Editor's note: A version of this article ran in the December issue of BRAIN. This version is updated to include the sale of Austin's Bicycle Sport Shop, announced Thursday.
FLOWER MOUND, Texas (BRAIN) — This year's bike boom left many retailers with empty shelves, bulging bank accounts, and greatly reduced debt. It also left many exhausted. More than a few have decided this was the perfect time to get out of the retail grind, one way or another.
In a recent article, we wrote about new retailers jumping into the bike business because of the much-publicized growth this year. But there's another side of the story.
Across the country, many shops are quietly shutting down or changing hands (Like this, this, or this, among many others). It's often sad, but many owners were able to close down without debt or inventory, which greatly eases their way into their next venture, or retirement.
"We've done well, I don't want to mislead anybody," one retailer in his 60's told BRAIN. He asked not to be named because he's still negotiating a sale of his store, which he has owned with a relative since the 1980s.
"It just did start to feel like we were in the store-running business instead of the bicycle business. I realize that the store-running business is where the industry is going, but maybe our talents are better used elsewhere."
The retailer has been contemplating a sale for several years, but this year convinced him the time has come.
"I think it gave us an opportunity. We've carried a huge piece of long-term debt for a very long time, and we were able to whittle that down to nothing this year. Our sales doubled this year, and they could double again next year, it's hard to say.
"And I have to say, we're just exhausted," he said. He said several staff members or their relatives are in high-risk groups for COVID-19 infection. Operating in safe conditions, sometimes with a reduced staff, made for a long summer. "I'm too old to work that hard!" he said.
Then he added, "I'm young and healthy. I'm not retiring. I still have things I want to do."
Many U.S. retailers are baby boomers who entered the business in the 1970s or 80s and are now at or past the typical retirement age, but lacking a plan. Time flies for entrepreneurs focused on day-to-day business and many approach retirement age with some trade debt, perhaps a mortgage, and a business of unknown value.
Family business experts say entrepreneurs often wait decades too long to develop a succession plan such as handing the business over to their children or employees, or selling it. Such a transition can require as much energy and motivation as launching a new business, and owners who wait to retirement age or later to begin planning might lack the energy to make it work.
COVID-19 made it easier for many of them.
Time to pivot?
Selling outright wasn't always the outcome this year. Some bike shop owners are finding the time is right to make a major shift in their business model.
Ryan Barber, owner of the Kzoo Swift store in Kalamazoo, Michigan, feels like he is being forced away from selling new bikes because of poor supply and small margins. So he's returning to his roots, selling refurbished used bikes online with greatly reduced shop hours. He doesn't plan to stock new bikes next year.
"I've been pivoting for the last four months to doing more e-commerce on eBay. I went from having four mechanics down to one part-time mechanic, but I now have six e-commerce people. We have a pretty good system going," he said.
Kyle May at Spin City Cycles in Decatur, Illinois, is using this year to execute a plan he's been contemplating for several years: Selling his bike shop and focusing on his Fleet Feet running store franchise.
May, 45, has been running the bike shop for 18 years and opened the running store about 8 years ago. In recent years he's slowly de-emphasized the bike business, moving it toward the back of a retail building he owns as he moved the running store forward. Now he's getting ready to sell the bike business to a relatively new employee.
"It's a good time to sell for any bike shop owner. Inventory is as low as it's ever been, for everybody. Everything is paid off unless you did something horribly wrong. I mean, I was way upside down and was able to catch up.
"It was not a fun year," he added. "There was money coming through, but it was exhausting. It was too much, I just can't do it any longer."
Taking the Trexit
Selling to Trek Bicycle has been an exit-plan option for many dealers in recent years, as the company has acquired dozens of stores around the country. This year Trek added the Goodale's retail chain in New Hampshire and The Bicycles Plus chain in the Dallas-Fort Worth area, and this week, Bicycle Sport Shop, a four-store chain in Austin, Texas.
Trek rarely comments on its store purchases and asks retailers to keep mum, as well. But one former Bicycles Plus employee who was familiar with the sale told BRAIN the chain owed a large sum to Trek early in 2020. Trek was close to calling in the note and taking over the business, he said, leaving the owner with little but debt.
But by autumn, the operation had paid down the debt and was able to negotiate a much more favorable sale to the Wisconsin company. The four Bicycles Plus stores have been renamed as Trek Bicycle stores.
