Local bike shop
Discussion
After 28 years in the same industry, 21 years running my own company I need a change of direction.
Have seen a local bike shop for sale, established about 10yrs, waiting for figures for the last 12mths but previous years accounts seem healthy enough (it's a Ltd Company) so if last years look similar I'll be tempted.
Great location though new lease will need to negotiated, 2 employees (so no skill req'd by me luckily!), low stock value currently.
Appreciate retail is NOT the business to be in, they do sell a few new bikes but profit mainly comes from repairs & 2nd hand bike sales.
Anybody got any experience or knowledge to help me make a decision?
Have seen a local bike shop for sale, established about 10yrs, waiting for figures for the last 12mths but previous years accounts seem healthy enough (it's a Ltd Company) so if last years look similar I'll be tempted.
Great location though new lease will need to negotiated, 2 employees (so no skill req'd by me luckily!), low stock value currently.
Appreciate retail is NOT the business to be in, they do sell a few new bikes but profit mainly comes from repairs & 2nd hand bike sales.
Anybody got any experience or knowledge to help me make a decision?
khushy said:
my advice - there is no money to be made in the bicycle industry UNLESS you make your own products - concentrate 100% on bike servicing or have the ££ to bypass UK distributors!
The business model of discounting and price-matching has killed our industry - DON"T DO IT!
I can buy stuff from Wiggle cheaper than the wholesaler - they deliver it next day, for free, do free returns and even refund your return postage too - nobody can compete with that from a price perspective!
Khushy
Looking at their accounts, servicing is the highest profit (& margin obviously), followed by new bike sales then in close 3rd is 2nd hand bikes (far higher margin than new). Accessory sales are at the bottom but still worthwhile. All 3 sales combined outstrip service income by almost 50%The business model of discounting and price-matching has killed our industry - DON"T DO IT!
I can buy stuff from Wiggle cheaper than the wholesaler - they deliver it next day, for free, do free returns and even refund your return postage too - nobody can compete with that from a price perspective!
Khushy
This is an established business with a great reputation, great online reviews & a great location. It has a long serving mechanic, is registered with all Cycle2Work schemes & is close to some VERY large local employers.
In most cases, I'd agree with you on starting from scratch, this may be worth making an exception for?
Apparently he's selling to take up another business venture, not sure if I believe that or not.
I have an MTB & a road bike, I used to MTB a lot years ago but have done very little in recent years, current owner does even less than me and is active on the sales side & buying used bikes etc. He claims he gets plenty of time off.
He is happy to admit the winters are tough & that retail is a struggle.
Having met the chap I can't now 'mystery shopper' them or I would for sure.
I have an MTB & a road bike, I used to MTB a lot years ago but have done very little in recent years, current owner does even less than me and is active on the sales side & buying used bikes etc. He claims he gets plenty of time off.
He is happy to admit the winters are tough & that retail is a struggle.
Having met the chap I can't now 'mystery shopper' them or I would for sure.
The Moose said:
trickywoo said:
Ask yourself what would happen if even one of the employees left and started mending bikes from their shed at home.
If this was a business I owned and wanted to sell, the first port of call is to the more senior of the two employees. It would probably have to be an earn out of some sort.The fact that this hasn’t happened would raise red flags for me (although he could just not want more than a 9 to 5).
The older/more senior chap just wants an easy life by the sound of it, like many folk.
Both staff f/t, 1 is an apprentice though. Yes, totally reliant on them but bike mechanics can't be that hard to find can they?
Not bothered about running a business, the industry I'm in know has been annihilated by the internet & changes in technology, I want/need a fresh start.
Vendor claims they normally have a weeks work booked in, I can only take his word for now but will do some discrete investigation.
Appreciate the retail side is never going to pay the wages, it's the service side I'm focussed on really plus the C2W aspect maybe? There are some very large public sector employers within a very short distance.
Not bothered about running a business, the industry I'm in know has been annihilated by the internet & changes in technology, I want/need a fresh start.
Vendor claims they normally have a weeks work booked in, I can only take his word for now but will do some discrete investigation.
Appreciate the retail side is never going to pay the wages, it's the service side I'm focussed on really plus the C2W aspect maybe? There are some very large public sector employers within a very short distance.
Some great responses, many thanks.
We have thought about cycle hire, not something they currently offer.
Would need to negotiate a new lease, wouldn't want to move as current location is a large part of the appeal.
Wouldn't want to work 6-7 days a week, they no longer open on sundays but working 80-100hrs a week again isn't hugely appealing.
I see no upside in opening a repair workshop somewhere, yes there have been cycle shop closures in the local area in the last 6mths, there are several others still trading.
Didn't specifically want a cycle shop, surfing businesses for sale looking for inspiration & this one popped up locally, figured it was worth a look.
We have thought about cycle hire, not something they currently offer.
Would need to negotiate a new lease, wouldn't want to move as current location is a large part of the appeal.
Wouldn't want to work 6-7 days a week, they no longer open on sundays but working 80-100hrs a week again isn't hugely appealing.
I see no upside in opening a repair workshop somewhere, yes there have been cycle shop closures in the local area in the last 6mths, there are several others still trading.
Didn't specifically want a cycle shop, surfing businesses for sale looking for inspiration & this one popped up locally, figured it was worth a look.
khushy said:
looking at the general consensus of opinion, some of it based on real experiences + some sound business experience . . . only a moron would make the investment - please don't be him/her/it
The only counter to that comment is this, if the business in question has maintained pretty stable t/o & GP for the last 9yrs, would it still be a stupid idea?Time for an update.
The business financial year end was March meaning no accounts for latest FY available for several months, this is bad.
Vendor has claimed T/O has increased slightly from him using VAT returns to calculate.
How best to proceed? Will be talking to my accountant over the weekend but any advice appreciated.
Appreciate all the advice saying 'RUN AWAY' but there are a number of things keeping me interested, I am not going to jump into anything unless I (& my accountant) are fairly sure it looks financially worthwhile.
The business financial year end was March meaning no accounts for latest FY available for several months, this is bad.
Vendor has claimed T/O has increased slightly from him using VAT returns to calculate.
How best to proceed? Will be talking to my accountant over the weekend but any advice appreciated.
Appreciate all the advice saying 'RUN AWAY' but there are a number of things keeping me interested, I am not going to jump into anything unless I (& my accountant) are fairly sure it looks financially worthwhile.
Sa Calobra said:
Nothing available for the past several months?
So you'd be going in blind.
People tend to sell when it turns bad or it's failing.
I knew a top bloke who owned two bikeshops in central London. He's main cashcow that had been doing well for years suddenly stopped. Almost no sales for no reason. He had to close up.
No accounts since March 2018 as last FY accounts (to March 2019) now with accountant, will not be ready for several months.So you'd be going in blind.
People tend to sell when it turns bad or it's failing.
I knew a top bloke who owned two bikeshops in central London. He's main cashcow that had been doing well for years suddenly stopped. Almost no sales for no reason. He had to close up.
So yes, very much blind at the moment & well aware that could mean anything.
C Lee Farquar said:
Perhaps a bit worrying that the owner isn't on top of the finances?
At the very least I would expect management accounts for an overview.
Several months to prepare Accounts for a small business when the owner want's to sell? It smells a bit.
I daresay most small business don't have access to management accounts, in 21 years I've never needed to. With the intended sale though, he might have considered it I guess.At the very least I would expect management accounts for an overview.
Several months to prepare Accounts for a small business when the owner want's to sell? It smells a bit.
The accounts for my Ltd Co. have always taken several months, this is after we have prepared them to send to the accountant so could be looking at 6mths plus in total.
DSLiverpool said:
A Bike cafe / shop - brilliant, organise treasure hunts etc, have club nights - quite fancy it myself.
A bike shop & cafe have always appealed to me, possibly hang a few pictures on the wall from local artists too as added interest / income.Sadly not really the space here unless either of the neighbours vacated!
Believe they do already do 'shop rides'.
HoHoHo said:
I would have thought any small business should be able to provide approximate YTD turnover (if not to the penny), profit and loss figures etc. almost instantly unless he’s using an abacus, his fingers or something similar on a daily basis.
They've given approx T/O based on VAT returns but I'm sceptical, partly after reading many of the replies on here!It's never going to make me rich, I'm fine with that, I want a reasonable income to clear my mortgage & increase my meagre pension pot, if I don't have to work for somebody else so much the better!
Sa Calobra said:
"there's no margin in bikes"
There is
I stopped using bike shops when they asked for full RRP off of me and they'd order it in.
They get full whack for no commitment and I have to wait who knows how long.
I stopped then. It was either that or the staff being on shop targets meaning they pushed products or didn't necessarily recommend the best for the customer.
When I was getting into cycling one shop stung me a few times. Funnily it's facing closure now.
OP if you want that mortgage of yours to go the right way go online. Go bricks n mortor and youll end up remortgaged.
You're right, there can be margin in bikes, I guess that with stiff competition online, you just won't sell nearly as many these days.There is
I stopped using bike shops when they asked for full RRP off of me and they'd order it in.
They get full whack for no commitment and I have to wait who knows how long.
I stopped then. It was either that or the staff being on shop targets meaning they pushed products or didn't necessarily recommend the best for the customer.
When I was getting into cycling one shop stung me a few times. Funnily it's facing closure now.
OP if you want that mortgage of yours to go the right way go online. Go bricks n mortor and youll end up remortgaged.
This shop has chosen a brand that does not discount online & offers a 40% margin if sold at full RRP, there's scope there to discount slightly or offer up some freebies to close the deal.
I have no interest in being online, if I did I'd be doing it with my existing business which lends itself far better to that format.
Plus to be honest, how do small businesses fair online when they are up against Amazon, Halfords, Wiggle etc?
After dealing with lots of small indie retailers for nearly 30yrs my view is that many of them simply choose to get out when things get tough, especially when they've been doing it for decades & have no energy/desire to make radical changes to their business.
People that came in later & are used to the 'new' way of things are more open minded to trying new ideas.
Time for closure, many thanks to all those that contributed.
Turns out the hive mind of PH was once again correct!
The shop in question has sadly announced it's closure & is clearing stock at huge discounts. A sad day for the current owner, another sad day for the independent sector. A bit low of the vendor to try & hoodwink potential buyers but I guess he was just trying to maximise his own return.
On a brighter note, I'm currently looking at another completely un-related business that is service based & the internet is actually a huge positive for.
Turns out the hive mind of PH was once again correct!
The shop in question has sadly announced it's closure & is clearing stock at huge discounts. A sad day for the current owner, another sad day for the independent sector. A bit low of the vendor to try & hoodwink potential buyers but I guess he was just trying to maximise his own return.
On a brighter note, I'm currently looking at another completely un-related business that is service based & the internet is actually a huge positive for.
Thankyou4calling said:
The PH vultures are circling
It’s very rare that a successful small business is advertised for sale in my experience
It’ll remain in the family or go to an employee on a payment plan
Most for sale (small businesses) are dead ducks..
They want a premium for non existent goodwill and generally lease premises so there’s little value there.
I don’t blame the owners, they’ve put everything in, have to find a job and often have a value based on there efforts.
Your best off starting from scratch or waiting for a closure or distress sale.
From my experience it would appear as if you're right in most cases, I have found a couple that seemed to be genuine retirement sales but the others have been hoping for a naive person with more money than sense.It’s very rare that a successful small business is advertised for sale in my experience
It’ll remain in the family or go to an employee on a payment plan
Most for sale (small businesses) are dead ducks..
They want a premium for non existent goodwill and generally lease premises so there’s little value there.
I don’t blame the owners, they’ve put everything in, have to find a job and often have a value based on there efforts.
Your best off starting from scratch or waiting for a closure or distress sale.
Current option is interesting but valued quite high IMO & for the money I'm thinking I'd be just as well to start from scratch in a different location, obviously need to do a lot of work to get paperwork right & get (leased) premises fitted out etc but would probably work out cheaper.
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