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Discussion Starter · #1 ·
I am planning on opening a new bike shop in my local area. There are 3 other local shops, but each have a bad reputation for service and bike selection. I am also part of a cycling group and have notice that the members are driving many miles to non-local bike shops to buy and be fitted to their bike properly. I am also one of these people who bought their bike in another state close by. I have been cycling for years and have always wanted to run a bike shop (childhood dream). I want to offer great service and selection. Any tips on how to properly start a shop? Any precautions I should be aware of? Any information will help! Thanks!
 

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A few points you may or may not have thought of:

1. Starting a retail business is horrendously expensive. For proof, walk through an established bike shop in your area and figure out how much they spent on inventory. Add the cost of the build-out on the raw space. Toss in the cost of salaries for all those service-oriented employees you're planning to hire. Put aside some money for local, state, and federal taxes. Earmark a reasonable amount of funds for marketing efforts. Estimate your monthly budget, then make sure you have several months' worth of expense money as backup. Now add it all up. Then double it. It's still not enough money. I don't mean to be a downer about the finances, but that's the reality of starting a retail business. Most entrepreneurs grotesquely underestimate how much it will cost to start up and run a business that will likely be unprofitable for a substantial amount of time.

2. Be prepared for what it means to turn a passion into a vocation. I used to be hugely passionate about wine -- you know, subscribed to all the magazines, visited all the wineries, chatted with all the winemakers, hung out in the shops, went to all the tastings, breathlessly awaited the new vintages. And then a funny thing happened: I started my own retail wine business and became a wine writer here in Seattle. I don't regret for a second making these choices, but your passion for a "thing" changes when it begins as love and morphs into the source of your income. I no longer own my retail business (very successful, by the way) or write my weekly column. I also no longer have a passion for wine. No, your feelings for a subject don't always change like that. But they usually do. Your love for cycling is a pure thing, unencumbered by the anxiety and heartbreak of asking it to fund your mortgage payment.

3. I don't mean this as criticism, but you've yet to convince me that your town needs another bike shop. Yeah, some people are dissatisfied with the current crop, but you can say that about any city. Obviously, the existing ones are pleasing a substantial number of people, since they're still in business. Be realistic here. What exactly does it mean to you to provide a better level of service? What are the costs of providing this kind of service? Why do you think the existing shops aren't/can't provide it? Do they just not care about service? Are you simply smarter than them? What bike brands are you going to carry that aren't currently being inventoried in other shops? Since 95% of your customers will want a Trek or Specialized, how are you going to sell your customers an alternate brand, since you probably won't be able to stock Trek and Specialized?

4. Have you ever managed people before? Hired them? Lead them to greatness? Set their daily expectations? Done course-correction when they get off track? Fired them when you can see they're not going to cut it? Like it or not, your employees will either make or break your business. Where are you going to find great employees? How will you recognize greatness when it's in front of you? Are you prepared to pay these people more than other shops can in order to have them work for you ... in a business with notoriously thin margins?

5. I will wholeheartedly second the advice that Henry offered: if you haven't spent at least a year working in a bike shop, you have no business opening one. The fantasy of running a bike shop rarely lines up with the reality: there are thousands of little details about running a shop that can't possibly be known to someone on the outside, no matter how thoughtful, intelligent, and intuitive that person is. Many years ago, my father had a passion for tropical fish. Like you, he wanted to convert that passion into a retail store. So he walked into his town's best shop and offered to work there for free. It took a full year of paying close attention in order to understand all the subtleties before he opened his own shop. And then he spent the next two years trying to recover from all the mistakes he made anyway. That's the reality of retail. If you invest your time and money in a retail business without having "gone to school" and without having done all the research, you're either delusional or suicidal.

If you've come to the conclusion that I think starting a bike shop (in a town where there are already established bike stores) is a mistake, I can understand why you'd think that. The truth is, I think it's possible for a great bike shop to succeed almost anywhere. But there's a wide gap between hoping it'll be great and actually being prepared to fund (financially, intellectually, emotionally) that greatness. My father and mother were very bright, friendly people. Excellent with customers. Good at dealing with vendors. Yet they still worked 16 hours a day in order to make their little shop viable. But ordering a dozen sail-fin mollies that don't sell isn't nearly as devastating as ordering a dozen Felt, Jamis, or Litespeed bikes that (for one reason or another) languish on the floor.

Here's the bottom line: if you really want specific help (and not a bunch of back-slapping and "go get 'em" platitudes) from the good folks who read this forum, then be specific about the deficiencies of the other shops and how you hope to address them. Then you'll give our base of shop owners something to respond to. If you're not able to recognize and specifically articulate why it is you think your town needs another bike shop, then you really have no business opening one.
 

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MDW has very, very good advice in his post. (I might quibble with the point that 95% of people want a Trek or Specialized, but not with much beyond that.)

I have owned two businesses. Years ago, I owned a computer consulting business. I convinced myself that there was a need, talked myself into believing that people would want to buy the services that I wanted to sell, and went out on my own. It failed. I did not have a clear plan to differentiate myself from the competition, nor a clear idea of my niche (being too broad can kill a business as easily as being too narrow), nor a clear idea how to market it. Costs were minimal, but I wasn't making enough to pay my bills, and went to work for one of the few clients I'd managed to obtain.

Now, I own an advertising business. It's successful. It's a franchise business, so much of the infrastructure work was done for me, and I bought an existing franchise, so I didn't have to deal with starting from scratch. I planned very diligently, ran very conservative projections, and still, if I were doing it again, would double the amount of startup capital I sought.

My advertising business primarily does work for other small businesses in the area, so we talk to small business owners day after day. Many of them are struggling. Many of those went into it because of a passion for the business, and didn't really do a hard-nosed analysis. Biggest factors in failure seem to be:

1) Market really doesn't need/want what you have to offer.

2) Poor marketing plan: even if people might want what you offer, how are you going to reach them, and how are you going to differentiate yourself from the competition? This oftten gets left out of the planning, or funding for it underestimated, and then people decide "well, let's run some ads" when the business is struggling. But by then it's not part of a coherent marketing campaign, and they often can't afford to do it right because they're already tight on finances. A good, comprehensive marketing plan right out of the chute often makes the difference between a business that makes it and one that doesn't. Look at VHS/Beta and Microsoft/Apple - it's not usually the best product that wins, it's the one with better marketing.

3) Capital. Capital. Capital. Having cash gives you a lot of freedom to overcome the mistakes you'll inevitably make. You need to have plenty on startup, and you need to be very wise about how you spend it. Don't skimp on anything to do with customer service or presentation to the customer, but carefully examine every "backroom" expense. Does it really save time/money? Do you really need it? A lot of people get enamored with "we can write it off as a business expense" and unnecessarily drain their capital.

Good luck.
 

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Ditto above. However: Bikes themselves cost lots and don't make much money. Accessories have a better margin. Service has the best margin. You could get yourself trained up to state of the art and keep yourself there, build a couple of specialty technical skills (e.g., wheels) and real setup skills (not a by-the-numbers thing) and real coaching skills. Then have a very small, off the main avenue, word of mouth business. If you know a local shop that hates their mechanics and has extra space you might work something out. Once you're known, then you can pop out on your own and cherry pick the service, setup, and accessory business.

Make a very very good business plan.

Don't think you know mechanics because you do your own work. I fix home mechanic work on musical instruments all the time.

Don't think you know setup because you can follow a chart or because you set up your own bike.

Don't think people won't find you if you're good. If you're good, you can work out of a van and people will track you down.

I started with a hobby. Our shop will probably do $1M in sales next year. So things can work. Overhead will kill you very quickly. Be careful!
 

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Discussion Starter · #9 ·
Henry Chinaski said:
You should work in a shop before you open one.
I have worked in bike shops and a kayak shop for 2 years. I do my own tune up as well as my own builds. I have a location that requires little monthly rent. I am planning on running the show for a while. I also have a buddy (bike mechanic) who would like to be a part of the shop. I just want to carry a great line of bikes and give awesome service. All of my advertisement and exposure will also be taken care of because I own my graphic design business (since 2003). My website will be my second store front.
 

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Discussion Starter · #10 · (Edited)
My Dog Wally said:
A few points you may or may not have thought of:
3. I don't mean this as criticism, but you've yet to convince me that your town needs another bike shop.
None of the shops in my area do anything for the community. They don't sponsor anything. I am also connected with the local colleges, as they have a bike organization and kayak organization but, no shops help them out. Everyone I talk to in the area (all cyclists and kayakers) say this place sucks for getting gear and good service. They have to drive miles and miles for a good shop. Biking has exploded throughout the world especially with the Tour de France and of course Lance Armstrong. Some people might think this is only a fad but, cycling is a sport and we all want to stay in shape and feel great and ride great bikes. It's an awesome hobby where you are not just sitting done and playing games or eating. People want the best they can get for their money. Which brings me to a not so important topic: Gas. People don't want to spend more gas and more miles on their vehicles to hunt down a good bike shop. The gas prices keep on going up.

Back to the shops in my area. People have problems with these shops. Bad service, terrible selection. The people who own the shop are ok but that is not good enough, and all they try to do is sell you stuff. Bikes should sell themselves. We are all connected to the internet. We all go to RoadbikerReview to check out what people say about the bike that we are considering, the bikes that are at our local shops. Another thing is how badly the bike shops around don't fit the bikes correctly for the customer and people end up buying the wrong size bike. I have my own ideas that will also make my shop a better shop but, I don't want to spill the beans.
 

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Discussion Starter · #11 · (Edited)
then be specific about the deficiencies of the other shops and how you hope to address them
I forgot to mention. Why can't I stock Trek or Specialized? None of the local shops carry these brands except for one shop which carries low end Trek bikes. No one carries Specialized, Kona, Litespeed, Felt, Serotta, Iron Horse, Bianchi, Kestral or Cervelo and these are the bikes that the local cyclists ride with. And there are lots of other great brand accessories that I am sure we all own which these shops do not carry, making the local customer buy their equipement online because it can't be found in the local shops and they charge ridiculous prices on low end stuff.
 

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ADKBiker said:
I forgot to mention. Why can't I stock Trek or Specialized? None of the local shops carry these brands except for one shop which carries low end Trek bikes. No one carries Specialized, Kona, Litespeed, Felt, Serotta, Iron Horse, Bianchi, Kestral or Cervelo and these are the bikes that the local cyclists ride with. And there are lots of other great brand accessories that I am sure we all own which these shops do not carry, making the local customer buy their equipement online because it can't be found in the local shops and they charge ridiculous prices on low end stuff.
How many cyclists are in your area? How many of them want to buy a high-end bike? From a new and unknown retailer? Be sure there's a demand no-one is catering for other than a reputation for service. Reputations build up over time and that's something you don't have as a newcomer. You'll need to do a lot of research before you take the plunge and have a lot of cash standby to cover the period you're not breaking even. Without 100% spousal support better bury the idea with a wooden stake rammed through the heart and a silver bullet through the head to be on the safe side. Good luck.
 

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ADKBiker said:
I forgot to mention. Why can't I stock Trek or Specialized? None of the local shops carry these brands except for one shop which carries low end Trek bikes. No one carries Specialized, Kona, Litespeed, Felt, Serotta, Iron Horse, Bianchi, Kestral or Cervelo and these are the bikes that the local cyclists ride with. And there are lots of other great brand accessories that I am sure we all own which these shops do not carry, making the local customer buy their equipement online because it can't be found in the local shops and they charge ridiculous prices on low end stuff.
correct me if i'm wrong but the big manufacturors limit how many dealers sell their bikes in a certain area, and did you ever think that if these existing dealers don't have these brands it is because the manufacturers don't want to deal in your area? i'm sure theyve probably tried to get specialized and trek. perhaps you should dandy the idea with the big brands before you set up shop and find out that you can't carry any of the big sellers.

btw, you haven't let us know how many cyclists there are in your area and what the population of the nearby area is.... these things matter, if you have a large elderly population or low growth i don't know if this is such a good idea....
 

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It sounds like you're excited. Go for it. You'll need to put in lots of hours and your passion for cycling and running a bike shop will help you to do that. You can tell when you walk in a shop if the owner is passionate about cycling. Those shops have lots of sustainability.
 

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Discussion Starter · #17 ·
OneGear said:
correct me if i'm wrong but the big manufacturors limit how many dealers sell their bikes in a certain area, and did you ever think that if these existing dealers don't have these brands it is because the manufacturers don't want to deal in your area? i'm sure theyve probably tried to get specialized and trek. perhaps you should dandy the idea with the big brands before you set up shop and find out that you can't carry any of the big sellers.

btw, you haven't let us know how many cyclists there are in your area and what the population of the nearby area is.... these things matter, if you have a large elderly population or low growth i don't know if this is such a good idea....
One of the shops did carry Specialized but, they didn't stay with them because Specialized was too demanding for them. Specialized wanted them to carry all their bikes and accessories. This made them too busy. All bikes today are great. With the rise of technology and the competition, bikes companies are striving to make a good bike. If I offer some good brands with clean meticulous service, people will see how careful and knowledgeable we will be when we service their bikes. I was also taught by a well known bike fitter who was trained by Serotta on how to properly fit people to their bikes for different types of riding and racing.

I feel that most of these shops don't know how to properly run a bike shop and yes, I probably don't know how to run a shop 100% but, a shop should have a friendly and fun atmosphere. When you come into the shop you are greeted with a smile. You talk about cycling and how their bike rides are going. You offer them something to drink, making them feel comfortable. You have to give a little to receive a lot down the road. When customers see that you are all about making them enjoy this great sport and that you are not just trying to sell them stuff and bikes they will most likely return. We are not dumb! People these days know just as much as the bikes shops know. We all go on the internet! Hey, if one of my customers were to come into the shop with an online purchase I would have to respect that and would help them with it, not make them feel that they did something wrong. Also when you purchase a bike at a local shop, you should not just be coming home with just the bike. Give them a water bottle and a cage, some stickers, a good discount on a helmet and clothing. Working at bike shop, I now that a box of water bottles, cages or even kick stands, doesn't cost that much. The area's population is 20,000 and growing rapidly. We have some of the best road biking routes and mountain biking trails in the country. We also have some big bicycling events here as well. I am aware that opening a shop is an extremely hard task, but I currently own my own business and I enjoy it. I also feel that opening a shop and running my current business will enhance both businesses. And we can't forget out internet market. That again is your second store front!
 

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Get a good bankruptcy attorney now

ADKBiker said:
One of the shops did carry Specialized but, they didn't stay with them because Specialized was too demanding for them. Specialized wanted them to carry all their bikes and accessories.
What makes you think Specialized won't be the same with you?

ADKBiker said:
And we can't forget out internet market. That again is your second store front!
Of course there are no other internet retailers out there. How could everyone not come to your site and order from you? The internet is the savior to all businesses right? It's your second storefront!

Me thinks you are a little delusional and haven't thought this through very well. Good intentions and bad planning will get you broke every time. Listen to the advice on this board. Read the other thread. It's all good info. The more input you have before you start, the better you'll be in the end.
 
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