Ask the trade: How to retain and add profit to your shop

The topic of profitability is often explored by CyclingIndustry.News, but often nothing quite beats trade secrets and hacks obtainable only by putting the hours in. CI.N asks the frontline to share the tricks they have to bolster net takings in part one of this month’s Ask The Trade…

It’s very often said that incremental gains can add up – what are some of the smaller things your shop does to retain profit?

Ruth Hargreaves, Tandems

If the bank balance allows, we always take early settlement discount or pay promptly enough to qualify for an early payment credit. We encourage our customers to pay us by bank transfer rather than credit or debit card. On larger sales we’ll only offer interest free credit up to 10 months rather than 12, and we restrict the items it is available on. This means it is only offered on our products with the highest profit margins and those which are readily available. Anything which is in limited supply is not available to buy on interest free.

During the quieter winter months we eBay any components which are slow selling, or those which we have excess stock of. When sending out items by courier we use a 48-hour service rather than a 24-hour service when appropriate.

Carl Percival, Revolution Cycles

In terms of products, I will often choose to stock a small step up from the basic versions of consumables as, while they cost just a little more to buy, they can normally be marked up a bit higher. They need to have a tangible benefit to the customer though, I won’t sell things more expensively just for the margin. Remember that a cheap product that needs remedying after a little while will cost you more.

Personally, I’m not a fan of charging for little things like cable ends or a squirt of lube during a service. I know some businesses do this and do well from it, but I prefer to include the little items into the pricing of servicing, as the cost is pretty negligible. Customers don’t like seeing too many additions to their bill.

Steve and Maria Masi, Falmouth Cycles

We try and stay involved with the community by attending local events, such as the recent skatepark festival and offering advice on a stand at a recent apprenticeship open day. We also donate bikes as prizes for local raffles and sponsor local clubs or events, including the town band and the trophies for the local gig rowing league. We also host our own cycling club weekend rides in the summer months and provide coffee and cake.

There are two ways to add profit – reduce overheads and bolster net takings – what has your business done on each point to stay healthy in the past?

Carl Percival, Revolution Cycles

I always keep an eye on the overheads. Once any contract period is coming to an end I will evaluate whether I can save costs, or even if the service is required. Never overlook this bit, it can save a lot! I have just reduced broadband/internet by £13 and discovered banking apps that don’t charge for their service and offer a few other benefits too, so saved £20 a month with no drawbacks at all.

It does depend on a person’s character and the business direction, but I prefer to evaluate everything without jumping on board with new releases, services or offers to the shop. There’s no point having a product on sale bought in temptingly cheap if it’s not something that appeals to your own customers. We hear it over and over but it really is the services, rather than the products, that people are interested in, which handily are the things with the biggest profit margins too.

I think people will always take bikes to be fixed, but to expand further there needs to be a broader offering. Teaching sessions, bike fitting and events are all popular with a little effort put into them. As a bonus, they don’t even need as much space as lots of expensive bikes on display. There are some areas where I believe profit shouldn’t come first, which is difficult to accept, but some things are just more important in the long-term.

I pay a little more for an energy supplier who reinvests in renewable energy schemes such as their own wind farms, and I use an expensive to run bioremediating cleaning system that doesn’t use harmful chemicals or aerosols.

Steve and Maria Masi, Falmouth Cycles

We maintain sensible staff levels and avoid purchasing bulk discount items. Also, we don’t spend money on advertisement, but instead we sponsor local young riders who frequently bring custom to the shop with their riding companions and this encourages word of mouth business and keeps our local riders happy.