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Opening new LBS - seeking input(24 posts)

Opening new LBS - seeking inputCaseysdad
Nov 12, 2003 8:27 AM
I'm in the very early stages of helping a colleague of mine prepare to pursue his life-long dream of opening an LBS. I've got quite a bit of experience in new business planning and development, but none of it is in this particular industry so I'm trying to quickly get up to speed on industry resources, successful business models, etc. - the whole ball of wax. Any thoughts and guidance from those of you with experience in this area would be greatly appreciated.
Start modest... find your niche, then diversifyrussw19
Nov 12, 2003 8:51 AM
If you are new to this, start off with a modest store. Don't go overboard and stock high-end stuff. Start with a bunch of cheaper bikes and see what your foot traffic all asks about. A lot of new store survival includes the ability to land a decent line of bikes. That is make or break for some shops, but not all. Find a line that offers good mountain bikes from the $300 to $600 range with hopefully 4 or 5 models in that range and that will be your bread and butter bike. You can always special order high end bikes. Especially from small niche companies like Colnago or Derosa or Merckx, as long as there aren't "protected dealers" in your area. So look around first.

Right now, the Dirt Jumping and Hucking bike scene is hot... so get aquainted with those types of bikes if you don't know anything about them. Take a look at Kona's line and the Specialized P series bikes for a few examples. Get yourself some good local help, good mechanics are key to a good bike shop.

And don't try to do too much too soon. Running a bike shop is risky, and you won't get rich doing it. Think long term and don't be afraid to not turn a profit for the first two years. Also, one personal suggestion is to order everything you can for your first year as COD. That way you don't get behind on your terms with the bike companies and then you can use your own overhead to leverage your credit line as everything you will own is paid for. If you have a line of credit with a bike company that sells accessories and clothing and stuff like that, use the credit on the bikes and pay for the other stuff. Clothes are more likely to sit, so if you pay for it up front, it's not costing you money in interest to sit on your show room floor.

But the most important point I can make is start modest and think long term.

Russ
Think twice about this siteZman
Nov 12, 2003 8:52 AM
There is a very high % of folks on this site that would just as soon see you guys go broke.

Go China Go!

Z
Another reason to think twice about this siteCory
Nov 12, 2003 10:07 AM
The people who post here aren't typical cyclists--we're generally more serious than average--and that's where your money's got to come from. I have two friends who operate competing bike shops in a city that's probably over-LBSed, and I think the thing that lets them both survive is that one handles the high-end stuff and the dedicated cyclists and the other, though he sells some good bikes, concentrates on the family/novice/casual end. It would be pretty hard to establish yourself in a place that already had a respected shop.
Atmosphere is important, too. In my case, I deal with both places, but I have to admit I'm more comfortable in the family shop--I'm just a middle-aged fitness rider and occasional tourer now, and I get tired of the condescending attitude and "If you ain't a racer, you ain't s**t" approach from the cycle Nazis in the other place.
More information please. Location, location, locationDave Hickey
Nov 12, 2003 8:54 AM
It depends on where your friend is going to open the shop.

Opening a shop in Denver/Boulder or So Cal is completely different than opening a shop in Dallas or Indianapolis.
Two successful shops at the opposite ends of the spectrumDave Hickey
Nov 12, 2003 9:13 AM
Both of these are located in Boulder, CO.

www.vecchios.com

Small shop with a european feel. Doesn't stock many bikes but will special order anything. Extremely knowledgeable staff. Has a area where you can sit and watch cycling videos and read magazines.

www.excelsports.com

All the latest and greatest high end gear. Huge inventory and mail order business.
re: Opening new LBS - seeking inputtreebound
Nov 12, 2003 9:02 AM
Contact the primary bicycle component distributor located in Minnesota if you're in the U.S. (I forget their name at the moment but any good shop should know it). The guy who works with approving new shops is usually very busy but also very good in giving data and info. I used to be in the early phases of looking into opening up a shop and another distributor said to call back when I was open for business, I replied that if I"m already open then I'll already have a distributor who had already supplied me with my initial inventory, then hung up. The gentleman in Minnesota was helpfull and honest, said that there are many new shops opening who don't make it and he wants to ensure that the ones that do open have at least a chance to succeed. There used to be a book published on opening up a bicycle shop that was supposedly available only to shop owners, which seemed funny to me at the time. There is the annual regional shows like the big one in Chicago that would be good to attend if you can gain admission, but it's a dealer/vendor event only and admission is strictly limited.

A bicyle business is a bit different that other retail businesses in that you'll/he'll also have a service/repair shop as part of his operation. I suppose he could open one without a service department, one PerformanceBike shop in California near Sacramento that I was in a few times seemed to be set up that way with a small service area for tech's to occaisionally use, but was mainly there for looks as it would only hold one bike at a time.

You're local market will determine to a large extent what your product mix will be. And not all bicycle brands will be available to a new shop as some manufacturers and distributors are selective and protective of regional allocations. One shop owner I know who recently sold his shop lost his Colnago access after having represented them and sold many of them through his shop for many years and had an excellent local reputation, but the regional rep for Colnago played a little politics and allocated local retail sales to a larger shop in a neighboring town, this other shop I rarely shopped at as I always found the service there lacking and the staff unproven. But hey, that's life.

I've done the background research but haven't been able to get to the stocking phase yet due to other time constraint committments currently in process. Still have it as a background goal and always have an eye open for good shop locations and an ear open to local cyclist needs and wants and complaints.

I doubt you'll get a whole ball of wax worth of info, but hopefully I've given you enough to get started with. Oh, and I think the Minnesota outfit is called Quality Bicycle Products, or something like that, good people to work with from what I've heard and seen.
Hire the best mechanics you can findgtx
Nov 12, 2003 9:46 AM
Most of the big chain shops have a bunch of high school kids wrenching. People will often buy their bikes there because of the low prices and big selection, but will quickly tire of the poor service and will quit going there after the first "free" tuneup. If you can attract them with excellent service they'll probably buy many of the higher profit margin small stuff from you in the future.

Also, you better have a good game plan for winter...
don't hire anyone you wouldn't want to ride with._rt_
Nov 12, 2003 10:04 AM
seriously. if you think they're an idiot on the bike, chances are good that you'll think they're an idiot off the bike as well.

good luck.

rt
one thinggtx
Nov 12, 2003 10:45 AM
Some of the best wrenches I knew while working in shops barely rode at all. Some of them were fat or maybe rode a BMX bike. A lot of the racers worked the sales floor but were often kind of hard to schedule in--they want to race weekends, which is when a shop does most of its sales (if you race it's actually better to be a wrench, but a lot of races are clueless about their bikes--what's up with that?). A lot of the good sales guys who knew a lot didn't ride much, either.

Regarding hiring good wrenches, if you don't wrench yourself, it's going to be hard to judge who knows what they're doing and who doesn't. Start by hiring a great service manager who has a ton of shop experience, and let him/her make the call. And don't trust anyone waving one of those United Bicycle Institute certificates.

Oh, another suggestion--definitely try to hire some women.
wanting to ride with someone & actually riding with them..._rt_
Nov 12, 2003 1:45 PM
are very different. don't hire anyone you wouldn't want to go ride with...in theory, be they fat, out of shape, into a different type of riding, whatever.

i completely agree with the hiring some women.....that is women who actually know about bikes. while some guys won't deal with a woman (i don't want to count the number of times a guy looked at me and said "do you even ride?!" and then went and asked the same question - and got the same answer - to one of the guys) a lot of female customers will feel 1000x more comfortable talking to another female.

re: racers who don't know anything about their bikes. ya got me. i went to work in a shop specifically so i could learn to wrench my own bike.

rt
re: Opening new LBS - seeking inputJBergland
Nov 12, 2003 10:04 AM
* Hire the best shop manger/mechanic you can. this will be a corner stone of ANY shop.
* Connect with the local cycling scene. racing, tours, teams, etc. Again, this will be a real corner stone
* Carry more than just bikes. This is prob. more important in the colder climate areas.
* Hire good people and pay them enough to stay. Share some profits with them. Get them as invested with the store being successful as the owner is.
* Don't forget to still have some fun. Owning a bike shop is VERY different than being an active cyclists. Many times, you'll have to work when it's the best time to ride/train.

Good Luck!!

JB
re: Opening new LBS - seeking inputMShaw
Nov 12, 2003 10:40 AM
Wow, where to start?

First and foremost, take care of your employees. If you don't, things will walk out the back door without being paid for... If you do, you'll have less theft and less turnover. If the employees are happy, the customers are happy, so your wallet is happy.

Service is where most of your money's going to be made. Make sure that you do a good job the first time. For tune-ups and overhauls make sure that the mechanic cleans the bike too. Even if they do nothing else, a clean bike means that someone looked at the bike.

At first stick with major bike lines: Trek, Specialized, Giant, Cannondale. People that aren't "cyclists" are probably going to have heard about these lines, but probably don't know KHS, Fuji, etc. As you grow, then bring in another "off-brand" to offer the budget conscious shopper an alternative to the "name brands."

There are a few major wholesale operations. Get to know them. Quality Bicycle Products, J&B, and EuroAsia are some of the biggies. There are more so don't flame me.

The bicycling business is usually NOT going to make you rich. There have been exceptions, Supergo and BikeUSA here in SoCal are a couple of them. LBSes are usually run by enthusiasts not businessmen. Be prepared to work long and hard, then have your prices undercut by all the mail order houses.

Remember when I said that the shop's where you'll make your money? Now you know why.

If you offer "free tune-ups for life" make sure that you honor the terms. In fact, I'd recommend a "free tune up for life" program to get customers back in the shop on a semi-frequent basis. Every time a customer walks into the shop, they may buy something: tubes, tools, lubes, etc.

Sponsorship. If you want traffic make sure you get in good with the local riding scene. Offering discounts on stuff will get you traffic, but the referrals from the sponsored riders is what you're really looking for. Sponsored riders: make sure that the people you send in to the shop tell that shop that you sent them. Makes the investment in the club/team easier to swallow...

If there isn't a ride leaving your shop every other day in the summer, start one. I've had good luck with Tue/Thurs lunch rides, Sat/Sun rides, and Wed night mtn bike night rides at some of the shops I've worked for. Make sure that everyone knows that your shop is just where everyone's meeting so you don't have a liability problem. Or, make sure that if you're sponsoring the ride that you have release forms. Riders gathering at the shop means last minute purchases of arm/leg warmers, tires, tubes, lube, etc.

Wow! This ended up longer than I thought it would. Back to work.

Mike
re: Opening new LBS - seeking inputteoteoteo
Nov 12, 2003 11:10 AM
Do all the things you ask of your employees,so many shops suffer a learn from the top attitude and the top stinks. Nothing will sink you faster.

If I am busy working with another customer on a busy Saturday I can look my owner in the eye and tell him to go open a dressing room or help air up tires for my testride.

Embrace your employees for their natural talents and let them specialize. If one guy is the best damned road bike fitter in the city tell people he is! If another guy is a freeride MTB genius let him have time to learn more--maybe an hour a week and then let him teach others. Be proud of them and say thanks often--it goes a long way when you don't make much money. Let the pride you build in them work for you. With the spotlight on the employee they become a real person with a name--customers remember them.
Been there...done that...would never do againwspokes
Nov 12, 2003 10:46 AM
Think twice! Been there...My folks and I had a very very successful shop. in the beginning, I loved the idea...after awhile I began hating cycling in general. My folks retired and I went to work full time at the local hospital...free time...time to now ride...no more pains...
Just know in order to be successful, you are going to make a ton of consessions and not get to ride as much. Take up a touring business where you have to ride with the folks...at least you'll get to bike!
What does your colleague have to offer that's different?The Walrus
Nov 12, 2003 12:32 PM
You don't say what sort of local competition he's going to be facing, but whatever it is, he needs to give potential customers a reason to come to his shop instead of going to the old tried-n-true place(s). I would suggest that if he hasn't already done so, he needs to make a point of visiting the other local shops--several times--to see where they're succeeding and where they're failing. Are their prices good? Are the sales people knowledgeable and friendly, or are they obnoxious punks too busy with their friends to regard customers as anything more than interruptions. Does the shop carry a good range of models and sizes, plus adequate parts, clothing and accessories, or does every inquiry get the "We can order it for you..." response? Is service done well, and ready when promised? More to the point, would
i he
want to be a customer at the shop he's envisioned?

I can't speak for anyone else, but I think the attitude of the owner and staff is paramount. If I get the feeling that my business is desired and appreciated, then I don't have a problem with paying more than I would on the internet because I know people at these shops will go the extra distance to do right by me. One shop manager recently spent several days locating a bike I wanted, when everyone else said there were no more to be had (finally locating the very last one in my size), and another finally ordered the bottom brackets I needed directly from the manufacturer after all his distributors simply shrugged off his queries. Your friend is going to have to be willing to do that sort of thing to get any kind of edge over the big box stores or the e-tailers.
EXPECT TO LOSE YOUR LOVE AND MONEYwardinside
Nov 12, 2003 1:50 PM
most people who get in the bike business lose money; those that get in due to a love of bikes, frequently lose that also

very few LBS make money today, so if you really want one ~ it will be easy to buy one very cheap ~ much cheaper than opening a start up

local bike reps will know who's on the ropes, behind on bills, and who wants out -- today that covers about 60% of shops
What did I tell you!!! I said the same above. nmwspokes
Nov 13, 2003 8:28 AM
Novel idea to toy and noodle overLone Gunman
Nov 12, 2003 5:13 PM
In Pittsburgh, there is a dirty, grungy shop called Kraynaks (sp?). He buys inventory from shops going out of biz for pennies on the dollar, stocks his shelves with this inventory, makes available to the public repair stands, tools etc for free, you buy the parts from him. He does offer his services as a mechanic, which he charges for, but will offer input for repairs providing you are still doing the work. Let's face it, not everyone has the space or money or need to field a full repair shop.

Mind you I am not advocating his idea as a full shop, possibly as a addendum to his regular shop if space or interest is there.
Can you say "www.chucksbikes.com?" nmMShaw
Nov 13, 2003 12:23 PM
ExperienceLO McDuff
Nov 12, 2003 6:45 PM
Remember that while it will be cool to work with bikes all day, meet people, and live the life, I must point out the more mundane items.

#1 - First and foremost, above all, NO PERSONAL GUARANTEES. If suppliers won't give you credit without it, pay cash and ask for additional discounts.

#2 - Set up good systems, Point of sale (POS), accounting, inventory, repair tracking, etc. Get a software package that can run a variety of reports. If you can't read and understand a P&L, Balance Sheet, or various sales reports, get someone (an accountant) that can.

#3 - You can't grow a business without cash.

#4 - Make sure you keep your margins up. Don't always try to price match.

#5 - Keep an eye out for closeouts from the manufacturer. These are usually steeply discounted and help with the average margin.

#6 - No Personal Guarantees - ever.
Add coffee shop / cafeTmw
Nov 13, 2003 2:08 AM
In Scotland near Ben Nevis there is a climbing shop with a cafe on the first floor. It's raining, you stop in for coffee as you can't climb and end up buying stuff.
In Bristol where I live there is a bike shop that is also a cafe/eatery and even if you don't buy stuff it's lovely to drink tea while looking at n*1000 pound bikes hanging up looking pretty. A couple of sofas and some bike mags and even if no one has any money to buy bikes they'll be sitting drinking coffee deciding what they'll buy when they do have some.
Good luck
Cheers
Toby
Add coffee shop / cafetreebound
Nov 13, 2003 7:47 AM
That's part of my basic plan, with a little more thrown in, but local coffee shops are not doing as well as they were in the past, and the food service industry has a higher failure rate than the bicycling industry from what I've read and heard. Still, you either go deep with a specialty or broad with a wide selection of variety, or find a balanced mix in there somewhere to fit your desires coupled with locally supportable needs.

My local community is starting a major push to bring in new and revitalize existing businesses. May soon be time for me to dive in, but it will mean I'll be competing with several existing shops. S'all right, one sucks, and the other may be open to a co-op sort of deal, and a third might do a sub-let from me of sorts. Could just maybe work and all come together.

Shoot, gotta go dig out the past research again and freshen it up for the bankers....
re: Opening new LBS - seeking inputSean008
Nov 13, 2003 1:21 PM
I recently completed a business plan for an LBS and I have some information that could be invaluable for you. You can email me at smcillwain@silverplume.com.