General Cycling Discussion - What does it take to run a bike shop?

Every once in a while when I complain about my job my girlfriend asks me "Well, what do you really want to do?" I always reply, "Play professional Baseball." Then we have a good chuckle and she asks again. "I want to own a bike shop." I mean, it's not as rediculous an idea as playing professional baseball is it?

My educational background is in Computer Science, but I consider myself to have good business sense and I've take some marketing classes as well. I do think I am capable of someday running a business and running it well. My bike skills, however, are currently limited to a few turns of the wrench here and there. The interest is certainly there and I love to consume bicycle knowledge, but I wouldn't be able to be a head mechanic or even provide professional fittings.

Well, an oppurtunity has up and bit me in the face. There's a bike shop along a major bikeway for sale due to family illness. I've ridden by this shop many times, but never stopped in. It always looked to me like they could do so much more to attract business. I'm not sure if this is the perception other cyclists share, but I plan to do a little research around this.

So the question is - if I hire the right people... smart people... customer oriented people, and trust them to do their jobs, what's to stop me from jumping at this oppurtunity? What are the pitfalls? Should I forget this stupid idea and find something else to do? Am I crazy? What am I likely overlooking (beyond the need to develop a business plan and get financing)?

That's the key...hiring the right people. To attract the best, you have to be willing to pay them more than the other guys. Finding those people is a whole other challenge.

http://www.bikeschool.com/WhatsNew/whatsnew.cgi
they teach a class on bike repair and shop ownership. the hardest part of customer service is not making the customer feel like an idiot, even though they may be.

Holy Crap!

Are "You" really "Me"?

I have a degree in Comp Programming, and I HATE it, and have always dreamed of playing for the Red Sox (I'm SURE I could learn how to pitch a Wakefield knuckler) And also use a "bike shop" as my fantasy backup plan....

Basically, I'd work on bikes for food.

It depends on your business skills and your cash flow. I have worked for small companies all of my life and I have worked for owners that became wealthy and some not so wealthy. I worked in high end home and car audio shops for 9 years and I have seen a bunch come and go. It seems the key is separating your feelings for bikes from the business. You have to love the business not the bikes. The most successful people I have worked for loved the deal not the product.

Then there is cash flow! You might be the best shop in town, but if you can’t make payroll, your shop will not make it. I promise you, you will spend more time with cash flow matters than with bike issues. There is tons of ways getting, keeping and spending cash, how long will it take you to learn them all? Will have you enough cash to survive while you learn them?

Here are a few things I have learned about owning a company.
1. A 40hr work week is a vacation. (you won’t be putting many miles on bikes.)
2. Cash is king and how many mistakes can you afford to make?
3. What is a pay check?
4. You will think about your business 24-7 NO REST!

After you get that down, then we can talk about the retail side of things. Dean

http://www.bikeschool.com/WhatsNew/whatsnew.cgi
they teach a class on bike repair and shop ownership. the hardest part of customer service is not making the customer feel like an idiot, even though they may be.

I second UBI. I took a one week class there, and i LOVE it. I learned so much it is rediculous. And I only took the Intro to Maintenance class cause I was to young for the pro class :(

Also get an MBA and hire one for your manager...

Check out SBA and business development advise.

A small business is a small business is a small business. 95% fail in first 5 years.

1. Secure adequate capital. Plan for at least 6 to 9 months of cash reserves.
2. Create a business plan and do adequate market research and business development.
3. Bikes are a maturish, non growth industry. If you're serious, go to interbike. I think it's the end of this month and get the information from those who know the industry.
4. Dual track your business plan: Path A- with ideal personnel, Path B- with non-ideal personnel.
5. Set up the business with proper legal structure. You may not want to stay/be a sole proprieter. In case you fail, you need to limit down side risk.

I quit my job last year and got a job at a bike shop, thought it would be cool and all. I liked working there, but I couldn't pay my bills making $8.50 an hour.

I'd like to own a bike shop too though.

Just out of curiosity, what shop is it?

Yes... curiosity...

-Rips up tuition check and readies pen and checkbook-

Its an existing business so you should be able to go over the books to see if it is worth the investment, and what the staff turnover is. You should then make your business plan based on what is there already. Is there a possibility of expanding into other fields, such as locksmithing, lawnmower repair, skateboards. Can family back you financially or will you have to rely on the bank.

...Here are a few things I have learned about owning a company.
1. A 40hr work week is a vacation. (you won’t be putting many miles on bikes.)
2. Cash is king and how many mistakes can you afford to make?
3. What is a pay check?
4. You will think about your business 24-7 NO REST!

Dean got it right! As owner of a small consulting business (selling services only, not products), I can tell you that stress will kill you unless you manage it well. Cash flow makes or breaks your business - especially if you've got others in your employ. Start out with at least three times the amount of cash you estimate that you'll need to get started, be prepared for "roller-coaster" cash flow situations, and separate the business from your personal life! Being a successful business person doesn't make you a successful person. Being a failure at business doesn't make you a failure at life.

Finally, treat your employees with courtesy and respect. Their life goals probably have nothing to do with your business aims. They're only working for you on a temporary basis and for a paycheck. Don't expect them to have the committment to the business that you do, and if they do go "above and beyond," reward them lavishly. NEVER CRITICIZE YOUR EMPLOYEES IN FRONT OF YOUR CUSTOMERS! Even if the employee makes a horrendous mistake, square it with the customer and speak to the employee later (and in private). Use every opportunity to praise and reward your employees - remember that they're human and have their own problems, strengths, and weaknesses.

No matter what happens, be able to look yourself in the mirror and have self-respect.

Good luck! If you open a shop, tell us where - I'll try to come shop with you!

Sometimes you just have to go for it....if you don't you will think about it forever and regret not doing it. Even if you go, and fail or put in tons of hours and become disillusioned, you will have learned and experienced something in life. That is what life is all about, the experiences, the adventures etc... It is not about how much money you have collected or what you can place onto your resume, rather it is the intangible things in life that truly add up.

So too few people even are aware of that...such as shame for most people go around dreaming of what they can be and never go for it. They go around buying all the material things in life and never realize that it is the non-material things in life that really make a difference.

My grandmother / father made over a million dollars in oil in the 1950's and lost it soon after and they invested in oil!... They never regretted it for like they told me time and time again, it was the adventure of doing. Bike shop...go for it!

I think you've received some sound advice here from some people likely more experienced than I. One piece of advice i will give you is to try and look objectively at the oppurtunity. I know you have looked at it romantically and think it is always what you have "wanted" to do.

Be aware, that since you have never done it, you are only speculating on what it will be like. Chances are that it will be NOTHING like you imagine it will be. Most things aren't. I have to admit that the allure is there for me as well. Hmmmmmm, being surrounded by bikes, all day....that would be perfect! Or would it?

In high school i ran an icecream shop in the summers. It has taken nearly 20 years to learn to enjoy icecream again. I would never want that to happen with bikes. I simply love them too much. ;)

Finally, treat your employees with courtesy and respect. Their life goals probably have nothing to do with your business aims. They're only working for you on a temporary basis and for a paycheck. Don't expect them to have the committment to the business that you do, and if they do go "above and beyond," reward them lavishly. NEVER CRITICIZE YOUR EMPLOYEES IN FRONT OF YOUR CUSTOMERS! Even if the employee makes a horrendous mistake, square it with the customer and speak to the employee later (and in private). Use every opportunity to praise and reward your employees - remember that they're human and have their own problems, strengths, and weaknesses.

No matter what happens, be able to look yourself in the mirror and have self-respect.

Good luck! If you open a shop, tell us where - I'll try to come shop with you!

You should be in management. I've never met a manager like you which is why most of them are horrible to work with.

My educational background is in Computer Science, but I consider myself to have good business sense and I've take some marketing classes as well. I do think I am capable of someday running a business and running it well. My bike skills, however, are currently limited to a few turns of the wrench here and there. The interest is certainly there and I love to consume bicycle knowledge, but I wouldn't be able to be a head mechanic or even provide professional fittings.

Well, an oppurtunity has up and bit me in the face. There's a bike shop along a major bikeway for sale due to family illness. I've ridden by this shop many times, but never stopped in. It always looked to me like they could do so much more to attract business. I'm not sure if this is the perception other cyclists share, but I plan to do a little research around this.


I would get a part time job in a bike shop and see if you like SALES! Sales is hard job and the smell of new bikes gets old pretty fast if you can't sell. Bottom line. If you are not a saleman, you will struggle if volume is low and did I tell you weekends are for working? Yes, you will have a day off and it will usually be on a Wednesday or Monday because there is no way that store can be closed on Sunday or you'll lose 20% of your sales or more!

As a business owner, you better brush up on your bike skills because this is where the money is and you may not be able to afford payroll. Who's going to fix the bikes should your employee get sick, go on vacation or quit? Being able to fix bikes will put more money in your pocket because selling bikes is a low margin business.

Ask for the past 5 years tax returns to see how much money they're making. Now you should have a hard reality of what it takes to run a business and I can almost assure you there is probably little profit in it for them. If the owners tell you they under report their income in order to explain their poor tax returns, run quickly for the door.

You should be in management. I've never met a manager like you which is why most of them are horrible to work with.

Please don't make me blush! I worked for 25 years for the worst-run company in the world. It was a valuable experience! Now that I'm in business for myself, all I have to do is the EXACT OPPOSITE of what the managers at my former employer did & I'm bound to succeed! :D

...Be aware, that since you have never done it, you are only speculating on what it will be like...

Exactly correct, Ranger. Allow me to dispense one more piece of advice (worth exactly what you're paying for it :D ) to the original poster:

DO SOME INFORMATIONAL INTERVIEWING!

What you do is call the LBS (preferably more than one), and ask to speak to the owner. Tell the owner that you're considering a career change to her/his field, and that you'd like to interview her/him just to see what it is like. Offer to take the owner to a lunch or to coffee at your expense & explain that you'll use no more than 30 minutes to an hour of their time.

When you get the interview, ask about what it's like to run a bike shop - what does the owner do with her/his daily time? how much money did it take to start? how long was it before a profit was turned? what is the thing the owner likes best about being a shop owner? what is the worst? TAKE NOTES!

You get the drift. Since this is a "no-stress" interview, the owner will tell you things that they would never disclose when interviewing a potential employee. You'll also find that about two out of five informational interviews that you do will result in job offers! You may want to try out working in a bike shop before considering buying/opening one.

You'll come away with a MUCH better idea of what a bike shop owner REALLY does. You may not be so keen on the idea, or you may become much more interested. Either way, your time and money are well invested.

Good luck! :)

Please move to clarksville and open a shop, I'll help you get going. I would do it myself, but I don't want to be married to a shop. I would rather ride. :)

Also get an MBA and hire one for your manager...


A good recipe for going out of business. You can't afford any dead weight.

Jim

Exactly correct, Ranger. Allow me to dispense one more piece of advice (worth exactly what you're paying for it :D ) to the original poster:

DO SOME INFORMATIONAL INTERVIEWING!

What you do is call the LBS (preferably more than one), and ask to speak to the owner. Tell the owner that you're considering a career change to her/his field, and that you'd like to interview her/him just to see what it is like. Offer to take the owner to a lunch or to coffee at your expense & explain that you'll use no more than 30 minutes to an hour of their time.

When you get the interview, ask about what it's like to run a bike shop - what does the owner do with her/his daily time? how much money did it take to start? how long was it before a profit was turned? what is the thing the owner likes best about being a shop owner? what is the worst? TAKE NOTES!

You get the drift. Since this is a "no-stress" interview, the owner will tell you things that they would never disclose when interviewing a potential employee. You'll also find that about two out of five informational interviews that you do will result in job offers! You may want to try out working in a bike shop before considering buying/opening one.

You'll come away with a MUCH better idea of what a bike shop owner REALLY does. You may not be so keen on the idea, or you may become much more interested. Either way, your time and money are well invested.

Good luck! :)

Sound advise. I've run my own business for ten years and would not hesitate to do an interview with someone who was interested in following my career path. Gaining experience from someone who has actully been there would be literaly worth its weight in gold.

Jim

Finally, treat your employees with courtesy and respect. Their life goals probably have nothing to do with your business aims. They're only working for you on a temporary basis and for a paycheck. Don't expect them to have the committment to the business that you do, and if they do go "above and beyond," reward them lavishly. NEVER CRITICIZE YOUR EMPLOYEES IN FRONT OF YOUR CUSTOMERS! Even if the employee makes a horrendous mistake, square it with the customer and speak to the employee later (and in private). Use every opportunity to praise and reward your employees - remember that they're human and have their own problems, strengths, and weaknesses.


Can I come to work for you???

(Hire an MBA...) - A good recipe for going out of business. You can't afford any dead weight...

I must reluctantly agree with Jim. I found that CPA's and atttorneys are ALWAYS willing to charge you top dollar - whether or not they know a D**N thing about your business. They'll try to be helpful, but they aren't worth the expense.

Can I come to work for you???

Unfortunately, you'd starve! My business is VERY occasional. On the other hand, when I work, I make up for lost time! :D

DO SOME INFORMATIONAL INTERVIEWING!

You get the drift. this is a "no-stress" interview

Don't forget to ask:
1. What are your three best ways of keeping the bike shop profitable?
2. What are the three biggest mistakes you made once and would never repeat?
3. What have you found to be the best sources of good solid bike shop management advice?

So has the idea of asking business questions of bike shop owners made this dream more interesting or less? If just reviewing the questions makes the idea of bike shop ownership painful, don't do it. If however you are drooling at the opportunity, go for it. But go with both eyes and brain open, not just your heart.

Pretty much all retail means lots of hours and in many cases no vacations ever. You really better love it. Sometimes the things we do for fun can have a way of no longer being fun when we have to do them for a living.

One cannot just "go for it" when acquiring a real business. Jeez! For one thing (of many, several of which were already mentioned) you need to look at historical net cash flows and profits, project what will happen to them in the future, and make sure that after you cover repayment of the financing the costs for the acquisition there's enough for you to live off of, and a cushion so you can keep the lights on and the store stocked during lean months or when things go wrong. A good accountant could probably be a big help.

A good recipe for going out of business. You can't afford any dead weight.

Jim

i couldn't agree more

Lots of good advise here.

Another factor to take into consideration is price. What's the going rate for a bike shop? That will depend on how healthy the shop is. Again, this is an area where it might pay to pay for professional advise.

Bicycles are low margin. That means low mark up above your cost ( you said you're not a businessman right?). Most shops make it on service repairs and accesories, which are high mark up. To show you how this works call a local car dealer, brand unimportant, and ask what their hourly shop rate is. The answer will be somewhere between $60 and $90 an hour. The mechanics that do the work don't make even half of that. Same deal in the bike biz, if on a different scale. Of course you are supplying a shop, electricity, tools etc.
One way to increase traffic and increase margins, if it's your desire to do so, is to diversify. Living in a cold(moderately) state one the areas most succesful shops sells tennis and swim gear in summer while specializing in bicycles. During Fall/winter the store switches to ski equipment while downsizing the bike inventory. This store has expanded from a small one room building to a large multi-level store in a new shopping center which they had built when they built their new store. They own it all, so obviously they've found a way to make lots of money and be in the bicycle business. Like a previous poster wrote, it's about loving the business, not the product.

Also be aware, that working retail is a tough gig.

Also get an MBA and hire one for your manager...
A good recipe for going out of business. You can't afford any dead weight.This is exactly why bike shops are such mom & pop operations that are going under for various reasons of profitability and efficiency. I worked in a shop for over 10-years and after the last couple years of managing it, I can really see the need for more effective management in this industry. This shop grew from a simple self-serve college operation into a chain of 7 stores for a reason. They were profitable enough to allow the owner to develop another business catering wholesale information services to bike-shops. Here's some ideas that may help out mom & pop operations:

1. information technology is of primary importance. We developed a detailed training, operations and management books for the entire operation. Employees are trained from day-1 with procedures from the Training Manual. Manual-labor repair and stocking procedures are outlined for people who've never touched a wrench in their entire lives. The quality of training is directly related to the quality of work you get from your employees. Management- and customer-service and sales-training is vitally important as well. There's only so much that can be done in-house, so select people with the initiative and drive are sent to Carnegie seminars on various subjects. Everyone is encouraged to write up reports on how operations can be improved.

The Operations & Management manuals details how the business is run. In a way, it's a detailed step-by-step expansion of the business-plan. Collecting and processing information can point out bottlenecks in the operation. Streamlining or eliminating those bottlenecks yields efficiency benefits. Tying in POS with inventory was a major move. We originally had a guy that looked through boxes and counted inventory every Thursday and he'd call up suppliers on Friday to order new stock. Sure, that's fine, but it's 4-7 hours/week of salary that can be trimmed. When he left, we got bar-code scanners to manage inventory coming in and going out. UPC codes are on pretty much anything that comes into the store. Labels can be added to those that don't. New procedures were added to the manual. We were able to reduce storage-space requirements by 25%, adding it to showroom space. Inventory turnover increased to almost just-in-time inventory management. Wasted inventory was reduced significantly and employee-theft became a non-issue. Check-outs for customers happened instantly. Reports are run on the rate-of-change of various inventory items. Items that are gaining in popularity is automatically pinpointed, things going out of fashions are noted, order-volumes are automatically adjusted.

2.Accounting need not be pointed out as a major make-or-break step in all operations. That's closely tied with POS & inventory. Taxes are a major issue for any business and a CFP and tax-attourney are worth their weight in gold. They're really only needed occasionally for consulting and they have a full copy of the operations & management manuals along with the business-plan so you can fully utilize their skills to fully optimize that part of the business. Bookkeeper can take care of the reconciling the daily totals and ledgers in a database. Paychecks were done by outside payroll company through same database.

3. Customer-service and sales-training are a necessity. Your staff is what presents the image of your organization to customers. Professionalism, customer-service and being resourcefulness in problem-solving are pre-requisite skills. Repair-abilities and other manual-labor type tasks are simply a given and easily trained. It's really hard to get the customer-service angle across to teenagers and college-students. They're still searching for the identity and sense of self-worth and in a way, are more into themselves than the general society around them. That's fine, it's part of growing up.

But as manager, you have to take that into account. Put your best workers with people-skills at the front-counter. Hide all the mechanics in the back. It's disgusting how many times I've seen shops with bike-stands right behind the counter where a customer can see the repairs when they walk up to the counter, and then the mechanic ignores them for 2-5 minutes as they're lost in their repair job.

Demanding, self-important, righteous customers are probably the ultimate test of your staff. How many of them have had training in business negotiations and making deals? Carnegie has a great series of courses all over the world, well worth the investment in customer-service training. However, the idiom of "the customer's always right" is NOT the rule. You can train the staff to diffuse crisis situations skillfully, but you also have to back them up. If they're being abused needlessly, it's not worth the measly sale at the expense of staff morale.

Sales is one area that can always be improved. There are ideologies and practices in sales that have been fine-tuned and honed to perfection through out the centuries. There's no way any single person can learn all of these ideas through hands-on practice. This ties in closely with techniques of customer-service. There's no shortage of training-programs to train staff in sales, then once they have the background info, hands-on training makes them that much more effective. Commissions and profit-sharing are usually good incentives depending upon how they're structured.

4. Supplier relations is another major component. Some bike-manufacturers have stipulations on who you can purchase from. Some suppliers have great pricing, but variety may be limited. Others have lengthy shipping times. Managing all this information effectively requires an IT-infrastructure. Bike'alog has brought shopping from print-catalogs and sales-sheets to a high-tech level. With ties to that database, we have our own software that allows point & click shopping. It creates purchase-orders automatically from the list of items you want and groups them by suppliers that you have accounts with. It also picks the ones with the best pricing when more than one supplier carries the same part. This is also closely tied in with the POS and inventory systems. Parts coming in are scanned into inventory and verified against the purchase-orders.

6. Outside consultants who are highly specialized in and skilled in a very specific aspect of business can be a tremendous aid. This is the new model of fast & efficient business. Lifetime- and career-employment is a stone-age idea. Using financial and legal consultants as already been pointed out and their ideas are tremendously helpful. Highly focused and skilled teams can assembled to work on a specific task and then disbanded once the project has been finished. There's millions of extremely experienced and insightful people out there in business; just tapping a couple of them and gleaning useful ideas can be very helpful to your business. It could even be as simple as doing that interview with a successful shop-owner from across town. Just make sure his operation is one that you want to emulate.


The bottom line is efficiency, getting the identical results with lower costs and less time. Spending a little extra time in the begining with fixed-cost set-up will help you a tonne later by reducing your operating expenses. By examining how information flows through your business, how parts flow in & out of your shop, how people & employees move through the shop, you can maximize your profits and stand a chance against the super-megastore chains.

BTW - you don't really have a "business" until you can set it off and let it run on its own. As an owner/principle, you're designing the structure of the business. If you're trapped there everyday propping it up and doing menial-labor tasks, you really don't have a "business", you have a 'job". You need to step back and look at re-designing the structure. Your role is in strategic planning for the future, not taking out the trash every night...