How to start your own small-town bicycle shop
(Page 3 of 5)
March/April 1974
By the Mother Earth News editors
Beacon Cycle Supply
1801 East Bolivar Avenue
Milwaukee, Wisconsin 53207
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D-I-N Industries, Inc.
2224 Old Middlefield Way
Mountain View, California 94040
INITIAL EXPENSES
Right! You've tracked down a building and contacted your suppliers. Now, how do you spread your money around so you'll have the best chance of making that new bicycle shop a going concern?
Let's say you begin with a total of $4,000. From that amount you should set aside $500 to cover your non-merchandise overhead for the first couple of months. (After that length of time the shop ought to be generating sufficient income to pay these expenses as they arise.)
Next, reserve another $200 for initial advertising. This isn't much, but it goes a long way in a small town where rates are generally low. We spent about that amount-mostly on modest sized, straightforward newspaper ads surrounded by heavy borders-just to let everyone know we were open for business. Now that we're established, we find that the same simple, direct advertising approach still works best for us.
STOCK
With the remaining $3,300 of your original investment you'll buy everything else you need, including $1,500-$2,000 worth of bicycles. This should get you 17 to 21 medium priced 10-speed machines which will retail for about $125 each. The average markup on bicycles is 30-35%, not a lot compared to that on other types of goods. Fortunately, you'll do considerably better on parts, accessories and service. Other dealers have told us that new bike sales pay their expenses while all their profit is derived from other areas. Not so with us we place a priority on selling new machines and let the sidelines develop in proportion.
Your initial supply of bicycles should allow the customer a choice of at least two brands. Your suppliers can help you decide on the best colors and frame sizes to start with. As long as you're dealing with reputable firms, you shouldn't have to worry about being oversold on any style. The wholesalers may, however, try to sell you their more expensive bikes (which retail at $200-$500 each). In the beginning it's best not to tie up your limited capital in such items but do get brochures on the distributors' entire lines in case someone wants a higher-priced model than you have in stock.
PARTS AND ACCESSORIES
You now have $1,300-$1,800 left to invest about $400 of which you should put into parts and accessories. That's not a lot, but it will buy most of the items your customers are likely to want at this point. Since the usual markup on such merchandise is 100%, this expenditure can bring you a return of $800. In our shop, however, we think it helps business if we hold our percentage down a little. (You'll find this wise, particularly if other stores around you sell cyclists' supplies.)
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