politicalgeek

I've enjoyed reading PlatyPius's thread on his new shop and didn't want to hijack with my own questions. The thread has been a good read (as have some of the others here) and pretty timely as I have started looking into the possibility of my own shop.

To start with, I know the challenges of small business ownership. My dad has been a small business owner my entire life and I have watched the ins and outs from the sidelines. I also feel that seeing this has better prepared me for the reality. I know this isn't going to be easy and will require much hard work. I won't have much to start out and it will definitely be a labor of love.

I'm in Central Ohio. We have a pretty strong and diverse bike community and around 20 shops currently. Through some work with one of our bike organizations, I've made some acquaintances in one of our local neighborhoods who have expressed interest in seeing a bike shop open. Despite the number of shops in our region, this area is pretty under served. There has been a recent influx of younger homeowners, taking advantage of the foreclosures in the area which is bringing more disposable income into the area. The area is still pretty rough but there is hope as new people continue to come in.

I feel I have a pretty good handle on the area and what would work best. I do intend to work with some of the cyclists from the area to help me. Largely looking at opening a shop with a decent range of bikes and prices, though largely focused on more hybrid/comfort/commuter/utility around $400-500 or under. Also looking at doing consignment to add some used options.

At this point it's largely just putting things on paper and figuring out what the startup costs would be, what brands I should be looking at, trying to understand the industry a bit better. I probably won't open for another year and a half to two years.

If anyone has any good advice I would greatly appreciate it. Mostly I am looking to learn which brands/manufacturers/distributors are most conducive to a small start up. Which distributors have the best terms. Which bike brands have the better price points and variety.

So far, I am looking at KHS, Downtube, Yuba Mundo to start. Also looking at Seattle Bike Supply (with a warehouse local), which would also give me access to Redline-another brand I am interested in.

I'm also interested in partnering with someone in Central Ohio to make this a reality. I am not as strong on the service shop side of things as I feel I would be on the retail/sales/marketing aspect.

DX-MAN

Wow, dude. Not trying to crush your dreams here, but there are a few things....

Ohio's economy is in the crapper; diverse cycling community or not, 20 other shops in the area is about a guarantee that you will have to provide something NO ONE ELSE does to stay afloat. Even if there was a screaming need for another shop in the area, you won't likely retire eating 'people food'.

Labor of love? Sure. Livelihood? Problematic is too kind a word.

Any of the other shops a co-op? If the cycling community is as you say, THAT could be at least marginally viable.

KHS, Haro, Redline make more 'budget-oriented' bikes than some of the others. It's more of their focus and market share.

Now, having said all that, I do truly wish you the best at whatever you choose. Heck, prove me wrong, I'd like that!

freako

Let me start by saying I never owned a shop so really I don't have a clue. But I have some thoughts that perhaps others will not like. But I would "think" you would want to offer bikes that are unusual from the rest of the bike shops in town or even surrounding communities, You have 20 shops in the area which is a lot so be sure you can bear the competition. Make sure you don't carry a line of bikes that are beyond what the market will bear, but it sounds like with 20 shops that shouldn't be an issue? I like the consignment idea, that would give others with less income to purchase a good used higher end bike then they would normally afford and profit is usually higher on used stuff.

You should visit the other 20 stores and act like a buyer to see first what they offer in bikes and accessories and how they "sell" their product. Learning how to sell is going to be important because you want to sell them a product before they leave; once the person leaves the store without buying chances are very slim that they will return to buy. So study how to sell effectively; car sales people at dealerships have this down to a science.

Anyway I'm a retired military, not a retired business owner or sales person so the above is just thoughts that may not be correct. My second disclaimer!!!

By the way business loans right now are almost impossible to get unless your a minority. DO NOT take a second or as collateral on your house to do this because if the business fails you will lose your home.

politicalgeek

Ohio's economy may be in the tank, Columbus has fared a lot better. We have a very diverse economy unlike a lot of the other cities in the state.

Columbus/Central Ohio is around anywhere from 700k to 1.9 million people depending on where you count. The 20 some shops I mention are pretty scattered around the area with a decent number in far out suburbs. In terms of competition in the immediate area it's more like 3-4 but with the freeways surrounding the particular neighborhood I am looking at, access is pretty difficult. I do plan to offer unique products. We really have no shop geared to the utility market, which is part of my interest in carrying Downtube and Yuba Mundo. We also have a rail trail project starting about 2-3 miles from the potential location which will tie in to a much larger state wide rail trail system, providing opportunity with tourism.

As to loans, I plan on doing very little on credit or loan. Part of the reason I am projecting at least 2 years to get this going. At this point I merely want to explore and evaluate the costs, consider the options and products to make the place unique. Property is also very cheap in the area. One building I am looking at is 14k on short sale.

I absolutely understand this is not an easy proposition in the least and needs very careful consideration.


Thanks for the thoughts.

ETA

I should add: from what I have seen being involved in the bike community here, people tend to be pretty local in their choice of LBS. Most want something pretty convenient to either work or home and tend to do most of their purchases and service work at that shop. Outside of that, they'll hit some of the other shops based on the niche those shops are filling and the products they carry. I think catering to a lower budget market is something that largely hasn't been done here. The utility and commuting market is something that isn't really touched here as well. We have 1 co-op that is doing well, another that is barely on the radar and 2 used shops (the co-op and used shops both in the campus area).

CNY James

Agree with the point to not use your home as collateral HOWEVER, loans are not impossible to get, regardless of your racial background. Check with your credit union, lending is alive and well in the credit union system. Trust me, it's my business. Check with your SBA too. You're going to need a business plan in place regardless of your borrowing source and you may need to show income, even after your start-up (i.e. you have a job to make ends meet until your business gets off the ground) do the legwork now so that you can refine as you go & it is one less thing to put together when it is time to apply for loans.

CNY James

get yourself a local map and figure out how close each respective shop is to the other. also, look at where they are relative to other businesses and traffic patterns/accessibility. We have 2 shops here that I can literally walk between in < 5 minutes. Both have been there forever, both are successful. Proof that proximity might not matter as much as the quality of your service. This is 100% opinion but I think one of these shops stays in business because they are that good and the other because they are that visible.

figure out approximately where you would be located & what your proximity to other shops is. How much is retail space in that area? Will you rent or buy? Is it easy to get to and from? Is parking free in that neighborhood or do you have to park in a municipal lot or pay the meter? Not all of your customers will be on bike. Myself, I never ride to my shop cuz I am only going when I need a part or repair. Also, might not be a bad idea to get some experience in the business working part time at a local shop.

IMO, the sale is the smallest part of a shops value, its the service before and after the sale. You can sell 100 bikes but if 90 of those people come back for tune ups, parts, or repairs and you botch em, you'll be out of business in no time.

politicalgeek

Retail averages $5/sq ft. Though I have found a building on short sale for $14k which would allow me to own the space outright and reduce overhead.

Freeway exit within a mile or less, the business district is located on one of our principal roadways for the city and one of our major bus lines runs on the street. New trail projects should be starting in the next 5 years or so to increase access into the area. Plenty of metered parking and this particular building has a deep enough lot to add customer parking in the rear.

Two major employment centers are within 1/2-1 mile from the shop. I know we (I'm part of the Bike to Work Week Planning Team) want to work with employers through out this area of town to get better representation in the challenge. Also 2 schools, an elementary and high school, within 1/2 mile or less

politicalgeek

Maybe to clarify and help make this even more productive for me (I do appreciate the reality checks, seriously it's not sarcasm):

In an ideal world, with a great economy, supportive and conducive market and location which bike brands/manufacturers and wholesalers offer the best working relationship with small shops? I've seen the accounts on other sites of horrible relationships and terms with some companies. How true are these accounts?

Beyond cycling, which credit card processing companies are better to deal with? Is it worth it looking into joining a group like The Bike Cooperative? Or better to go piece meal and shop around for consumer financing , warranties and the like?

Again, thanks for all the friendly advice. It's helping keep things very real for me (and helps the thought process).

wahoonc

Andrew,
Good luck on your new adventure.

I find the Torker line of bikes interesting and affordable. Also available from SBS. I have seen KHS and have heard good and bad when it comes to selling them. Not the bikes themselves just being able to market them effectively for whatever reason.

Aaron

politicalgeek

I have some ideas on marketing that might help. I've also heard of the issues on selling them.

I know a number of cyclists in this part of town and as I get closer to the end goal, I do want to enlist their help in talking with the people most likely to be my customers and see what they would buy.

nwmtnbkr

Decades ago, when I was getting out of graduate school, the conservative rule-of-thumb was that if you wanted to start a business you should have enough capital to cover your business and living expenses for five years. I don't think that advice has changed. Anecdotal information about the economic health of your community may not be very accurate. If you have any friends who are attorneys, ask them about the pace of business bankruptcy filings in your region. The last general articles I read in the summer indicated that business bankruptcy filings in Ohio had increased by 22 percent. The number of filings for your area may be slightly different; clearly, some of the communities in the northern part of the state may be suffering slightly more than your area. Talk to your father and get his views. As an experienced business owner, he can give you invaluable advice. Rather than re-inventing the wheel, and building up your own business reputation and customer goodwill, why don't you feel out whether any of the owners of existing bike stores that have a good reputation might be willing to sell. Buying a well-established business with a good reputation and excellent customer goodwill would give you a head start, if you can afford it. If you have children, think carefully about endangering your financial prospects if your business fails. Definitely, sit down with a good attorney and organize your business in a way to shield your personal assets as much as possible (yes, get advice on incorporating). Good luck. Don't give up your dream, but be willing to postpone it if all the indicators are that this isn't the right time to pursue it.

politicalgeek

Thankfully I am single and no kids. And I think the majority of our shop owners aren't at the age they would consider selling off and retiring. It never hurts to feel it out but I think this particular neighborhood has a need. It's also ripe for this with the investments and plans for bikeways in the area.

no1mad 

I wish you well, but have some storm clouds.

-You say you're 2 years out from opening? There could be another price increase on your potential inventory in that time frame. Remember 2008?
-You got a shot at a building now. If you get it, and the funding falls through on the shop, then what? Could the building be re purposed somehow?
-You claim that you want to serve the commuting/utility market. That's an uphill battle in the US. Americans still perceive cycling to be purely recreational in nature, that's why LBS' sell mainly road/mtb/comfort.
-You aim to cater to the lower end (price point wise) customer. I commend you on that, but you realize that same customer base would be just as happy to spend even less on a bike from an online source or a big box department store?
-You claim that you aren't the best wrench around. That's both good and bad. Good that you recognize your weakness. Bad that you may not be able to tell someone who is from someone who isn't. After all, you don't want the build/service reputation of your shop to be equivalent to a big box chain, do you?

politicalgeek

All fair points.

I am looking into how feasible having a consignment service would be, which would help some of the inventory concerns. Something I have seen in other cities but not here. Not only carrying consignment bikes but also bags, racks etc. in good, used condition.

As to the building, the neighborhood is going through a rebirth. I am pretty confident I could either sell or lease and regain some of the cost.

"Hybrid/comfort/commuter/utility" from my original post. Serving the commuting/utility market won't be the major focus but a part of it. First and foremost, providing products that fit the needs of the immediate residents and secondly working to build a destination shop of some of those niche products. I think it's possible here. As to the lower end, it'll be a focus but I do want to strive to maintain a balance. Which is part of me looking at which brands offer a diverse product line so I can have a $300-400 new bike next to a higher end next to a <$200 used consignment bike. Very few of our shops cater to anything but a mid to high end consumer base and I have heard rumblings of a need to see some better value. With the low cost of real estate in this neighborhood, I can hopefully work on keeping overhead low to be able to provide a higher quality of service to consumers with their purchase-like sizing, financing, warranty programs and the like.

Overall I have always seen an LBS as something akin to a convenience store or grocery store. Every neighborhood/region has one serving their immediate needs. You might shop around, travel to a more gourmet shop for something special but when it comes to the basic products you'll tend to shop at the store most convenient. Customer service is an absolute must, of course, as well as the knowledge and quality of products.

I'm taking steps to get a better handle on my bike skills. Attempting to weld a 'bent from scratch this winter and do the assembly my self should help. I'm looking into the various certification courses to help increase my knowledge. That's something I am going to have to consider.

no1mad 

Well, sounds like you have given this some considerable thought. Good on ya!

Take a look around at what other brands are available in your area. Some good ones that have a broad spectrum of price points are Kona and Jamis, as well as the ones already mentioned in this thread.

Also, something else you might want to consider is bike rentals, though you have to be careful with that. There are only two shops in the Tulsa metro area that even touches used/consignment, and one of those is the only one that rents. Hourly and daily, but weekly is not advertised.

politicalgeek

We have several shops doing rentals, including a new non-LBS bike rental startup. If I do rentals it'll be probably more as a way to hopefully brand and market: renting Yuba Mundo's for a day or folding bikes.

nwmtnbkr

With gas prices hovering at close to $3.00 per gallon in much of the US, it doesn't bode well for the yearly ritual of boosting gasoline prices come spring (with continual hikes through summer). Another shot of $4.00 per gallon gasoline prices will clearly have an inflationary affect. Weary, debt-strapped consumers in the US might just seriously begin considering supplemental and alternate forms of transportation. If that happens, you may want to consider a range of moderately-priced folders as well as electric conversion kits and some inexpensive to moderately-priced e-bikes, like Currie's Ezips and Izips . (FYI--Amazon reported a 6,000 percent increase in the sales of e-bikes in 2008, the last time we had gas spike to/and above $4.00 a gallon--if you don't believe me, read these links https://keetsa.com/blog/auto/the-worl...lectric-bikes/ https://articles.sfgate.com/2008-08-1...e-rider-pedals.)

StephenH

My local bike shop has a weekly ride. I guess I rode on that for a year before I ever bought a bicycle from them. So business can build slowly.

When I was shopping for that bike, I looked at several brands of touring bikes. What I found was that some fairly popular bikes have local dealers, but nobody actually stocks them. (Example: Surly LHT). You can potentially have a market that is being overlooked.

I would treat the Utility Bike market very cautiously. I find a lot of internet discussion about bakfiets, etc., but there appears to be just about zero market here locally for them. So just because people in Portland or NYC buy them doesn't mean you can sell them where you are. A lot of it relates to how easy it is to get around your area by bicycle.

Nobody here locally sells industrial bikes. You have to order off the internet or go to the Houston area. So that's a potential market. Another potential market is to offer on-site service for those bikes, just send a mechanic out once a week or month or whatever to do whatever needs doing. I don't know if anyone offers that service, or if there's a market for it, but it's a potential.

It seems where a lot of people go wrong on the bike shop business is saying "I love bikes, so I'll open a shop", when they need to say "I'm good at running a business, so I'll run a bike business". You seem to be approaching it from the right angle. Good luck.

politicalgeek

^ Thanks. I'm still young (24) and have been stuck in a rut working to finish school off and listening to what everyone else felt I should be doing. A long conversation with an old and very close friend has slowly snapped me out of that. I first considered going into business for myself about a month and a half ago and have been carefully looking into it since, with the goal of finishing out some type of education while slowly working towards an opening day.

I should also mention our city is working towards installing over 500 miles of bikeways in the coming year. With a rabid and impassioned local cycling community, I don't doubt we will see this happen and the city held accountable to their pledge. For me, in this location, it means being a stone's throw from a trail head for a large portion of the city's trail network, as well as being a gateway for cyclists coming into the city from the rail trails.