The Complete Guide To The Home-Operated
Bicycle Business
Part 7. The Bicycle Retail Store
It is likely that you will make more money than the
local glass-front bicycle store from your own home-based used
bike shop. The real bike shop has major overheads to cover
that you do not need to pay. You must be experienced in the
bicycle business, and have a good sense for business in general
to make it in the real-live glass-front cycling business. But
why bother, if you are making more money? I guess you do have
the potential to go even beyond the best used bike level and
eventually own a chain of bicycle shops coast-to- coast. Keep in
mind that 90% of real retail businesses fail. But if you
insist, here's my list of pointers:
* Make sure you go into this well capitalized. You will need
$20,000 minimum and $10,000 for every 1000 square feet of
space over the first 1000 sq ft.
Lets look at capitalization in detail, This chart
assumes a new bicycle shop that will take some months to build a
clientele, or an established bicycle shop going into the winter
season. We will propose a hypothetical shop of 1000 square
feet, about 1/2 the size of a 7-11 store, or mom-and-pop
grocery.
End of season: December 26, no more sales until May 1.,
essentially 4 months. In real life, there is some income
during the seasonal months, but we'll write these off for
purposes of this chart by balancing them against expenses,
your living costs, which will similarly be left out of the
chart. In California or Florida there is also an off season,
the summer, when students go home and the weather is too hot
for most customers to want to ride a bicycle.
Overhead per unit unit total
============ ========== ========== ==========
Rent 1000.00 month 4000.00
Gas 70.00 month 280.00
Electricity 24.00 month 96.00
Phone 15.00 month 60.00
Yellow Page ad 125.00 month 600.00
Water 9.00 quarter 9.00
Alarm system 35.00 month 140.00
Insurance 90.00 quarter 90.00
==========
subtotal $5,275.00
if you have one employee
for 40 hr/wk, @ $5/hr + taxes =
250.00 week 4000.00
==========
total $9,275.00
Please note, this chart does not cover your own cost of
living, general repairs such as broken windows, incidentals
like window cleaning, cash register tape, etc.
Typical Start Up Costs
1,000.00
1,000.00
500.00
125.00
400.00
7000.00
5000.00
$15,025.00
$9,275.00
$24,300.00
Deposit to Landlord
Materials for workbenches,
displays, wall paint
Tools, Air Compressor
Deposit to gas & elec.co
glass display counter make it yourself
cash
register not needed at this time
Alarm installation
initial parts and accessories
initial new bikes
initial used bikes assume you have so===
subtotal
add the overhead of 4 months
from above ==========
As you can see you need some good cash to get started,
not an impossible amount by any means, but are you totally
sure you want to risk it?
* Until you are truly aware of your finances and what
inventory sells well, and what things cost on the wholesale
level, resist buying in quantities. You do not need 144 Zefal
pumps. Even if they are $7.50 instead of the usual $8 each.
The money tied up in the pumps could be better spent getting
a variety of other things. Once you get your business behind
glass, you do want to become "full service". An important
goal is having everything any customer could ever ask for.
You'll never reach this goal, but you can come close. You
want to sell something to the guy who comes in to get a 24 x
1.75 tire for a Schwinn unicycle. You want him to tell his
friends that you have everything so they will buy from you
too. If you put $10,000 into your parts and accessories
inventory, you will have 90% of your customers' requests
covered. If you quadruple that to a $40,000 investment, you
will only cover 94% of the requests.
* Do everything yourself that you can. Get your wife to help.
Labor costs are the expense that kills the most businesses.
* Read the trade journals and the retail magazines very
carefully. The things advertised in Bicycling Magazine are
the things your customers will want to see.
* Most customers want to see the fancy high-ticket stuff, but
what they buy is the common everyday replacement parts. Tires
and tubes are 50% of your parts and accessory sales. Stock
just enough of the fancy stuff to draw the people in, like a
museum does, but have lots of the common things on hand.
* Consider an alarm system for your store. You can sleep
better knowing your store is protected and your insurance
will cost less. State Farm Insurance Company has a good low-
priced policy for bicycle shops.
* In the cities, take precautions against shoplifting. This
invisible threat can wipe you out.
* Remember that the repair shop is your prime source of
income for the small shop. Treat your customers well.
* Location is everything. Make sure your building is located
where everybody in town drives by. You want them to know you
are there. Parking spaces are important. Visibility at night
will help sales. Put a line of bikes outside your store in
good weather.
* Resist the temptation to advertise. None of it pays off.
Not radio, not TV, not the newspapers. You should have some
business cards, and perhaps an occasional classified ad. A
big expensive display ad will bring in no more people than an
classified. The classified should be specific. List items or
services and their prices. I believe that you should just
wait for the clientele to build, no big ads. As long as your
location is good, and you have the right kind of merchandise,
you'll do ok. If you must advertise, fliers or posters all
over town are more effective than anything else, but check
legalities in your community. A big A-frame sign on the
sidewalk is seldom legal in city situations, but the the
officials of the city usually take a month or two to tell you
to take it down, and they don't throw you in jail for an
A-frame sign. If you are in the country, try to display as
much outside as possible so people driving by feel a need to
stop and check out your store. Novelty advertising works
well as advertising goes. Pens, little flashlights, or tape
measures with your shop name and phone number are good.
There is one thing that does work well. A small yellow
pages ad will bring business. It must be small because they
are tremendously expensive. Make it distinctive instead of
large. Advertise in the main Yellow Pages, not any little
auxiliary phone book. The name Yellow Pages is not
copyrighted and in some places there are several fake Yellow
Pages companies offering to take your money.
Since the phone book comes out only once per year, you
may be in business some time before you have the Yellow Pages
ad. What little advertising you do should have your phone
number prominently displayed. I mean business cards and
imprinted receipts and repair forms, that's all.
* Offer to work closely with the home-operated bike shops in
your area. Its true that their existence may cost you a sale
or two, but more likely that they can help your income. If
they know that you are friendly, they will send customers to
you for everything that they don't have. Furthermore, some
home-operated bicycle people spend as much as $3000 at your
business for their business. Even if you give them a
discount, the profit on $3000 is a lot of potatoes. The
home-operators are often bike-freaks of the most gear-headed
kind. Translation: for their own use, they will buy lots of
nifty new bicycle gadgets from you.
* There is an art to it, but if you can dabble in other
businesses while your bike shop clientele is growing, but
keep your place looking like a bicycle specialty store, you
may make more money. If you are qualified, you may handle
welding, skis, vacuum cleaners, toys or whatever you think
you can do to make more money. This is more effective in
small towns than in cities. In the city, customers do not
expect the shopping variety nor do they trust the expertise
of the personnel in a multi-faceted shop as much as the
bicycle specialty shop. In a small town, multi-faceted retail is
perfectly acceptable.
* Be especially careful with your first inventory. If you
buy the wrong things, you won't sell them, and your first
customers will not be impressed. If you buy right, you are
well on your way to being rich and prosperous.
