Start a Bike Shop

[wondermakerstudio@gmail.com]

Hi all

Just a question.

If you start a bike shop or want to start one, what is the procedure?

I ask this mainly because every supplier you find wants to do business with existing shops. This I understand, they want to make sure you are legit. Still. How do you start from scratch? It seems like its impossible, even if you carry your stock cash, you are a new start-up therefore you have no track record. 

Please help.

[Zebra]

I started a motorcycle accessory store 11 years ago,from scratch; as you say, cash accounts for(at least) 6 months, pay ON THE. EXACT Day they expect when you have 30 days terms; wholesalers will ALWAYS welcome a dedicated/hardworking/HONEST retailer.

GO!
Chris

Edited August 16, 2021 by Zebra

[Mountain Bru]

I've never tried to start a bike shop, but I'm gonna guess it's a terrible idea these days. Opening a restaurant in the middle of a hard lock down might be a better business opportunity.

Don't want to be unnecessarily negative though, but ask yourself 2 questions... 
1. Who is my realistic target market / customer? 
2. Why would that person buy from me instead of CWC, CycleLab, Buycycle, Evobikes, etc,  and also why would they not just import the stuff themselves given how easy it is these days?

Honestly, there's a million other considerations and questions, but if you don't have rock solid answers for those 2 questions, I don't think anything else matters.
 

[HenryS]

16 minutes ago, Zebra said:

I started a motorcycle accessory store 11 years ago,from scratch; as you say, cash accounts for(at least) 6 months, pay ON THE. EXACT Day they expect when you have 30 days terms; wholesalers will ALWAYS welcome a dedicated/hardworking/HONEST retailer.

GO!
Chris

I think you are misunderstanding his question. The problem as he states it is that the suppliers don't want to do business with new shops even on a COD basis. They only want to sell to business that have been going for a while and have a track record.

[Rolf Hansen]

14 minutes ago, Mountain Bru said:

I've never tried to start a bike shop, but I'm gonna guess it's a terrible idea these days. Opening a restaurant in the middle of a hard lock down might be a better business opportunity.

Don't want to be unnecessarily negative though, but ask yourself 2 questions... 
1. Who is my realistic target market / customer? 
2. Why would that person buy from me instead of CWC, CycleLab, Buycycle, Evobikes, etc,  and also why would they not just import the stuff themselves given how easy it is these days?

Honestly, there's a million other considerations and questions, but if you don't have rock solid answers for those 2 questions, I don't think anything else matters.
 

I am going to have to agree. There is very little that I cannot buy at Cycle Lab or Cajees for much less than my LBS. If you main aim is service/workshop then I would say go for it. 

[Zebra]

30 minutes ago, HenryS said:

I think you are misunderstanding his question. The problem as he states it is that the suppliers don't want to do business with new shops even on a COD basis. They only want to sell to business that have been going for a while and have a track record.

No misunderstanding whatsoever, I was in that EXACT situation to start off with; yet most ALL Suppliers will accept cash accounts, and convert them when they see you are indeed ‘viable’…starting alone, and now with 8 Staff, it is a journey, but suppliers will work with ‘newbies’, it is PURELY how you approach it that gets the accounts; of this much I am certain.

Chris

[madmarc]

I also did a lot of research on this subject - the idea was to first start a proper professional workshop with qualified mechanics and all the tooling required. Then grow into component retail, used bikes and finally getting a few bike brands on the floor.

1st problem - Component importers are not interested in even talking to you unless you have a proper shop, and even then, they will not guarantee they will supply you and certainly not on credit for the first 12 months. So go crunch the numbers - get a shop, kit it out, tool it up, employ 2 mechanics & load your budget for TorqZone academy training, and this is only the workshop side i'm talking about.

So now you spent the money and still hemorrhaging cash on overheads without much shop income, you be buying spares and components from other retailers to do repairs - the only income you really have is labor. So you approach the importers again, and they prepared to talk mmmmmmm we see you are too close to one of our other long standing customers, sorry we not prepared to supply you even on COD basis, or yes sure no problem but then load the wholesale prices and you find you are always the most expensive.

Lets not even go down the rabbit hole of becoming a retailer for known brand of bike. 2 of the biggest brands are concept stores, so they off the table - The others will also look at your location in relation to their other big retailers and soon they will be off the table as well - So unless you planning on a shop in the middle of the Karoo in Kakamaaz you against a brick wall and a hard place.

From my research i came to the conclusion that dealing with most (not all but most) of the bike and component wholesale market is who you know not what you know. 

After 5 months of business model building, planning, budgeting, phone calls, meetings etc etc - I invested my time and money in learning share & Crypto trading - Trust me, i'm a lot happier today and get far better return on investment than most bicycle shop owners. 

[Puncture Kid]

Someone I know did this. Fail. Bike owners do not want to pay for a service for what the labour is costing you. You will not run a viable business on workshop only.

6 minutes ago, madmarc said:

I also did a lot of research on this subject - the idea was to first start a proper professional workshop with qualified mechanics and all the tooling required. Then grow into component retail, used bikes and finally getting a few bike brands on the floor.

1st problem - Component importers are not interested in even talking to you unless you have a proper shop, and even then, they will not guarantee they will supply you and certainly not on credit for the first 12 months. So go crunch the numbers - get a shop, kit it out, tool it up, employ 2 mechanics & load your budget for TorqZone academy training, and this is only the workshop side i'm talking about.

So now you spent the money and still hemorrhaging cash on overheads without much shop income, you be buying spares and components from other retailers to do repairs - the only income you really have is labor. So you approach the importers again, and they prepared to talk mmmmmmm we see you are too close to one of our other long standing customers, sorry we not prepared to supply you even on COD basis, or yes sure no problem but then load the wholesale prices and you find you are always the most expensive.

Lets not even go down the rabbit hole of becoming a retailer for known brand of bike. 2 of the biggest brands are concept stores, so they off the table - The others will also look at your location in relation to their other big retailers and soon they will be off the table as well - So unless you planning on a shop in the middle of the Karoo in Kakamaaz you against a brick wall and a hard place.

From my research i came to the conclusion that dealing with most (not all but most) of the bike and component wholesale market is who you know not what you know. 

After 5 months of business model building, planning, budgeting, phone calls, meetings etc etc - I invested my time and money in learning share & Crypto trading - Trust me, i'm a lot happier today and get far better return on investment than most bicycle shop owners. 

 

[Prince Albert Cycles]

I was in the same position 4 years ago .  I started a shop in Prince Albert with almost no stock offering to repair bicycles . Bought parts from other shops with sometimes a small discount sometimes not . Few suppliers were prepared to supply me even on a prepaid basis . Some of the bigger suppliers either ignored my approaches or demanded ridiculous first orders . If I was not retired from my earlier profession and having a small pension I would have been dead before I started . Got a lot of help from a shop in Oudtshoorn . Rush Sports and Silverback were extremely helpful. The big ones Omnico, Cool Heat, Cape Cycles Systems, Ryder, Paragon require huge 1st orders . I fail to understand their logic . I am a cash buyer . I am the only shop in this small town . Surely if they help me to help people to continue riding the whole industry benefits ?

[Christian nieman]

1 hour ago, Mountain Bru said:

I've never tried to start a bike shop, but I'm gonna guess it's a terrible idea these days. Opening a restaurant in the middle of a hard lock down might be a better business opportunity.

Don't want to be unnecessarily negative though, but ask yourself 2 questions... 
1. Who is my realistic target market / customer? 
2. Why would that person buy from me instead of CWC, CycleLab, Buycycle, Evobikes, etc,  and also why would they not just import the stuff themselves given how easy it is these days?

Honestly, there's a million other considerations and questions, but if you don't have rock solid answers for those 2 questions, I don't think anything else matters.
 

I feel people rather like buying and getting their bike serviced where they have a more interactive experience with the owner, this is my personal opinion 

[daveno7]

3 hours ago, wondermakerstudio@gmail.com said:

Hi all

Just a question.

If you start a bike shop or want to start one, what is the procedure?

I ask this mainly because every supplier you find wants to do business with existing shops. This I understand, they want to make sure you are legit. Still. How do you start from scratch? It seems like its impossible, even if you carry your stock cash, you are a new start-up therefore you have no track record. 

Please help.

interesting.....have a mobile unit/van....keep overheads as low as possible....word of mouth etc...start low and might have to be slow...gradually build up and be accessible to customers..an experience I had here in Ireland...tried to get a big service..all I got was "no..no...no " from a shop...3 week lead to get a service...horrible experience...lets say I won't set a food in that shop...while being in SA...there was a 48hr turnaround from a local shop..made alternative arrangements via a contact...better around..

sometimes you don't need fixed premises as you start off...

hope it works out..

[Mountain Bru]

13 minutes ago, Christian nieman said:

I feel people rather like buying and getting their bike serviced where they have a more interactive experience with the owner, this is my personal opinion 

There's some value in that for sure. But most people probably like money in their pockets more than a friendly store owner. 

Here's the rub - when it comes to big purchases of an off the shelf item, 90% of people only care about what it costs. If I'm buying a new bike/groupset/fancy wheels/etc etc, I'm either gonna shop around, and buy where what I want is cheapest, or I don't care what stuff costs and will just walk into cyclelab and swipe my card. If you start a new shop, you're not going to be able to compete with the existing online shops on price. let alone overseas retailers, and you're not gonna be the "default store" that uninformed people buy stuff at. So that portion of the market is basically out. 

When it comes to "medium value" items, like ballpark R2500 items (new derailleur, helmet, saddle, etc), you might get some business, but I'd say at least 75% of the market is still going to be loyal to their pockets and buy things wherever they're cheapest. And then of the remaining 25%, you're gonna struggle to compete with bigger shops with more variety and more stock, . 

When it comes to small items, I doubt you're gonna keep a bike shop afloat and cover your overheads only on small "sub R1000" items, especially when you're probably more expensive than online shops. Even if you win 50% of your local market, I doubt it'll be enough if all you're selling is tubes and chains and socks. Desperate and loyal people might be willing to pay higher prices because they like you, or they punctured on a ride and need a tube desperately, but those sales aren't gonna make your business viable. And with a lot of shops at bike parks selling "the essentials" too, that portion of the market isn't very reliable because it's the kind of thing people will buy wherever they are, rather than going somewhere specific just to buy a tube/bottle/socks/etc.

And after all of this, even if you manage to somehow lower your prices to beat your competitors, CycleLab will match your prices, basically eliminating your advantage. 

And then there's the workshop/service issue.... Gotta remove maybe 30% of the market that ride spez bikes and service them at spez shops regardless of the price. Nothing's gonna change that. At least in the mtb world, spez bikes are probably the most popular in SA, so that's a huge chunk of the market that's not ever gonna consider you. And then there's the big part of the market that's gonna service their bikes where ever it's cheapest, and then the guys that already like the interactive experience they have with the owner of another shop, and then the guys that get a discount because they're part of the store's club,  and then suddenly you realize that the portion of the market that you can realistically win is very small.  

Hence my initial questions:
1. Who is the target market?
2. Why would they buy from you? (ie - what's gonna win you sales? I'm not sure being a "nice guy" is gonna win you enough sales to make your business financially viable) 

[Eddy Gordo]

1 hour ago, Prince Albert Cycles said:

I was in the same position 4 years ago .  I started a shop in Prince Albert with almost no stock offering to repair bicycles . Bought parts from other shops with sometimes a small discount sometimes not . Few suppliers were prepared to supply me even on a prepaid basis . Some of the bigger suppliers either ignored my approaches or demanded ridiculous first orders . If I was not retired from my earlier profession and having a small pension I would have been dead before I started . Got a lot of help from a shop in Oudtshoorn . Rush Sports and Silverback were extremely helpful. The big ones Omnico, Cool Heat, Cape Cycles Systems, Ryder, Paragon require huge 1st orders . I fail to understand their logic . I am a cash buyer . I am the only shop in this small town . Surely if they help me to help people to continue riding the whole industry benefits ?

This here. I was about to open a shop a few years back. The big distributors are not interested. I think this is why we now see a franchise store concept. I dont know the finer details behind one, but I am guessing its similar to franchise operation. I even approached some brands to become an importer for them locally but once again moq. It is just ridiculous.

[BuffsVintageBikes]

I'd suggest you approach your LBS and get stock through them on a COD basis until you have built up a client base, as @Prince Albert Cycles was forced to do. There's a few smaller bike shops in the great CT area that operate like this as they just cannot afford the high "minimum stock" purchases from the suppliers.

[Edereese]

I am currently thinking about this too. My aim is more on the workshop side though. It's a long term plan so i'm more focused on building a clientele, the rest will follow. On the component side, I haven't thought about that as that is something that will follow after. The reason for doing so is purely because of the lack of service in Cape Town. I don't mind paying for a service, but the issue I have is when there's a problem after the service. If you have the time and capital, go for it. 

[Danger Dassie]

Speaking from experience.
There's no set procedure as such, aside from the general business basics that apply. But that is where it starts and ends within a portion of the industry. There are plenty challenges with gate keeping attitudes, but there are also plenty smart proactive folk with the right entrepreneurial mindset.
I could write a book .... ????
However, currently. Your biggest challenge now, there simply is no stock to supply you. Demand far exceeds supply, globally.
Bikes, workshop, consumables, soft goods, accessories etc ... these are all severely constrained. 
Expect this to only stabilise in 2022, at least for the larger brands.

MadMarc and Prince Albert Cycles have also given you an honest solid assessment based on relevant experience.