Starting a Shop

[motoxr377]

Hey all,

My enlistment will be up in Summer 2013, and I'm thinking of using some VA small business programs to kickstart a small, motocross-focused storefront with Parts Unlimited, WPS, Tucker Rocky, and Helmet House distributors. I'd also have a do-it-all (mostly) performance shop. My main focus for generating revenue will be online sales using a well-developed website. I've got a wife and small child and will probably have another (child, that is) by my ETS date. I'm a combat veteran so I'll still have the option for VA health insurance when I'm out.

I'd appreciate any thoughts, from all forms of experience, including "high motocross population density" locations, possible issues, advertising, inventory systems, etc.

Thanks!
Bugs

[ford832]

Wait for Sachs and TMKIWI to happen along-and possibly others here.Having done it,I'm sure they can advise you and maybe save you a few mistakes as well.

[motoxr377]

Wait for Sachs and TMKIWI to happen along-and possibly others here.Having done it,I'm sure they can advise you and maybe save you a few mistakes as well.

I appreciate that, and look forward to their input.

[TMKIWI]

Not sure if I can help with a MX store ( I was in Marine) but the key things in business are the following.

90% off advertising is a waist of money. You need to find that 10% and make it work for you.
I gave up on Print/Radio advertising years ago and concerntrated on advertising directly to my customer base through Fishing club mag's and Sponsoring Fishing Competitions.
Look at Sponsoring track days/Riders/Clubs.
And don't listen to any bullshit from advertising guys you have to spend x amount of your turnover.
Remember they are after your money,not there to help.

OVERHEADS.  The biggest killer of small business's
Work out what it will cost you to open the door's each day.
That is a fixed cost which wont change if you sell $1000 off gear a day or $0.
Do you need the store on Main St or will around the corner work just as well with a lower rent.
Rent/Rates/Insurance/Tax/Wages are a fixed cost that needs to be factored in before you do anything.
Once you have all your costing done you can then decide the best plan of attack.

Good luck.

[motoxr377]

Thanks very much, please if anything more comes to mind, don't hold back! 

[Charles Owens]

You may want to consider passing up the store front and just stick to online sales.
'Brick and Mortar' shops are real hard to maintain now that most people shop online. Online prices are hard to beat as well because they don't have to pay rent/taxes/utilities,etc.
Unless you are in an area that is VERY populated by your target audience.
TMKIWI pretty much covered the rest.

If you do decide to go with a storefront make sure you can offer what people want and need, at a price they are willing to pay.
Doing your research is the top priority.

[SachsGS]

Step one - I would take some business/accounting  courses to help with the decision making processes.
Step two - Minimum economy of scale/barriers to entry.How much do you need to invest in the business initially to be competitive.This is really what kills 90% of motorsports businesses.Most of the time for a brick and mortar business to survive you will need at least one major "anchor" franchise such as Polaris or Kawasaki for example.After market suppliers usually give existing retailers some protection.See what wholesalers (Parts Unlimited,Fox etc.) are willing to talk to you in your area.

Step three - Have enough cash reserves to give the business a fighting chance for survival.You may need to pump money in for two years or more - that's right,no money out during this time. 

Are you physically/mentally up to the task?Getting a business off the ground is enormously taxing to your health.

If you go the store front route remember "location,location,location!".

As TMKIWI said, advertizing usually yields mediocre results and by far your best return will be by word of mouth - generate as much goodwill through your shop as you possibly can.

Are you mentally up to the task of dealing with costumers? One friend (40+ year family run business) gave me this advice:"No matter how much you would like to leap over the counter and choke the living sh*t out of a customer - just smile". It's just a business and don't take anything personal.

Thieves will be watching your every move and will clean you out the first chance they get.The only way to keep them out is steel - lots of it.Bars on the windows,jail doors,posts in front of overhead doors,send them a message - they are not getting in.

As your business grows the banks will treat you like toxic waste - be VERY creative at raising capital.

Be prepared to work ungodly hours.Many times I worked from New Years to the end of February (when spring work started to come in) non stop - over 35 days in a row to keep the lights on.

And lastly,for now, enjoy yourself.The whole process is very challenging and satisfying and give yourself enough "breathing space" to enjoy this next step in your life.

[Charles Owens]

Well said Sachs.

Also very important is the lease on the building.
We also have a pet grooming salon, which the lease is $2600 per month. AND it raises $155 per yr, locked in for 3 years.
Plan wisely, and be prepared.

[Coop]

You may want to consider passing up the store front and just stick to online sales.
'Brick and Mortar' shops are real hard to maintain now that most people shop online. Online prices are hard to beat as well because they don't have to

This is good advice. Every small shop around here that has tried to just sell parts and accessories has gone under. The ones that catered to motocross and dirtbikes seemed to go faster than the Harley ones, but none make it very long. When I can order a part cheaper even after shipping it's hard to justify buying local with my limited funds. It's great supporting local businesses, but not when it makes really poor financial sense for the buyer.

[citabjockey]

Every small shop around here that has tried to just sell parts and accessories has gone under. The ones that catered to motocross and dirtbikes seemed to go faster than the Harley ones, but none make it very long. When I can order a part cheaper even after shipping it's hard to justify buying local with my limited funds. It's great supporting local businesses, but not when it makes really poor financial sense for the buyer.

So the one thing that cannot be "outsourced" to web parts providers is mechanics service. Are you planning on running your own service shop? Doing rebuilds? engine and suspension tuning? Tire changes? etc etc? THEN you don't have the online shops breathing down your neck. I do not run a shop myself but I would think service would support a store front more than parts/accessories.

[motoxr377]

Thanks to everyone, immensely.

Let me fill you all in on my background - I'm 24 years old. My father got my gears grinding about motorcycles and cars (and airplanes - the holy triad!) when I was just a little kid. I used to draw cross-sections of two-stroke engines in my Middle School classes and study Gordon Jennings' book on two-stroke tuning to mock up a tuned pipe for my old FA50 moped. I worked at a Ithaca, NY based Suzuki dealership on and off for the family friends that owned it. That was a learning experience in itself, both in customer service, shop politics, and industry mullings. I worked at a Sears Lawn & Garden center during my senior year of High School, which bolstered those customer service relations in a different environment (and got me discounts on Craftsman tools!). All the while I worked on motocross bikes under my father's expert hands. He draws from a background of trial and error learning - all of his errors made forty years ago. He was an accomplished local mechanic-turned-race-mechanic for a pro Suzuki suberbike team with the first generation GSX-R750's (he still has a limited edition model in the garage, mint). I raced motocross (solid C rider), and rode trials casually.

So, after high school I went to college. No time for bikes. I got about 80 credits into a B.A. in Economics & Finance when I couldn't afford it any longer and changed it up. I joined the Army, went to Infantry School, Airborne School, and went to an Airborne unit. I then went to Ranger School and the Reconnaissance and Surveillance Leader's Course, and went to the unit I'm in now. I just finished a deployment and am on leave. I have a 2001 RM125, coming together slowly, and a '77 RD400 coming together ten times slower. I love bikes.

My goal is a performance shop. I can do engines well, and am studying the daylights out of suspension (although I admit going to FC for my RM125 - need more tools). I'd like the performance shop to have the capabilites to do a small Parts Unlimited storefront. Tires, wearables, and breakables. The meat and potatoes of the shop will be the service and perfomance component, with a trackside support element if possible. I think it may be too nuts to go toe to toe against the internet wholesalers.

The local Suzuki dealership gave the same advice. Go into the industry in a service capacity. They say, "The worst thing is when a customer comes in to try on a helmet and openly admits they are buying it online."

I appreciate everyone's opinions, keep them coming! I hope my little background can give you some insight from which to draw advice from.

[Charles Owens]

Well, it sounds like your qualified for it. Just do your research, make a plan and stick to it.
The first few years will be tough. But if you stick it out, it will be well worth it.

[motoxr377]

Thanks Charles. We should have Project YZ meet up with Project RM sometime this Spring!

[TMKIWI]

Don't let your enthusiasm for bikes cloud your judgment when it comes to making hard financial decisions.
Head before heart.

Having said that there is also a place for work/life balance that can not be calculated on a spreed sheet.

Service is the key and a missunderstood word.
A happy customer is less likely to tell EVERYBODY how good you are, while an upset customer will tell EVERYBODY how crap you are.
You will never please everybody but if you can build a reputation of being Competent/Hard working/Honest guy , the rewards will come.

When I sold my shop, I had scores of people wishing me well and also being disappointed that they will have to take their boats somewhere else that they didn't want to.( They didn't trust the other shops)
If you can build that sort of loyalty you will do well.

[SachsGS]

In business you have to have an edge (comparative advantage) over the competition in order to bring customers to your door.An advantage I had was a machine shop in one of my service bays, other local businesses could not compete with me in that area.In addition to the motorcycle/ATV/personal water craft and snowmobile clientele I was getting customers from other sectors - repairing bell housing for drag racers (cars) for example.

Another profitable area was used motorcycle/ATV sales - the stuff usually sold faster then I could find it.

A riding partner of mine has an online parts and accessory business (GnarlyParts). There is an inverse and linear relationship between price offered and quantity demanded and this business is founded on such a premise.My friend negotiates with suppliers for better prices based on very large orders and this is why his retail prices are lower then what shops pay wholesale.He charges very little markup and claws back his profits through high volume.This is also why many brick and mortar shops are dropping like flies, they can't compete.

If I was still in the business I probably would have added cylinder plating to the services I offered customers.