Own the property. If borrowing and even if you're bleeding on down months, at least you can still be putting that mortgage towards equity.
Keep a very sharp pen on overhead---- everything.

Don't sign any franchise agreement. Be truly independent. Join an indi dealer bike network for new inventory. Sniff out dead stock, 18 month old bikes from around the country. Be brutal with offers. Its just business, no hard feelings if you want to survive.

Your profit should be made at your commitment at when purchased. Rotate no longer than 90 days. Keep dumping it. Close the deal while that customer is right then and there. Be fast on your feet and what will make them super happy. You can have boxes of quality brand jerseys that might've bought for pennies on the dollar... retail tag them at $55 or whatever. Though toss them in to close the bike sale. Don't look back. At worst, have that bailout plan, $1 profit is better than nothing. Have handy your fave list of flippers. Use them. They're like having free salesman.

Don't be loyal to any single parts wholesaler. In these days when retail customers routinely buy direct and cheaper than dealer wholesale, you better do the same and even push for a few volume points with that seller. Play the game, sometimes the seller doesn't want your business as dealer and become a competitor. So perhaps then bypass with a tax reseller number and just use your private CC.

Service. 100% upfront customer prepaid for parts. Have them sign agreement for when service is complete, 10 days to settle and pickup. Show terms if customer fails that, storage fees, percentage added etc... 60 days post that, they lose rights to property / items etc..

Run a tight ship.

my word.

i'm exhausted just reading the replies.

edit: i just read the entire thread again. i feel sorry for some of you guys.

It seems like a very tough business and fewer can make it every year. I suspect Dave Mayer is closer to the mark than many here want to admit. Even if the markup on a $5000 bike is "only" 33%, you gotta sell 300 or so inner tubes at 50% to make the same amount. Yeah, you gotta be nice to everybody and have competent mechanics if you want those $5000 customers to keep coming back, but if you are not in a location where $5000 customers ever go then you have a lot tougher road. You also gotta hope some of those $5000 customers have a kid living in the basement who wants to be a bike mechanic, because you sure aren't gonna pay anybody a living wage plus benefits on what most people are willing to pay for repairs.

A couple of mechanics from an LBS near me recently opened their own "shops" in nearby towns, but the the shops are very small and basically do service only plus very basic consumables like tubes. Too soon to say whether this is the way of the future.

More: when I was shopping at the big-brand bike shop, I noted the parts that they were clearing out. This shop has been in business forever, and is apparently successful. Certainly during the pandemic, they had customers lined up out the door (socially-distanced spaced of course).

They were clearing out all obsolete parts that presumably would not serve the profitability and sustainability of the shop. This included all freewheels, all chains and cassettes for <10 speed drivetrains, all rim brake pads, all older brakes such as canti's and V-brakes. etc. All rim-brake wheels had been cleaned out in a previous purge, and no mid range or above rim brake wheelsets were available, even by order.

No bike that used rim brakes could be purchased, except for a few lesser kids models. Except by special order, no replacement parts could be obtained for bikes/drivetrains older than 10 years old.

Lesson reinforced: if the bike shop objective is profitability and long-term survival, then cultivate preferred customers and aggressively manage your inventory. Inventory is a key tool in screening your preferred customers.

What he said.

From what i see it is some mix of the following

1. being able ride the trends getting on and off at the right time....i.e the cruisers, then fixies, no e-bikes
2. Family owned and third or forth generations are buying their first bike from third and forth generations
3. Good service
4. Niche specialty
5. Owning building
6. Small regional chain
7. low prices with quality

In my area (San Jose)
Hyland and Wheel Away hit 1, 2, 3, 5
Slough's hits 4,3, (defunct cupertino bikes and Silva's fit here)
Mikes bikes hits 6, 3,1

this is not all shops by any means but ones I have dealt with

It is a similar thing for me with the owner of my LBS, we have known each other for 45 years due to a shared interest in motorcycles and rock music and we can chat for half an hour about that and I spend five quid on a couple of brake cables, he does admittedly have his son and a couple of staff members to make up for it.

(snip)

So which type of customer should you cultivate? .[/QUOTE]

The answer is all of them. Yes the person pestering the mechanic is not likely to be a net benefit, but the downside of poor customer service in terms of word of mouth and google reviews is severe. If shops are giving you discounted consumables, they are cultivating you as a customer. And obviously, the customer dropping 10k after a short chat is the unicorn that shops will do everything to attract, but they don't keep the lights on every day. That's why shops employ mechanics, sales assistants, and the store manager/floor manager will deal with the top end customers - to capture each type of customer. I've seen shops leave money on the table because they're fixated on the high end customer, while ignoring the needs of the greater majority of riders who will comprise the bulk of their traffic, phone calls, etc and wonder why their shops struggle when the latest and greatest new bit of kit is in the rear view mirror so to speak.

Customers will wait till the high end bikes go on sale, so if that margin is available from the wholesaler, after accounting for freight costs, assembly and the first free tune up, that margin is optimistic and any margin is under a huge amount of pressure. In our shop, selling bikes drops our gross margin to the mid to high teens - if we have a weekend where we sell predominantly p and a, the margin is mid-20s to maybe 40%, which we hit when certain clothing brands have large promotions.

Most larger chains will depreciate stock, so the value to the business of those parts drops over time - the incentive to buy is pricing on those items, it's the only lever they have to pull so that's why they will clean out stock for peanuts if it's aged past a certain point.
The rest of your post is pretty much correct though - very tight stock control is vital, and carrying dusty shelves full of NOS campy unobtanium parts, priced into the stratosphere is not the way to make a lot of money in a retail setting. Maybe on eBay.

i completely understand why the LBS can make more $$$ on a kid's helmet than me when i need a 6mm left handed black anodized truss head screw.

so i just don't go there.

when i need something bigger, for example a Nitto rack or Honjo fender set with additional hardware kit, i go where it's available, not where the guy tells me "we can order it" and seven weeks later only half the order appears.

so i just don't go there.

when i need something which is 30% less expensive, i order it.

so i just don't go there.

when i can't listen to some 55 year old attempt to impress me with his experience because he has a job "in the field"

i just don't go there.

What does any of that have to do with what makes an LBS successful?

Bike shops exist because they offer a service most people don't have the skillset or time for. They may offer a product line you can't buy online. And they have popular stuff in stock that can be purchased immediately.

Most customers like the kind of people that choose to make too little money because they love bicycles and bicycling, and have a pleasant time when they go to a store that caters to their hobby.


So the discussion about what makes an LBS successful isn't about why they exist at all, but why some thrive and some die - not whether any one person approves of them in general.

I think part of the discussion about what makes a bike shop successful or not should also include the reasons people go into those shops--and why some don't.

my thread: i'll discuss what i want.

right now i'm compiling the recipes for Gran'ma's oatmeal raisin cookies.

some folks will probably whine about that, too.

and have a nice day

DIscuss whatever. But I asked you to answer the question you asked us. The reasons you don't like bike shops are no more material than oatmeal cookies.

I don't think many business's success comes from who doesn't patronize them. I thought the topic was LBS success, not failure or why some people don't need or want them.

I cut my own hair. Doesn't mean much when it comes to finding a good barber.

it was rhetorical, but thanks for playing.

i know you like to be included.

What makes something successful or unsuccessful is the same question,

That's not what rhetorical means.

ha ha - i see what you did there

This thread is starting to circle the bowl...

perhaps this will make us one:

cash flow.

Maybe if bike shops served us more oatmeal cookies we'd have a reason to shop there.