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The Complete Guide To The Home-Operated Bicycle Business

Part 6. The Business of the Business

               Develop  a  friendship  with your local bike shops.  If

         they  know  what  you  are   doing,   rather   than   feeling

         competitive,  they may be supportive, offering you a discount

         on parts, advice, etc. Sometimes they will send people to you

         if they do not have what the customers want.
               Once your bicycle business grows to a profitable  size,

         you will probably want to start keeping records. If you start

         your  bookkeeping  right from the beginning, it may be fun to

         look back someday.


               It does not really matter how you keep your  paperwork,

         as long as you keep it.
               You  must  protect  yourself  against  stolen  bikes as

         discussed in the buying chapter. A good idea is  to  file  on

         cards,  every  bike  you buy. You can organize those cards by

         serial number in ascending order. You can do it by  the  date

         you bought the bike, or alphabetize by brand name. Organizing

         by serial number is best, because the number will not change,

         but  the  color  may,  or  the  brand name become obscured if

         someone removes the decals. If a  inquiry  is  made  of  your

         files  you may not remember the date you bought the bike.  If

         your police department requires that you fill  out  paperwork

         on  bikes purchased, they are doing your job for you, no need

         to duplicate it.
               You should keep track of your expenses and your  income

         if  your  business  starts  to  grow big.  I recommend Dome's

         Monthly Bookkeeping book,  available  in  almost  any  office

         supply  store.   Dome's  contains  easy  instructions and has

         charts that line up all your information so that you can  see

         trends  in  your business, and so that an accountant can make

         sense out of your doings without having to charge you a whole

         bunch of money to figure it out.
               Anything else that you want to keep track  of  is  your

         option.  Some  people like to make voluminous charts, or hook

         up a computer to everything. This can be fun, but if it takes

         up too much of your time, you will make less money.


               Your bike shop charges you double on  any  items  under

         $10.   They  pay  $5 for a $10 item. Tires go for 3 to 1.  If

         they pay $3, you pay $9. Small parts under $1 cost  the  bike

         shop about 17 cents.
               There  is  not a very good mark-up on new bikes. A $300

         mountain bike costs the shop $220. They have to pay  for  the

         shipping  which  is about another $10. Then the bike shop has

         to pay one of their mechanics to put the bike together,  they

         pay  a  salesman  to  sell  it,  which  takes  about  an hour

         typically,  and  the  shop  pays  for  warranty  labor  which

         averages  $10  per  bike.  As  you can see, you have to spend

         quite a bit for a small relative profit with new bikes.
               The bike shops cannot charge less.  They  have  to  pay

         rent, but they also have to tie up lots of money to stock all

         the  specialized  parts  that  they can manage in order to be

         full service. They also have to hire people competent to give

         you free advice.
               If you support your local bike shop as much as you can,

         they will support you. They will be able  to  advise  you  on

         tough  cases,  and they may give you a small discount if they

         know you are a volume buyer. The discount is a good  business

         expense  if  they  know  you will be faithful to their store.

         They do not profit if all you buy is a spoke here and a  bolt

         there.  In  order to stay in business, they have to sell what

         they can, and you need to send them customers for big  ticket

         items.   If  you  have a customer that needs a tire or even a

         bike that you can't provide, send that customer to the  store

         that  helps you the most. Surprise, they will reciprocate! If

         they know you have something that they don't have, you  could

         get a recommendation from them.
               If  you compare prices at department stores, you may be

         surprised.  Often department stores charge you close  to  the

         wholesale  price bike shops pay. But the department stores do

         not have experienced advise, they do  not  carry  specialized

         parts.   The  department  store  is  a good source for tires,

         tubes, and some standard replacement parts.
               As business gets bigger, you may want to start  selling

         new  parts,  or even bikes. One advantage of this is that you

         can order things for your own bike and pay less than  retail.

         Most  wholesalers  will  try  to screen you out if you do not

         have a real store. They may ask you for a  sales  tax  permit

         number, they may ask for a photograph of your store, they may

         want a commercial credit application filled out.
               You   can   get   a   sales   tax  permit  (aka  resale

         certificate), just go downtown with $5 and  bop  around  from

         one  office to another until you get to the right place. Fill

         out a form or two, be willing to collect sales tax and mail a

         check to the government every 3 months.
               You can mail the wholesaler a picture of your  barn  or

         whatever  if they ask for a picture, or you can tell them you

         are interested for future reference, when business increases.

         You can just tell them you are doing a business out  of  your

         living room, many wholesalers will accept this, because, they

         are in business primarily to make money, just like you.
               When a credit application comes, fill it out as well as

         you  can and then write C.O.D. where it asks for credit limit

         desired. They like that, since  there  is  no  risk  for  the

               Many  wholesalers  will send you their catalog and open

         an account even if you have the sketchiest looking  business.

         You may have a problem selling some bikes however. There is a

         system in the business called protected dealership that makes

         it  so if one bike shop handles a certain brand of bikes, all

         other shops within a certain  radius  cannot  sell  the  same

         brand.  If you want Raleigh bikes, for instance, and there is

         another Raleigh shop within 5 miles of yours, sorry. Not  all

         brands  have  protected  dealership,  and  not all brands are

         spoken for.

         Seattle Bike Supply,  1-800-283-2453  SBS  will  do  business

         with the smallest dealers, no minimum
         West  Coast Cycle, 1-800-252-0580 Remarkably low prices, hard

         to do business if small
         KHS, 1-800-KHS-BIKE General wholesaler, no peculiarities
         Security Bicycle Accessories, 32 Intersection St., Hempstead,

         NY, (1-800-555-1212) This company specializes in high-ticket,

         Peugeot, 1-800-262-1591 Peugeot bicycles, general  parts  and

         Specialized,  1-800-245-3462  Stumpjumper  bikes, Specialized

         tires, Crossroads, Ground Control, Tri-Cross,  mountain  bike

         parts and accessories.
         Merry Sales, 1-415-871-8870 General parts and accessories

         There are hundreds more wholesalers. Think of a bicycle brand

         name,  dial  1-800-555-1212  (toll-free directory assistance)

         and ask if there is a phone number.  Most  brand  wholesalers

         have a parts and accessory department.  There are a few trade

         journals that you can subscribe to for free.  These magazines

         have  ads  from wholesalers.  They have to believe you are in

         the industry, not just a retail buyer looking to find out the

         inside scoop.  Here is an address: Bicycle Business  Journal,

         Box 1570, Fort Worth, TX 76101.


                                                          chapter end.


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