The problemYou can't make money in the bike industry as a retailer any more. We have discussed that at some length on this blog in past years, primarily in response to the closing of Neuvation (later reopened as Neugent Cycles).
That is because bikes are commodities. One carbon frame is the same as the next and everybody uses one of three groupsets. Only by (1) innovating, or fake-innovating, and getting a first mover advantage; (2) building a brand name by sponsoring, e.g., Lance (before you later drop him like a turd); or (3) designing something unique and convincing people it is cool -- the Boulder Cycles approach -- can you actually achieve normal profits.
And the retailer, well, forget it. In a world in which we get our education on Youtube, there is no value added at retail except convenience. Which is not worth the cost of keeping a storefront open.
How do you make money and keep yourself in the bike industry, then? One way: selling a lifestyle. Compass Cycles has actually pulled this off, by all appearances.
The ideaNot much of a biker here, but I do one thing that I think people would find cool. I buy a six-pack, something good, and disappear into the basement to watch "Bicycle Dreams" while rebuilding a bike. Strip down the frame, wash and lube the components, wash and wax the frame, grease the threads, pull out the torque wrench and put it back just so. I've blogged that process a few times recently and, if I do say so myself, it makes for some drool-worthy results.
|The Gunnar, most recent rebuild.|
|An older effort that is at least intriguing. Cervelo P2.|
Too much? Probably so, for a house. But not for a shop. (And, in truth, I think not too much for a house either. Some people have artwork. I have bikes.)
The ideaBring these together:
- Bikes. Lots of them. In various states of dress or undress.
- Old furniture, the kind you find on Craigslist. Or in dumpsters in college towns.
- A big old oak bar.
- Taps. Lots of them. 30 or more, and all local. Except Fat Tire. Fat Tire always available.
- Big TVs playing cycling videos, cycling movies, old TDF footage, current TDF footage, and the Big Lebowski when there is nothing else to watch.
- Hipster music, jazz, Edith Piaf, and '80s punk.
- Outside tables.
- 5-10 bike work-stands.
- Sets of bike tools.
- Parts of every shape, size, vintage, material, hanging all around the walls and overhead, some bought new, some bought on eBay, some found in dumpsters, all cleaned, polished, lubed.
|One block from the condo and one block from a hip pedestrian street in Indy.|
The warehouse is close to lots of residential housing.
|This is one direction. Similar in two other directions. Maybe 2000 units at 1.5 persons average per unit, all of beer-and-bikes age and financial demographic.|
Find a few underemployed bike mechanics. Hopefully with beards. And tattoos. Lots of tattoos.
Find a few bartenders who like bikes, beer, and who like people who like bikes and beer.
Basic lifestyle sell: drink a beer, build a bike. Pay for what you drink or use, tools and advice free. Need the bike finished? Leave it and pay basic mechanic rates. Already have a bike? Bring it in and work on it yourself, or let us work on it while you drink beer.
Bring in "programming." Mechanics teach courses on stripping and cleaning an old bike, repacking bearings, building vintage and building modern spec. Local bike phenoms talk about their latest adventure. Chris Hopkinson rides on trainer on the bar for an entire week, fueled by nothing but beer. OK, maybe only that last is realistic.
Sell ironic t-shirts and trucker hats. "Hipster Bikes and Beer." And a play on the old Hard Rock shirts, but edgier: "Indy." "Stockholm." "Juneau." "Beirut." "Detroit." "Tehran." "Marrakesh." "Kinshasa." OK, maybe that last is too far. But you get the idea.
Could you make it work?
CostPure back of the envelope guesswork here. Please throw darts.
- Rent: $2000/month until it doubles when the street sells out a little more.
- Salaries $10/hour for two staff full time 64 hours weekly. Plus benefits and taxes makes $15/hour, or $8000 more per month.
- Equipment (bar, tables, couches, bike stands, tools): $6000 total at various auctions, amortize one-time expense at $1000/monthly for first six months.
- Insurance: one site says $20-$35K yearly. Split it at $28K or $2300/month.
- Inventory (bikes): start with a few thousand worth and hope it pays for itself immediately. $3000 startup for month one. Amortize at $500 monthly for six months.
- Inventory (beer): can you arrange for trade credit (pay after sale)? If so, nothing.
- Inventory (food): arrange for delivery service from local eateries. Ride around on a Sun Atlas Cargo or Surly Big Dummy and pick up orders. Thus, $1000 for the bike. Or nothing.
- Marketing: get the various city papers interested. Hopefully very little.
|Load this with pizzas and subs from up and down The Avenue and bring to the clientele.|
RevenueAnd revenue? A short canvas of the internet suggests $5 net per beer sold. Can you average 100/night, for $3500/week or $15,000+ monthly from beer alone. Perhaps man *can* live on beer alone!
And if the place works, $15 net per t-shirt ($10 net per trucker cap) sold. Can you stick the shop name/logo on a local brew and get a discount from the brewer?
On that theory, the place covers costs before making any money off the bike part of the business. Not a gold mine by my accounting. But maybe worth it?
Ideas in the comments, please!!!
I think the idea has legs, or wheels as it were. The startup costs are daunting, and I think with the idea (pick parts and build a bike) you're talking a lot more than $3000 there. Maybe $15,000 to get a reasonable selection of stuff.
Maybe you start a little smaller. A few workstands where people can work on their existing rides, using tools they might not have at home; headset press, etc... Block off the back portion of the building to start, because you don't want a bunch of vacant space.
If you get much business, you might be able to get a couple food trucks to park outside, but your delivery model is probably a better idea.
I'm guessing you're looking at more than $10/hour for the type of worker you'd want. Probably double that. But maybe that's the Portland in me talking.
30 beers on tap.. I don't know what it costs to set that up.. You really think only $6K for that? My guess is much higher.
That building.. Sure you want the look to be rustic, but rustic is an intentional look. Rats in the corners don't qualify. So there's some serious renovation costs there.
My guess realistically is you've got $200K+ in initial costs to get it off the ground. Which certainly does /not/ mean that it's not viable.
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