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Making a bike shop

An AI generated image. A cartoon image of a bicycle, in a bike stnad outside a bicycle shop

I’ve been in the cycling industry for a fair few years now, either working on the shop floor, to more lately, working in things like comms or web site stuff. I’ve suffered redundancy when the arse fell out of the bike world post pandemic, and although I’ve faced many challenges, accompanied by the realisation I can make at least £10k a year more working for some other possibly boring  company that makes boxes, thankfully I found a home again working alongside bikes. I’ve been lucky.

So what’s spurred this writing exercise, and the eventuality for someone like you, yes that’s right, you... to allow me to be the voice inside your head while reading it? 

I’ve been sat on my hands for a while now, contemplating the notion of what goes into the workings of a bike shop, more to the point, what makes a successful bike shop? Not just by the metric of profit margins but also longevity. And I should be able to easily answer this question being that I’ve been working on the inside of a few of them. But it seems as if I can’t quite put my finger on the magic sauce that enables a bike shop to be able to pull off what is quite possibly the same struggle as a planet being able to first of all harbour life, but for it to then go on to produce life forms with intelligence. 

I think the secret sauce lies in deeply good accounting and finance management and community building

Anal accounting

Starting with the ever so boring accounting side of things. Let's face it, this is probably the least most exciting thing to think about when your passion is cycling. Never have I gone on a bike ride to mull over the profit and loss margins of a five year business plan. But that being said, with some of the conversations I’ve had with people that have owned, or own bikes shops, anal accounting (there’s a saying I thought I’d never mutter) has to really take the lead. 

     I know I’m starkly naive when it comes to accounting, looking at what’s making money and what business practices should be discarded. That being said over the past 6 months or so I’ve come to see a few different business models that really make sense to the retailer, but maybe not so much to the supplier, at the moment I don’t have much sympathy for the supplier as it seems the old practice of offering a better margin on products “if you buy more” is now sorely outdated, even the old “buy our stuff to put in your shop” is, and forgive me here, a massive piss take. Let me explain…

     Company A offers retailer B their products, Retailer B says “yes please I’ll sell your products, your sales rep has gotten me excited about the brand and I’m convinced that everyone close to my shop wants to buy your products”. Retailer B places an order, and Company A offers a lager margin if Retailer B orders more product. What ever happens, retailer B must pay for the products first, before being able to sell them. Now on the face of it that seems like sound business practice, however the current reality is that once retailer B receives the product that’s where everything stops, Company A has made their sales, they all look financially good and they can go on twiddling their thumbs and manufacturing. There’s no support offered to retailer B, little to no marketing on their behalf, all the retailer B can now do is sit on company A’s product till it's an inch thick in dust with no hope of selling it even at below margin costs. And fair do’s we’re in a cost of living crisis on the back of a pandemic turbo charged by Brexit.

     This is quite probably one of the biggest problems with the cycling world at the moment though, Brands are pushing their problems on to retailers, naturally retailers have to close doors and shut down and eventually the problem comes back to the brands. Some brands are now only offering their bikes direct to customer, that’s great, they can offer the bikes with a reduced cost, but now what’s happening is that these same brands are now going to local bikes shops and asking them to be a service and warranty centre for them, in turn removing any possible margin from a bike sale from the retailer and asking them to pick up a bill for warranty and service only to be paid after all the red tape and invoice schedules. I’m not looking at you Canyon at all… no, really… 

     Ok, so I’ve just rambled on like a frightened old man sat on his sofa on a Sunday evening, and laid quite a lot of the blame at suppliers and brands, However, the retailer can do things here to stop themselves going the way of the dinosaur. Retailers can and should demand sale or return on products from suppliers. This shares the burden with everyone, it means that suppliers don’t think “job done” once the bikes are in the shop, it means they’ve still got to get out there and sell their bikes, suppliers could even offer a reduced margin as compensation. This in turn means the retailer has less pressure and could ultimately turn over more bikes through their shop. 

     Alternatively, and this is currently becoming a thing, retailers rent out space in their shops to brands, as opposed to actually paying brands to display their bikes and apparel. Again brands can offer a reduced margin on sales, but that will ultimately mean the shop turns over more product in the long run. Everyone helps each other out. 

     Interestingly, being someone that works in an environment that is currently using this business model, I find brands are far more keen to talk to you, the retailer, about their products, how they work, what their use cases are and actually educate your sales teams on the product. Rather than, “here’s a bunch of stuff, that’s what it looks like, see ya later” It’s really refreshing, and I think this comes down to the fact the the brands now have some skin in the game and they want to see it all work.

Of course, what I've said above isn't the be all of accounting, making sure the lights are switched off when you not using them and that every nut and bolt is counted is where it can get really anal, and bikes shops need to do that too, I'm sure some do.

Making a bike shop - Community calamity

     Brands are really good at driving brand loyalty. Building a community around them, full of people that are keen to sit upon, or wear their products. This is fantastic. However the retailer loses out a bit here too, because if company A has their product in retailer B,C,D and E's shop the customer doesn’t really care where they get it from, they’ll probably go to the closest most affordable place, which might mean that all the retailers are dropping their prices to foster conversions. Anyone seen a bike for sale at the moment with 40% off? Yep that’s what that is, a race to the bottom.

     So as a retailer, they’re gonna have to up their game a bit here and build their own community around their own bike shop. This can be done in many ways some of which we’ll get to.

I think the real starting point is beyond great customer service. You know what I mean here, you've been some place and the person who's been your waiter, shop helper or bar maid has gone above and beyond what would normally be expected. So ee that customers friend, ask them about their day and what bike are they riding right now. Be their google search engine when it comes to questions about awkward geeky things, and be their support hotline when something has gone wrong and don't just fix the problem finish by having them completely forget a problem ever existed. Customer service, above anything else, will be the possible beginnings of a success story.

     After that how do you build a community around a shop? How about don’t be a shop… No one, ever, wants to be sold to. Typically, if a customer is stood in your shop, and you’re not the only bike shop in town, then they’ve already done some of the figuring out of what they want, sounds a bit silly really but it’s true, they’ve come in with a goal, all you need do is allow them to achieve it, even if it’s trying on a jersey to see if it fits and for them to say I’m going to buy it online. That there is probably one of the most galling statements I here on a shop floor, but that’s not the point. Because if you’re doing things right, you’d then say to them “cool and the gang, once you’ve got that jersey, why don’t you come out on one of our free shop rides with us” and slowly you might turn them into someone that actually wants to support a local business. 

     There are many ways you can build community around your business, and really I’m sure you’ve gotten bored of my voice rambling on inside your head so I won’t go any further in to it right now.

I think I wanna do it better - Can I do it better?

So why have I waffled on so much about bike shops and their torments so much?

    I like the idea of being my own boss at some point, I haven’t quite decided if,  when or even how... But why not open a bike shop in the middle of a recession and cost of living crisis, with the west and Russia standing off in the middle of the town square casually tossing nuclear bombs up and down in their hands in a menacing way while side eyeing each other, and with Brexit causing more and more issues, all while the UK sails down it’s own homemade poo river?

Why not indeed?

So if you want to follow that story make sure you subscribe to this blog or follow the Burnt Toast instagram here >> << to keep up to date.

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