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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













Deposit to Landlord                                                         

Materials for workbenches, displays, wall paint           

Tools, Air Compressor                                                        

Deposit to gas &                                                     

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.

chapter end.

Bicycle Repair

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