretion, and I am able to fire the subjects you describe. Only had to fire two customers since switching to this model. Smiles, MH

hefeweizen

Do you work at a bike shop now?
If not, I would strongly suggest it.

shelbyfv

Find a good mechanic.

ramzilla

#1 Flat tires
#2 Broken brake/shifter cables
#3 Broken spokes/tacoed wheels

zacster

The customers...

Andrew R Stewart 

This is one of the bigger challenges, hiring good help. When I had my shop I found the ratio of hires to keepers was about 5 to 1. These days I see even less keepers. Glad I don't own a shop any longer. Andy

cpach

I think that a general trend is probably going to be a refocusing on selling services rather than selling things. There's a lot of pressure to deflate margins from the internet for bikes, components, and accessories, but bikes are only getting more complex and there will continue to be a need for professional service. In more conventional bike shop models, service has often been seen more as a tool to sell bikes, rather than a profit center itself. It's important to be able to track time and wages against profits to gauge service pricing appropriately and to find places to optimize. Aside from mechanical services, I think there's a real space for fit services, and in many markets rentals/demos can be an important part of the business (even if it can be a pain in the butt). If you're a strong mechanic personally, mobile is definitely growing both in market share and in perceived legitimacy, though honestly I don't think I'd enjoy it.

With regards to inventory, it's important to really focus on keeping it moving. Increasingly shops are relying on market analytics tools to make buying decisions.. Bikes in particular are a significant gamble, as they deprecate pretty significantly and also eat a fair amount of time in assembly and a fair amount of floor space. In many cases bikes are a net loss after a year. While there's certainly a space for shops with wide ranging bike inventory, I feel like the trend is to move to more of a showroom model. For high end road in particular in small high end shops, there's more business that do a detailed, high end fit before selecting the bike, that build up to match the customer at pickup.

Other significant challenges are the intense seasonality in most markets. My last two shops were in Santa Cruz, CA, which only has a slight riding slump in the winter; my new work in Mt Shasta, CA pretty much entirely shelves bikes in favor of snow sports in the winter. How big will this be in your market, and how will you deal with it?

I think the industry runs too heavily on cheap labor. It's fine to have some seasonal workers around peak times, or an inexperienced kid in the back shop helping out and using the opportunity to learn, but the bulk of your repair work should be done by experienced, career mechanics, and you should have sales staff that can actually keep things organized and know what they're talking about with customers. Find employees you can trust to work efficiently--your customers will be happier, and efficient workers can do way more work with far less mistakes in the same amount of time, and they will ultimately be the reasons the customers return with their business or not. Also while staff ultimately need to pay their bills, but most are probably choosing the bike industry because they prioritize quality of life over high wages, so do your best to make things not suck--a lot of this is making it possible to be flexible about peoples schedules, honestly. Doing good analytics on labor efficiency and profits can make it clear that sometimes you get what you pay for in wages.

To run a shop you need to be able to identify competent individuals to delegate responsibilities to, and to be able to cover any responsibilities you don't have the staffing for. Successful owners I've seen were very good at building relationships and are strong salespeople--they don't necessarily have to be strong mechanics. If they aren't strong at finances, they need someone who is. If you're doing traditional retail, someone needs to be good at the floor plan and product presentation. Someone needs to be smart about marketing. Also, you have to really not just love the sport but really enjoy the day to day of the shop. Bike shops aren't a particularly safe venture so you have to be pretty into it (and have a good plan) to make starting one make much sense.

100bikes

Where to begin....
Many great comments above.

All pertinent and insightful.

From my perspective, not in any particular order:

Don't expect to make a bunch of money.

If you can't do everything in the store, or are not willing to do everything, you will need to pay for it.
That is you will have to sell enough products at margin to pay someone else to do it.

Know your margins (not markup), and costs.
You can't expect to not cover margin requirements by increasing volume.

Be aware of the real COGS- cost of goods sold.
Sourcing , carrying costs, service and ............?......... , ........?....... and finally ................?...............!

Enter bicycle retail for your own reasons.

Don't borrow money to do it.

Understand your insurance exposure.
My attorney "strongly suggested" that I fire a guy for leaving training wheels loose - on his child's bike. .
His comment were " I could own your store right now!"

Don't expect to leave when the closed sign goes up and door gets locked.

In my years in the industry, I have worked with many "business" people who entered the retail bicycle store/ IBD.
These were sophisticated and successful people in their respective industries. They did their homework, saw what
they thought were great historical margins and growth trajectory.
This is the biggest falsehood to fall for.
Most, if not all failed. by end of first lease term, or ended up putting more and more money in.

They put their stores in expensive space (strip malls in high traffic locations),
What is the reason so many desirable locations /storefronts are available.....?.

Business people had to hire mechanics and managers.
Paid them to much(sorry, but that is the case) and didn't hold them accountable.

Unless you have something very special to offer, or have a great following for some reason,
don't expect people to flock to you door. The comments about selling experience and service
are the future of the IBD.

I met a guy who was leaving bicycle retail (late 1980's) to become a TREK rep.
His comments still ring true - the days of the guru in the cave are done.

Read the trades- Bicycle Retailer and Industry News( BRaIN), Pinkbike and the European trades
.
Currently trending is an article about high end bicycles being sold wholesale to retailers and the same brand being
sold by the wholesaler on Amazon for near wholesale(no where near MSRP)- the SAME BICYCLES!
NOTE: wholesalers police the MSRP of their retailers so they don't undercut others selling the same product.

Dealer agreements truly only favor the vendor/brand, not the dealer.

Wholesalers are not your friends.
They want to sell product to you. In most cases, they don't do much to facilitate, or really care about the sell through after that.

Sorry to be such a downer, but the reality is the retail bicycle industry is cutthroat, low margin and consumes many invested dollars,
your time, and if you are not real careful, your enthusiasm.

I speak from my experiences - as a mechanic, retail manager, retail owner, sales rep and sales manager all in the IBD not in this order.

Last thought is if you can overcome the obstacles you can be successful and survive today, but always be aware of tomorrow.

JoeTBM 

Trakhak

This thread should be made a sticky, if only to better inform the posters who are sure that bike shop owners selling at (shudder!) MSRP routinely make obscene profits.

TakingMyTime

+infinity

Every time I speak to someone who is thinking about opening or running their own business I usually have 2 pieces of advice. The first one is basically what Mad Honk is saying... figure out what you think your costs are going to be and then double or triple that. To add to the above, what do you do when the fire department comes in for an inspection and tells you that all you fire extinguishers have expired dates and they are either closing you down or asking you to remedy the problem immediately? There goes another $500-$1000. Expenses happen. The second thing is that you do not only run the business when it is open. You will be thinking about it 24/7/365. No matter how even-keeled you think you may be, it will consume more of your time than you ever imagined.

justinschulz9

how popular is an appointment only model? are you running out of your garage? are there too many bike shops where you live?
how does one create a model based on appointments?

justinschulz9

what is score?

Mad Honk 

Justin,
I am a bike mechanic by hobby. My business is fitting and repairing golf clubs. Golfers who come to me are not casual players but those who are really serious about the sport. My shop rate is $100 per hour and the clock starts when they come through the door. If all they want to do is talk they still pay for my knowledge. Like any physician I have about eight years of professional training and I have Certifications from every golf association internationally. I am a swing instructor, and professional with the USGA. I recently stopped being a Division 1 assistant coach, and I teach for the Association of Golf Clubfittng Professionals annually at their international meeting.
I quit as a full time mechanic and didn't want to compete with all of my friends by opening a competing bike shop, so I turned to golf as a profession. My clients do not want me to be bothered when they are paying top dollar for my time with them. So it is by appointment only with time blocked out for just one person at a time. They get my full attention, which is worth the price for them.
I worked in the cycling industry as a mechanic and shop manager from the mid 70's to late in 1988. During that time I managed the repair shop at the largest bike store in Indiana selling over $1m in 1982, and working for 3 RAAM's with Bob Beeson.
Also during that time I coached eight Little 500 teams and was the mechanical steward for the race for five years. So I have a bit of experience with cycling, but like I said; I don't compete with my friends in the industry. The local co-op is the major beneficiary of my hobby now. Along with having some fun here on the forum.
I trust this explains a bit about my answer earlier. Smiles, MH

squirtdad

Take a look at stores in your area that are successful and have been around for a long time.....as a generality this is what I see in long term stores in my area

1) Family run stores that parents take their kids to the same store the parents got bike from. these stores typically jump on and off trends, (cruiser, single speed/fixie, ebikes) because that is what the market demands. I think there is a solid chance that the stores, having been in families for 3 or 4 generations have the advantage of owning the building.

2) stores the focus on high end expensive bikes...typically either road or mountain, but not both to any degree of significance

3) Stores that have a high end of service and personality. two local examples, one is a mish mash of stuff and with a bit of a curmudgeon owner (wouldn't work on fixies unless they were true track bikes used on the velodrome) but super mechanic and sells the latest high end road bikes and another that does fabrication, builds frames and sells Jones, Rivendell, and other (and custom unicycles)

wrk101

#1 Issue: Money, the lack of/not enough of it.


Bike shops go out of business here every year. Business plan is a good start along with metrics to see how close to plan you are performing. Know when to cut your loses so you don't waste money chasing your way to the bottom. Have enough cash to sustain yourself. Don't count on the business providing profits any time soon. Don't plan on getting good help. Knowledgable mechanics have choices and working for the "new guy" might not be their choice.

In my area, small businesses continually complain about the inability to get help. In reality, it's not a shortage of help, its a shortage of people that will work for the low pay they are used to paying. The times have changed. The mechanics I know have left the industry as they can make more serving beer than being a mechanic.


Do you have experience owning and running a successful retail business?


+10 Work a regular job, and volunteer at your local co op.


Post #11 is spot on.

Vintage Schwinn

Service Corps Of Retired Executives = SCORE
https://www.inc.com/encyclopedia/ser...ves-score.html

https://www.score.org/frequently-ask...ns-about-score

May I also suggest that you meet in person with the Professors of the school of business administration of a four year accreditated University or Community College that is located in your city or nearby, within 25 to 30 miles. The reason that I suggest this is that if you talk to them, you very possibly can get your "bike shop" assigned to a portion of the students in an upperclassmen Marketing class, doing market research and finding ways to generate business, improve advertising, net sales per customer, ......and all of that work is done by students at no cost to you. The downside with this, is that they are students that are still learning and they will probably have many questions for you and may monopolize too much of your time, figuring things out. The UPSIDE mainly might just be that those six or seven students assigned your "store" as their class assignment-----might be just the word of mouth among their select friends about the new bicycle shop......because you can bet that their little group's marketing project will not be nearly as good as just one person with a decade of experience from a professional firm..................but you'll have no out of pocket cost.....although you may find the college students who are still learning, will waste a good bit of your time in the process. You could very well end up with a very productive effort from the college student group project, but it might just be stuff that you figured out by the seat of your pants during your first two weeks or first two months in business.

You also need to connect with the nearest office of the Small Business Administration.(SBA)
SCORE, the SBA, and the Business Administration faculty and dept heads at your local UNIVERSITY or Community College (4 Year Accredited....not some sham
diploma mill, no value "deegreeZ"........those take the money and run and outta biz, "colleges" in strip malls and former grocery store locations are not colleges, no
matter that they say college on the marquee..................
-----------You will get quality advice from SCORE, SBA, and UNIVERSITY professors within the school of business admin/accounting --------
You might not like what you may hear, but they will shoot straight and give you valuable advice, that isn't like something Jethro Bodeen might say if he had a late night infomercial for How to Suceed in Business, or you too can make millions in real estate with no money........just register for Jethro's seminar in your town on Tue the 25th to see Jethro tell you his secret......sign up early as the Ramada Inn Ballroom can only accomodate so many............yea that type of bull and baloney.

TiHabanero

Lack of business accumen is the single most lacking "thing" in any business.

Opening a shop is quite an endeavor. The single best advice one can provide is to have someone with business knowledge, preferably one successful in the sporting goods industry, at your side offering a sounding board for you to use.

Vintage Schwinn hit on something we used back around 1989 when we went looking for a location for a third store. Used the local business school at the college just down the road. They did a market study for us covering incomes, population, zip code analysis(where our customers were coming from outside the immediate area, etc). It was worth the interactions we had with them. Eventually, after that class graduated we hired one of the kids on the team as a store manager, managing the largest store in the operation.

Have fun with the planning, and the operation!

PS, Not all talented mechanics are grumpy. Just a lot of them are, but they are becoming scarce as the industry turns the corner into a higher tech platform.

justinschulz9

You guys have been nothing but helpful! please keep the advice coming!
with the coming of electric bikes, do you believe mechanics should take electrician classes to better understand the mechanics of batteries/motors?

Mad Honk 

Justin,
When GM brought out the Volt model they cautioned every technician who went to the GM school that they needed to have a wooden pole or 2X4 available in case a fellow technician would touch both of the poles of the batteries, and be electrocuted. E-Bikes are likely not that dangerous, but there are issues that e-bikes will bring along like needing some electric knowledge, just like the need for that in the auto industry. I spent $2300, on a scanner for the auto industry to just keep my friends in a particular shop up to date with technology. I got the tool as a byproduct and that helps me maintain my own personal vehicles and the price was well worth it. For example: I needed a key for a newer car and it was $400 for the key. I could buy the blank and program it with the scanner for $100, so it worked for me. But in the future if being a mechanic involves these types of things, being a bike shop owner means making the prices paid to mechanics will be sky high. Smiles, MH

cpach

I don't think it makes a lot of sense currently. It is important to be able to work on eBikes, but most eBike work that is specific to the electronic drive system involves either running software diagnostics or replacing physical parts, which are usually held together by connectors and not soldered. Most motors and batteries are considered nonserviceable by manufacturers.

In a crowded market I think you could build a business focusing on lower cost eBike conversions and possibly battery rebuilding, but this isn't a mainstream part of the bike industry at present.

TiHabanero

A friend of mine went in with a guy and opened an ebike store around 2000. Yes, they were available then, but no one knew about it. What he learned was that the consumer sees a bike as a bike, not a serious mode of transportation or technology. Pricing killed his business and within 2 years he was done. The response he constantly received was "I can buy a moped for that kind of money, and it is faster and I don't have to pedal!".

Ebikes are something special and new. I believe the upper end of the market is where sales success will be found, but it will take some doing to get there. We have had moderate success with ebikes, and learned that the cheapies are exactly that, cheap and for those interested in cheap. Once we got into the mid drive stuff and that level of quality, we have been able to move the units, albeit, slowly, but with more success than the inexpensive models.