How much $$ do I need to open a (small) shop?

HippieKai · Jan 10, 2005

it's like this
to make a million dollors in the bike world you have to start with two million.
good luck man.

-dustin · Jan 10, 2005

might want to see if there is any interest for a bike shop in that town.

punkassean · Jan 10, 2005

Since it's a no-shop town, you won't be competing for dealer agreements in order to carry a specific brand. That's a bonus, but why are there no shops there now? Is there a big enough market? Your best bet is to secure a few name brands that have a complete line and start small w/ low-end bikes mostly. Don't load the shelves with high-end components, focus on basic repairs. The biggest downfall I've witnessed in most shops is the desire by the purchaser to stock "cool" parts. No one really buys cool parts, they buy what they need to make the bike work. High-end customers will go mail-order or through some other hook-ups 99% of the time. Develop some sort of fast way of getting special orders filled at a reasonable price. If you tell someone "I can get it by the end of the work week" instead of 10-14 days then they are more likely to go for it. I could talk about this for hours...

punkassean · Jan 10, 2005

Keep in mind that most suppliers have multiple levels of pricing and that favors the big guys who have a long-standing relationship of buying large qty's. This will make you choose between marking things up more or absorbing the difference. It will take time to grow but with good service and friendly staff, you can make it happen.

blue · Jan 11, 2005

GT is an excellent line to start with...Yes, it IS Pacific, but their stuff is decent as far as entry level bikes go, and supposedly Pacific maintains excellent dealer relationships. Trek and Specialized have a habit of requiring dealers to sell certain numbers before they can be carried by them I believe, or they have to have a certain percentage of floor space or something along those lines if I remember correctly. You'd have to double check that, as I'm notorious for being unreliable with such secondhand info (Hooray for being a shop bitch). See if you can get in touch with owners that carry the lines you're looking at and see what they say.

skyst3alth · Jan 12, 2005

I'm part of a student run bike shop, we don't carry any bikes (no room), but the biggest advice is to stock your inventory with only what you need. Set up a day or two in the week when you make your orders, and tell customers if they want something, it's getting ordered this day, it should be here within 5 days (well for us through QBP, next day through downeast, 3-5 days with BTI, 7 days with action...etc etc).

As far as tools, if you can get them used that'd be best, cause they aren't cheap. You'll be making most of your money through repairs most likely, but another option you could look into is selling used bikes (there's a HUGE market for that around us, with the students looking to buy ****ty 50 dollar around campus bikes). I don't know what kind of town it is, but if you're near a college, that might be something to consider.

And as punkassen said, try not to carry to much high end stuff. In my shop for instance, we pretty much only fix the crappy point a to point b bikes, so that's what we stock for. 5 dollar brake pads, 10 dollar chains, etc etc. The other mechanics and I are the only ones with real nice bikes, besides 3 or 4 other kids that we ride with (so they pretty much get hooked up), and the bike team (which gets a discount depending on how much they spend), so we never stock anything nice, just order it as the demand comes in. If someone needs a specialty part, we'll hold the bike for a couple days, fix it, call em up and send them out.

Again you have to take this with a grain of salt, seeing as how the school gives us a shop, set us up with tools. We do have to cover our costs (phone, electric, parts, tools, labor, etc) but we aren't looking to make any money in reality, we're basically here to serve the community, make a few bucks for the mechanics, and just make enough to cover our costs, no long term goals for making money. So you might have to modify stuff, but that's what i can see is needed when starting a shop.

Maybe you could set up shop where the other bike shop used to be? Just an idea, if people are familiar with it and everything.

Best of luck to ya, it's not going to be easy but if you can pull it off, that's a hell of a job. Sure as hell beats desk work

-Adam

BRacing · Jan 13, 2005

as for starting a small business, usually a small business loan will require you to come up with 10% of the amount you're asking for. So if you'd like a loan for $100k, you'll need $10k to start.

Base your loan amount on how much you would need to start your business, and run it without ANY sales for 1 year and still be able to cover your expenses. That way, any sales you are making will help pay down the principal of the loan, and expand the shop, without driving you further into debt.

Only 1 in 3 new businesses succeed for more than 3 years.

Ask me how I know. I opened a business, and now manage a bank.

-B

sanjuro · Jan 14, 2005

acs said:
I'm definately not looking to make a million dollars. How would you go about measuring interest? It's a small town of about 10,000. There was a bike shop that closed a few years ago. I talked to that guy and the shop was open for about 10 yrs. He wasn't making a fortune, but he was making enough to stay in business. I'm tying to buy his used tools.
punkass- I agree on the low end bike advice, and I could read about this for hours.
What's a good line to sell. I'm thinking specialized. Trek, giant, Kona? I will stock low end and have to order the good stuff for customers.
Keep it coming.
-Adam

I think Specialized and Trek are a little too big business for a new shop without an established base. Not only do they have a huge line of bikes (Special Ed has 5 road lines alone, as well as DH, FR, XC, BMX, Comfort, and Kids), they also have a ton of equipment as well as a huge advertising budget. The bottom line is they expect certain minimums or you don't get to have a dealership.

I was thinking about opening a shop in a small, rural/suburban town. The shop already there had a couple of $100-250 bikes, a Park workstand, key blanks and a grinder, and fishing hooks (it was right next to a river). In the towns over, there were long established shops which carried lines like Gary Fisher and Litespeed, so it was not like I was going to get those lines.

I was focusing bringing in second tier bikes, like KHS and Jamis, who will sell to anyone. I also realized that I was going to selling and fixing alot of junk as well.

My experience is lines like Jamis, Fuji and KHS are much more doable. Their prices are lower, and they have a very large selection of bikes under $400. They also have some great high end bikes, so if a customer wants something nice, you can supply it (unlike Diamondback and GT).

Other good lines to carry is the bikes sold from QBP, like Banshee and Salsa. You can bring in just one frame (impossible with any other frame builder) for sale. I am sure there are other frame companies like that (esp road).

Finally, I would try to establish a relationship with the local reps. They will move around, and the rep for some crappy line might become the rep for a much larger company. The scraps you fed him when you were both broke might pay dividends in the future.

sanjuro · Jan 14, 2005

Actually, I'm curious to know the state you live in. Don't say the town before another ridemonkey open a shop before you.

Mostly, I've worked in shops on all 3 coasts (East, West, and Gulf), so there is a different bike culture in each.

ladysmithryder · Jan 14, 2005

Im 16, and planning on opening a shop in my town. It has a population of about 7000, but it is growing fast. Tourism is a big thing here, as my town is in the to p10 most beautiful towns in Canada. Anyways Im working hard to get all the tools to open a shop after i graduate, but before i start it, I am planning on taking a business course in college, just so I have a better chance in suceeding. My town has such a large forested area, its unbelievable. I spend my free time working on trails up in the mountains, or hiking and biking up there. And everytime I go I find something new. I am trying to build a few good trails, so biking will become more popular here, I'm thinking ahead so I can have a few local customers to start me off. Its pretty much all I can do to help my business-to-be at the moment because i am still in highschool.
Well thats all for now, Ill keep checking back here because this topic really interests me.

-Cory

sanjuro · Jan 14, 2005

ladysmithryder said:
Im 16, and planning on opening a shop in my town. It has a population of about 7000, but it is growing fast. Tourism is a big thing here, as my town is in the to p10 most beautiful towns in Canada. Anyways Im working hard to get all the tools to open a shop after i graduate, but before i start it, I am planning on taking a business course in college, just so I have a better chance in suceeding. My town has such a large forested area, its unbelievable. I spend my free time working on trails up in the mountains, or hiking and biking up there. And everytime I go I find something new. I am trying to build a few good trails, so biking will become more popular here, I'm thinking ahead so I can have a few local customers to start me off. Its pretty much all I can do to help my business-to-be at the moment because i am still in highschool.
Well thats all for now, Ill keep checking back here because this topic really interests me.

-Cory

You never know. Read "Desert Solitaire" by Edward Abbey. It is an amazing book, but the funniest thing about the book, is that it is about his experiences as a park ranger for Arches National Park in the earlier sixties, which is next what he describes as a sleepy town only known because of uranium mining:

Moab

sanjuro · Jan 14, 2005

acs said:
I'm in N. Cal. Just moved from Arcata, which supports 4 descent sized bike shops with its massive population of 15,000.
There's not a massive biking and outdoor atmosphere ( along with a college) here, but a new skatepark was just opened up, and I've seen a few nice mountain bikes around town. Seems promising. I appreciate all of the advice.
Also, GT is making some pretty high end bikes, and they have a solid BMX line...any opinions? Haro? Any other companies that won't require a minimum number of bikes up front?
-Adam

Well, GT does make some high end bikes, but I found there to be some huge gaps in price points (I am a GT dealer). Also, while GT has a name, unfortunately today it is a bad one (although any publicity is good some might say). Finally, because it is a Pacific Bicycles company, you can expect bad dealer service and zero protection, i.e., the local S-Mart (if there is one) could become your competitor.

S3C · Jan 18, 2005

My LBS sells mostly Giant bikes. They have a smaller shop that started in our city (55,000+) about 7 years ago. Giant has a good range of bikes that are pretty good in price too. He had something for everyone.

trialsboy50 · Jan 18, 2005

Alright heres my two cents on the bike shop industry.

Youre doing well by knowing not to expect to become a millionaire in the bike industry. I'm only 17 years old, but have had 3 years experience in the industry and am certified by Barnetts Bicycle Institute (CO) so take my advice with a grain of salt.

Don't stock expensive items, as stated earlier. While your location is important, my shop (Kopps Cycles, oldest shop in America, Bicycling Mag 2004 November) has never stocked a fork worth more than $50, or any fancy dancy disc brakes, let along anything more than $15 v rbakes. While those nice products may intrigue customers, your margins are a lot lower.

Brands to carry? My shop carries Fuji, Haro, Bianchi, Litespeed, Schwinn. I have found the Fuji s to sell really well, especially to poor college students or people on a general budge. Haros are good for those looking for a bit nice bike, and Bianchi IMO has some great entry road bikes and some of the best hybrids for the money, so check them out.

Depending on what size a shop you are starting out, I've heard estimates of $50,000-$250,000 in captial necessary, NOT including rent/overheard costs.

Tips thats I've found

Hire employees, but not too many: Make sure you pay them well, but also make sure their freindly, hardworking and willing to stay that extra 30min to finish a repair. My shop has only one full time mechanic, the owner and 3 high school kids. Whoever you hire, develop a good relationship, as a bad fish can screw your whole shop over. My boss/owner treats me incredibly well, and in return I respect him and am willing to go that extra mile for him, as he does for me.

As stated earlier, your customer service is what really brings you sucess. You can sell an $8k road bike once, but selling a $3k road bike to the guy who has your loyalty is better in the long run, as he comes back and refers to you. Your facial appearance I can't stress is so important to the person who steps in the door, you may sell them a tube or a litespeed, either way, thats how you get repeat customers. This is going to sound arrogant, but honestly, my boss/his dad have been able to keep such a long lasting business since 1891 not because he sells litespeeds or high end bianchis, btu because he is willing to help ANYONE and has developed an incredible reputation in the community.

Hope I have helped in some way, and if not, sorry. I'm also intersted in starting a bike shop, although only 17, opeing my own shop is something that truly interestes me in the next few years. Good luck and keep us posted.

Byron

teamkranzelbike · Jan 19, 2005

been in business for 4 years and still not making any thing more than friends. iI started with 8 grand and a lot of hard work. be sure that you hav enough population to support a shop. only a small percent of the population rides on a regular basis. the bigger the population the more sales. I still work a second job. Watch your expences and get your name out there by reputation and not advertising. I am just now beginning to see light at the end of the tunnel. avoid using credit untill you are busy enoufgh that you dont actually need it. you probably wont get any of the "big three" bike companys even remotly interested in you on a shoestring budget, so find a good middle of the road company for now and eventually the big guys will come around. always remember to give the people what they want. my biggest market is in beginner intermediate models, not the direction I was looking for. and beware of family and friends. nothing will put you in trouble quicker than giving stuf away. I could go on and on but I wont. asked if I would do it all again, the answer is yes. I love this sport and the people I have met along the way. good luck!!

SuperJ · Jan 26, 2005

get a bigger space :think:

crash test · Jan 26, 2005

Pickup some lines that are really penetrating the market. For instance I foresee the Norco line to be growing and penetrating the East coast market. It fits alot of our terrain. They also have a variety of bikes and they are cheap.
And of course you need the cheap brand bike line for 80% of you customers, like Fuji..

I love mtn biking and cycling in general, and i pondered opening a shop for a long time. But money and expensive hobbies interest me too much. So i am pursuing other things. If i ever hit it rich I will open a shop for the fun of it rather than for the profits of it.

OGRipper · Jan 27, 2005

Market research will be tough because most people don't take surveys very seriously. If you are involved in the local scene you can just ask around. Otherwise you would need to do some kind of promotion with a few survey questions to answer, then if they return it to you, you send them a free tube or water bottle, one per customer. When you open, consider some kind other promotion as a loss leader just to get people in the door. Give away a free tube or water bottle, one per customer, in exchange for their name and address to get a mailing list together. Don't ignore the marketing end. Spread flyers around the community if you can't afford to advertise any other way.

That space is small and will make it hard to expand. There might not be anything you can do but you could try to find something with adjacent space that you don't take right away, maybe ask for a right of first refusal if the adjacent space becomes vacant at some point in the future. That way you'll have at least the chance of some room to grow.

You will have a hard time getting any of the major lines to give you a shot, and many have full programs where you need to buy minimum amounts of bikes and other stuff you may or may not want.

The really small shoestring shops that I know are all about service, selling parts (usually in connection with service), and selling bike-specific apparel and accessories. There are good profit margins on these items and they take relatively small amounts of space. To the extent they sell complete bikes at all they are used or project bikes with (for example) a used frame and a new parts kit. QBP has complete kits and cheap frames, so you might be able to get some cheap floor bikes together that way. And yeah you will need to quickly get a handle on special orders and follow through with them. Depending on your focus you might also consider some sort of online component to your business to help out with the bottom line.

It's tough to make any money but there's more to life than that and if you work hard chances are good you'll survive. Some of the most "successful" people I know own bike shops, it's just that to them success means owning their own business, doing something close to what they love, and being a part of their community.

thesacrifice · Jan 31, 2005

why not start with bike repair out of your home and move up from there?

gschuette · Jan 31, 2005

Know when to say when on ****ty bike repairs. At some point the piece of crap from Wal-Mart is no longer worth your time to fix. Customers don't like it when you want $175 for repairs on a bike that originally cost $125. Normally they will never pick it up if it costs a lot and you are out time and the money for parts. I can fix almost any piece of **** with a hammer but at some point it is no longer worth it. Start really small and go from there.

blue · Feb 5, 2005

sanjuro said:
Well, GT does make some high end bikes, but I found there to be some huge gaps in price points (I am a GT dealer). Also, while GT has a name, unfortunately today it is a bad one (although any publicity is good some might say). Finally, because it is a Pacific Bicycles company, you can expect bad dealer service and zero protection, i.e., the local S-Mart (if there is one) could become your competitor.

Yep on all counts...I'm not a fan of Pacific, they're in the business for the $$$ and nothing else. If they don't need you, they will cut you loose. And yes, they have massive gaps in their lines, and not much in the way of FR/trail offerings. Their full-sus Ruckus with 6 inches of travel still relies on the old eccentric BB that was used in the old i-Drives. They have developed the new I-Drive (ID XC 5) system, but it's still more expensive than most intermediate customers want. Their name is still in the crapper, I race a GT ID-XC 1.0 (Sponsorship), and if I had the choice, I'd be riding something that didn't say "GT".

Stick with smaller lines, maybe even check out these "up and coming" budget-type lines, like Soul Cycles and Fetish (Both based out of Scottsdale, AZ). I'd think a smaller manufacturer like that would establish better dealer relations...

MtnbikeMike · Feb 7, 2005

Trek, although some say to stay away from them, may be a good option. They do have a minimum first order, but they also offer their shops a credit line (my lbs's is around 40k). Plus, a lot of people, bikers and non-bikers, at least know of Trek, or have heard the name. Plus they're not going to sell to big shops or mail-order companies, they protect their dealers.

How much $$ do I need to open a (small) shop?

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