Hidden Hurdles to Avoid: How To Run a Profitable Bike Shop
Sometimes, your business’ biggest hidden hurdles to avoid is yourself and the beliefs that you may have about how your company operates, or what your customers perceive your business is. It would be best if you always worked towards becoming more profitable sometimes at the expense of understanding that your preconceived notions are wrong. Not knowing this is a significant problem for many struggling retailers. So let’s dive right into some of the personal hurdles.
Your beliefs of what your store’s position is regarding who you are serving
This gap is quite common in my experience with stores that are struggling. Simply put, the owner is trying to be or become the store they aspire to own in the face of directly contradictory evidence. This misconception is most common when the owner believes they can sell either higher-end products than their market/customers are interested in or a category that they appeal to them. Still, again, their customers are telling them differently.
Your personal bias in choosing inventory that reflects your personal preferences
This concept is pretty straightforward. You like things that you use, yet they are not selling for various reasons. You may want certain brands, models, or categories of products, yet your customers are not in agreement, which should be evident because it isn’t selling. Yet, you persist in a cycle of ordering and needing to discount to these items believing they should sell.
A belief that customers will not accept higher prices or charges for service.
I have heard “we can’t,” so often when it comes to product and service pricing. It usually has to do with the perception of what the market the can bear. The shop owner who feels this way may be right, but I will go out on a limb and say they have not experimented with different pricing strategies to see if there is any pushback. If there is pushback, determining how much is also crucial. Humans seem to be very averse to criticism. Even one negative experience may produce enough ammo to revert, even in the face of the vast majority of sales transactions garnering no reaction to the rise in pricing.
The belief that a specific percentage increase in sales will solve any financial strain.
This challenge is an arduous thought process to overcome. I have heard many times from retailers over the years the description of the perfect sales increase percentage that will free them from stress. The problem is that unless there is a concerted effort to reduce expenses and increase margins, the extra costs associated with the increased sales will probably not be the panacea it was hoped to be. Often an immediate expense reduction is what is needed to the right the ship. One of the first reactions to a stagnant or slowing of sales companies often makes to reduce payroll through layoffs. It is an immediate change to the financials. In less extreme measures, you may consider pricing strategy solutions and more deep analysis of your critical metrics if not already doing so. The point is that there are many more good and quickly attainable solutions to tight cash flow issues than merely raising your sales volume.
Most of the above issues can be resolved by diligent best practices in the areas of reporting for both inventory and sales, along with margin maintenance and stocking items that sell along with digging even deeper into items that sell faster, etc. Utilizing your financial reports also to verify you are making data-driven decisions versus emotional or ego-based decisions. Please review the NBDA’s programs such as P2 Consult with myself, or the peer to peer, P2 groups, where you can learn from other excellent retailers how to elevate your business with increased profits following best practices. Some retailers will push back that some of the things discussed here will suck the soul out of their business by being too business-like. I have heard arguments to that effect. But I say that nothing could be better than being more profitable as you get to chose what to do with those profits. If you honestly feel you would not like more money for you or your employees, you can donate to a million worthy causes. The point is that being profitable should drive your decisions. You can still operate a profitable business that gives you the living you desire and can benefit the greater community right as well.
Words by David DeKeyser
The NBDA has been here since 1946, representing and empowering specialty bicycle dealers in the United States through education, communications, research, advocacy, member discount programs, and promotional opportunities. As shops are facing never-before-seen circumstances, these resources offer a lifeline. Together, we will weather this. We at the NBDA will not waver in our commitment to serving our members even during this challenging time—but we need your support.
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