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How To Start a Bike Shop

Complete Details For Building a Successful Bicycle Store From Scratch
Even If You Have Little Money, Time, or Experience.

Copyright 2014, Jeff Napier

Table of Contents

Start Here
Why - The Benefits
Why Not - The Objections
About The Author - Is He Qualified?
The Evolutionary Approach
Partnerships
Some Ways to Start Small
Stepping Up to a Storefront
Licensing, Paperwork, Credit Cards
Inventory
Sales Techniques
Managing Employees
Advertising and Publicity
Websites That Work
Social Networking
Craigslist
Leveraging eBay
The Guy Who Did Everything Wrong
Summary

Start Here

Table of Contents

This book is for anyone who is considering starting a bicycle store, and may be surprisingly profitable for people who already own one. By reading this book, you can avoid the pitfalls many of us had to blindly fall into, and enjoy building a bike shop easily and profitably. Have fun and prosper, - Jeff Napier, author

Why?

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I once read that owning a bicycle store is the number one entrepreneurial American dream, and probably of people throughout the world. So, why on earth would anyone want to start a bicycle shop? Perhaps because. . .

* You get to be your own boss. You set the rules. You make and benefit from your decisions.

* You can make more money than most company employees.

* You will have a business with unlimited growth potential.

* You represent a good product. Bicycles are certainly earth-friendly. A human being on a bicycle is the most energy efficient machine on earth in terms of energy spent for mass moved. A human on a bicycle is also the most efficient animal on earth. Bikes play a central part in childhood, giving kids their first opportunity to expand out into the world, learning to be accountable for their own actions, pride and responsibility of ownership, and even mechanical skills.

* As a retailer, you meet lots of people and have wonderful conversations.

* You gain the esteem of being a business owner.

* You get to play with inventory management. This is a bit like stamp collecting. You manage an ever-growing collection of bikes, parts and accessories, and get to profit from 'trading' them.

* If you wish, you can participate in the rewarding craft of bicycle repair.

* As the owner of a bike shop, you have the opportunity to branch out. You can manage a fleet of bicycles for package delivery or rental. You can build custom human-powered machines. You can teach bicycle repair. You can lead tours or sponsor races. Your bicycle shop can even become the stepping stone to philanthropic pursuits.

* Your shop can be your legacy. It can outlive you, being something that can be sold, or passed on to your children.

Why Not

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You may have been told that starting a retail store is a very risky undertaking. That it costs a lot to start, and you could lose it all. Or, that you can't ever get enough cash or credit to start a bike shop. Or that it is too difficult to learn and manage. Or that you are lacking something you may need, such as time, or experience. You may have been told you'll need to spend long hours just breaking even for the first several years.

You may have been told these things by well-meaning people. Unfortunately, they don't know what I know, and what you'll know by the time you finish reading this book. While starting a bicycle shop without knowing exactly what you are doing can be risky business, I'll tell you exactly the things that you need to know to do it easily and safely.

About The Author
Is He Qualified?

Table of Contents

Jeff Napier, author of How To Start a Bike Shop
Jeff Napier, your author

You may be wondering who I am to write this book. Sometimes, I wonder, too! After, all, I'm not going to sell many copies of such a specialized book. So, evidently, I'm doing this for something besides profit. I simplay want to share this information. By supporting bike shops, I'm supporting bicycling, and we all know the benefits - exercise, enjoyment, kids gaining a 'can-do' attitude, reduction of urban noise, danger, and pollution - the list goes on. I made mistakes when I started out, and I'm still making mistakes. I've seen so many bike shop owners mess up in various ways. There is no need! Read a bit, and you can benefit from what I picked up along the way. What way?

It all started in 1974 when I opened my first bike shop with six used bikes, a handful of tools, a few boxes of used parts and $400. This was in a small city of 350,000 residents, and there were already ten other bike shops. In five years, it grew into the leading 'pro' shop in the city. In the winter I taught framebuilding, wheelbuilding, and general bicycle repair courses. A local newspaper reporter stated that my shop was the 'fastest growing retail store in town.' How he compiled that information, I do not know. Perhaps he just guessed. In any case, customers frequently commented on the remarkably rapid growth of the business.

Being young, and full of enthusiasm, after five years, I lost interest, so I sold my shop, and traveled around the country in a motorhome for several years. Along the way, I coached the owner of a floundering bike shop that had fallen $140,000 in debt. In six months time, we had his debt reduced to $60,000, the owner knew how to move forward, and had his confidence back. That was more than 30 years ago, and his shop still exists today.

I started two other bike shops, one a sole proprietorship, and one was a partnership with two others. I also had several related and unrelated businesses, such as a mobile welding operation, a bookstore and a fairly large eBay business. At one point, in order to support some relatives who had got themselves into a bad financial position, I rented a large house, and started a Craigslist-based used bike business that was as profitable as a typical glass-front retail store.

As time went on, computers started to amuse me more and more, and the Internet came into existence. So I wrote BikeWebSite.com. After it entertained the first 385,000 visitors, I sold it, and moved on to other pursuits. BikeWebSite has changed quite a bit over the years, but here's the original author page. bikewebsite.com/author.htm.

Jeff Napier's First Bicycling Website
BikeWebSite

Having been successful in a varied assortment of businesses, I was being asked more and more often to coach people in business, so I became a business coach. By 2004 I was noticing that while several of my clients were doing well, some were evidently coming up against blocks. They seemed incapable of managing even simple changes they so much needed in their businesses. Convinced that the problem was some sort of psychology, I took two years off, studying Neuro-linguistic Programming, which is the applied study of human nature, and eventually became a certified master NLP practitioner. Now, I can help business owners with blocks, family and employee relations, and so much more. For instance, in studying the subconscious ways we communicate, I have even learned many inner secrets of advertising and publicity, which I will share with you in this book. I usually have a couple openings left for new clients or the waiting list is short, so if you already own a bike shop or plan to start one, and you want to make the most possible profit, while avoiding mistakes, and have the most enjoyment with your business, go ahead and give me a call at (805) 843-5353. It has been documented that average business coaches make their clients 5.22 times more than they cost. I think you'll discover we can easily beat that number. Besides, you'll enjoy my friendly, informative manner. More...

I've done all my business in America, so you'll find American prices, and our silly non-metric measurements in this book. If you are outside the USA, I'm sure you can make the necessary conversions. In some of the business details, I discuss the American ways. With a quick check on the Internet or a phone call or two, you will be able to determine any differences in your country.

The Evolutionary Approach

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It starts right here with this very simple bit of advice:

Start small, then let it grow.

Here is a typical example: I knew a member of the bicycle racing club in a small city. He found a wholesale source of high-end bicycle tires. He bought 100 at a time and sold them to his fellow racers and a few tourists. He also started re-wholesaling them to the local bike shops. Pretty soon, he added some Campagnolo components to the things he carried around in the trunk of his car. Then he started selling hand-built frames. And Chris King headsets. Pretty soon, he outgrew the trunk of his car, and his garage became filled with inventory. His tiny business was becoming quite profitable. Can you guess what he did next? Right, he started a bicycle shop.

Another example: A 16-year-old boy started fixing bikes for the other kids in his neighborhood. At first he did it for free, but when it started taking up a couple hours of his after-school evenings, he decided to charge a bit of money. Not much at first. Perhaps $10 for a tune-up, $2 to fix a flat tire. Then, he started charging more. At first, when he needed parts, he rode to the local bicycle store a mile away and bought whatever he needed. He sold the parts he bought there to his customers for what they cost him. Then, he discovered a department store that had some common items for lower prices. Inner tubes, tires, brake cables were being sold for around 2/3 of the price of the local bike store. So, he bought a half-dozen cables, a few inner tubes, a couple of other things, and sold them for a small mark-up.

This particular kid dropped out of high school at age 17. Dropping out is not recommended. High school is free, you might as well take as much as you can get! He dropped out because he rented a small storefront and no longer had time for school. He moved his stuff out of his parents' garage (to their delight), and into to the new store, made a sign himself, and was 'in business.' The business grew and grew, and five years later he sold it for enough money to live on for years. By the way, that kid was your author.

That is exactly how I started my first bike shop, but not quite how I'll tell you to do it in the following chapters. Thirty years, 15,000 bikes, and three shops, and several other businesses later, I have developed some refinements, so that it will be even easier and safer for you than it was for me.

Along about now, you might be wondering whether you can do this. You may not have any space to set up a little home bike shop. You may not have any money at all. Or maybe you don't know much about repairing bikes. Or, maybe you already have a full-time job, a family, and so very little free time. What can you do? You can consider a partnership. You can bring in a partner who has the things you don't have, and you can supply the partnership with what your partner does not have.

Partnerships

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Starting out with a partner who has the same strengths and weaknesses as you means something won't be covered. That's a recipe for disaster. So you're specifically looking for someone who can supply what you don't have. Generally, the three ingredients that a partnership (or an individual) needs are time, experience, and money. There's a fourth ingredient - one that all partners need, and that's enthusiasm. You absolutely don't want to start something with someone who is not enthusiastic about the idea.

Before forming a partnership, assess carefully your partner's personality. Will you be able to get along with this person? How about in cloudy weather? Is the person lazy? Does the person have shoddy ethics? Is the person obstinate? I once saw a bicycle shop almost destroy itself because one partner of the three who owned it suddenly decided that they needed new wall-to-wall carpeting just a few months after starting the store. It had a painted concrete floor that was just fine. Carpeting would have cost $10,000. I think any objective person would agree that carpeting was not a top priority in that store. But, he couldn't be talked out of it, and the partners nearly came to blows. Finally, the two other partners bought this fellow out, at an inflated price that took them years to recover.

In another case, a partner got evicted and decided to live in a little room where the inventory was stored. This was entirely against his partner's wishes, leaving little room for the business, and violating the local zoning ordinance. This fellow would do things like wake up and walk out among customers in the showroom at 11am, unshaven and shirtless. Nice partner, eh?

So, if you're going to consider a partnership, think about all the things that might go wrong with your perspective partners. Do not mention the idea of a partnership to any of your prospects until you are absolutely certain. It is harder to burst their bubble after you've created it, than before they know a partnership is being considered.

Family members can be the best, or the worst! I think you know what I'm talking about. A grandfather-grandson (or grandmother-granddaughter) partnership can be wonderful with the right people. I have seen several successful multi-generational bicycle shops.

Let's say you have a brother who has been in jail twice for drunk driving. He's unemployed again because he came to work too hung-over. You might think that if you offer this brother of yours a partnership, it will help him. Wrong! You must, absolutely must, consider partners for their strengths, not their weaknesses, if you intend to succeed. And if you don't succeed, it will not help your brother in the slightest. It will probably make his lack of self-esteem worse.

How many partners should you consider? The minimum number you can get away with. If all you need is someone with repair skill, or someone who can greet customers from 10 to 5, then one partner is sufficient. Additional partners means that the profit is split smaller. It also means it is harder to make decisions. Larry Page and Sergei Brin have been very successful with Google. When it came time to make decisions, they had a brief discussion, came to a consensus, and moved forward.

On the other hand, I knew of an organic restaurant that had 17 partners. One of their specialties was waffles. They had one waffle iron, and so customers had to wait up to 45 minutes for their orders in the morning. So, the 17 of them had a meeting to decide if they should buy a second $30 waffle iron. The meeting, argument really, ran until after midnight, and they couldn't come to a consensus. In fact, it was weeks before they could all figure out that $30 was a reasonable price to pay to satisfy their breakfast customers!

Once you've sorted out who your partners are going to be, you need to state some things up front. Is one going to be a silent partner? If so, how silent? How will various kinds of decisions be made? For instance, the person working the sales floor probably shouldn't have to place a phone call to another partner if a customer wants a $10 discount on a new bike. What happens as the business grows? Do you add more partners? Do you hire employees? How do the partners decide on new employees?

I know of one bicycle store with a rather unique partnership. It consists of four people. One partner, Susan, comes from a wealthy family. She put up the initial investment which was enough to start a complete retail bicycle store from scratch. Since most people do not have that kind of money available, I recommend starting something small and building it slowly into a full-fledged retail business. More about that later. Susan was married to Fred, a fellow who had retail management experience and loved bikes. Their friend Jacques also loved bikes and knew a lot about brands and accessories, so these two men ran the sales department. To break it down a bit further, Fred took care of the inventory and paperwork, and only appeared on the sales floor when Jacques was overwhelmed with customers. Susan didn't work in the shop at all. She took care of her and Fred's children. Finally, there was James, who was the repairman. He didn't have the kind of personality you'd want on the sales floor. But he was a wizard with a wrench in his hand. In this particular store, the repair shop was in the basement, and James was perfectly happy to spend all his time down there. In fact, as I understand it, that was set up as a separate business. The three upstairs partners had a contract to supply James with all the repair work. They got a small percentage of the repair income for writing up the repair orders, handling the credit cards, and so on. They also paid James a flat rate to assemble and adjust new bikes.

In summary, all the terms of partnership need to be discussed. More than discussed. You want the major points in writing, and a contract signed by all partners.

The very most important clause in that contract will be an escape hatch for each partner. What happens if the business loses money? What happens if a partner becomes sick or dies? What happens if two partners can't stand the sight of each other after a while? Escape clauses need to be fluid. For instance, if a partner wants to leave early on, his value in the business is worth far less than after five years. These escape clauses must be manageable, so that it is truly possible to make changes in a partnership as needed. For instance, a very bad escape clause would be that if a partner leaves, the others have to immediately pay her $500,000. If an escape clause is all spelled out in writing ahead of time, all will be well in these eventualities - or at least as well as it can be.

Another consideration in partnerships is your own personality. Take me, for example. I can't stand having to share my decisions with anyone. I have always been a sole proprietor. I'd make a horrible partner unless I was allowed to run the show 100%.

So, on the opposite end of the partnership spectrum is sole proprietorship. The individual owner doesn't have to defer to anyone before making major decisions. 100% of the profit goes to the individual. That's huge, even with just two partners. Let's say that the profit of a business is $60,000 per year. That means that an individual proprietor takes home $60,000. But two partners owning the same business would only get $30,000 each.

There's also an ego component. I love being able to say, "I own this." For me, it would be horrible to say, "I own a portion of this."

Getting back to the original question, what if you don't have the time, experience or money to start a bike shop on your own? And if you don't want a partnership, there is a very simple answer. Start with something evolutionary. Start something small that you can manage, and let it build as you gain experience, money, whatever you've been needing.

Some Ways to Start Small

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We've already talked about the man who sold high-end tires out of his car. And, we covered me, the young fellow who started fixing bikes for kids in his neighborhood. What else could you do?

If you know nothing about bicycle repair, you'll probably want to focus on buying and selling, or perhaps a bicycle service, such as being a bicycle messenger, or organizing a messenger service.

how to start a bicycle messenger business
Bicycle Messenger

To be a bicycle messenger is as easy as falling off a log. All you need is a bike and a cell phone. You can make up some business cards and flyers. Your first task as a messenger is to deliver the flyers to bulletin boards all over town, and to deliver the cards into the hands of as many people as you can. Don't forget about Craigslist - a great cost-free way to advertise a service in most towns. If you live in a large city, there may already be messenger services. But there's always room for more. Especially if you do something unique. For instance, you might deliver meals between 9pm and midnight. Or you might specialize in transporting medical records - whatever you find a need for in your city. If you're in a small town, even as small as 5,000 residents, you can set up a general messenger service and prosper nicely.

Buying and selling can take several forms. If you work with whole bikes, you may want to partner with, or hire a bicycle mechanic so you can be sure you're selling properly-running, safe bikes. You can make more money buying broken bikes, having them fixed, and selling them in guaranteed good condition. It is entirely possible to make $1,200 per week just buying bikes at garage sales, fixing them or getting them fixed, and selling them through Craigslist.

Bikes at garage sales can be incredibly inexpensive. The people may be moving next week, and haven't been able to sell their bikes for a reasonable price. The owner of the bike may be at college and the parents want to sell it to help pay for textbooks. A bike may be broken and quite undervalued by the owner. It is very common to pay $25 for a typical mountain bike, one that sold for $300 when it was new. You can put $20 worth of parts in it, perhaps $50 for labor if you don't do it yourself, and then sell it for $150. For a few months, in a somewhat offbeat scheme to support some relatives, I did this with twenty bikes per week out of my one-car garage. I just went to as many garage sales as I could hit on Friday, Saturday and Sunday, rounding up the bikes with my pickup truck. If I didn't have a pickup truck, I could have rented a U-Haul for $40 or so on Sunday evening, and gather up all the bikes I had purchased over the weekend.

It is great if you can display your bikes locked up outdoors, with prominent price signs where many people drive by, but most people don't have a place to do this. You might consider a consignment arrangement with someone who does. You can place classified ads in the newspaper, and although expensive, this generally works well. In most communities, the best bet is Craigslist. You can place ads for as many bikes as you want, along with pictures, and it is all free. I'll talk about ways to leverage Craigslist in a later chapter.

home bike business - bikes for sale

When I was doing this out of a home, I mostly dealt in medium-quality mountain bikes, a few road bikes, and one or two children's bikes. In general, children's and low-end adult bikes don't sell for a sufficient profit to be worth your while. A twenty-year-old mountain bike that you price at $150 is the easiest thing to sell. I also had some relatively high-end bikes when I could find good enough deals. Typically, I'd pay $100 or $150 for a high-end bike at a garage sale, and sell it for $600.

As you develop your selling business, you'll discover that you no longer need to get all your bikes at garage sales. People will start calling to find out whether you'll buy their old bikes. You can enhance that by telling everyone you see that you're always willing to buy broken or inexpensive adult bikes. (Remember, there just isn't much money in low-end and children's bikes.)

You'll want to be careful about stolen bicycles. They don't generally show up at garage sales because thieves don't operate that way. They wouldn't want the exposure. Still, you'll want to be careful about anything in too good a condition at too good a price being sold by people between 12 and 25 years old unless their families are at the sale with them.

If you have doubts about the history of a bike, you can ask the seller for a receipt. Often they'll have legitimate excuses - such as they didn't save the receipt. But if they can produce a receipt, you'll know for sure that the bike has not been stolen. Sometimes, you can ask whether anyone has taken a picture that includes the bike. If they show you an old picture on their smartphone, it's a pretty good bet that the bike has a good history.

In many communities, the police have worked out some sort of system to register used bikes. If you start dealing with used bikes regularly, they'll want you to let them know about bikes you purchase. This probably isn't as important as when you get an actual store, but you'll want to participate if you can to protect the community at large from bike theft. The police won't charge you any money, but they'll want you to provide the serial number, description and source of every bike you handle. They usually ask you to hold every bike for 72 hours so they can have a chance to follow up if something turns out to be stolen. The downside is that if a bike is stolen, you'll have to give it up, and won't be reimbursed for what you paid. The upside is that the owner from which it was stolen gets it back.

Imagine a twelve-year-old boy who saved all summer to buy his BMX bike, has it for two weeks, leaves it unlocked in a friend's yard, as twelve-year-olds will do, and discovers it has been stolen. The poor thing will cry his eyes out. If you can help prevent that sort of scenario, you can be proud to do so. Wouldn't it be a great gesture to clean and tune a bike that's going to be reunited with it's owner? I never got the chance. I registered hundreds of bikes with my local authorities, and no bike was ever reported as stolen. Part of the reason is that the majority of bikes I purchased were broken, not shiny, valuable bikes. I think another reason is that most homeowners fail to record the serial numbers of their bikes, laptop computers, cameras and such gear.

If the police recover bikes that have been stolen, but don't have a serial number or some way to positively identify the bike and reunite it with its owner. they hold it a while, then sell it at a 'police auction.' You can sometimes buy some remarkably good bikes for very little money at these auctions. You're bidding against the general public, most of whom are looking for bikes for themselves, and know very little about how valuable certain models are. Others will see a bent wheel, or a missing cable, and just assume the bike is beyond their ability to repair for a reasonable cost.

That's not always the case. Sometimes, the police auctions are way too popular, and you'd be wasting your time to try to buy bikes there. For instance, at some auctions, you need to pay as soon as you win each bike, so you miss the opportunity to bid on the next several bikes that go across the block while you're waiting in line at the cashier. Of course, in that case, bringing a friend to help is a good idea. Some of the best auctions happen in inclement weather. In late fall, the police will have their last auction of the year. These will be many good bikes that accumulated during the end of the summer. There's less interest as soon as the weather cools, and if it rains, or snows, there won't be many bidders. You win. Mostly. But there is an unexpected catch.

When you buy a bike at a police auction, guess what? It's still a stolen bike! Normally, this means nothing, and having gone through the process, and paid money, it is morally and nominally yours. But if the original owner discovers you have his bike, you are still obligated to give it back.

Buying and selling can also be about parts and accessories. I believe a person could watch eBay like a hawk, and pick up things like Campagnolo components, and bullet headlights from bikes from the 1950s. You could turn right around and sell them for more on eBay. There is 14-speed internally geared hub made by a company called Rholoff that sells for $1000.

The Rholoff 14-speed bicycle planetary gearing rear hub
The Rholoff Speedhub - 14 Speeds
via: http://commons.wikimedia.org/wiki/User:Marcela c

If you could pick a used one up on eBay for $300, you could sell it for $600 - $700 easily. Interestingly, even a common three-speed hub sells regularly on eBay for $40. You might also mix and match with your local market, using Craigslist and garage sales. I think another good eBay business could be had by buying the lowest of the low bikes locally - you know, the department store $100 mountain bikes, disassembling them, and selling the pieces on eBay. Better yet, if you can score the older bikes, maybe something like a Peugeot PX-10 from 1970, you can disassemble them, and sell the parts for a rather remarkable sum. More about eBay.

As you develop your sales business, you may find opportunities to do simple repairs. In time, the repairs you are capable of performing will become more complex until finally you are qualified to do repair work professionally, if you want to do that sort of thing. That's how it worked for me. I started with simple things for my neighborhood friends. I tried experiments with my own bikes and with bikes I eventually put up for sale, until finally I was building custom frames, making customized tall unicycles, specialty human powered machines, and bicycle trailers. You should have seen my first paint jobs. Horrible! But eventually, through trial and much error, I learned how to professionally paint a bike.

The one thing to always remember is to know your limitations - for two reasons. One, you don't want to promise something you can't deliver. I still remember the time I took apart a shifter to replace a cable while the customer waited, back in 1976. It was one of the first-ever index shifters. I didn't realize there was a little spring in the thing, and it jumped out on the floor. I spent fifteen miserable minutes looking for that dang-blasted thing! The more important reason is safety. You want to make absolutely, completely sure you never compromise a bicycle's safety. There are things you might want to learn about before offering professional repair, such as over-dishing a rear wheel, so that it suddenly collapses on a high-speed turn. There are many good books and websites that teach bicycle repair. You might enjoy BikeWebSite.com.

Jeff Napier's First Cycling Website

If you are good at, and enjoy repairing bikes, you have some fun opportunities. Of course one is to run a little underground repair shop out of your home. You might be in violation of your local zoning ordinances. If they reach out and bite you, it is not nasty. They just ask you to stop. People don't go to jail or pay fines for that sort of thing, unless they persist after they have been told to stop. Almost always, a home-based bicycle repair business would have to grow rather large and noticeable before the neighbors start complaining. Basically, keep the noise down, try to let your customers know where to not to park, and be ready for your home-business to collapse at any time. The most likely scenario is that you'll be ready to move into a proper storefront long before anyone reports you to the zoning authorities.

Another way to make money with bicycle repairing is to create what I call a Safety Tune-Up Station.

One out of eight bicycles has a safety problem. These problems are often hidden, such as a frayed brake cable that will fail at the worst time, during a hard-pulling panic stop. Seventy percent of bicycle accidents don't involve cars. What do these statistics mean? They tell us that if these bikes could all be inspected and repaired, a number of people could be kept out of the hospitals. And not just kids. It turns out that more than 60 percent of the people injured in bicycle accidents are adult males.

So my proposal is that you could get paid to do safety tune-ups. One version might be to set up a bicycle repair stand and a toolbox near a public bike path or a place where people gather. You'd put up a sign saying that you're doing safety tune-ups on the spot - in just a few minutes while people wait. You could charge money for each bike. Perhaps $8 or $10, or whatever the market will bear. But you could also do it other ways. One way would be to just ask for donations. In a way, it would be like a street performer, passing the hat, or with an open guitar case full of one- and five-dollar bills. To maximize your profit, you might point out that the average person pays $10 per bike. But to be fair to those who have little money - the very people who most need their bikes made safe, you may end up doing a lot of safety tune-ups for free.

You can get sponsorship. Wouldn't it be great publicity for a local business to promote free bicycle safety tune-ups? They'd pay you $200 per day, or $8 per bike or whatever you agree upon, to fix bikes in their name, perhaps at their facility.

This would be a good fit for a corporate or public grant. If you are a grant writer, know a grant writer, or would like to take a crack at grant writing, it would be well worth applying, don't you think?

You can also perform safety tune-ups in trade for old broken bikes - from those who can provide them. In other words, you're mostly doing safety tune-ups on a free basis, but willing to accept donations of cash or bike items. You could then fix up the bikes, or strip them for parts, and sell them on Craigslist or eBay.

So what is a safety tune-up exactly? You'd make sure all the nuts and bolts are tight, make sure the brakes work properly, and that the wheels are not in danger of collapsing. You'd run the chain through a rag held in your fingertips feeling for defective links. You'd look the bike over for other safety concerns such as a bungee cord wrapped too loosely on a carrier, which could come loose and catch in the spokes. Beyond safety, anything else you might do would be optional. If you have time and interest, you might adjust index shifting so it clicks in properly. You might true a wheel so it doesn't rub on the brakes. You might make sure the tire pressures are just right. And, you might just teach a bit of bicycle safety when appropriate. Wouldn't it be nice to come up with some nice metaphorical bits you could drop, especially to the younger riders, so they'd be more inclined to ride more defensively in traffic?

Or, maybe put together a fun show, perhaps with some magic tricks, juggling, music, or comedy skits, to teach bicycle safety. You can get grants to present it in the schools, or street perform, passing the hat at the end of your entertaining safety shows.

Maybe you know some trick riding. There was once a motorcyclist who had mastered a little routine where he took 26 footsteps all over his motorcycle while balancing, not on the kickstand and not rolling. You could combine something like this, plus your BMX, circus bike, or even unicycle tricks into a bicycle safety show.

Getting back to the safety tune-up idea, you could also do house calls. Advertising on Craigslist, with business cards, and flyers, you could let people know you'll come to their house and do safety tune-ups on all their bikes, for perhaps $18 per bike. Or maybe full regular tune-ups, where you check and adjust all the bearings, adjust spokes and true wheels, check tire pressures, make sure all the bolts are tight, do a bit of cleaning, adjust brakes and derailleurs, and advise the rider about proper seat position, riding style and so on.

Evolving from house calls for safety tune-ups, you could offer house calls for general bicycle repair - tune-ups, overhauls, parts replacements, wheel repair and so on. Maybe even offer emergency road service for punctures, broken wheels and so on. A full tune up is worth much more than a 'safety tune-up.' You can check with your local bike shops to see how much they are charging. You can charge just as much, or even more, since your customers wouldn't have to bring their bikes to a store, wait days, then go back to the store to pick up their bikes.

If you can repair bikes, you can teach bicycle repair. For those who have not only repair skill, but people skills, teaching bicycle repair through the adult or community education schools can be a good gig. The basic idea is that you contact these schools, put a listing in their catalogs, and get paid per head when the students sign up. You're not bothering these schools to ask. They want teachers to sign up. Dale Carnegie, the famous author of "How to Win Friends and Influence People" launched his career this way. He started teaching at his local YMCA with just a handful of students, and ended up teaching to stadiums filled with 20,000 people. I suppose teaching bicycle repair to 20,000 people at a time might be a bit problematic, but for the kind of money that would generate, you'd figure out a way, right?

Some community education schools expect you to work for very little money or for free. You can leverage this by inviting your students to something else that costs money or selling an additional product or service. For instance, you could teach in my town, where the school pays only $15 per hour. But during your classes, you tell your students that you are also teaching advanced bicycle repair and wheelbuilding out of your home - for quite a bit more money, of course. In every community, there are people who would love to attend a two-day weekend in which they learn about building and truing wheels. They'd pay well over $200 per person. So, if you get ten students, that's $2,000 for a weekend's enjoyable work.

Beyond bicycle repair, one can also teach bicycle racing and touring technique, bicycle safety, and even bicycle politics. One could start a school of bicycle technology.

Something else that might interest you is the idea of bicycle detailing. As you know, bicycles have a way of getting dirty, and it is not easy to clean the chain, in the spokes near the hubs, around the bottom bracket and so on. There are no doubt ways to build a nice business around a bicycle detailing service. You might be surprised how much some people are willing to pay for detailing. Many people who have plenty of money, but not much time or interest in work for which they are not experienced and for which they do not have adequate equipment - whatever that might be. (I'll leave it to you to figure out efficient bike detailing equipment.) This segment of the population, would be delighted to pay you to detail their bikes. Perhaps you'd make house calls. Perhaps people would have to bring their bikes to your location. Maybe you'd set up on weekends in a park, assuming you can get a permit to do business in your local park.

Taking an evolutionary step toward a real bicycle shop, you can move up to a flea market, selling bikes or parts and accessories or service on weekends. Many flea markets are held at self-storage facilities, so you can have a low-rent place to store your ever-growing inventory. In some, you can have electricity, so you can set up lights and operate tools. And, in some, even though most of the business happens on weekends, you can work and entertain customers on weekdays as well. For most flea market items, weekday selling does not work very well, but for your flea market-based bicycle shop, as you gain a reputation, you can have a parade of customers throughout the week.

Stepping Up to a Storefront

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The evolutionary approach has been great so far, hasn't it?

Now that you've got some money, time and experience, or a partner with what you need, you can safely start your retail store.

As you may have heard, one out of every four women fail in business. But what about the men? Four out of every five men fail in business! That's what this portion of the book is about, how to start your bicycle shop without failure. Those who fail are those who haven't learned what works and what doesn't.

They don't have the benefit of the 'secrets' you're going to read in the next few paragraphs.

The first secret you already know: Start small, and build slowly and carefully.

Secret Number Two: You've got to take in more than you spend.

In my very early twenties, during the growth of my very first bike shop, I also rented and sold cross-country skis during the winter. I had many requests to do tune-ups on downhill skis, but I did not know anything about that skill. One who does has to know all about inspecting and adjusting bindings, filling scratches with plastic candles, and planing the bottoms good and smooth. I had a friend who was an unemployed ski mechanic. Both of us not knowing any better, I invited him to rent some bench space in my shop and start his own micro-business within mine. He would be our downhill ski expert. The bench rent was to be $80/month, which he could start paying after his first month.

We put up a paper sign in the window advertising ski repair, an in that very first month, he took in quite a bit of money. Feeling successful, he bought things. He didn't like his old beat-up electric drill, so he bought a new top-of-the-line drill. He bought some great bluejeans, and some excellent cowboy boots so he could be the stylish guy at parties. You know what? When it came time to pay his $80 rent, he didn't have it! After a couple more months of watching him struggle with lack of supplies (although well-dressed), and never, ever seeing my $80 rent payments, I had to throw him out. It seems to me this poor fellow is destined to be someone's employee forever.

So, you've gotta take in more than you spend - from the first day. If you can always follow this rule, you will be successful.

Now, you've been buying, selling and repairing bikes. You have experience, and at least a little money. Maybe it's time to look for a business place.

It would be nice to have 10,000 square feet right in the middle of the busiest mall in town. That'll cost you $25,000 per month in most communities. OK, so maybe 700 to 1,000 square feet in a strip mall or a place where people can see your signs and park. That will cost between $700 and $1,400 per month. With first month's rent, security deposit, deposits with the utility companies, and some other startup expenses, that'll work out to $5,000. You might need to buy some furnishings. You might need to expand your inventory. You might not be able to cover the rent out of your gross sales for the first couple of months. We're talking about perhaps $15,000 that you can afford to risk. If you don't have that amount yet, no worries. Just go ahead and continue to run and expand your existing business.

An option is to draw up a business plan, show it to bankers, or wealthy family members, and borrow the money to start. I don't recommend this approach. It shortcuts what is typically a necessary learning experience, and puts you in a high-stress situation that tends to last for years. It is also not necessary. Also, depending on the nature of the loan, you may feel like someone's employee, who has to do things the way they want them done, and has to explain why the repayment isn't happening as fast as they'd like.

Location

"Location, location, location." You've heard it before, and it couldn't be more relevant than when renting a place to conduct a bicycle business.

First, you need exposure. You need to rent a store where your signs can be seen by a lot of traffic. This will work far better than any other sort of advertising. A good location is at busy intersections where people have to wait for red lights to turn green. They'll look around and see your bikes lined up out front. This has to be an intersection where everyone comes by from time to time, not an intersection in a neighborhood where it is only the same 500 commuters every day. Another location is inside a mall where there is a lot of foot traffic. And, not just any foot traffic. These people are there to spend money. Malls can be hard to get into, and expensive. If they're not, there may be a reason. I have seen malls with many closed stores, and very little foot traffic. That's not the mall for your store. If you can locate next to, or within eyesight of a Walmart, a busy movie theater complex, or even a RadioShack store, you'll do well, assuming people can park.

If people find it hard to park, they may never bother to visit your store, so easy access is essential. Even though your business is bicycles, a majority of your clientele will arrive in automobiles. Look beyond easy parking. The parking lot should look inviting and have easy access. If people have to make a U-turn, negotiate speed bumps, and wait for an unloading truck to move, they're going to shop elsewhere.

Parking meters are death to a retail business. If your customers have to put coins in the meters, they'll be agitated, impatient shoppers. Rather than focusing on buying your stuff, they're worrying the whole time they're in your store that their meters will run out of money. Worse, they remember this feeling from other times they have shopped in stores where they had to park at a meter. They may have even forgotten or got tied up, letting their meters expire, and had to pay parking tickets. So, they may never come to your store in the first place. They'd rather drive another ten miles to another bike shop than park at a meter.

In many communities, there's the 'good side of the tracks' and then there's the other side. The other side is not always so terrible. If you are a good manager of people so that you can deal with the occasional unruly customer, you can save a lot of rent. You'll be serving a grateful clientele, one that consumes bicycle products and services as much as, or even more than a suburban clientele.

Some of the most successful bike shops I have seen are in the worst parts of town. Once the bike shop develops a reputation, people from all sides of the tracks will shop there. On the other hand, the suburban bike shop will tend to service only a local clientele.

My first bike shop was in one of the 'terrible' areas. Most of my clients were amiable, good people that I enjoyed having in my store. A few were real weirdos. One fellow, although very nice, came in and browsed almost every day. He never said much. Oddly, he always wore brown pants and tan shirts. Not a uniform, just his colors, I suspect. But that's not too weird.

Now, Larry was weird. He was an air-traffic controller who became over-stressed in the Vietnam war. He was also one of the highest-ranking chess players in the nation. Very thin - I suspect because he often forgot to notice he was hungry. Sometimes he'd come in during the summer dressed in seven layers of shirts and sweaters. Sometimes he'd wear a huge clunky necklace he'd made out of derailleurs, brake calipers, hubs, and other parts. He was quick and jerky in his movements and in his speech. He became a bike shop regular.

You'll soon discover that every bike shop has its groupies. Most of them spend only a little money every month, but they are very worth supporting because they bring all their friends to your store. Larry, however, was an exceptional case. He'd do something like start a conversation with another customer. Then, out of nervousness, he'd take a bite out of the newspaper he was holding. Discovering that his mouth was full of newspaper, he felt he had no choice but to chew it up and swallow it. I don't know whether Larry had any friends, but he was so quirky, I enjoyed having him around. That is, most of the time.

One slow winter day, he challenged me to a chess game. He had a three-minute limit. I had infinite time. He sat on a stool at the sales counter, facing away from the chess set, and blindfolded. Of course I was able to look at the chess set. As soon as I announced a move, he called out a response. Typical of Larry, his responses were lightning-quick, and way too loud. I pride myself in being fairly good at chess. Larry won in 20 moves. with two minutes and twenty seconds left on the clock - two seconds per move! Then, he had me reset all the pieces, and still blindfolded, he replayed the entire game from memory.

I used to keep the phone on the front counter, so I could answer it without having to move anywhere. One day, it rang as usual and I reached to pick it up. Larry snapped it up in a split-second, listened for perhaps five seconds, then yelled, "*%@@&!" into the phone and hung up. I threw him out of the store. The phone rang again. It was the sister of one of my mechanics wanting to arrange a lunch with her brother. For the next 45 minutes, Larry loitered across the street, trying to look casual while leaning on a vending machine. Finally, I let him back in the store.

The bike shop sales floor
The Counter where Larry grabbed the phone

I wanted to take a moment to point out that this photo, and several others, were taken with a Kodak Instamatic, a state-of-the-art point-and-shoot camera, more than 40 years ago.

I have had a few worse customers. Shoplifters. People who just can't seem to stop yelling. People who are obscenely dressed. They are few and far between, but if you have a sensitive heart, you might prefer to set up in a 'better' part of town, or hire salespeople who have strong people skills.

Saving rent is essential, especially in the early stages. The difference between $1,000 per month rent and $1,200 is a lot of inventory. On the other hand, if you can get a location with good exposure and parking for $1,200, or a junky location for $1,000, you are way, way better off getting the place with exposure and parking. For the $200 per month you'd save, you could never buy enough advertising to make up the difference.

Did I say, "buy" advertising? I meant "get free publicity." Just about any form of advertising that a small bicycle shop can buy will be entirely ineffective. Yellow pages ads are the worst. You end up paying a lot of money per month to the phone company, or a phonebook publisher, and get little effect. People don't use phone books any more. They use the Internet. So you'll want a website. It can be a simple one-page affair. All people want is your address, the hours you're open, and phone number. You can do some search engine optimization tricks (SEO), which I'll discuss later, to get people to your webpage. If you're in a city with a dozen other bike shops, they'll all have their own websites, and without SEO or some other tricks, you might be 13th on the list, on the second page, when people google your town name and "bicycle" or "bike" or something like that.

You don't need a business coach be successful in a bicycle business. Everything you need has been written in this book. However, you'll make more money sooner with a coach. The coach can keep you motivated and on-track, which can make or save you literally tens of thousands of dollars a year. I usually have room for a few more clients, or the waiting list is short, so go ahead and call me at (805) 843-5353, or drop me an email at jeff@jeffnapier.com for a free, no-obligation strategy session. More details here.

Licensing, Paperwork, Credit Cards

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I'll bet you've been thinking that licensing and paperwork are difficult to deal with. Nothing could be further from the truth.

At first, when you're just doing something small, like selling out of the trunk of your car, fixing neighborhood bikes, or selling at flea markets, you don't really have to keep track of anything. Oh, yes, technically, you are supposed to have a business license and collect sales tax. But no one does. Think about it. If those things were truly enforced, everyone would have to file before having a garage sale, and pay sales tax after. Kids couldn't have lemonade stands.

If you want to be entirely kosher, you can get a business license, or at least collect sales tax for later payment to the local government. And if you make any money at all, you ought keep track for when you pay income tax.

On the very rare occasions when people are caught running a tiny at-home business, they are given very tolerable treatment. Typically they pay approximately what they should have paid, plus perhaps a $20 penalty.

By the way, some businesses are very simple. If you buy and sell on eBay, all you need to do legally is keep track of your income and sales tax or VAT collection in most countries and all but the five US states where sales tax is not collected. You don't usually need to comply with zoning restrictions if you don't have customers coming to your home. In fact, piano teachers run more risk than eBay sellers.

But this book isn't about how to do anything illegal. I suggest that you do try to comply with the law as soon as you possibly can. Certainly, by the time you start an official retail bicycle shop, you ought to have all your legal ducks in a row. These are the ducks:

1. You must rent space where the zoning is correct. The reason you don't see auto body shops in residential neighborhoods is because they are typically noisy and stinky, and so the neighbors, through local government, have agreed that only homes can be established in those neighborhoods.

In the middle of the city, where there are stores, factories, offices all lined up, the zoning is much less restrictive. Pretty much anything goes, but before you sign any leases, you'll want to actually google your community's zoning office, then email, phone, or visit them with the address you're proposing to rent to see whether it checks out.

Zoning also controls what kind of signage you can display. Be careful about that before renting. You wouldn't want to be restricted to a 2-foot by 3-foot plaque as I once was at a business location in Marin County, California. If you violate signage zoning, they typically issue a notice to stop doing that - take down your offending sign - within 30 days. No fines, no court, no jail time.

In fact, in most business offenses, the various government agencies realize you are not trained in business law. They are very flexible and forgiving in accommodating your mistakes, unless you continue to misuse the system after knowing better.

2. Business checking account. Get a business checking account at your bank. It is free at most banks.

3. Business license, often called DBA, which stands for Doing Business under an Assumed Name (even if it is your own name). Each community handles this in their own way, but while you are chatting with the zoning people, you can ask who handles business licenses. Go to that office, and fill out the single page form. It takes five minutes. In most places, they want an annual fee. It will be in the range of $5 to $150. In order to prove that you're in business, they may ask to see a business checking account number.

4. Sales tax collection is not required in Alaska, Delaware, Montana, New Hampshire, and Oregon. If you are in one of the other states, or in any country that depends on VAT or sales tax, then ask at the city offices who to visit to set up sales tax collection. They'll know exactly where to send you, because that's everyone's next stop. That too, requires a simple one-page form and is free. You are obligated to collect sales tax on all appropriate transactions. In some places, labor or second-hand merchandise is exempt. In others, everything is taxed. In some places, Native Americans, members of the clergy, or others are exempt. They'll hand you a pamphlet with all the details. In most cases, as you conduct your business, you periodically set aside the sales tax you have collected in a savings account. Once every three months, the tax people mail you another one-page form in which you state your gross (total) sales, the sales that are taxable, anything you've taken from inventory for your own use (taxable), and how much you owe. Throw a check in the envelope, and you're all set for another three months.

5. Fire inspections. In some communities, the fire department comes along every year or two and inspects all businesses. They want to see that isles are clear so people could escape a fire. They worry about extension cords, and want to see fire extinguishers hung on the wall. Compliance is easy. After a typical inspection, you may have to move some equipment to eliminate an extension cord and buy a fire extinguisher.

6. Insurance. Sometimes, a landlord will want to know that you plan to carry liability insurance before they'll grant a lease. But you may want to get insurance anyway, as soon as you can afford it. If you are wealthy and something should happen, you want to protect your assets. You don't want to be sued, or if you are sued, you want the insurance company's lawyers working for you, and you want them to cover any eventual settlement. If you have pretty much nothing, you are not likely to be sued, because the opposing lawyer will see there's nothing to collect, and therefore no incentive take the case. Still, you may want insurance. This is to protect your customers. What if something did happen? In a bicycle shop, there are exposures. A customer may crash on a test ride. A customer may fall on the front step. Once, an eleven-year-old boy tried to ride his bicycle up a stair and into the narrow front door of my shop. He lost control and slammed into a plate glass window. Fortunately, the window didn't break and the kid wasn't hurt, but it could have been a different story.

Another time, I was trying out a new mechanic. She came highly recommended, but she was very shy and nervous about her trial day. If you've ever been nervous, you may remember how you somehow don't see details as clearly as you would if you were calm. We had a chain strung up at waist height across an opening between the sales floor and the service area, with a sign that said, "Authorized Personnel Only." Just before lunch, in front of two mechanics, three sales people, and several customers, she came walking through that opening at a fairly good clip, and somehow didn't see the chain. She went head over teacup, or whatever the expression is, doing an almost 360 degree flip over that chain. She wasn't hurt, but she was so embarrassed she ran out of the shop and didn't return. I had to phone her at home and let her know no one was laughing - even though secretly we were.

You get the idea. If something serious happened to a customer, wouldn't you want to know there's a way to compensate them? For a regular size bicycle shop, general liability insurance costs around $500 to $800 per year. A fringe benefit to the general liability policy is that your own tools and inventory are covered in the case of a fire, major theft, or a similar eventuality.

Are you starting to worry that something could happen? In all my 15 years in the bicycle business, I have to admit I took some rather large risks, but I was never sued. I never even came close because I cared about my customers, so I was always conscious of making sure bikes were safe, and that the store itself was safe - no ice on the sidewalk and that sort of thing.

Another bicycle shop, about the size of mine, had three concurrent lawsuits. What was the difference? I was always polite, and more than polite. I was friendly, with my customers. I kind of wanted them all to be friends. They knew this, and loved it. If I had been like the owner of the other place, I would have been grouchy, and well, just the kind of person people would want to sue, given half a chance. He was also careless in his repair work. I think his motto was just get it done, charge the money, and get it out of the shop. The people he hired were the same way, or they became that way once they had been working there a while, and adopted the owner's business mood.

You may have heard of Patch Adams. He is a doctor, a general practitioner, who practices for free, or for donations. He does not carry malpractice insurance, which is unheard of for medical doctors. One out of sixteen doctors is sued every year. But Dr. Adams is doing good work, really cares about his patients, and they know it. If something goes wrong, they know he did his best. Consequently, he hasn't ever been sued, as of the last time I checked. But it isn't quite as simple as that. He may be lucky, or probably has little personal wealth, so suing him might not be sufficiently profitable. However, the insurance companies do not take into account how likable or how well-meaning a person is. They just look to see if there are assets to be taken, and a legal way to take them. So, as you start to gain wealth in your bicycle business, you may be well-meaning, and you may have a well-meaning client who has been injured. The client would never sue you, but his insurance company will.

If you are in America, when it comes time to fill out your federal income tax, you'll discover a thing called a Schedule C. This is also a single sheet of paper, and is easy to fill out. It will ask about the value of your inventory at the start of the year, the end of the year, and how much you spent on rent, utilities, office supplies, and things like that. As you work your way through the Schedule C, which takes maybe 15 minutes, you discover how much you actually made that year, and write that number into your 1040. These days, it is even easier. If you use TurboTax or HR Block Online, or any of those services, the software just asks questions, which you answer, and everything else is done for you.

In America, because you are self-employed, you end up paying 13.5 percent of your personal income in Social Security Tax, which seems like a lot compared to the 7.25 percent that is withheld if you have a job. But the truth is your employer pays the other 7.25 percent. Still, it is a lot of money, and the government doesn't trust you to hold it. Therefore, you are supposed to fill out a 1040-ES four times a year, and pre-pay your taxes. For the average bike shop owner, the income tax situation may seem shocking at first. Instead of getting a big refund at the end of the year, you have to pay thousands of dollars four times a year. To reframe this more comfortably, remember that as a self-employed person, you have the potential to make far more money than most employees will ever get. Once you're making enough, the taxes seem trivial. This is pretty much the same in most countries.

As far as filing your 1040-ES forms, Schedule C, and all that, the online software will guide you. Or, if you like doing things yourself, you can find out everything you need online, and you may discover it is all rather simple in the end. By the way, if you fail to pay the 1040-ES payments, life doesn't end. You just pay it all in April, and a small ($20 - $50) fine for not pre-paying. If you can't pay in April, the IRS will let you make payments, although they do charge a fairly hefty interest rate.

accept credit cards in bicycle store - bike shop
Photo credit: mediaphoto.org

Setting up to accept credit cards used to be complicated and expensive. In one of my businesses, I had to sign a three-year contract at $35 per month to get a credit card machine. Now, PayPal.com, an online money transaction company, makes it super-easy, and free! Sign up for a free PayPal account if you don't already have one. Then look for "On Your Mobile Device" or something similar, since they change the layout of the website from time to time. When you click through, you are taken to a page that explains you can accept all common credit cards on any standard smartphone. PayPal even mails you a free attachment for swiping the cards. When you take a card payment, the money goes instantly to your PayPal account. From there, you can transfer it to your checking account, spend the money on eBay, have a check mailed, whatever you want. PayPal takes only a small percentage from each transaction, the same or less than any of the old-fashioned credit card companies used to charge.

That's pretty much it. Nothing more, except inventory management, and that's actually quite fun!

Inventory

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When you're just starting out as a home business, you can buy things on eBay and mark them up a bit. But that's not sufficient for a proper retail store. You want to buy from the wholesalers. They have catalogs and secret price lists. Once you have a business, these catalogs are very easy to get. The wholesalers want you to buy from them, and eventually they'll seek you out. Initially, you need to seek them out. In order to prove you're in business, so you can get the secret price lists, you need to show them a sheet of paper called a resale certificate. This is what your state's sales tax office gives you when you sign up to collect sales tax. You mail or fax a copy to the wholesaler, and you're in business. Sometimes all you need to do is tell them your sales tax number on the phone or in email. If you are in one of the five non-sales tax states, they'll probably ask for a copy of your DBA. In other countries, I'm guessing the procedure is the same, just the names of the paperwork may be different. You'll want contact your local government offices to become aware of any possible differences.

You can find wholesalers by simply googling "wholesale" and whatever you're looking for. In some cases, "wholesale" won't quite do it. Instead, you just google the brand name, come up with the manufacturer's website, contact them, and ask whether they wholesale directly, or through general wholesalers. You'll find variations in the way they do business. You might also want to sign up for the free newsletter at BicycleRetailer.com. You'll find many leading wholesalers advertising on the site and in the newsletter.

On one end of the spectrum is West Coast Cycle, which is a general bicycle parts and accessories wholesaler in Carson, California. From them, you can buy Zefal pumps, spokes, headlights, brake pads, handlebar stems, whatever you need. They also supply the CyclePro line of bicycles. Anyone who has a bike shop can buy from West Coast Cycle.

Then there are specialized companies, such as "Specialized." (Yes, that's their actual name.) They sell only certain parts or bikes that carry their brand name. Companies like Specialized, Raleigh, KHS, Schwinn and others have what they call protected dealerships. If another bike shop within a certain distance of your store, typically five miles, is carrying the brand already, you can't carry it.

Schwinn used to be on the far end of the spectrum. In the past, you had to be an exclusive Schwinn dealer. You couldn't sell Peugeots along with your Schwinns. You had to have company-approved display equipment. Even the cash register had to be Schwinn-approved. There may still be some companies around with such severe restrictions, but they are few and far between.

In my first bike shop, for my first parts and accessories purchase, I had a total of $200. I wanted to have a few of the popular size inner tubes, a few patch kits, one headlight, one taillight, one bar lock, and so on. I had to show the widest possible range of inventory. I always thought dealers had to buy things in dozen-lots or even hundred-lots. It turns out most wholesalers will sell as few items as you want. From some, you can literally buy a single axle nut. The prices for such small quantities are only a fraction higher than in large quantities. For instance, you can buy a single patch kit for 50 cents. If you buy a hundred of them, they are 40 cents. I was also surprised by the size of the markup. I figured on a $20 saddle, I'd make perhaps $4 or $5. But no, the saddle that sells in the store for $20 costs only $10 or $12. Sometimes, the wholesalers will put that saddle on sale for $8.

Of course I'd advise that you, too, start out with small quantities and a large variety. Even if you have a lot of capital to start, you ought to start with small quantities, because you need to learn what sells and what doesn't.

I heard about a camera store that started with a single Hasselblad - a top-of-the line camera at over $1000. When it sold, the proprietor bought five more. Turns out, he accidentally tied up $5,000 for quite a while, because Hasselblads only sell once every few months. If you play your initial inventory right, you can turn it four or five times a year. This means that the entire value of your inventory will be sold and replaced four or five times. Oh, not every item. Some things will get dusty on the shelves. But others will turn ten or twelve times a year.

In very short order, you'll learn what to stock in larger quantities. You'll find that you probably need to keep a hundred 26 x 1.75 inner tubes in stock. On the other hand, if you stock a couple of 26 x 1-3/8" inner tubes, you may still have them four years later.

Should you use a computerized inventory control system? No. If you do, you'll be a slave to it. Computerized inventory can be pricey and time consuming for the small bike shop. Later on, when your store is grossing $1 million or more, and when you have employees, computerized inventory makes sense. In the meantime, the best system is want lists. You, and everyone who works in the store should have little notepads available. As soon as anything appears to be in too low a quantity, it needs to be written onto the list. So, if a mechanic uses the only seven-speed trigger shifter, she writes it onto the list, and a replacement is put back in inventory. If the sales person notices that there are only six Kryptonite locks left, they go on a list. You place small orders from the want lists every couple days. Maybe every day at first until you have enough wealth in the store to support a larger, more redundant inventory.

As you order things from the want lists, you cross them out. If an order arrives but something on the order was out of stock, it is written back onto a want list.

You'll want to have accounts with several wholesalers. You will find that one has a certain popular tire for $3 less than the others. So you buy those tires from that supplier. Another will be the only one who carries seatposts (OK, "seat pillars" if you're obsessive in bicycle terminology.) in all the diameters you may need, and yet another has all the little Shimano parts that the others don't carry.

You'd be surprised at how helpful the wholesale reps, and the salespeople in the wholesaler's office can be, if you'll ask them. Oh, they probably don't know much about bike repair, but they can tell you that 26 x 1-3/8 tires don't sell very often (so you shouldn't stock very many), and 26 x 1.75 tires are the most common. You might already know this, but no doubt there are places where you can use their guidance. You can do things like tell them to send you $400 worth of the most common handlebar stems, letting them work out the details, so you don't end up with the weird stuff, and you can fulfill most requests when someone needs a handlebar stem.

With careful management, your store can satisfy 90 percent of your customers' requests. More important, more than 90 percent of the repairs will be completed in a single session. It is expensive to start a repair, wait for a part to arrive, then resume. Furthermore, the customers don't like having to wait a few days for parts.

Interestingly, with a fairly small, well-managed inventory, you can fulfill ninety percent of requests. If your inventory is ten times larger, you can still fulfill only perhaps 92 percent of requests.

In time, you'll find out which wholesalers are best for most of your inventory. Then, every couple of months, you can crack open a catalog or website you don't usually deal with, and order a bunch of things your store doesn't normally carry. You'll be surprised by a few of the items. For instance, you may discover that a certain kind of mountain bike fenders are very popular. You'll also end up with a lot of odds and ends to fill out your inventory. But, how nice it is when someone comes in for a Campagnolo bearing cone, or a pad for a Mafac brake, and you have it in stock!

Once your shop has a large inventory and plenty of money, you can make even more money by ordering as many sale items from wholesalers as possible. Almost all wholesale suppliers will have weekly, monthly, or holiday 'specials,' as well as other reasons to discount some items. Many of the discounted things will be oddball inventory that you can't sell, but much of it will also be spot-on. You're looking for sales on the ordinary everyday things that sell all the time, such as brake cables, inner tubes, helmets, and locks. You can constantly shop the sales, stocking up on large lots of anything good that's on sale. So, if you normally pay $8.00 for 26 x 1.75 tires, and you can get a hundred of them on sale for $5 each, your profit is an additional $300.

My bicycle shop started smaller than what I recommend to others. I started in the autumn in a city that gets significant snowfall. I had six used bikes. After paying the rent and deposit, I had $120 left, which quickly went to utility deposits, paint and wood for signs, and so on. It wasn't even a real bike shop. Because I had so little, I started it as a general fix-it shop, specializing in bikes. In time it evolved into the premier 'pro' shop in the city. But the first few months were tricky. From the beginning I planned to make it a bicycle shop, not a fix-it shop. By the end of November, I had $200 more than necessary to pay the rent and utilities. I placed my first wholesale order of parts and accessories. I sold most of the original $200 order, and got more. By Spring, I was ready to order my first new bicycles. I was so excited!

One of the wholesalers carried a full line of bikes, while most of the others carried only mid- to high-end bikes, so I placed my order with that company. I purchased four mid-level adult bikes in varying frame sizes. I purchased a low-end bike, which can purchased in department stores for less than the wholesale price. And, I purchased one child's bike, also in competition with department store bikes. Guess what? The four mid-level bikes sold fairly soon. It took months to dump the child's bike, and the low-end adult bike gathered dust in my store for more than a year, while I sold and reordered bikes all around it. In that first year, 125 new bikes sold.

Knowing what I do now, I would have ordered nothing but mid-level and semi-high-end bikes right from the start. I would never try to compete with department store bikes. In time, I sold very high-end bikes, but like Hasselblads, they sell slowly, and so are not a good investment for a shop just starting out.

I also learned about frame sizes. The most common sizes sell regularly. As you reach toward the limits of very large and very small bikes, they sell less and less often. You might fill your store with eighty percent normal-sized bikes, and only twenty percent, or even fewer, particularly short and tall ones.

One thing I didn't know is that it is important to stay mainstream. It took me a couple of years to learn this. I put a number of really weird bikes in the store. I had a recumbent. I had a penny-farthing replica (an antique high-wheeler), a bike with very fat tires, and so on. They took forever to sell, and in the meantime, they took up valuable floor space. Later on, these odd ducks became valuable to my store in an unexpected way. The place became a bit like a museum. People brought in people who wanted to see the unusual machines. Then, when these new people needed an ordinary new bike, guess where they bought it? Right! In time, I displayed a 90-speed bike, a 9-foot tall unicycle, an ultimate wheel (a unicycle with no seat or frame), and a PPV (a People Powered Vehicle - pedal-powered car) just to attract attention. It was great free publicity.

Another upside to weird bikes, if you have the money to buy them and the space to display them, is that something unexpected may become popular. I made a frame with polished-steel tubing under clear paint. It was just an experiment, and was a weird-looking frame indeed. Guess what? Everyone wanted one!

One downside to weird bikes worth considering: You are responsible to keep them running. If your customers need a replacement part, you are expected to be able to get that part. So, ideally, buy only oddball bikes for which parts are available, and from manufacturers who you expect to stay in business.

I loved the weird stuff, and I'll bet you do too. For instance, one day a wholesale rep gave me a prototype all-plastic freewheel that his company was considering carrying. This was in the days when freewheels screwed onto hubs. Every part of this was plastic except for six little gravity and centrifugally loaded steel pawls that engaged the plastic ratchet surface. I was excited, and asked the rep whether I could put it on a bike right away and test it. He was enthusiastic to see the result also, so I put it on a bike and took it for a little test ride. I do mean little. I went approximately six feet (two meters) before the pawls chewed through the plastic ratchet.

The second year I was in business, I sold 625 new bikes, with the help of the wholesalers. It turns out, they'll offer credit to an established customer. When open credit was offered by one wholesaler, I put $7,000 worth of bikes on the sales floor that I didn't have to pay for until 90 days later. I was quite worried about making the payment in time, but I did it with room to spare.

Bicycle shops handle test riding in various ways. At first, I would let anyone ride anything if they could leave a parent or a drivers' license in the store while they were out riding. But one day, a guy left a license, and never came back. He had stolen my bike! After a couple of hours, I looked at the license, and discovered the picture wasn't even of him. He had probably stolen a license, and used it to steal my bike.

That incident caused me to really think about the test ride policy. I considered everything from not allowing test rides at all, to making no policy change. In the end, I considered test rides important, but I didn't offer test rides to people who didn't seem trustworthy, and just held driver's licenses from those who did. No more bikes were stolen in that way. I did lose three more bikes during the five years of my first bike shop. That's a reasonable proportion compared to the number of bikes I dealt with. Two just disappeared off the sales floor one day. I think someone just walked out with them when there was no salesperson in the front room.

In another case, I learned about extending store credit. A fellow bought a new bike. I tried to sell him a lock, but he wasn't interested. A few days later, he came to buy another bike. His first had been stolen. Still, he wouldn't buy a lock. A month later, this happened again. In retrospect, I should have realized this guy had a screw loose. Anyway, over the course of a year, he bought a total of five bikes. When it came time for the sixth bike, he told me he was short of cash, and could I just give him the bike today, and he'd bring the money on Thursday. Since he was such a good customer. . . I never saw him again.

I don't want you to think that a bike shop is all about selling new bicycles. In fact, I could have been just about as successful if I didn't sell any new bikes at all. The bulk of the income came from repairs, accessories, and parts, in that order.

When you sell a spoke, it may cost you five cents, and you might sell it for 25 cents. A great markup, but a small profit due to the handling time involved. When you sell a $20 saddle, you make $10, for only a couple minutes work. When you sell repair labor, the markup is around 200 percent. In other words, your labor cost on a typical repair may be $20, but you sell it for $60.

In my first bike shop, I didn't pay much attention to the used bike market. Too bad, because my shop could have been even more profitable. A typical used bike costs $30 as a trade-in. You put $40 worth of parts and labor into it, so the total cost is $70. Then you can sell it for $150. In my later bike shops, I bought and sold a large number of used bikes.

New bikes are horses of a different color. A typical new bike costs the store $350, plus $25 for shipping (if you buy a large enough quantity of bikes at once). Then you have to pay a mechanic to assemble and adjust it, unless your business is small enough that you do that yourself. Then, you have to take quite a bit of time in selling it. So, you might have $50 labor tied up in it. And, all you can get when you sell it is $495, so you make $70 for all that investment. Then, you may have to pay for more labor to make adjustments or warranty repairs after the sale. The manufacturer or wholesaler will cover parts, but labor is out of your pocket. So maybe you end up with $50.

New bike sales become profitable when you sell accessories to the new owner. And when, during the following years, the customer brings it in for repairs.

Oh, a bicycle store can be profitable by blasting out hundreds of new bikes. Many have done it that way. But if you are starting out with a small store, you may want to focus on repairs, parts, accessories, and used bikes.

For more profit when you sell a new bike - or a used bike - see what you can sell along with it. You are doing the customer a favor if you recommend a lock, helmet, and such accessories. You are not doing the customer a favor if you go too far with it. You can make the customer aware of accessories, but it is not right to insist or oversell. The same is also true of the bike's price. Many salespeople push a higher-level bike than the customer really wants. In the long run, that will backfire. I think I surprised many customers when they came looking for a $600 bike, and I showed them $400 bikes, explaining why spending more was not necessary.

As I mentioned earlier, I started my first bike shop in a small city of about 350,000 residents, where the winters were harsh, and there were ten other bicycle stores. One would think the numbers were against me. But my store was immediately successful because, not knowing any better, I focused on bicycle repairs. Over time, my store became one of the larger ones in town, and was eventually considered a 'pro' shop, specializing in high-end equipment and customization for racers, tourists, and serious commuters.

To survive my first winter, I took in any kind of general fix-it work I could get. I put cords on lamps, got vacuum cleaners running again, and reglued dining room furniture. In later winters, as my place became a real bike shop, I still felt it was important to supplement my income. I enjoyed cross-country skiing, so I bought twenty pairs of cross-country skis, and started renting and selling them. I bought an initial inventory of twelve Victorinox Swiss Army knives. These took up space in a three foot long glass display case.

the front room in bicycle shop
The display case with the Swiss army knives

The Swiss Army knives sold very well, especially right before Christmas. In time, I had hundreds in stock, and carried every model the company produced. In my last couple of winters in my first bike shop, I started teaching bicycle repair, wheelbuilding, and then framebuilding. These classes covered my expenses nicely. The framebuilding went especially well because the students not only bought the lessons, they bought the materials, and eventually most of them furnished the bikes with components purchased from my store.

Let's talk a bit more about the cross-country ski rentals. I started with twenty pair. Figuring the big ski shops in town were too competitive, I didn't try to sell them. I planned to rent them, hoping to get fifteen pairs out every winter weekend. I did manage to get ten or twelve pairs out most weekends, but to my surprise, people wanted to know whether they could buy the rental skis, poles, bindings and boots, figuring they'd get a better deal on used rental ski sets than on new ones. I charged almost as much as new ski sets would cost and people bought them. So, it turned out I was in the ski sales business. In time, I added and sold more ski inventory, sometimes just letting people think they were used, even though no one had actually rented them. This was in the era when most serious cross-country skiers used waxable skis. The various hardnesses of wax came in different colors, which made the wax kits attractive-looking gifts. I sold quite a few of those wax kits.

Bicycle stores will do other things to survive the winter. Many sell camping gear. That's not a winter inventory per se, but tends to sell more year-round than bikes.

Neils, a brilliant fellow had a friend a few years ago who was a printer. The printer had a rush order one evening that was to be completed by morning. Unfortunately, he was too drunk to do it. He gave the print shop keys to Neils, Not knowing the first thing about offset presses, ink or anything like that, Neils looked around, put two and two together and by morning, he had the order ready to deliver. Within days after that success, he bought the business from his drunken friend.

Neils was fluent in English plus four Eastern European languages. In fact, his sons, ages five and six at the time, could speak three languages, and the six-year-old was reasonably proficient in writing in English, and Romanian.

Neils got what few orders there were in our city for printing in these other languages, but business wasn't great. To supplement, he started selling camping gear out of his store. Still, he struggled in business. Not many people wanted to buy camping gear from a print shop, and not many printing customers trusted a camping goods store to do their jobs right. Besides, Neils' inventory was out of balance. For instance, he had replacement mantles for lanterns that he didn't stock. Neils was brilliant, but not a nice person. He started refusing all refunds. One time, as I was visiting in the back of his store, someone returned a raft they had rented. Neils went into the back room and stuck a screwdriver in the side of the raft. He then went back out and showed the hole to the customer. He said he couldn't return their deposit, since they had somehow punctured it. He came back into the back room with a big smirk on his face, and that sickened me, so it was the last time I visited him. Shortly after, as I rode my bike past his shop one morning, I noticed it was totally empty. No more Neils.

Some bike shop owners just take it easy, or go on vacation all winter. I know of one owner who'd run his small store during the warm season, then go down to Florida and work as an employee of a large bicycle store in the winter.

Sales Techniques

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I mentioned that my first store started out with ten competing stores in a small city. How did I survive? There were a few factors, most of which I managed to figure out only because I was lucky:

1. My personal expenses were low. If you are planning to start a retail bike store, one of the things you can work on as you are building up to it is to lower your personal expenses. Can you move to a smaller apartment? Can you avoid car payments? Can you drop some channels off your cable bill? Do you really need a new computer right now?

2. I put myself out as a sincere individual. I listened to my customers. By doing so, they became my friends. They'd do just about anything for me, even recommend my store to all their friends. By listening to my customers, I was able to tailor my service and inventory to their needs. When a fellow came in and told me about a certain brand of bike he thought was special, I ordered two of them. They sold, and I bought more. That particular brand eventually became a staple of my business.

3. I learned some sales techniques. If you have someone who is pondering the purchase of an accessory or component, put one in his hand. Let him handle it. Once you do that, it is as good as sold. Taking it a step further, I bought a triple-beam balance and put it on the sales counter so anyone could weigh parts. They loved this, and often purchased a certain brake, hub, or derailleur because it was lighter than the others. Many of these are people who came in not expecting to buy anything.

Taking the tendency of customers to loiter around that scale one step further, I found a couple bar stools and planted them in front of the sales counter, like what you see at car parts stores. The shop regulars lived on those stools, not unlike the characters in Cheers, the old 1990s TV show. When all the salespeople were busy, they might start selling a bike for us. If someone was considering a certain bike, they'd endorse it, or endorse our service policies. They'd bring their friends in, many of which turned into regular customers. So letting the regulars tie up the space in front of the sales counter turned out to be quite profitable.

4. I picked up an old reel-to-reel tape recorder because it intrigued me. I set it up in the store, and experimented with recording background music. I noticed that if I placed an up-tempo song in the mix about every fifteen minutes, I'd have a rush at the sales counter right after that song played. Sales in general seemed to pick up once I put in full-time background music. I think people are more comfortable when there's background music to muffle the sounds of life - coughing, shuffling of feet, and so on.

5. My store was laid out in such a way that customers could see the entire repair department from the sales floor. They felt they could trust the mechanics if they could see them at work. Taking this a step further, I filled the shop with important-looking tools, so the customers would be impressed. Actually, that's not why I did it. I bought those tools because I loved collecting tools, but the tools did impress the customers.

bicycle shop repair area workbench

metal lathe in bike shop, bicycle store

custom framebuilding in bike shop
scenes from the repair area

6. The customer was always right. I would never argue with someone about a problem. (Probably because I was too timid.) It was instant refund, always. The percent or two of gross sales this may have cost was well offset by the reputation this built.

7. I would make special deals, accommodate special needs, and talk to individuals as if they mattered - because they did. When someone brought in a bicycle for repair, I'd take a couple of minutes to look it over carefully. I might find a loose headset, or an untrue wheel. I'd recommend additions that made sense, but would not push them into buying more than they wanted. For instance, a customer might bring in a bike for a tune up, which was $29.95 back in those days. I'd notice that the back tire was quite worn, and sell a tire and installation, so now instead of a $30 sale, I had a $50 sale, and a happier customer, because I noticed a problem with the tire that could have caused trouble for him later on.

8. I found that in a competitive environment, people often shop around quite a bit before they'll commit to buying. They'd come look at my Raleighs and then go to the Schwinn store, then maybe the store selling Fujis. Sometimes they'd come back. Sometimes not. In time, more and more came back. Why? Because my salespeople and I learned to talk with them. When they first came in and expressed interest in a bicycle, a salesperson would generally not lead them to a row of bikes right away. Instead, the salesperson would spend a little time finding out who they were. We would ask about hobbies, family, wherever they wanted to go, conversationally. Sure this took an extra ten minutes, but then when it was time to talk about bicycles, the salesperson was already their friend. We seldom put ourselves across as experts. Oh, we knew the specifications and the reasons you'd want this feature or that, but the salespeople would often wait for the customers to ask specifics, rather then just blurting out information like a waiter telling restaurant customers about the daily specials. If a buyer was misinformed, we didn't argue. The salespeople didn't lord over them in any way. If their misinformation was going to cause them trouble, we might find a way to work a correction into the conversation metaphorically, or in a way that would not offend them, or make them feel inexpert. For all we knew, every customer was a respected doctor, lawyer, celebrity, or child prodigy. So who were we to tell them what's what?

9. I really tried to notice what people want. If there was a lot of interest in cable locks, I made sure to carry a wide variety of cable locks. If two or three people asked for a brand I didn't carry, I'd try to get it.

10. As I started hiring salespeople, I tried to look for the same qualities in them. They had to do more than know brands and specifications. They had to be personable. Oh sure, some needed a bit of training. For instance, I had seen sales people closing a sale, and then keep on talking about features, as if the customer didn't already agree to buy the bike. As soon as your customer says yes, start the paperwork. Then see if you can sell some appropriate accessories. I didn't know this at first, but learned it from one of my first salespeople. I learned a lot from them.

11. With new bike sales, buyer's remorse is common. When I encountered that, I told them that I completely understand, and hat they could keep the bike for a while, as long as it remains looking fairly new, until they made their final decision. And I let them know that if they didn't want the bike in the end, I'd refund it entirely, without a problem. Most ended up keeping their bikes. The few that were refunded, I sold as 'slightly used' at a small discount, and still came out ahead.

12. I feel that with bicycles, test rides are important. Once the customer has ridden three bikes, s/he will have an opinion, and will know which one is right. I encouraged test rides - for those buyers who I thought were responsible and legitimate. From those customers, I would hold their car keys or driver's license until they returned. Some stores do not allow test rides, preferring to keep all the bikes absolutely new until sold. I understand both points of view, so I leave that judgement up to you. By the way, if you do allow test rides, it is absolutely essential that all your bikes are properly tuned so the customers will be impressed. Between test rides, I make sure the derailleurs are set to a low gear, so the bike will seem effortless when starting out.

Managing Employees

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In most bike shops, the employees are paid an hourly rate near minimum wage. The sad truth is there are many people who would like to work in bike shops, so they don't have to be paid much. But, as Armand Hammer pointed out, "When you pay peanuts, you get monkeys." At first, as my shop grew and I started hiring people, the quality of their work wasn't great. Even though almost everyone I hired had good references from other bike shops, they weren't what I was hoping for. People came in late or not at all. Some took overly long lunches. Sometimes bits of inventory or tools disappeared. Some of my salespeople exaggerated or even lied to customers. Some just didn't care about the customers. The repair people did less than ideal work. Well, not worse than average, but they just weren't great.

Somehow I discovered a better way. One day, I made an offer to one of my mechanics. For a week, we would add up his labor charges. At the end of the week, if 1/3 of the amount of labor charged to the customers exceeded his hourly wage, he would get paid that amount instead. I don't remember the exact numbers, but his hourly wage was something like $200 for that week. But, he had done $900 worth of repairs, which magically, was quite a bit more than he would typically turn out in a week. (He usually generated about $500 worth of repair labor.) So I paid him $300!

The other mechanics liked this quite a bit, and as you can imagine, they begged me to do the same for them. So I did. All except for one fellow who ranted and raved that being paid piecework was "un-American" among other choice words. So I fired him.

Guess what happened next? We never missed that guy. The remaining three mechanics easily did the work of four. They each took home more money. Because of a clause I added, their work was of higher quality than ever before. The clause was this: If a repair failed due to workmanship, that mechanic would do it again for free. And, if the customer was present, the mechanic might have to do it while the customer sat on a stool and watched - if the customer was so inclined.

I figured that what was good for the goose was good for the gander, so shortly thereafter, I put all the sales people on commission. They got five percent of new bike sales, and ten percent of all other sales. The ten percent commission included parts, accessories, labor, and used bikes. They, too, made more money, and sales increased. I had to be careful to monitor them at first. They did tend to oversell. In time, being paid more than bicycle personnel anywhere else in town, they took pride in their work, in their customer relations, and felt no need to oversell.

Especially when the next phase hit. It didn't take long for all the experienced bicycle professionals in town to apply for a job at my place. Instead of the going wage of $8 to $10 per hour (at the time, late 1970s) they could get $15 to $18 hour, if only they could work in my shop. Now, I had my pick of the very best! As my business grew, I could pick and choose the most experienced sales and repair people, some with a clientele that would follow them to the ends of the earth.

In the end, even though I paid my people twice as much, I made more profit from their work.

I didn't quite know the best approach regarding employee taxes. I figured they were actually independent contractors and treated them as such. I didn't collect income and Social Security taxes for these former employees who were now contractors.

At one point, one of the mechanics consulted the IRS about how to fill out his tax forms. They mailed me a questionnaire that kind of scared me. After all, no one wants to be in trouble with the IRS. They had about twenty questions. Among them were: Do I set the hours or do the employees get to pick their own hours? Do they own their own tools? Do I tell them what to do? Can they refuse to do a job?

I answered every question truthfully. I sent the letter back to the IRS and waited six worrisome months before they finally replied with one short sentence, "The IRS has decided in your favor."

Knowing what I do now, I would have continued to withhold taxes and do the proper paperwork for these people anyway, considering them as employees instead of contractors. In fact, in later businesses, that's exactly what I have done, and all has worked out perfectly.

You may be wondering what's involved when you get your first employee - or 'contractor.' Turns out, it is fairly simple. Contact your insurance agency and let them know you're going to have employees. They'll set you up with Workers' Compensation insurance. You legally need to carry that, probably even with contractors if they work in your store, but it is not very expensive.

You need to do some paperwork to handle withholding taxes. Or not. There are companies that do all the heavy lifting for you, such as ADP (www.adp.com). For around $50 per employee per pay period, they'll take care of all your employees' paperwork needs. They'll keep you informed of what and where to pay, and forward to you the occasional paper that needs a signature. And that's all there is to having employees!

Many small business owners start by hiring friends and family members. While this can work out well, it is far better to surround yourself with people who know as much or more than you do about bicycles. Finding people to work in a bike shop is easy. You'll get unsolicited applications every day. Most of the customers who ask whether you have a job opening have no useful experience. If they have worked in other bike shops, that is a good indication that you should record their name and number in case you ever do want to hire anyone. Even as you take their contact info, let them know that the chances are slim that they'll get hired. People have this amazing optimism about jobs, so if you say something like, "I'll put your name in the file," what they hear is, "We'll get back to you in a week or two, and you have the job almost for sure."

When you have someone with previous bike shop experience that you might hire, you'll probably want to conduct an interview. Ideally, everyone who has to work with this person will be present. This way, if there are going to be sparks between a partner or existing employee and the new person, you can know about that before you hire the person. You'll want to be careful to avoid asking discriminatory questions and you can't base hiring decisions on sex, religion, skin color, weight, and so on. That's illegal, and immoral.

There are two things you're trying to discover during the interview: Whether the person has sufficient technical knowledge, and whether the applicant's personality is right for the job. You don't want someone with a grouchy monosyllabic attitude in your sales department. You don't want a mechanic who doesn't know which end of a screwdriver to hold. So, you ask technical questions, and have a conversation in which you're trying to discover something about the true nature of the individual. I once hired a salesperson who said the word "pray" at least six times during the interview. That should have been a clue. I had to let him go because he started trying to convert customers. It was more important to him to talk about religion than to sell bikes. It was more important to me that he sell bikes. We did discuss it, but he refused to change. You can't discriminate based on someone's religion, but you are not required to let an over-zealous person poison your business. So, you can't refuse to hire someone, or fire someone because he's Catholic and you're Protestant, or whatever, but if the individual is not properly performing the duty for which he was hired, that's another story.

Check their references. I can't emphasize this enough. Remember that they'll give you their best references. They aren't going to volunteer names of people who fired them or have a grudge. When you call their former employers, remember that most will try to give glowing reports. If possible, you want to dig past that. Most people do enjoy talking, and employers are no exception. If you can have a friendly conversation with the former employers, you may find interesting surprises. More than once I found that a person who said they quit a job were let go due to performance issues. In one case, I spoke with a former employer who initially gave a glowing report. After ten minutes, I discovered that the person came in drunk after lunch more than once. The person was let go when in a messed-up state, he sexually harrassed a customer.

Before you hire anyone, make sure they understand that it is initially a trial. That they may get to work for a day or a week or two, then be let go if they aren't a good match for your shop. I once went through twenty people who tried out for a job as a mechanic. Each had previous bike shop experience. None were really, truly gifted as mechanics - and that was what I wanted. This was before I started paying on commission. After that, I had a whole list of remarkably qualified applicants.

Finally, before you hire a new person, make sure they understand all the important details up front. They should know exactly what is expected of them, what hours they are expected to work, whether they can come in late occasionally, whether they need to dress a certain way, and the exact way they'll be paid. You'll find it helpful to write up a list of requirements in advance, and when a person is hired, have that person read and sign a copy of the list.

I prefer a flexible management style. If I have a problem with someone, I first try to understand their motivation for what they are doing. Sometimes I can accommodate whatever they are doing, once I understand that it makes sense. For instance, I had a mechanic that spent what I thought was a ridiculous amount of time cleaning bikes at the end of tune-ups. But, it seemed important to him. I wanted higher productivity, but I realized he was good, and since he was being paid on a commission basis, it didn't really cost me anything. It also made the customers happier. If I do not want to accommodate a certain behavior, I try to address the behavior as well as the motivation in a calm, conversational way. Sometimes, rather than taking a drastic measure, such as firing the person, I see if there is a way to make things better. More than once I moved a person from a mechanic's position to a sales position, and if qualified, visa-versa.

If you do need to let someone go, try to give them some warning, and a chance to correct their behavior. If it still doesn't work out, then tell them the exact reason you're letting them go. And just as you can't hire someone based on their age, sex, color, religion, etc, you can't fire them for discriminatory reasons.

With practice, and empathy, you can strike a balance between being the boss, and being one of the workforce. In a toxic workplace, there is a 'us against them' attitude. On the other hand, if you are one of the guys, friends with your employees, all sorts of magic happens. Your employees will work late without being asked when the shop is busy. They'll go out of their way to treat your customers right. They'll bring in their own tools to help support the shop. In our shop, we had developed a tradition of all riding our bikes to a pizza place on Friday evenings. In time, owners and employees from some of the other bike shops in town joined us on our Friday pizza outings. A great time was had by all.

On the other hand, I may have gone a bit far with the 'just one of the guys' attitude. It's not entirely believable, since I did own the shop after all. There must have been some envy, so I tried to counteract it by being an especially 'nice' guy. In retrospect, I think it is best to maintain a bit of an 'alpha' personality, be the boss, so you get things done the way you want them done, while at the same time, being empathetic and friendly.

You could think of all the other bike shops in town as competitors. Or you could think of them as friends, maybe with a "we're all in this together" attitude. Once again, magic can happen. On dozens of occasions, we'd need a part to complete a repair, call another shop, and borrow it. And they'd borrow parts from our inventory. We shared ideas. We sold and traded equipment back and forth. When I decided to sell my shop, guess who bought it? Right, one of my 'competitors.'

Advertising and Publicity

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It is easy to buy advertising. There are many salespeople who would love to have you advertise in their newspaper, in their phonebook, their website, or on their radio or TV station. If it doesn't bring the results you expected, they'll just tell you that you didn't buy enough advertising yet. They'll tell you people need to hear the same message over and over. But you do need to buy some advertising, right?

Did I say, "buy" advertising? I meant "get free publicity." Just about any form of advertising that a small bike shop can afford will be entirely ineffective. Yellow pages ads are the worst. You end up paying a lot of money per month to the phone company, or a phonebook publisher, and get little effect. People don't use phone books any more. They use the Internet. So you'll want a website. It can be a simple one-page affair. All people want is your contact information. You can do some search engine optimization (SEO) tricks, discussed in the next chapter, to get people to your webpage. If you're in a city with a dozen other similar bicycle stores, they'll all have their own websites, and without search engine optimization, you might be 13th on the list when people google your town name and "bicycles."

So, when it comes to paid advertising, almost nothing works for a small business. Good free publicity, on the other hand, can change things overnight.

You may be thinking I'm talking about sending press releases to the local newspapers, radio, and TV stations announcing that you have a new business or have added something to your business. That can have a small effect. Much greater is to do something newsworthy, meaning, something positively eccentric.

I mentioned this to one bike shop owner, and he said, "Oh, like give away free water bottles printed with the store logo?" He didn't get it. Better is to sponsor something unique. Sponsoring a compelling but unusual free entertainment event, or offering a free workshop is a start. Getting clients to wear your custom printed T-Shirts is a step in the right direction. Then, they will hopefully tell friends to do business with you. That will have a small effect, but it is not newsworthy, and it really isn't free, because you have to pay for the T-shirts. I'm talking about something newsworthy. Let me give you an example.

Customers of an old bookstore in San Francisco used to complain from time to time because is was sort of dark in there, especially in the deeper shelves. That gave the owner an idea. He held a one-time special sale. All books were 1/2-off. But, the sale ran from midnight to one in the morning. And, he turned all the lights out. At the door, all the customers were handed flashlights. That not only made the news, but it is still talked about today, twenty years later. After reading the story, thousands of new customers visited the store, mostly because they were curious about how dark it really was, that people were complaining.

At another bookstore, some college students created an art project. Their idea was to rearrange all the books, not by subject and title, but by color. Shopping there during that time may have been tedious, but all sorts of people came by to see it, and no doubt many of them came away with books they would never have noticed normally. (After two weeks, the same college students put all the books back in subject and alphabetical order.)

So, what kind of positive eccentricity can you think of for your bike business?

Your author had a one-acre yard behind his second store that could be seen from the street. In time, old junk bikes started collecting there. They were for parts. As a last resort, if a new item wasn't in stock, if a customer just couldn't afford a new derailleur, or if we wanted to grab some material to build something, there was that pile of junk bikes. As you probably know, bike frames tend to accumulate. In time you sell the wheels, the shifters, the pedals, but the frames tend to be the last things to go. Soon, my pile of stripped frames had grown quite large. I was thinking I ought to build a fence around the pile, so I built it out of these old frames. It kind of looked like a sculpture. People driving by saw the fence, and immediately knew we had a bike shop there, even if they didn't see the sign. So, the crazy fence was acting like free publicity. People used to start telling their friends, ". . . you know, the place with the bicycle fence."

That fence played a bigger role that was unexpected. Upon noticing the fence as they drove by, people inevitably also noticed that there was a pile of old bikes behind the fence. They started stopping into the store and asking whether we wanted more old bikes. They were giving them away. I instructed my sales people to say, 'yes' - that we'll recycle the bikes to the best of our ability. After a while, we had a quarter-acre covered five feet deep in old used bikes. Now, we never had to buy low-end and mid-range used bikes. We had plenty. All we needed to do was fix them up and sell them. Very profitable. And of course as people saw more and more used bikes accumulating around the store, more people came in looking for used bikes. Many bought used bikes, and many others bought new bikes from my store. And, we had a sideline - we had a parts junkyard. Many customers loved this. Imagine, someone would donate a bike for our pile. We'd sell a derailleur for $8, a rear wheel for $20, a fork for $15, a saddle for $10, and by gosh, it was very profitable indeed! The junkyard business could have supported the bike store by itself. And never once, did I advertise the availability of used parts.

As I mentioned, having at least a basic website is important for most businesses. Fortunately, a one-page site is sufficient for most, and easy to create. You can do positive eccentricity on a website as well. We'll talk a lot more about websites in the next chapter.

A guy who's business was repairing Apple computers uploaded a little video to YouTube and linked to his website, that showed him dropping a PC and a Mac computer off a six-story building. Both crashed to the sidewalk. The Windows computer was smashed to bits, but with the aid of trick photography, the Mac had only a couple of scratches. That was a fun video. I don't think anyone has done a 'drop video' of bicycles yet.

In one of my bike shops, I had an area of wall above a double-wide door that I covered in broken bicycle parts. This included a horribly bent wheel with spokes sticking out every which way, a Zefal pump that had been run over by a car, some mangled derailleurs, and things of that nature. Many people talked about that wall. It was part of what made the bike shop what it was.

One day Sam, a fellow in a wheelchair and his hired helper came in to buy some more material from our junkyard, These guys had been in several times before. Sam had cerebral palsy or something like that, so his body was really quite twisted. He could stand up for brief periods of time, but his stance was odd and he was wobbly. Sam's hobby was building human-powered machines. The helper would do the actual construction work, while Sam did the inventing. His helper saw the badly bent wheel on the wall, pointed to it and said, "Sam, that wheel is as bent up as you are!" We all laughed.

Then there's the old fashioned way to bring customers - business cards and flyers. Putting business cards in everyone's hands who comes your way can build a business slowly, but surely. Of course, giving them something more interesting such as a keyring tape measure, or an interesting hologram, will be more effective. A computer store can give out business cards that have a chart of the common [Ctrl] (or [Command] on Mac) keyboard shortcuts. You know:

[Ctrl] + [A] = Select All
[Ctrl] + [C] = Copy
[Ctrl] + [F] = Find
[Ctrl] + [V] = Paste
[Ctrl] + [X] = Cut
[Ctrl] + [Z] = Undo

So what kind of bicycling information could you put on the back of your business cards? (Hint: A gearing chart is too common, and not interesting enough.)

For a short while, I experimented with what I called micro-books. These were the size of business cards, but had a dozen pages. They contained a wealth of fun bicycle trivia. The front and back of the little books had my shop name, address, phone number and a map. I gave up the idea because it took too long to organize the pages and staple them together. Customers used to pull the books out of their pockets years after I gave them away, just to show me they had kept them all that time.

These days, it is a simple matter to print business cards on your own computer printer. You might look into using photo paper. It is almost as thick as card stock, but the glossy surface looks like a million bucks. Especially if you incorporate a nice graphic or photo. Avoid the tendency to put too many words on your cards.

You might also consider using cards as coupons. You can give out cards that are a dollar off on helmets, or 10% off tires, etc. Put an expiration date on them, so you don't have to deal with discounts years after you've moved on to something else.

Putting flyers on all the local bulletin boards can surprise you. You'll get more business with no cost. Bulletin boards at laundromats work well, because patrons have to spend idle time waiting for the wash. You might think that laundromats attract low-end clientele - those who can't afford their own appliances. This is true, but they also attract a higher-end clientele. These would be customers who have to wash blankets bigger than their home washer can handle, or people who are waiting for their home machine to be repaired, or - I hate to say it - people who will wash greasy rags in a public machine because they don't want to mess up their own machine. All these may be bicycle customers.

Bulletin boards at natural food stores work especially well. I'm not quite sure why. Bulletin boards at diners, quick-change oil places, and elsewhere can work well, too. The best kind of flyer is one that makes only a few quick points, because too much text is hard to read. The best flyers have little pull-off tabs at the bottom with your shop's contact info, especially your phone number. You might want to have full-page and half-page flyers, since many bulletin boards are too full to accommodate full pages. When space is very limited, you can put several business cards fanned out under a thumb tack, indicating to people it is OK to take a card. For this use, the cards ought to have large text that's easy to read at a distance. There's a color called "Solar Yellow," that's very bright and sometimes used for cards and flyers. It is a bit loud for sure, but in a jumble of white flyers, it gets noticed.

You may find a big drawing of a bicycle is helpful. It will draw people in from thirty feet (10 meters) away if they're interested in bikes at all.

Sometimes people will tear off a tab on each of the flyers they put up. This is to make the general public think there's interest in what the flyer advertises. Chances are, for your bike shop, that won't be necessary. Flyers work particularly well if you include a special offer. Like $10 off a tune-up when someone brings in a pull-off tab. Or a free safety inspection. Or 10% off accessories.

Going a step further, you might replace your flyers from time to time. One might advertise half-price headlights until the end of September. The October flyer might offer a "Fall Tune-up Special," and November might be 10% percent off all cycling clothing. Each flyer should look different than the previous ones, so people recognize that something new is being offered.

You might think flyers on local bulletin boards are not professional enough to represent your shop. More likely, they will attract many new customers, and once people see your shop itself, they will have no doubt about your professionalism.

Are you concerned about the cost of printer ink? If you're printing color cards or flyers in the hundreds or thousands, you'll use up ink quickly. And we all know how much that costs! But you don't have to pay $30 per cartridge. For most printers, you can buy replacement ink cartridges on eBay for remarkably low cost. I mean really low. For my Brother MFC-255CW printer, I get cartridges for under $4, postage included. Now that that's taken care of, what about wear and tear on your printer? My Brother printer is years old, and it has spit out 20,000 pages, yet it is still working like new. I think most printers are like that these days. The one thing many printers can't stand is not being used. If you ignore your printer too long, the ink dries up in it.

Websites That Work

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Just about any bicycle store will benefit from a website. In fact, some businesses can be entirely websites. I won't go into much detail about deriving profit directly from the Internet, because this is supposed to be a book about "bike shops." However, it is possible for your bike shop to derive a nice additional income from online activities, such as selling on eBay. In any case, your store will be more successful if you do a few simple Internet things.

You don't have to be an HTML master programmer to create effective websites. In fact, you don't have to know anything at all about HTML, Javascript, or any of that.

There are now several places where you can create your own website by simply cutting and pasting or entering text, dropping in a picture or two, and click an OK button. Blogger.com and Tumblr.com come to mind. However, if you want to take advantage of all the ideas in this book, you might want to learn some basic HTML, or just hire someone to help you with the optimization parts.

Whenever you hire someone to help you with a website, make sure to maintain all access. You don't want the site on some guy's server. You want it on a big national company's server such as Godaddy.com. Because, what if your webmaster goes broke, leaves town, or has an argument with his wife and shuts down his server?

It is very important to get all passwords associated with the site. You don't want to have to hire the same webmaster over and over again for each little change that you could eventually make yourself, or pay someone else to make for you. What if your webmaster disappears and you don't have a password? I can't tell you how many times, I, as a business coach, have had to tell business owners (kindly), "I told you not to trust that webmaster."

The most important thing websites need is visitors. There are three main ways to get visitors.

1. Buy advertising. That mostly doesn't work. Or more specifically, with enough money you can buy visitors, but that would be fewer visitors than you would need just to pay for the advertising. I think it was Pets.com that was famous for that. Right before the big tech crash of 2000, this company had a popular website. It turned out that the company had spent millions of investors' dollars on advertising, and their revenue was far below the expenditures.

There is one form of advertising that can work nicely for bike shops. That's Google AdWords. You can sign up for an AdWords account for free. Once there, you bid on keywords. They should actually be called "key phrases" because most keywords are more than one word. Let's say your keyword is "bicycle shops Cincinnati." You may find that your closest competitor has bid $2.17 per click on that same keyword. You can bid $2.18. Then, your ad will show up at more websites, and closer to the top of the paid side of Google search results than your competitors. So, your ad is then shown on random websites. Well, not random. Targeted. This means that if someone has a website that has something to do with bicycles in Cincinnati, your ad - and your competitors' ads - will show up on that site. Or if no one has a site about bicycles in Cincinnati, then you'll show up on websites about bicycles, and other sites about Cincinnati, Ohio. When someone clicks your ad to go to your website, Google takes $2.18 from your account. You can adjust maximums, and all sorts of other settings so that if it runs wild, you won't go broke. You can do things like change your keyword to "Bicycles Cincinnati Ohio" (adding "Ohio"), which may not cost anywhere near $2.18 per click. Fewer people enter "Bicycles Cincinnati Ohio" than "Bicycles Cincinnati" when they are looking for a bike shop in Cincinnati, but those who do will see your ad right at the top.

AdWords works particularly well because it is well-targeted. Google's automated software does a good job of making sure your ad shows up on only the most relevant sites, and with only the most relevant search results.

Think about the results: How much does your average customer spend per year? You'll find each regular customer is worth hundreds or maybe thousands of dollars, right? So what's $2.18 compared to that? Not everyone who clicks through to your website will actually turn into a regular customer, but the ads are well-targeted, so a good many will. Especially if your website is well-designed, which we'll talk about in a minute.

2. SEO - Search Engine Optimization. You can do some simple things to make sure your website shows up near the top of search results in Google, Yahoo, Bing, and other search engines. We'll talk mostly about Google, because it is the elephant in the room. My guess is that at least seventy percent of all searches are done through Google, with the remaining thirty percent handled by Bing, Yahoo and a hundred lesser search engines. Then too, if you make a website that works well with Google, it will work pretty much the same with the other search engines.

Google 'ranks' pages based on how closely parts of the page match the keyword people are searching for, and on how many other websites link to a page. The first aspect, matching elements of the page to the keyword is easy. The second is more work and takes longer to achieve, but that's OK, since it is probably less important.

By the way, don't let anyone tell you they have a magic formula to get top ranking. There are hundreds of companies out there willing to take your money for search engine optimization that is all smoke and mirrors. What you are going to read in the next few paragraphs is the heart and soul of search engine optimization. Oh, there are some complicated schemes that might bring a marginal increase in results, but these companies that promise the sky do not deliver. That's guaranteed.

Because your business is a bicycle shop that serves a local clientele, and because the term "bicycle" is so common on the Internet, you'll want to target your website to your local community. What are the chances that someone googling some aspect of bicycling is in your area? It's one in a million. On the other hand, what are the chances that someone who is in your area is googling something about bicycles? That happens all the time.

So, to attract people who are searching for "bicycle shops Cincinnati," for instance, all you need to do is put that phrase in the page title - between the <title> tags, and in the< It can be helpful to have a page filename that also matches the keyword, such as www.mywebsite.com/bicycleshopscincinnati.htm. Google says that as of October 2012, having an exact match page name is no longer significant. However, I have noticed that if you have an exact match domain name, such as www.bicyclescincinnati.com, Google seems to index your page - include it in their search engine listings - within a day or two, rather than within two to three weeks.

So how many people are looking for "bicycle shops Cincinnati?" It would be important to know that, wouldn't it?

As of now, 140 people per month are entering that keyword. How do I know? I used the Google AdWords Keyword Planner. It's free when you sign up at adwords.google.com. Signing up for AdWords is also free. It only costs money if you place a bid on a keyword. You can enter any potential keyword, and it will show you how many people are searching for that. It will also tell you how much AdWords bidders are paying for the keyword and some other interesting information. It will then offer a list of related keywords, in case you find there are already too many websites optimized for your keyword.

Once you are on the AdWords home page, select the "Tools and Analysis" tab, and then "Keyword Planner." Once that's in front of you, select "Search for new keyword and ad group ideas." Enter a keyword in the "Enter Your Product or Service" field, the scroll down and click the "Get Ideas" button.

You'll see an interesting list, but that's not the list you're looking for. Click the "Keyword Ideas" tab. Now you see information for your specific keyword - data about the people who have entered exactly your keyword into Google, and below that, you'll see a long list of suggested keywords based on what you entered.

So, the next step is to see how many people have already optimized websites for your keyword. Good news, well fairly good: Not many people have optimized sites for "Bicycle Shops Cincinnati." When you simply enter that keyword in the Google search engine, several sites come up, some which have the term in their titles, descriptions or <H1> tags, but none seem to be doing it in all four.

As you may know, you can see the source code of any web page by right clicking (or [Ctrl] and click on a Mac) and selecting "View Page Source" in FireFox, or from within a context-sensitive menu on other browsers.

So if your bike shop is in Cincinnati, you could be the top page in Google search results, and most of 140 people a month who are actually looking for bicycles would click through to your website. Gosh, that could bring you 40 or 50 new customers every month! If you treat those customers well, they'll spend on average perhaps $400 per year in your shop, raising your gross sales by $16,000 per year each and every month! In real life it may not be as efficient as that, but it will certainly be significant.

If many websites have already used your keyword, there are still some things you can do. You can change the keyword a little bit, checking the Google AdWords Keyword Tool and actual search results, until you get something that has enough people looking, and isn't highly optimized. Maybe "Bicycle Shops Covington" (a small city just a few miles away), or "Bicycle Repair Cincinnati," or "Bicycling Cincinnati."

You can optimize for more than one keyword. Or, you can make a whole bunch of similar web pages each focused on one area, or put several area names in your tags. For instance, "Bicycle Shops Cincinnati, Covington, Florence, Ohio."

Next on the list is backlinks. This thickens the plot a bit. If a thousand websites have added links to your page, Google puts you higher in search results than someone who may actually have better on-page SEO, but fewer backlinks.

This is another place the charlatans go crazy. They tell you they have all sorts of ways to get instant, automatic backlinks, for only $39.95 per month. . .

Don't fall for any of that snake oil. Much of what they do, when they do anything at all, is pure spam, and in the end, may weaken your position with Google. You don't need to pay money for backlinks, and you don't need to do spammy things to get them. Google's automated software has little tolerance for spam, and tends to penalize websites that have been linked with any disreputable practices.

The charlatans also tell you that backlinks are essential. However, with a well-selected keyword you can usually ignore backlinks and still end up with lots of hits. Nevertheless, we'll talk about the best ways to get backlinks in the next chapter.

Many SEO experts are saying that you want to make sure your website stays natural. If you weave too many keywords into the text of your website, so you no longer have sensible English sentences, your site will be less effective in two ways. First, the search engines will not rank you as high as when all your on-page SEO is reasonable and your backlinks are organic - meaning derived from actual people deciding to link your site from their blogs, websites, and forum posts. And then if your customers can't make sense of your website, or if it seems too spammy, they are less likely to actually visit your store.

Besides asking webmasters to add a link - many will, without cost, just because you asked, you can trade links, as long as you don't mind adding a reciprocal links list to your site. Better yet, you can post in newsgroups, forums and discussions, especially on social networking sites. You can answer questions, or ask questions. At the end of every single post, you are allowed a tag line in almost all forums. Your tag line can contain a few words about what your site is, plus an actual link to your site.

Not only will these be noticed by Google as backlinks, but some real people will actually click through, bringing up your visitor count organically. The trick to not spamming is simple: Contribute legitimately to the discussions in which you participate. You can answer questions, postulate theories, bring up analogies. If you don't know much about a subject, it is completely OK to ask questions, as long as you are not selling 'expert service' on your site on the very subject of which you're asking questions.

What's wrong with spam? Besides the fact that you're interrupting people, and diluting the value of bonafide discussions, Google and the other search engines have become quite smart about spam.

Another little trick that can be helpful when you're not at the top of the Google search results is to become a verified author through Google+. You need to join Google+, a social network, but it is free. Then using Google itself, you can look up "verified author Google+" where you will find the details. Basically, you have to certify that you are the author or owner of the content on your website, then add a little bit of Javascript code to the page. When Google sees this, they put your picture next to the brief description in the search results. Google also ads some other data for you. But displaying your picture is the main thing. People are more likely to click through when they see who you are. Even if you are not particularly photogenic, they'll click through because on some subconscious level, they feel they know you now that they've seen you. Some people will show their place of business rather than a picture of themselves as the proprietors. It turns out showing your actual face is more valuable in causing people to click through.

Once you've built or updated your website, you can let Google know it's there. This is especially important if no other websites link to it yet. Without any backlinks, Google has no way to know you're out there, because Google finds websites by investigating links from other websites, crawling the entire Internet every two weeks or so, link by link. However, you can expedite the process through "Fetch as Google" a simple, free and easy-to-use part of Google Webmaster Tools.

If all goes well, you can have a dozen visitors within 24 hours of building a new website.

Valuable Content

Once you've got at least a handful of visitors coming to your site, you can do some more things to make sure it works.

If you can provide some useful content or positive eccentricity, then people will tell people who will tell people. Your site can go viral. Take a look at hamsterdance.com. Especially take a look at the "Hamster Classics" and then "Interactive Dance." This one dance page is similar to how the whole site originally looked.

It seems a computer science student made a one-page website as a thesis project. All it did was show lines of cartooney dancing hamsters with some background music. That was in the late 1990s, when it didn't take much of a website to excite people. There was something about the cuteness of hamsterdance.com that caused everyone to email everyone else, and it went viral almost instantly. Millions of visitors came. The creator saw the potential, and quickly added more pages and advertising to the site.

It will take more than dancing hamsters to impress people these days, but if you can do something sufficiently amusing, or informative, you win the game!

Another example is Crayola.com. There, you'll find quite a few interesting and interactive things for children. People come to the site because there's something useful there.

Yet another example is a website where you can buy an antenna for specialized electronics. The site has many charts with just the information that radio designers need, so of course this site is where the radio people go to when it is time to order antennae.

Your author has made several such sites. One of the more interesting sites is www.worlds-worst-website.com. Its sole purpose is to cause people to tell people, who will tell people, and so on. If I recall correctly, I have never done any SEO with the Worlds Worst Website. This is because the site has functionality and eccentricity.

Then of course we have BikeWebSite.com. Built by your author, with only a total of eight hours spent posting in forums, it received over 385,000 visitors before I sold it six months later.

Once you've got a site that gets visitors, you want to direct their time there. It would be a shame to build a large visitor count, then have all your visitors become confused and leave the site without satisfaction. Or more to the point, you want them to do something that satisfies you, also, like come to your bike shop. Think of your webpage, or your website, as a funnel. The top is wide. Lots of people spill into your site. The funnel narrows, directing people downward. Or more specifically, it holds their interest. Someone told me the average web page visitor stays one and a half seconds, unless something catches their interest in that time. The funnel eventually directs them all through the spout. The spout is the action step. What do you want people to do? Click the "Buy Now" button? Give you a phone call? Come to your store? Set up the page to have this effect.

You should have a compelling title, or short bit of text in the upper left corner, since that is where most people look first. The purpose of this top left item is not to sell something, but merely to cause them to feel that your site is worth focusing on. To have them become invested in your site enough to stay on the page and read more, perhaps click through to other pages on your site. Finally, at the bottom of every place they might go within your site, you have your action step - the button to click, the phone number to call, a map showing how to get to your store - whatever you want them to do. During this process, you may also want to convince them that your site is so excellent they should tell all their friends.

One thing you almost never want is links away from your site. In this book, I can tell you about crayola.com, because you already bought the book. I don't need to sell you anything. But if I did, I would not risk losing you to Crayola. Besides, I think I've got your interest by now. Hopefully, I have you well on your way to starting your own bicycle store!

Social Networking

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There's a super-effective trick with the social networking sites that can bring you hundreds of new customers, but which is oddly left out of most social networking discussions. I'll tell you about it after a brief introduction and 'how-to' in case you are new to the whole phenomenon.

The Big Three

The big three social networking sites are Facebook, Twitter and Google+. Some may argue that MySpace is one of the big ones also, but I think it was more than it is now. There are hundreds of others. And then, there are sites that you may not think of social networking sites, but have interactive features and can be used for social networking. These include Pinterest, Tumblr, YouTube, and even eBay.

For this discussion, we'll just focus on the big three. There'd be little sense in putting much effort into 'lesser' sites when the same effort on one or more of the big three will yield ten times the results.

Twitter

Let's start with Twitter. The main concept is that anyone can enter messages at any time of up to 140 characters in length. You can also attach pictures, links and videos. But the core of Twitter is these little messages, called tweets. What in much of the Internet world might be considered spam is perfectly fine on Twitter. In other words, sharing trivia about whatever interests you, as often as you like, is perfectly fine.

Amateurs use Twitter to tell you they hate today's homework, Jane wore the wrong dress, the boss said something insane, Frank just took a picture of his malamute - you get the idea.

Most communication of this type happens among people who have decided to follow each other. For instance, if you start following Barack Obama, you'll get his tweets about the things that interest him - health care, politics, international relations, and so on. When he posts a tweet, only those who have opted to follow him see his messages. In his case, millions of people are following. But unless you are the President of the United States, not that many people will follow you.

Here comes a big trick with Twitter: You can incorporate hashtags into your tweets. A hashtag is a word or phrase that starts with a number sign. Phrases consisting of more than one word are compounded, like this: #MileyCirus. When you put a hashtag in your tweet, anyone who has elected to see all messages about that subject will see your message. Now, rather than the three people who are following you, suddenly thousands may see your message.

If you pick something too common, no one will be following because the number of tweets are simply overwhelming. For instance, if you add a #bicycle hashtag, chances are few people will react because there may be thousands of tweets about bikes every day. On the other hand if you pick something too specialized, no one will care. Something like #BicyclingCovingtonKentucky - just isn't going to bring results. But if you use a hashtag that some people are going to be following, such as #Cincinnati, magic can happen.

First, they'll get your message, and perhaps go to your website to learn more about what you're doing. Then, if your tweet is compelling, they may start following you, so you can speak to them even in ways you can't incorporate effective hashtags. Finally, they may tell their friends about you or your website, or at least your tweets, in their own tweets to their friends (called retweeting).

Facebook

Can you do the same thing in Facebook? You bet. Hashtags work almost the exact same way. You can even link Twitter and FaceBook together (and even several other social networking sites), so that when you post a tweet on Twitter, it also shows up in your Facebook activity.

Facebook has a concept called Groups. There are thousands of groups. These are just what you'd think: People with a similar interest 'subscribe' to a group, where the photos, messages, videos, and links are all about the topic of the group. For instance, there are more than 4,000 in a group about juggling. There, you'll find posts about jugglers who have appeared on television, pictures of people juggling three, four, five and more objects, how-to information, and more.

You'll find many general bicycling groups as well as specialized aspects of bicycling, such as classic bike collecting or road racing. You may even find groups about bicycling in your community.

The magic of Facebook groups is that you can subscribe to a group and post messages that will be seen by everyone in the group. Unlike Twitter, you don't have to depend on people searching for hashtag terms, and you don't have to already have made friends with hundreds of people. Just post in an appropriate group, and you can have dozens of targeted visitors to your website within hours.

Just like the rest of the world, you don't want to spam groups. You can't subscribe to a group about orchids, and post about inexpensive mountain bikes. Well, actually you can, but you'll probably be banned from the group. Besides, it is just plain not nice. Spam weakens a group. Have you ever seen a group that has lost the spam war? It's disappointing. You might want to read about a vegetarian diet, but every post pushing weight-loss products. As a group is dying, you see nine out of ten spam posts, and have to sort through them to find a tiny bit of good stuff.

But you can post on-topic material, and leverage your presence in the group. You might find a group about the Cincinnati Bengals. There, you can say whatever you want about other football teams. The Bengals fans in the group will love you for it. Then, at the bottom of your post, you can have a signature line, complete with a link to your website. In fact, you don't even need a signature line. You can add links to posts - as long as they aren't wildly off-topic. You don't even have to do that. Many people will wonder who you are, check your profile, the links you have posted there, and so on.

It is better to stay nearly on-topic, even with your signature and links, if you can. You can post in running, kayaking, and other outdoor sports groups in which you can participate in a valid way, but it is better to stay closer to home, subject-wise. If you post in a bicycle racing group, you'll get bicycle enthusiasts coming to your bicycling website. Many of them will visit because they are interested in everything 'bicycles.' If you post a bicycling link in a mountaineering website, even if your text is a valid on-topic post about mountaineering, few people will actually click the link.

Let's say you've found the pay dirt. Perhaps you found a group that is specifically about bicycling in your city. You can't just post over and over again that you're selling bikes. What you do instead is offer interesting bicycle trivia, post technical information, state that your first bike was a Schwinn Continnental, and so on. You can answer questions that you're qualified to answer. You can ask questions if you're not an expert. You can ask controversial questions which will sometimes keep an active discussion going for weeks. With all this stuff on your wall, you can become somewhat of an authority on the subject. By simply participating in a natural and appropriate way, you'll bring many visitors to your website who end up visiting your bicycle store.

As of 2010, Facebook added a concept called "Like." You can paste "Like" or "Share" buttons onto your web pages. When people click a "Like," a message appears on their Facebook wall with a link to your site. These can be valuable backlinks, especially if someone with a large following clicks your "Like" button. Many other social networking sites have a similar concept, but you'll find that Facebook Like buttons are the most effective by far.

Google+

Finally, we have Google+ (www.plus.google.com). Anyone can sign up. You may be already signed up and not know it. Google has recently taken the initiative to link all their divisions together. If you are using Gmail, or YouTube, Google knows who you are, and you can just start using Google+.

Google+ has hashtags and groups. Their term for groups is "communities." Communities work pretty much the same as Facebook groups, but are not yet as popular. For every Facebook group, a Google+ community will have perhaps a third as many people. The reason to pay attention to Google+ is that it is up-and-coming. Some experts are predicting that Facebook is a fad, that five years from now, it will be a 'thing of the past.' Google+ may suffer the same fate - that all social networking will evolve into something else. But your author's opinion is that in the next few years, Google+ will grow considerably. They certainly have a powerful organization behind them.

Google Groups

Google also has something called "Groups" but it is not the same as Facebook groups. This is an extension of Usenet newsgroups.

In the early days of the Internet, before the WorldWide Web took off, there was another division called Usenet, also known as Usenet newsgroups. Usenet still exists, but most modern Internet users are unaware of it. There are more than 100,000 newsgroups, covering a huge variety of topics. A newsgroup is a list of messages by individuals. You can click titles to read messages, answer messages, and post new messages. It is a lot like email, except every message is addressed to the world at large - anyone who wants to subscribe to the groups. Just like email, messages could have files attached. Most of the time the files were pictures. In the past, you had to download special software, and put up with funky free access, or pay money for a subscription in a 'newsreader' service to gain access. Now, Google has made it much easier. Anyone with a Google account can go to groups.google.com and participate. The messages show up in your web browser - no special software required. There are two major differences: Google doesn't support attached files. With Google, it's just about text messages. And, there are even more groups, in addition to the Usenet groups.

So, if you want to publicize something, you find appropriate groups, post messages, and add a tag line at the bottom of every post. Or, in some groups, you can blatantly advertise. Of course the ones you can advertise in directly don't have much valuable content. They are often called "spam traps," I experimented with some, such as alt.test.test, and alt.announce, misc.forsale, and sure enough, there are a number of people just idling around there who will read pretty much anything interesting, and click through to see what you have.

Let me give you a concrete example of how you can use Google Groups. Actually, you can use this same technique in Facebook groups, on Twitter, and even on YouTube.

I wanted to publicize an idea about bike safety. I found a group called ba.bicycling. After reading a few messages, I figured out that the group is about bicycling in the San Francisco Bay Area, a place I have lived. There is a popular bicycling road that goes out to the rural edge of west Marin County called Sir Francis Drake Boulevard. It is dangerous because it has no shoulders, blind curves, and trees casting mottled sun and shade, making visibility difficult at times, especially since it heads due west into the sunset in the evenings. So I said so. I created a brief post stating that Sir Francis Drake was dangerous, and exactly why. At the bottom was a link to my bicycle safety website. You've gotta remember, I just told a bunch of bicycle lovers that the place they like to ride is dangerous. That was very controversial, just as I thought it might be, and so I was able to keep the discussion alive for a week. On the first day, 400 people came to my website. By the time the discussion died out, 1,000 visitors clicked through. And, these were exceedingly targeted customers - the very bicycle advocates I wanted to come to my site. My site was actually of international interest, but I happened across a Bay Area newsgroup, and remembered the problem on Sir Francis Drake, and so was able to make my little splash.

You may notice that I keep mentioning putting links to your website in your messages. Why not just the address and the phone number of your bike shop? The reason is that almost no one will drop what they are doing and go visit your bike shop. By the time they are out and around town, they will have forgotten all about the mention of your store in something they saw online. But if you link to your site, they may go there, spend enough time to be convinced they have to visit your store, and eventually they'll show up. Furthermore, if they find something interesting or valuable about your site, they'll bookmark your site, come back from time to time, and they may tell their friends and associates. As if that wasn't enough reason, you may find that you can earn money directly from your website. Maybe people don't need to come to your store for some things. You can do a mail order business from your site. Now, if you try to sell the same things everyone else is selling online, forget it - there's too much competition. But what if you have invented a little something that bicyclists would like, and you are the only source? Right, you can sell it from your site. If your site is interesting enough, perhaps a virtual museum of some aspect of bicycling, perhaps it contains some interesting bicyclist biographies, or an interactive cyclists' forum on a specific topic, you can add Google AdSense, or affiliate links to whatever products you like. You don't even need a bike shop. Just earn a living from you website. But that's way off-topic for this book, isn't it?

But you can certainly augment the profit from your bike shop. In some cases, that can make the difference between success of a retail store and well, not success. For instance, I once had a bookstore in a time when bookstores were already flailing due to Amazon, Alibris, ABE and other online booksellers. Kindle and other ebooks were making inroads, and many people do seem to prefer videos and interactive computer activities to reading books. My bookstore started out like most little bookstores, selling books to people who came into the store. I learned to list some of my books on Amazon.com. In less than a year, my store did more business out of the back room selling books on Amazon, than it did out of the store itself.

For you, that may or may not be acceptable. Some people just love retail, and that's all they'd want to do. Others are willing to make money any way it comes to them. Yet others love any opportunity to avoid the public, and would like to make money somehow involving bicycles online, without a bicycle store!

Letting eBay Spread Your Message

I've listed some things for sale on eBay, and noticed that hundreds of tire-kickers may come by before anyone actually buys a thing. How can you leverage this? You can post things that are not designed to sell. If they do sell, that's just frosting on the cake. The reason for posting is to get a couple hundred viewers, who will then click through to your website and eventually visit your store.

Now, eBay frowns on sellling things outside of eBay through an eBay listing. So you can't do that. But you can mention a non-competing website in your listing, and you can direct people to your 'about me' pages on eBay.

You may find this chapter interesting. It is all about buying and selling on eBay as it relates to the bicycle business.

YouTube

YouTube is another great website that you can use in a social networking sort of way. People love videos, especially ones that explain something or eccentric videos. Within your video, you can include links to any site you want. YouTube even gives you ways to monetize your videos directly. Let's say you have done something weird enough that it goes viral, like this one:

Danny McCaskill bicycle entertainer
Danny McCaskill

The bicyclist is Danny MacAskill. As of today, this video has been viewed more than 34 million times.

If that were your video, you could have YouTube supply advertising within and around the video. Their advertising is linked to Google AdSense, which is no surprise, since Google owns YouTube. AdSense places context-sensitive ads automatically. Ads will be displayed that are related to the subject matter, (probably "bicycle" and "BMX" and "Danny McAskill"), and also to what the viewers have shown an interest in. For instance, Google must be hip to the fact that I have been interested in Dremel and Foredom tools lately, because these are among the ads I see. Or, you could embed your own links into the video. So, if you own a bicycle store in Miami, then you might make an interesting and unique video about bicycling in Miami. People who search for "Miami" or "Bicycling" or "Bicycling in Florida" or something like that will want to take a look at your video. You'll see the visitor count at your website build, and ultimately, welcome hundreds of new visitors to your bike shop.

Interestingly, the quality of a video is not nearly as important as the content, or the subject it addresses. Many successful YouTube videos were shot with cellphones, and barely edited, if at all. But what all the successful ones have in common is that they do something people want to see. They are informative or eccentric.

If your video is like most, and gets three visitors, one of which is your mother, you may need to do some adjusting, so it's title and description contain keywords that people are actually looking for, or so it is sufficiently interesting or eccentric to go viral. For instance, this video of Steve Moore, known as "The Crazy Drummer," shown below, had very few visitors. It just sat on YouTube for two years being generally ignored. Then the title was changed to "This Drummer Is At The Wrong Gig," and suddenly, 23 million people had to see it.

Steve Moore, eccentricity in drumming is the same as in bicycle entertainment
Crazy Drummer

And there are the other websites. You can post photos or artwork on DeviantArt.com, Pintarest.com, PhotoBucket.com, you can make interactive blogs on Tumblr.com or Blogger.com.

Memes

In these websites, or any social networking or similar websites, memes can be effective.

A meme (pronounced 'meem') is a unit of information that carries an idea from person to person almost in the way that genes carry physical traits from generation to generation. Shortened from the Greek mimeme, which means "imitated thing," the term was coined by Richard Dawkins, an evolutionary biologist, in 1976. Modern memes can be a written phrase, an image, an animation or sound clip.

Bumper stickers might be typical memes. A common one from years ago had a picture of a golfer and said, "Don't drink and drive. Use a 7-iron." Hopefully, this meme made driving a little safer. Bumper stickers promoting your bicycle store can be somewhat effective. You'll have customers who are almost like groupies. If you were to give them bumper stickers, they'd proudly put them on their cars, and on the toptubes of their bikes.

But, it's easier to create memes these days. You can just upload a little something to Tumblr, Twitter, Google+, you name it. And if your meme is successful, everyone will share it with their friends and associates, and soon, your meme will be seen by millions. A typical image meme would have a photo or drawing, and a bit of text. There are no standards - yet. Your meme can be any size, any of the standard Internet formats - .jpg, .bmp, .gif, or .png), and of course it can contain anything you want. All you do is make your meme, including a link to your website, upload it somewhere, set back, and watch the business roll in. At least that's the idea.

bicycling meme
Your author's attempt at a cycling meme

As with so much of this Internet-based publicity, it will be more effective to create memes of interest to your community, than to the world of bicycling in general. That's because everyone in your community can come to your bike shop. But to the whole world of bicycling, very few live near enough to your store.

It would be pretty hard to make a text-only meme. The closest I came is this: "If all the toilet paper used in America was on one giant roll, we'd be unrolling it at 7,600 miles per hour, roughly ten times the speed of sound." This could be uploaded to some trivia websites, or into various groups on Facebook, along with a link to whatever you'd want to link.

The problem is that text memes will tend to get separated from their links when people spread them around. So, a better solution is to embed the text and link in a picture, so it is the picture that gets passed around, not just a line of text. Besides, the picture may enhance the concept of the text.

You can also make video memes, with or without sound. They have the advantage that they more completely involve the viewers. The downsides are that they take a bit more effort to produce, they don't run consistently in all environments, and people have to sit and watch them before they get the entire message. In this information-rich society, you've gotta remember that the attention span is said to be one-and-a-half seconds. If your animated meme doesn't catch people in that amount of time, it isn't going to be effective.

Craigslist

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I wanted to tell you about a couple of Craigslist tricks that can be important to your bicycle shop, especially if you buy and sell secondhand bikes. If you only sell new bikes, you'll find the same ideas work nearly as well. You can also use this information to sell parts and accessories.

First, let's talk about a couple of tricks for selling things on Craigslist.

When you list a bike for sale on Craigslist, it scrolls down the list as other people add the bikes and related items they have for sale. In a busy community in a busy category, such as Chicago or Seattle, your ad can scroll out of sight within a few hours.

So, here's what you do: Every couple of hours, add a different bike. You can put up an ad for a BMX bike at 1pm. Then at 3pm, you can put up an ad for a tandem. Then at 5pm, a mountain bike, and so on. Each one of these ads carries a link to your website, saying something like, "many more bikes available at mywebsite.com." You might even have thumbnails for some your other bikes at the bottom of each ad. This is not spamming, because every ad is for something different.

As you may know, with Craigslist, you are welcome to 'renew' an ad every 48 hours. This means that your ad will reappear at the top of the list. So, after you've built up a sufficient number of ads, you can start renewing them, one at a time, every couple of hours, so you always have something near the top of the list.

The other trick, which I already alluded to above, is that you can have a website that has a larger list of your inventory. Every one of your Craigslist ads can link to your website. It seems to work well to have a vertical table on your website, with thumbnail images of each bike on the left, descriptions to the right, and prices to the far right. I did this for a short while when I was building a business to help some relatives. We kept an inventory of about 18 used bicycles and each was pictured on our website until sold.

I have to admit we didn't stay up to date with posting on Craigslist. I usually only managed between one and three ads per day, and skipped some days altogether. This was because our bottleneck in the used bicycle business was getting bikes, not selling them. Unlike many other product lines, all except high-end bicycles are too big to buy profitably on eBay - due to the shipping cost, and you can't just buy used bikes from wholesalers, so we had to depend on a local market. And there too, I have to admit, we could have done things to purchase more bikes locally, but I had other business interests at the time and the idea was to start something simple that could be maintained after I moved on. Still, we sold twenty bikes per week with an average profit of $75 to $100. So this could work the same way for your business. After doing it for three months, I moved on to other pursuits, but during that time, strictly from Craigslist exposure, our bike inventory website had received over 20,000 unique visitors.

When an item sells, it is appropriate to delete it from Craigslist as soon as you can, but I think it is better to leave the listing on your website for a day or two, marked "Sold," leaving the price visible. When people see that your business is active, an unconscious impulse causes them to want to buy something 'before it's too late.' It also keeps tire-kickers coming back. They want to watch the activity, and eventually when they need an item, or have a friend that does, where do you suppose they'll look?

You can use Craigslist to sell new merchandise also. The public is a bit more finicky about spamming, if you do something like list Raleigh after Raleigh after Raleigh on Craigslist. Better to list a saddle, a taillight, a lock, a tire, along with just an occasional bike, and each item links to your website. Even better, the items you list can be on sale. Like, "Today only, Genuine Kryptonite Lock, $32.95, regularly $42.95." You'll still make a little bit of money if you bought your locks well, but once the lock buyers come into your shop, they may buy other things at full markup. Furthermore, if you treat them well, they may become regular, dedicated customers, worth hundreds or even thousands of dollars per year.

The impact of such listings grows with time. Several months later when Fred, who doesn't need a bike, hears that Jenessa wants a bike, he'll remember the 'bikes wanted' ad on Craigslist, and direct Jenessa to your linked bikes-for-sale website.

And of course, on your website with your list of items for sale, you can mention that you are also a buyer.

One of the best ways I could have increased our purchasing of bicycles at the time would have been to keep an ad active in the "Items Wanted" section of Craigslist telling people that we buy used and broken bicycles. This would have the added advantage that our 'wanted' posting would also link to our website, so people who see that we want bikes, will also see we have bikes, in case they are upgrading, or looking for a bike for any reason.

Unfortunately, the only category on Craigslist for buying is "Items Wanted." Whereas you could post multiple similar ads such as "Cash paid for bicycles," "I buy name brand bikes," and "I want your quality used bikes," in Items Wanted, this verges on spam, in fact it pretty much is spam, in the "Items Wanted" category. Not only does spamming make a mess out of a good category, and is unethical, and will probably get you a bad name, but Craigslist users will probably get in the habit of flagging and deleting all your ads. You might be able to expand in the items wanted category if you are careful. You could run an ad that you are buying mountain bikes on Monday, an ad that you are buying broken bikes on Tuesday, and an ad that you are buying road bikes on Wednesday, but I think you'll find this is too risky.

If you're offering a service such as teaching bike repair, detailing or repairing bikes, you'll discover the same problem. There is only one category on Craigslist for "Services Offered." Everyone is going to be posting there from rug cleaning services to computer repair. An ad there is seldom seen.

A better way to let people you're buying things on Craigslist, or offering a service is to sell things.

Now that you've read this book, you have a good idea about how to buy and sell things at a profit. I'm going to suggest you dabble a bit in selling items, even if that is not your primary business. Now, you can put ads in the bicycling section of Craigslist for your bikes or parts and accessories, doing the tricks stated above. But your objective may not be to sell the things, although that could be a good income on the side. Your ads are there mostly to let people know that you're buying, or present the links to your website where you sell the lessons and repair services that you offer. If you don't really want to mess around with buying and selling (but who wouldn't?), you can keep your prices too high. The point is that people looking for used items are often the same people who want to sell their junk, or want lessons or repairs. This is where they'll be, in Items for Sale, not Items Wanted or Services Offered.

You might be surprised to discover that the for sale ads which happen to carry a message that you're also a buyer or are offering a service are far more effective than the single ad you can legitimately run in the Services Offered or Items Wanted category.

How can you tell? You can go to a website such as Vendio.com which offers free hit counters. You can past a counter into the text of your ad and that way you'll know how many people are looking. You can use a Hidden counter style, if you don't want the general public to see how many hits you're getting. Many items offered by Vendio are free including hit counters. Since Vendio specializes in ecommerce solutions on eBay, Amazon and other such sites, it takes a bit of looking to find the type of counters you can put on general web pages. Vendio calls this category "Web Counters," and the place to create new counters is "Manage Web Counters."

Finally, for building awareness through Craigslist, you'll notice that there are forums at the left side of the home page. Yes, another social networking opportunity. You can participate in those forums. You can teach what you know. You can answer questions. You can ask questions about what you don't know. But at the bottom of every posting, you can have a low-key link to your website. Keep in mind that some of the forums are national, so you'll want to notice that before you post a link for local service or large items for sale.

You can also leverage Craigslist as a buyer. People who are moving out of town, don't want to pack and ship things, and who want immediate cash will sell things for much less then they would otherwise be worth online, or if they had all the time in the world to attract the right buyers. They can't get the full value for these things, because the market is limited to the local community. So of course you can come along, swoop these things up, and sell them for a profit. Sweetening the deal, many of these bikes offered on Craigslist are not in ideal condition. The sellers know this, but so do you. So, you might discover a mountain bike that you can sell for $500, once you replace the rear wheel. The seller is happy to get $75 for a bike that was once nice, but now has a broken wheel.

Leveraging eBay

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eBay for the bicyclist or the cycling world

Imagine having a retail store with unlimited space, where you don't have to actually greet customers, it's open 24 hours a day even though you have no salespeople, has almost no overhead costs, and has not hundreds, but millions of customers!

That would be eBay. More than 150,000 people are earning their livings entirely on eBay, and you can be one of them. In fact, if you have a bicycle store, your opportunities to add eBay into your profit mix can be rather amazing. The most common way to use eBay is to sell things that might come through your store that would be difficult to sell to a local clientele. For instance, an old Simplex plastic derailleur is something that will not be asked for very often. Probably never. So if you put on in your inventory, it will gather dust for a very long time. If you'd rather sell it, put it on eBay, where it will be seen by an international clientele, not just the people in your local community. Someone out there collects plastic derailleurs. Maybe there are two or more such collectors, and they'll get it a bidding war for your derailleur, driving the price up much higher than you might expect.

eBay is one of the easiest businesses to set up, and can start bringing you money within just days. It is possible to start an eBay account, list your first-ever item, and have it sell 10 minutes later.

Setting up an eBay account is as easy. You enter your name and contact info, make a couple of choices, and you're all set. You'll also want to set up a PayPal account, which is equally easy, and also free. PayPal is a division of eBay that takes care of collecting money, so you don't have to deal with credit card numbers or anything like that.

You can start your eBay business with a single bicycle component. For an example, let's say you have a Sturmey-Archer AW 3-speed hub.

You might first want to find out whether your hub is worth anything. On the top of most eBay pages is a search field. You can type in a description of your hub. Maybe something like "Sturmey-Archer AW" You will see a list of any such hubs currently being sold on eBay.

This list is interesting, but not very helpful. It shows only what's currently being offered. Some items are being sold as fixed price, but you don't know whether they will actually sell. Others are being sold through auction, and you don't know what value they'll rise to when finally sold. So, scroll down the column on the left where you can narrow down the search results. Click "More Refinements," then "Show Only" and finally "Completed Listings." That's more like it. Now, you have a list of all items that closed during the past 30 days.

Items that didn't sell have their prices shown in red. The sellers may have ended the item early, or let the time expire without a sale.

Items that have their prices in green did sell. So you can see how much people have actually paid for your hub. You can click any of the items, see the pictures and read the description so you can better understand competing conditions. For instance, you might find that four of the hubs sold for only $12, while two others sold for $50. Upon reading the descriptions, you see that the four $12 hubs were without axle nuts and indicator chains (the linkage to the shift cable). You might see one that sold for $250. What's up with that? Click through, and you might discover that it was a rare version with an aluminum alloy hub shell. And look at that! You didn't notice it before, but yours also has an aluminum shell!

Now it is time to take some pictures. eBay requires that you supply at least one picture, and allows for up to twelve pictures at no cost. You'll want to take your pictures in such a way that they make your hub as appealing as possible. You might want to set the contrast up just a little tiny bit. Make sure the camera is held still, and the focus is good and sharp. Think about the background. It should be non-distracting, and of a contrasting color.

I have found that including your hand in pictures seems to slightly enhance sales. I don't know if something that's flesh colored automatically attracts people's attention, or if it makes an item seem more real, or perhaps it makes people feel as if it is their hand holding the item.

Keep in mind that the first picture you upload will be used as a little thumbnail. You want your hub to be obviously a Sturmey-Archer three-speed hub at first glance in the thumbnail. Or sometimes, it is better to make it questionable. It is possible to create thumbnails that spark curiosity. People will want click in so they can figure out what they're seeing.

Then you create the listing. First you select the right category. Most of the time, the right category is within the Sporting Goods | Cycling section. Other possibilities include the "Weird Stuff" section under "Everything Else." This would only be if you do have a weird item for sale. People look in that category who don't know they're going to end up buying a bicycle item.

For the item title, describe your item in appealing terms, but don't forget to use the keywords someone who wants this hub will actually be entering.

Click the various options as you create the listing to set it up the way you want. Be honest and straightforward throughout.

These options include:

Condition: New, used, etc.

Description: If it is collectible, state why. If it has special features such as signed by a celebrity, make sure to include that information, even if it is in the pictures.

If there are any flaws, you must mention them. You cannot omit something like a cracked spoke hole. If you try to sell it without mentioning such flaws, you will not be an eBay seller for long. On the other hand, honest mistakes can be made, and as long as you don't do it excessively often, all will be OK.

Size: For some bicycling items, you can select a size. Whether or not you have a field in which to enter a size, put it in the description also. You don't want buyers to forget that they have to take size into consideration. However, there are also many professional buyers. They don't care so much about size, because they're just going to sell it to whomever it fits.

Some items have other important specifications, such as number of spoke holes. For instance, 40-hole Sturmey-Archer hubs were very common, but 40-hole rims are not common. If your Sturmey-Archer hub has 36 holes, it will be far more desirable. On the other hand, if you fail to mention it is a 40-hole hub, your buyer may be disappointed, or may even want a refund.

Auction or Buy-It-Now: An auction listing can run for one, three, seven, or ten days. You get to pick an opening price. For instance, you may decide that there's no way you'd accept less than $30 for your hub. So that's your opening price. As the auction progresses, people will hopefully bid higher and higher. There is no limit. I once started an item at $50, figuring I'd be happy if at least one person would bid and give me $50. It sold a week later at $1,200. If you're lucky, at least two people will want your hub, they'll get into a bidding war, and the winner will pay way more than you think is sane!

You can also set a secret reserve price. You can start your hub at 99 cents, with a $30 reserve. This way, you can see what people are willing to pay. If no one pays $30, you get to keep it, yet you can see what they were willing to bid. Maybe the bidding stopped at $25, for example. Most savvy eBay sellers don't use reserve pricing.

For ordinary non-collectible things, Buy-It-Now, also known as "Fixed Price," is probably a better option. You set a price, and your hub remains available until someone is willing to pay your price. Many people don't like the auction game. They come to eBay to get something, and they want it as soon as possible, and it would drive them crazy to have to wait until an auction closes to find out whether they won or not. Buy-It-Now generally closes a bit higher than auctions on non-collectibles. Buy-It-Now runs thirty days, and can be set to automatically renew every thirty days until the item is sold. It is not uncommon for a merchant to list an item for a fairly high price, and then wait eight months until it sells.

Return Policy: You can decide what happens if an item doesn't work out. Will you accept a return? Will you pay return shipping cost? If so, you may find that ten or fifteen percent of what you sell comes back. On the other hand, the individual buyers are happy to pay much more when they know that they can return things if necessary. With bicycle clothing and buyers who want things for themselves (as opposed to professional buyers and sellers), ending up with the right size is essential. For them, a return policy can be very important.

Shipping: You get to decide whether you'll ship an item for free, or whether the buyer has to pay a shipping charge to you. Many sellers offer free shipping, thinking that will make their items more attractive. Others charge the exact amount the shipping will cost them. I charge a bit more to cover the cost of packing materials (when I don't use the free envelopes and boxes provided by the Post Office), and to cover my time in packing the item and applying postage. I feel that whereas free shipping is an attractive offer, my prices feel lower, because people don't really think very much about the shipping cost when they're considering an item.

You can ship by any carrier you like. You may prefer UPS, FedEx, US Mail (USPS), or another. I like US Mail because most of my items are fairly small and light, so the costs are smaller. Working with the US Postal Service seems a bit easier to me than the other services. Out of thousands of packages shipped, only a a handful have been lost in the mail. More specifically, I've probably shipped 20,000 items to customers in the US, and only around six of them were lost or damaged.

eBay has a fairly new service called Global Shipping. Before that, if you chose to sell to buyers outside the USA, you had to fill out customs paperwork on each item. You also had to pay for shipping insurance, or risk that some items would be lost in the mail. I used US Mail exclusively for my overseas shipments, and I'm going to guess that ten percent of the packages I shipped were lost or very delayed. Dealing with the insurance was tedious, so I generally didn't bother.

With Global Shipping, I send the packages to a central processing location in Kentucky. They take care of the customs forms, and guarantee delivery. If a package is lost or delayed, I don't hear about it. eBay takes care of it with the customer for me. There are only two small difficulties: eBay Global Shipping doesn't service all countries. Occasionally someone will write from Russia or one of those countries asking if I'll ship an item by other means. I always decline. It just isn't worth the trouble for me or the customer. The other problem is that eBay Global Shipping determines the price the customer has to pay. I only charge an amount sufficient to send it to Kentucky, just as if I was shipping to any US customer. But, the shipping price the customer pays is more - enough to cover whatever it is eBay has to do to get the package to them. I don't get to see what they pay, because I'm only seeing eBay from the US site. When I have asked customers about the shipping prices they are charged, they seem to vary greatly. Sometimes reasonable, sometimes remarkably high. One customer told me it was something like $22 for a two-ounce package.

When you list an item, there is a small listing fee. Depending on a few factors it can range from five to thirty cents. You can also add options such as subtitle, or larger pictures, so the listing fee will be over one dollar, but I don't recommend any of these options. They make more money for eBay, but don't generally help your item make more money.

When an item sells, there is also a closing fee. This too, is a variable amount, but it averages around eight percent. Finally, PayPal has a fee of around three percent. I like to ballpark my figuring by saying all the fees add up to twenty percent. It is a bit less, but this factors in mistakes and return expenses. So, if something sells for $100, you actually get about $80 after costs.

You'll find shipping is easy, because eBay includes a free part of their website called Shipping Manager. You put your item in a box or envelope, click Shipping Manager, choose your carrier UPS, Fed Ex, or US Mail, enter the weight of your item, a couple of other choices, and print a shipping label with the address already filled out on an ordinary printer using ordinary paper. Later, you can get a fancy label printer, if you wish. The shipping cost is automatically deducted from your PayPal account. Shipping with eBay Shipping Manager is slightly less expensive than taking this to the Post Office and paying there.

eBay has a feedback system in which a buyer can rate the transaction. They can give you a positive, neutral, or negative vote. In almost all cases, they'll give you a positive one. In order to get a neutral or negative rating, you have to misrepresent your item, ship it quite late, and communicate badly with your customer. If you have made a mistake, such as listing the size incorrectly, but communicate with your buyer and do your best to make things right (offer an exchange or refund), then you won't get negative feedback. Oh, there is the occasional crackpot who is mad at the world and issues negative feedback for no good reason, but that is rare, and eBay has some mechanisms in place to keep that to a minimum.

You can sell things if you have no feedback. Many people will trust a brand new seller with low-value items. If you have something that is selling for a lot of money, lack of feedback can cause some people not to bid. However, most people understand that eBay offers so much buyer protection that even if you turned out to be a horrible seller, they'd be reimbursed by eBay.

As you start selling things on eBay, you will build more and more feedback, and that enhances your profit slightly. If you want to accelerate the feedback process, you can buy a number of inexpensive things on eBay, since feedback is offered on the buying side of transactions also. However, sophisticated buyers can tell the difference between feedback as a buyer, and feedback as a seller. You might rummage around and find a number of inexpensive things to sell on eBay to generate feedback quickly, before you start offering high-end items.

I have discovered that there is a market for many common bicycle parts on eBay. It might even be possible to buy a low-end bike at Walmart, take it apart, and sell all of its pieces for a profit, although I'm sure there are easier ways to make money.

One way is to advertise through your store or on Craigslist that you'll buy broken bicycles. Many can be had for only a few dollars. The sale of a single derailleur or handlebar stem can bring more than the entire cost of the bike. If you can find collectible bikes from the 1970s or earlier, you'll find the parts are quite valuable.

You'll find wheels are problematic on eBay. Unless a wheel is quite valuable, the shipping cost is so high that you're better off selling the hub, and perhaps the rim, spokes, and tire separately. You can send a rim through plain old US Mail by simply attaching a flat piece of cardboard to hold the mailing label. No packaging is required. That is, unless it is a particularly valuable rim. Then you might want to protect it in cardboard. As with any kind of shipping, you want to balance the cost of secure packaging against tho value of the items being shipped. There'd be little sense in putting a $10 rim in a custom-fitted box that costs you two dollars and adds a pound to the weight. The worst case scenario is that you'd have to refund the $10 if the rim is damaged in shipping. On the other hand, a rare wooden sew-up rim ought to be double-boxed, with an inch of padding all around.

You can sell entire bikes on eBay, but there is the added difficulty of packing them for shipping. If you have never done that, you'll be amazed at how much time it takes. Since the cost of shipping bikes is high, you'll be restricted to high-end bikes where the shipping is a smaller fraction of the entire cost.

eBay can also be a source. If you're repairing a bike that requires a rare part your wholesalers do not carry, check eBay. Sometimes, you can find whole bikes that are a good deal, even with the shipping cost. Be careful to check the shipping terms with whole bikes. A large number of people list their bikes for sale with "Local Pickup Only." This means that the seller will not assist in getting the bike to you. If you're in Los Angeles, and you buy a bike with "Local Pickup Only" that's also in Los Angeles, no problem. You just go pick it up. If you are in L.A. and buy a Local Pickup Only bike in Boston, you've got a problem.

If you can invent something that bicyclists would want, and no one else sells something similar, you can potentially sell hundreds of them per day on eBay.

The Guy Who Did Everything Wrong

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As you've read elsewhere, my first business coaching client owned a bicycle shop, back in 1979, before the days of the Internet. His business had put him $140,000 in debt. I won't say he really did everything wrong, but he made many of the mistakes that people tend to make in the bicycle business. This is an entirely true story of what was needed to get him back on track. Of course every situation is different, but you may see some things here that you can apply to your own business.

Jason (not his real name) had seven employees. The business could run well with four. If there is an alternative, it is always best to avoid firing people, so after we talked, he called around and found positions for them in other bike shops.

The employees who remained could have felt that they were being given more work without more pay. So, they were switched from hourly pay to commission. The salespeople were given ten percent of gross sales, and the mechanics were given thirty-three percent of the labor charges. This was less of a percentage than they were making before on the hourly basis. In other words, mechanics had been costing fifty to sixty percent of the labor income, and sales people had cost up to twenty percent of gross sales. Still, they ended up with bigger paychecks at the end of each week. In fact, they became the highest paid bicycle personnel in the city. Interestingly, with the higher pay - that they truly earned themselves, they took more pride in their positions, and in their work. There was only a bit of training necessary to make sure they understood the consequences of working too fast, or over-selling customers.

Part of the decision as to who was to be transferred to other bike shops, and which employees stayed, was based on their reaction to the change from hourly to commission. Those who understood and figured they could make more money stayed, and those who only wanted hourly pay left. (If you've ever read Atlas Shrugged or seen the movie, you might see a situation reminiscent of the Twentieth Century Motor Company here.) This change in structure really worked out to suit everyone.

Jason had an inventory that was quite out of balance. So, learning of an upcoming bike swap 60 miles away, they rented a truck and shlepped all the misfit and overstock items and a bunch of borrowed tables to the swap meet, and sold it at or even below cost, bringing in $12,000. We took that $12,000 and purchased inventory that was just right, the kind that turns several times a year. Jason had to learn not to buy everything in lots of a dozen or more just to save a small percentage. On items he sold infrequently, he started purchasing ones and twos from wholesalers that would sell on that basis. Before long, almost everyone who came to the store to buy something got what they wanted. Repairs were no longer put on hold waiting for parts.

All generic advertising was canceled except for the main phone book ad, which was reduced in size. Carefully designed, smaller ads were placed that carried specifics. For instance a tune-up special (with coupon) for $19.95 (the typical price was $29.95 in that era). When a bike came in for a tune up, the sales people learned to look for other things that would pump up the sale. If the customer was agreeable, accessories would be shown, new tires discussed, and so on. The mechanics loved the tune-up special because they became routine and only took about fifteen to twenty minutes each, complete with accessory installations, which, of course, brought additional commissions.

The somewhat toxic atmosphere on the sales floor changed almost overnight. Like many such stores, the sales people acted like the customers were an inconvenience who didn't know anything and really ought to get their education elsewhere. Once the sales people were switched to commission, they somehow became the sweetest people. It didn't take long for the reputation on the street to change so that people dragged their friends and relatives to this bike shop, not any of the others in town.

We found some other product lines that Jason liked so he'd have something to sell in the winter months. These were board games, Swiss army knives, new and used books about bicycling, and bicycle repair classes (six people per class, six weeks, two hours per week, $120 tuition, in 1979 money).

There were plenty of smaller changes also. Jason had to discover that it is OK to guess at a price when a price tag was missing. Before the change, I once saw a sales person approach him while the customer waited to find out the price of a child's bike. Fifteen minutes later Jason came out of the office clutching an invoice and announcing that the bike was $69. The customer had long since left. Now, he just takes a guess. It might be $59, or maybe $79, but he wins the sale, saves his valuable time for more important tasks, and enjoys his business more.

And that was in 1979. The bike shop still exists and it's doing fine.

Summary

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There are many reasons for starting a bicycle shop, including a profit that can exceed what you can earn as an employee. Unless you are wealthy, it is best to start out small, very small, offering a bicycle-related product or service that you can do out of your car, home, or perhaps a little place like a flea market. Let your micro-business grow until it is flourishing, then slowly evolve it until you are in a good position to rent a store, and start a real, glass-front retail bicycle business. Partnerships make a lot of sense if you don't have something you need such as time, experience or money. But partnerships can be tricky, so should be considered carefully. Never spend more than you take in. Free publicity is better than paying for advertising. Treat your customers well and listen to their needs.

Have fun and prosper! - Jeff



blue bicycles in retail bicycle store



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