so i started a bike shop. update 31/07/24

[jonnyboy666]

@brocklanders023 that's cool!

@retroJIM it's too new as a model, the first model was basically a 27.5 clockwork with a rigid fork, this model is basically an RX9 frame although i thought they were the same they are not, subtle differences between them geometry wise etc, i was told the new ones are not available till around March, but depending on the size you want/need will depend on availability, for example last year there only 6 size small RX9's! medium and large are the big sellers. the new model will be "jagger green" which is a pale mint green

 

[jonnyboy666]

ok so i thought i'd do another little update.

first the serious, i'm thinking of binning off bikes, going back to concentrating on repairs more, basically like i lot of shops i'm in a catch22 of if you stock bikes it's expensive to have them, you inevitably end up discounting a bunch of them, not making any money so what's the point. i decided to look at it logically through the numbers, the profit (please note profit not mark up) on a £500 bike is about £27 after tax assuming it's sold at retail price, the time it takes to build/sell/first service that bike i think is about 4 hours in total, so that's £6.50 per hour, when you multiply that out to say 100 bikes, that's 50,000 in sales but only 2,700 profit but for 400 hours work, that 10 weeks fulltime work for 2,700, it's not viable, what could i do with those 400 hours? 400 basic services? at £40 a service, that's £16,000! so repair makes way more sense for me. also i started paying attention to the bikes i service, i think about 1 in 30 is bought from me. the amount of stock to carry is enormous and expensive so i find myself looking at all the bikes and thinking "if i sell that lot and don't replace them then X amount of money will be in the bank", at which point i can look to do the other things i want to do in the shop. i will keep Orange though, the stock in deal to be a dealer is quite low compared to pretty much any other brand. the other reasons are things like worrying about break-ins at the shop, my logic being, less bikes, less likely to be broken in to, also if it does happen it's less cost to replace stock etc. also i have realised i don't need the sales, i can go weeks without selling a bike but the amount of work i get still supports the shop. so we'll see what happens over the coming months.

but here's some stuff i've been playing about with:-

my Phase, i have not been particularly impressed with the fox forks and shock on the bike, i think i have got used to how plush DVO forks are on my other bikes, so as i am selling my Alpine 6 frame i removed the coil shock and decided to stick it in the Phase as it's the correct size, and obviously i had to match the fork, wow what a difference, the coil shock has way more adjustment than the fox shock so it pedals fine while still being nicely plush, the fork is like buttery smooth.

 

[jonnyboy666]

also in the last few weeks i have been doing these beauties:--

my explosif got a clean up



i built a Kilauea to match my KilaHonzo, haven't gone mental on period correct, just want to build it period-ish


then i built an Explosif for a friend, he went mad looking for period NOS for this one, i got Gary at GA cycles to build the wheel as i have never done snowflake wheels



i built this one a while ago for the same guy, again, he went looking for loads of NOS, love this one, it's my favourite from a looks point of view, but i know the explosif rides better!

 

[greencat]

Interesting assessment on the profit on selling bikes. On the face of it, it makes no sense at all. Have you done any calculations on lifetime value of a new bike buyer? ie do they come back for future services/parts etc. I wonder how they compare with other ways of acquiring new customers eg marketing and retaining them.

 

[jonnyboy666]

@greencat well my logic is that the shop profit margin is around 7ish percent, so a 500 quid bike = 500 x 0.07 = 35, less tax etc =£27, pretty pointless really, effectively you're in up in a situation where you do some mental gymnastics and say well i paid X for it and technically i sold it for X and therefore i made X but the actual truth is far worse in terms of the sales, pretty crap really.

the workshop, parts and accessories is separately is more profitable, basically looking at my figures over the last few years the profit margion of the shop has gone down but the turn over has gone up, essentially if the turnover goes down because i don't sell bikes it's likely the profit margin goes back up, it sounds wrong but it's true!

also by not selling bikes there are less big yearly outlays, less chance of being broken in to, and a lot less warranty issues.

it also gives me more freedom to be honest about bikes when people are buying elsewhere, for example if i'm not supplying a bike if they show me something they are interested in i can be more honest (trying not to say blunt!) about the spec, for example i hate the basic suntour forks, we all know they suck, but almost every manufacturer uses them for entry level stuff, now i describe them to my customers as "entry level and basic" but in real terms i mean cheap and crap! currently because i have bikes with those forks essentially i have to lie, which i hate, i always give the customer the advice of keep them clean, lubed etc but we know they are gonna seize up or get excessive wobble after a while, by not selling bikes i can be more blunt about the bike they are looking at and say, tery and spend more to get a basic pair of rockshox etc.

 

[greencat]

Yes, the calculations around small businesses are fascinating, not least because there's so much at personal stake.

I had a small business around ten years ago that was operating at 95+% profit with no more than an hour or two a month of effort, the only problem was that it was an online one, relatively easy to enter, niche, subject to the whims of a major corporation etc - and therefore time limited. I made like a bandit in first 18 months, and then it basically collapsed due to all of those factors. Whatever I had done would have only have prolonged the inevitable so I kept at the day job throughout, and bought our house/stoked the pension with the proceeds and left it on autopilot.

Sometimes, it's just not worth fighting what the numbers are telling you...and it sounds like there will be other benefits of not having to stock entry level bikes.

 

[brocklanders023]

Sounds like a plan Jon, you can just sell everyone an Orange!

 

[d8mok]

It’s a very similar story on the motor trade side. The general public assume that direct profit from cars sold keep the doors open but in reality it’s pennies. The stock ties so much cash up along with all the other costs its unreal
Used cars are a little better but the major money is via servicing and manufacturers bonuses on targets.

The issue is many places can’t bin off the new car side as that’s needed for the badge above the door. It’s the same for motorcycle trade mostly.

However , the guy who services my motorbikes is a franchise of the brand but chose not to sell bikes at all. People think it’s crazy but he’s been going years now (I’m 10 years using him) He’s a one off that he just services and sells parts. It’s a brilliant business without all the hassle. He can refer people who want to buy a bike to the nearby (30 miles away) dealer and I assume get a fee.

So very similair to what you are suggesting , maybe you can strike a deal with a brand to refer people online? Maybe be a approved pDI centre for a brand where the customer comes to have the bike assembled (at a cost)

As let’s be honest sales are moving online more and more now. But the internet can’t physically fix the bike like you can.

 

[Guinessisgoodforyou]

The Konas are lovely

 

[coomber]

My LBS has a lot fewer bikes these days. Most trade is repairs. Like you say, it just makes business sense. They seem to have a lot of random stock, marins at the mo which they must have hoovered up cheap but honestly, I think higher end (over 500 quid) that there is little market for most independents