In 2000, our Director of Advocacy, Gary Sjoquist, realized that the industry needed to unite to fight for resources, access, and safer bike laws so we helped create Bikes Belong, now called People for Bikes, and have been members ever since. We have been long time supporters and allies with the International Mountain Bicycling Association. We support and attend the National Bicycle Summit put on by the League of American Bicyclists. More recently we have fallen in love with the National Interscholastic Cycling Association (NICA). Our COO, Jerry Pomije, is even joined the board of directors and is now the Chairman of the Board after he saw firsthand how the MN High School Cycling League positively affected his son. We see how NICA fuels the passion for cycling in high school age kids and converts them and their families into customers for our specialty retailers.

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Episode 17 – Bicycle Retail Radio

Tue, 8/18 10:41AM • 41:55

SUMMARY KEYWORDS

bicycle, bikes, people, advocacy, industry, communities, retailers, funding, congress, organizations, advocates, members, involved, realize, dc, ride, places, work, leading, money

SPEAKERS

Morgan Lommele, Rod Judd, Chad Pickard, Gary Sjoquist

Rod Judd  00:10

You are listening to the Bicycle Retail Radio brought to you by the National Bicycle Dealers Association.

Morgan Lommele  00:16

This is a bicycle retail radio. I am Morgan Lommele and the state and local policy director at people for bikes. And today I’m interviewing Gary Sjoquist, who’s the advocacy director at quality bicycle products. Gary, how are you? 

Gary Sjoquist  00:30

Good. 

Morgan Lommele  00:31

I feel a little bizarre interviewing you today. When I was doing some research for this podcast, I realized I was only nine years old when you were well into your career as an advocacy leader, and passing some of the most significant legislation that would provide funding for bicycle and pedestrian infrastructure. So it’s an honor to chat with you today. And I hope that a lot of the folks who listened to this podcast we’ll get a few quick tips and a really in-depth history lesson on that. How to be a good advocate and build better places to ride bikes. So with that, well I give you a chance to introduce yourself and just talk about kind of where your career started and what’s been your path to today. And then I’d love to spend some time asking a few kinds of more in-depth questions around some of the ways that we’ve been able to find better places for bike riding and some of our critical partnerships with government agencies that hopefully get more people riding bikes. So do you want to take some time to introduce yourself and talk about how you got to erect today?

Gary Sjoquist  01:30

Yeah, sure. So I was fortunate because I came to bicycling in 1990. I’m guilty of not being a longtime commuter or a cyclist. I was a motorcycle racer, who had to quit because I got hurt a lot. And what I found was mountain biking, that was 1990. And right away, I got involved in access issues, or mountain biking here in Minnesota, and help sort of over a period of a couple of years I became kind of the voice of mountain biking And eventually started road riding as a way to stay in shape for mountain bike racing, which I continued to do since then. And so I learned all about the problems of riding on the road, and the need for facilities and infrastructure and that kind of thing. And this was in the early 90s.  And then conveniently, professionally, I got laid off from my job. I spent almost 15 years doing corporate publications work here in the Twin Cities and I was with a company called Unisys, and they laid me off in June of 1994 gave me a fat severance check. And I like a month later, Randy Neufeld, who’s a longtime bicycle advocate, and works for SRAM these days, came through town and gave a talk about the need for bicycle advocates in states like Minnesota, and he said there is funding available resources but we just need somebody to pick up the ball and run with it. And I thought I can do that. I was kind of tired of the corporate world and I liked bicycling and have done some work here locally. Yeah, I’ll do that. And so in 96, I attended an event, a very pivotal event at the Thunderhead Ranch in the boys Wyoming and met about 10. Other there only about 10 full-time bicycle advocates in those days. And so I met them and sort of learned who was who and what was what. And that’s actually the offshoot of that. The second event, the 97, which is what we now called thunderheads was really where the original bikes belong was launched, which allows people for bikes down the road.  But anyway, I was involved in that. And then conveniently in 1998, quality bicycle products, asked me to come in and create a position as the bicycle industry’s first full-time advocate. The employees a kewpie had gone to the flag and just said, we want to support this, this isn’t something we should just contribute to we should actually create a position for a bicycle advocate. And so I came in and got the job in January 98. And I’ve been a full-time vice Go advocate ever since. And I’m kind of unique in the sense that I don’t have anything to do with product or shipping or logistics or anything like that most of my work takes place outside of the building.  And so for 21 years now, I’ve been actually 22. And I’m starting, I guess. I’ve been working with retailers and manufacturers and suppliers and doing some political work on behalf of the bicycle industry. And it’s been wonderful because Huey P has continued to grow over those years and become an influential player. And so I’ve had lots of resources to work with, and manage to find some other similarly minded people in the bike industry. And it just continues as the political landscape changes. And as new programs are introduced, I was kind of unique, in a sense, because most advocates I’ve met over the years, they’re either mountain bikers, or they’re, you know, road riders, regular commuters, and road riders. And I was both in so that allowed me to actually Engage in both arenas. And so I’ve been involved with him ever since the early 90s. And then have been fortunate to have quality, basically subsidized kind of work that I wanted to do and have continued to do for, I guess, 22 years now. So,

Morgan Lommele  05:17

well and I guess, stepping back a little bit, one of the reasons, you know, bikes belong now people for bikes was created was because if you think about it, all of the infrastructures that we use to ride our bikes, whether it’s on single track trails, or bike paths, or bike lanes, it’s all managed by government agencies. And so people for bikes or bikes full-on was created to, you know, really leverage and elevate the voice of the industry in these decisions that can be about how much money gets put towards bicycling infrastructure and pedestrian infrastructure. And we take that for granted I think now, but, you know, I’d love for you to kind of go back to 1991 I think it was it was the intermodal Surface Transportation efficiency. Yeah. was passed. And one thing we always take for granted also is the amount of work it took to just shift that mindset around moving a lot of funding, you know, from highways and roads to carving out a little bit for bicycles and, you know, a non-car built environment. So what we’re like if you could recall, like in 1990, in early 1991, before the billion dollars was authorized, essentially, what was a lot of the feedback you got from legislators and from agencies around? Why bicycling had a place and needed to be funded?

Gary Sjoquist 06:31

Yeah, you’re right. It really changed everything in 1991. And that’s thanks to really some visionary members of Congress. Jim Oberstar from Minnesota. Patrick Moynihan was a senator from New York, and others, of course, but they were the two really visionary people and they both had been in Congress for many years and they had seen the complete build-out of basically the Eisenhower vision of creating a massive highway Infrastructure all through the United States. And in doing so, building many of those freeways, we ripped apart communities. And we made it really challenging for people to move through the communities except in a car. And so Oberstar and Moynihan saw the chance. With the federal surface transportation. Legislation gets reauthorized every five or six years. And so, in 1991, with ice T, the word intermodal was introduced for the first time in Congress. And it was important because Congress would recognize that travel doesn’t just happen by cars and trucks or buses. It can also happen in transit, in light rail, in bicycles, pedestrians in rail trails and things like that. It also was pivotal because it brought planning into the equation that gave states more flexibility with the money that they had. They could devote money to things like air quality mitigation. To put federal highway funds toward things like refurbishing old train depots that were on abandoned rail trails, or even building rail-trails, those kinds of things.  So ICET, really was pivotal and opened up a lot of eyes to possibilities in the idea that through planning, we could have citizens and advocacy organizations, community organizations could have a say in what was going to happen in their communities. And, of course, what we wanted were things like more mountain bike trails, more bike lanes, more sort of integrated, dedicated facilities for bicycling, so we didn’t have to always be in a car. And so it really changed things a great deal. And it also presented the need to use in the bicycle industry that now that we have this funding, we have to fight to protect it, because the road and highway lobby, in a sense Moynahan Oberstar that kind of sleight of hand with iced tea, the thought of those days in the vise look up national vice lattice communities was the federal government needed to put a billion dollars into, basically into creating places for people to ride bicycles robbed us. And Oberstar. And Moynihan knew that if they lead with that, that billion for bikes was going to be broadcast and headlines and people are going to be talking about it, that the road truck lobby would just kill them. I mean, the road and highway lobby would spend like $20 million lobbyings every four or five years to get their share of this federal highway money. And so after it was passed, the road and highway lobby, put out a smear campaign basically, that said, we need to redirect that money back to the necessities of building roads and highways, we can’t be spending federal money on luxuries like bike trails. And so those of us in the industry realized it’s great. We have this but now we have to continue it. We have to in the future iterations of the surface transportation bill. We have to make sure that Legacy of funding for non-motorized transportation and things like air quality mitigation and environmental concern that stay within that those parameters and that there are policy decisions and funding policy or funding decisions made.  And so those of us in the bike industry got together. And really, that’s sort of the I hesitate to call it the birth of the modern bicycle movement. Because I’m pretty sure before my time, guys in Schwinn were doing a lot of work politically, Schwinn was such a big deal leading up to the 90s. But in this transition, bikes belong was launched. And it really to your point, it really was focused on building an industry presence in DC on Capitol Hill. And then also leveraging the people like Oberstar and wine a hand who had built this legacy of funding and how can we continue it. And sort of parallel to that was the need to build advocacy organizations in all 50 states. To figure out how do we harness these so that they can work in conjunction with a national organization like real strength, certainty, and the bicycle Federation of American adventure cycling and Amba. And national bicycle Dealers Association, the original steering committee, for the very first issue of bikes belong in 1997. Included Fred Clements from NVDA was on the steering committee. So NVDA has been involved at the very earliest levels of building this political support within the bike industry. So

Morgan Lommele  11:33

do you have any I mean, these are all characters, Randy and Fred, who retailers might or might not know. But any funny stories around, you know, the Thunderhead ranch meeting or, I mean, you get them gals probably weren’t all on the same page. I mean, and we all can acknowledge the role that retailers and industry play and speaking with that voice, but what was the vibe in the room there? No, yeah, I was thinking differently. Some It’s Yeah.

Gary Sjoquist 12:01

First of all, in 1996, it was the very first Thunderhead meeting. I have a picture of everybody who was there. And like I said, unfortunately, some of them are passed away. But first of all, I was very weird because we were in the boys, Wyoming. And we’re actually at a trial lawyers college, there was a guy, a national guy in Jerry spees, who taught trial lawyers out of this remote location in two boys, Wyoming. And I don’t know how we ended up there, but we ended up there. And it was, I mean, this is like the cream of the crop of the national average jurors was sponsored by lamb and Amba, and bicycle Federation America. And then there were seven or eight of us who were leading organizations, full-time bicycle advocacy organizations, small somewhere sophisticated. But I remember the premise of this gathering was what can the national ag organizations do to make the state organizations more effective, and the more we talked about it, the more we realize none of that really matters. We need To continue what I see started, that’s the real need because if there’s no funding or no policy decisions for us, we’re not doing anything. So that’s really when the first bikes belong, was formed. And guys like Andy Clark and lovely Boehm and Chris Cagle and others, began to make the case that the bicycle industry needed to fund these sort of political efforts and needed to have a regular presence in DC, like daily or monthly not just once a year or occasionally. And so that led to we lost the national bike summit to try and at least have an annual gathering there. And then work with members like Oberstar and some of the other people assisting because the current chair of the House Transportation Committee, Peter Defazio, actually goes back to those days. He came in the Congress in 86. And has been on the house Tni committee since 87. And so he’s very much in the Oberstar mold. He wants to make sure that the funding continues in That, that remarkably that, that climate change factors into our surface transportation, policy and funding decisions going forward, which is the battle we’re fighting right now on Capitol Hill, leading into 2020. So, it was a time when you felt that you were helping start something, that there was a tremendous collaborative sense.  Guys like Leslie Bohem, Mike Korean, and John Burke were huge, like senior industry, Titans really stepping up to provide funding and leadership. And then when the second Bikes Belong launched in 1998, we decided was going to become an industry-funded and industry-led organization. And then that eventually turned into people for bikes. And a lot of the great work that’s being done now can be traced back to those early origins. So it’s been tremendously fulfilling for me, because number one, QBP just turns me loose. I’ve never had anybody at QBP tell me, we think you should work on this or You should do this. I get to work on whatever I want every single day and it’s been that way for 22 years. And so it’s been great and I know like I like Randy Neufeld, Noah Schramm, and I have a presentation I give called the surprising future promise of bicycling. In 1996, there were basically 10 full-time bicycle advocates. Now there are probably 4040 500 tucked away in different organizations. So it’s been great to see this sort of blossom. And to see the growing presence of women the growing presence in the changing faces retailers, who sort of understand you’re leading businessmen in your community, and you have skills to offer and you’re a successful business person and that counts on Capitol Hill.  That’s why we need to build more of a presence in like retailers and manufacturers suppliers. need to understand is not just about a product or the larger technology, lightweight price points. We have friends in Congress who can help us With long term funding long term policy decisions that are going to benefit all of our products. So I think one of the main focuses in those days was let’s not focus on selling bikes so much as using bikes. And if we create more places for people to ride, and that was the original bikes belong tagline more places for people to ride bikes, will also more products. And so it’s in our best interest to work together through organizations like NBDA and people for bikes.

Chad Pickard  16:29

Your NBDA membership helps support Bicycle Retail Radio, go to nba.com to join or renew your membership today.

Morgan Lommele  16:42

That’s a really interesting messaging point because I think a lot about messaging in terms of how to paint the picture that bike infrastructure isn’t a luxury when we’re asking for funding at the federal level. Yeah. How to get you to know, messaging in terms of getting retailers involved, getting them excited about advocacy and showing up to meetings, and a completely different set of messaging and people for bikes. We’ve done a lot of market research around, like, how can we really get drivers to accept bicycle facilities as needed cause needed source of funding. And really, in that respect, it’s painting the picture that more space on the road, it makes everyone safer. And I think a lot about how to motivate all the different stakeholders that need to come to the table and make that argument. What is your kind of life lessons around removing bikes from this category of luxury and motivating different advocates to tell that story?

Gary Sjoquist 17:34

Well, I think a very early lesson that I learned and I and again, I, by the time I came to QBP, and basically started my bicycle advocacy career, I was already 40 some years old, and had been around the block had a lot of corporate experience that has life experiences, so and stuff and so I had a, I guess, a long term perspective. And I quickly realized that advocacy moves glacially slow. You’re working with big bureaucracies, like departments, transportation, and Natural Resources, and Congress and stuff just moves slow. It takes a lot of planning and a lot of involvement. And you have to be in it for the long haul. I meet advocates all the time who just burn with passion. And unfortunately, in many cases, they’re anti-car and my personal experiences you’re not going to get very far in dealing with barbers, transportations, and bureaucracies. If you’re anti-car, cars are one part of the solution, but elevating bicycling to a mode that will probably never have equal footing, but at least is part of the discussion.  Always. That’s really what it all started mind a hand required that the State Department of Transportation had a bicycle and pedestrian coordinator as a full-time position within their departments. And so it starts at the planning process. And then we need just to get some more citizen involvement in going to meetings to say I’m a taxpayer Why don’t we have places to ride bicycles here, I literally I can see where I need to go in my suburb, but I can’t get there, except in a car is really life-threatening. So this is where the advocacy organizations can help. And then the retailers can help because they can play a leadership role in their communities to help harness this. The citizens many of these people are in their databases or customers are buying a lot of products. If they can just see those people as a way you can reach out to them and get them involved in whatever kind of an advocacy effort that’s going on in their community, whether it’s building along with bike trailer, or building a rail trail or connecting trails or bike lanes or whatever. I think it’s taken a long time, but I think communities are realizing, especially with the younger voters, millennials and Gen Xers, those kinds of things.  They want to live in urban centers and communities where they’re not sentenced to a car. You don’t have to have a car to get around. You can walk to bars or concerts or you can use transit or, or bike shares. You know, that’s A wonderful situation there. And so I always tell communities, you may not realize it, but you’re on the competition with other communities. Because increasingly, these days, people can live wherever they want. You don’t have to necessarily live next to where you get your paycheck or where the driving distance you can choose to where you live. And increasingly, people are choosing, especially millennials, are choosing to live in places where they don’t have to have a car, they can access public transit, and more bicycling. And this plays well into, you know like bicycle-friendly communities have been a very influential force, because it sort of verifies this competitive process, where communities realize, if we’re going to keep the best and brightest, we need to cater to what they want. And what they want are ways to get through the city without having to drive two hours out to a starter castle somewhere. And so I think it’s this ongoing process, and then carrying that message to Congress and being involved in thanking members, keeping them elected. So they can in the office to help us get what we want. And that’s all part of a long process. And it’s a complicated story, it’s not easily told to people who are just starting to sell. And at the retail level, I tell people, you know, I work for QBP. And so my main focus is that you stay in business and profitable, I want you to buy products from us, as well as the other suppliers’ manufacturers.  But if you are not profitable, you’re not gonna be in business and you’re not really going to be able to help anything. So number one, you have to stay in business. Number two, if you want to get involved in advocacy, myself, and many others can help with figuring out some kind of a plan or figuring out do you have time? Do you have money? What level Do you want to help a national effort like imba or people for bikes? Or do you want to work more at a local level with a community initiative to get a bike trail or to get a bike lane or to help with an open streets event or a mountain bike trail or whatever? But a lot of this just goes back to education people have to understand sort of the playing field That you’re going to be engaged in. And then I think having that perspective that it’s different in business, you make your own decisions, you can turn. In many cases, if you’re a small business person, you can turn on a dime. That doesn’t happen at the bureaucratic level, big deal keys. And with Congress, it takes a long time. And you have to develop working relationships with members of Congress. And that means you have to be there on a regular basis. And that’s the beauty of what people for bikes can do or has done is provide that liaison. So the industry has some kind of presence in DC. You have about a funny story, I want to do something else. But I want to tell you so the very first time we launched, the National bike summit was in particular 1999, maybe 2000. And we had basically 18 members of the bicycle industry, who came to DC for this inaugural effort to be on the hill and talk to members of Congress. And I remember I think it was Bob. I think his last name was down who lost planted bikes, which is a company that has always dedicated the percentage of their revenue toward advocacy. That is wonderful. Anyway, Bob decided to ride his bike to DC from Wisconsin to sort of making a statement, a passionate statement about this is important enough to me that I’m actually going to ride my bicycle the hallway. So he did that. And so here we are in DC, it’s time to go up to Capitol Hill and you have to dress the dress, you know, you have to have a suit and tie and you have to dress as you belong there because that’s what everybody else wears. And so, unfortunately, Bob’s luggage didn’t make it in time. And so Bob didn’t have any clothes to change into. So he wore his bike shorts to Capitol Hill, as we’re walking around, they’re going to different members of Congress. And it was funny because many of the staffers tried to hand in packages because they thought he was a bike messenger because there are always bike messengers running around filming Max’s back. And so he just wasn’t dressed approach. Really for the activity that was going on there. So yeah. And then another thing I just want to quickly is, you mentioned something funny. So, Congress and Oberstar who was a gifted orator pretty soon at Interbike, and national bike summit and people for bikes events back in the day, those a small group of us would take a bet when Oberstar started to talk the first that was how long would he talk? go on forever, like a lot of politicians. But number two, the second bed was how long before he breaks into French, because he spoke several languages.  And he was a big fan of the Tour de France had been there when Armstrong was winning all those titles and stuff. And so he would always break into French at some point in his speech. And then finally, his gift of languages came into play. And I think it was 2002. You could pay for congressional travel in those days, so I could fly overseas around the country and so I brought him to Interbike a couple of different times in Vegas. We go for long bike rides and talk. And then we come back and he gives a very impassioned speech to members, the industry of us supporting advocacy and lifelong was called those days. So anyway I have at Interbike. We’re going to walk around the halls, he’s just like a, he’s a gearhead, he just loves high-end bike products and stuff. So we’re walking through, he’s like a kid in a candy store. And we get to the camp and all of those. And, you know, capitolo has got these, the railers and shifters and things that are in glass cases or it’s like exotic jewelry. And he was just so impressed. And then I introduced him to Vittorio Capitola, who was I think they ate at the time was like the eight-year-old patriarch of the company. And so they broke into Italian and they spoke Italian with each other for about 15 minutes. That was one of the overseer’s languages, and so when he found somebody that he could speak Italian with, he was just thrilled. So that was a remarkable thing to see. And have happened. So I’m sorry I interrupted you. You’re gonna have to Wash into something else, I think.

Morgan Lommele  26:02

No, I love those stories. I would have loved to be a fly on the wall. And I’m sure Victoria was so pleased to find someone who he could just not have to speak English with.

Gary Sjoquist  26:11

Yeah, right. Yeah.

Morgan Lommele  26:13

And I know, this is our retailer podcasts. And so thinking I mean, and we get questions a lot, I mean, feely sometimes from retailers saying, What can I do to build this bike lane? or What can I do in general at the local level, and my hope is that every retailer knows, this is impossible, but every retailer knows how to use a lot of the federal funding that trickles down to state and local communities, and how to work with their city governments and state governments take advantage of that money and be involved up for someone whose expertise is running a business and hopefully doing it well. Advocacy can be really intimidating. And so how do you answer a question when you know, do shop visits or whatnot around the globe? Can you actually do whatever you know, whether you have 10 minutes or 10 hours or whatnot?

Gary Sjoquist  26:59

From the scientists, one of the first things I tell retailers is that just realize it’s not up to you. You don’t have to carry this thing completely. Because you have a shop to run. And so you have to figure out right off the bat. So how much time or money can I put toward this? And if you’re fortunate, I know many retailers over the years, they’ve built their businesses to the point where they really trust the staff. And so they can get out and be involved in their communities to prosper. Like at my seminar, I’m going to have a retailer from Athens, Ohio, Peter Cosas, who’s going to talk about that process, about how, you know the developing business and having staff that you can trust and it’s running and it’s profitable. That gives you the chance to get out into the community and do some things but I think people retailers have to figure out okay, is a time, or is it money, and then realize, probably somewhere in your community.  There’ll be a citizens group or in a book club or a chapter of some organization trips for kids or maybe it’s unlikely High School, likely whatever you can help with that effort. Maybe they need you as a board member, maybe they need you as a funder. Somebody write a manual check. Maybe you’re somebody who can bring people into your shop, like the high school team to show them how to fix bikes or something. But you have some expertise. It’s a matter of finding where that will fit into the existing structure. And in some cases, it’s just simply writing a check being a part of people for bikes. I always tell retailers, if you want to get involved in advocacy at the national level, the first thing you should do is go to the national bike summit, because that gives you a context for the playing field. You realize how important it is to be in DC because if we’re not there for our bicycle industry, everybody else is there refrigeration, trucking drop, every kind of anything that gets sold or marketed or transported in the United States has a presence in DC already.  You know, the National Rifle Association hasn’t One lobbyist for every member of Congress, share a call all these big organizations. And so that’s what we need from the bicycle industry. So go to the national bike summit, learn what’s going on is inspirational, you’ll find a lot about what’s actually going on. And you’ll get a little peek into what it’s actually like to be walking the halls of Congress and meeting with staffers. And you’ll be doing this with a bunch of other people. So it really can be fun. The next thing I’d say is if your company or the company that you work for is a member of people for bikes, and hopefully, they are, then you can take sort of the next step, which is to go to an industry flying people for bikes organizes these, I think their quarterly or whenever they happen. So the idea is they fly in people from the industry in small groups, and then arrange meetings with members of Congress and there’s always dinners involved and I’ve gone to a couple of these, they’re the most recent one was great because I met five or six other people from the industry we traveled together. people for bikes does an excellent job of grifting you know, the issues and what the ask is the kinds of things you’re going to talk about. And then for Part of it is very simple because it’s you talking about your business or your state, and we call it that. I mean, you’ve been doing that your whole life and your passion for bicycling. And again, nobody has to fake that we all get that that’s part of it. So you just have to open that up to the staff or the people that you’re talking to. And so those flyers are a good way to sort of taking it to the next level. If you want to be involved locally in stuff, I would check and see, is there an AMA club? Or is there a Mumbai group in your area? Is there like an open street organization?  Chances are, there’ll be an organization that’s trying to stay engaged and helping planning departments create more areas for people to ride bikes, maybe it’s to connect a rail-trail somewhere, or be involved in some kind of a maybe there’s a local, state-level legislator who could do good things for bicycling. And so it’s a matter of supporting His or her efforts, you really have to do kind of an assessment of what’s out there and how you can have an impact, I think. And in some cases, I think, so matter of how deep Do you want to jump into this, with the realization that you know, you do have a business to run, and if that goes down, and you’re going to be in problem. So that’s your first priority. But I often talk to retailers and say, you know, this is the great thing about QBP. I’m paid to do this. So I’ll come and visit you. I’ll help you lay this out. I’ll find out what you’re interested in. And then we can plug you into, do you want to work with kids? Do you want to work with an established organization? Do you want to help with mom biking? Do you want to be involved in the high school migration aspect of it? Is there a trick for kids after you get involved with it can sort of tailor given the playing field with a retailer’s involvement might be great because if you’re buying from QBP, you’re going to get that’s just part of the deal. So

Morgan Lommele  31:55

I’m always inspired by the amount of well not just the leeway, you have to kind of create your own adventure around advocacy and empowering local shops and communities. But just the way that QBPempowers its own employees to become advocates, I don’t think there’s a day or maybe a week that goes by that I don’t talk to someone new or, you know, it QBP around our sustainability efforts, e-bikes or local advocacy in a place building. So how can we take that and inspire other executives not to discount the countless other suppliers, manufacturers that do have dedicated staff and budget for this? How do we want that corporate culture to live on and all of our panelists and members and retailers are listening to this, but how can they kind of inspire the companies that they buy from to do the same with their team?

Gary Sjoquist  32:41

Yeah, I’ve been very fortunate to be a QBP. But, but I mean, I worked with wonderful people at Trek, that specialized planet by different organizations to have sort of realized many of us feel, you know, bicycling can change the world. Gombrich used to say bicycling is the fix for everything. And in many ways, it is But you have to be able to carry that message and figure out ways to keep it going and to make it effective. And in many cases, that means separating a portion of the funds that companies make or operate on to some kind of an advocacy effort. And if it means only a part-time, person who, you know, we have it at our Lancaster Sileo, a guy named Nick Loftus, who spends eight hours every week focused on advocacy, he runs the DC, the distribution center at our facility. So he’s a really, really busy guy. But we just carve out eight hours for him. And he’s been tremendously effective in the area with like parks and mountain bike trails, and we’re going to be doing a gravel summit out there in October.  And so, carving out a little niche of time for an employee who is inclined to do this kind of a thing is really important. In fact, that’s when QBP did this in 1998. Part of it was to show other companies that you can do this You know, the bicycle industry has and will always be the product is king. The bike industry is always focused on the newer, better, lighter product. And that’s what drives many of us were like junkies. I mean, like many people come to work at QBP, because they know they’re going to spend seven or eight grand on bike stuff every year. And you might as well work in the industry. And, you know, but if you all are involved in advocacy, you want to be involved in advocacy. It’s really great if a company can carve out some time and let you get involved. If we have more companies that could do that. It’d be great to take some visionary thinking. But I think there are a lot of people who never get it that if you model the right kind of practices, other companies will do that.  Certainly, TREK has done that and Specialized in QBP and many others. So WTB Patrick Seidler like you could just go on and on and on. And I think this is something that’s lost on a lot of new sorts of startup companies. You know, we’ve had a tremendous amount of, especially with the E-bike side, a new startup who don’t really understand the kind of struggle that it takes to change paradigms to get involved in and reconfigure our communities to make bicycling not just okay, but a preferred mode or a way to, you know, one of the things that people for bikes did that was really wonderful as I was part of this, fortunately, is you’re talking to people in bureaucracies or city council people or mayors, whatever, about the value of bicycling their community and they don’t quite get it. And so we would just take them to Amsterdam for a couple of days and a couple of days in Munster Germany.  And I remember one year we took the mayor of Madison, Wisconsin, and a whole group of people to 2010. And I think after the second day on riding our bikes, on the wonderfully integrated systems in Amsterdam that night to the mayor said, Now I get it now I see what you guys are talking about riding all over the place and it works. wonderfully said. I think we should devote another couple of million dollars a year. Bicycle facilities in Madison, Wisconsin. That kind of paradigm change is hard to get. But taking people to places where bicycling works really well, I do the same thing here. in Minneapolis, I brought a group of 10 people from Central Pennsylvania here last August. And we spent three days on our bike-sharing bikes, looking at bike trails, talking to people figuring out how do we make this work, we have this wonderfully integrated system of pedaling our bikes here. And our streets are safer because there are more bicycles on the streets. And so you can show that to people and then the spark. They sort of get it. And then a challenge is, well, how can I do that in my own community, but there are organizations to help with that, too, like myself and others who can provide resources.

Morgan Lommele  36:45

Wonderful. Yeah, you can talk a lot about I’ve heard you speak about market-based advocacy of using funds to build more places for people to ride and you know, key areas. And then that kind of industry power in terms of funding invoice and so just using the industry funds Then leveraging that for public fun vehicles that are places to ride bikes are really important

Gary Sjoquist 37:05

when bikes belong, essentially the original, not the very first iteration of bikes belong. But the second one in 1998. What a bunch of us just came to the realization that we just have to tax ourselves basically figure out a way to tax how the number of bicycles that we sell, and then create a pool of funding, sustainable annual funding to support these kinds of efforts. And was a hard lesson but it’s something I think is really proven to be beneficial people places very influential organization, doing great, great things. But it is sometimes incumbent upon the industry themselves just to realize we need to do this. And so I think it’s just pretty cool that it did happen. And then transferring that to other people. You know, everything I’ve said here today is not on paper anywhere. And that’s one of the things I’m trying to do is get it down on paper so I can then get it verified for those of us We’re still living, who were involved in those days. That’s just a way to show people like yourself, for example, who probably hope to do this for a long time. And if you can learn and see how we got to where we are, then it’s better for you down the road to get what you will continue to want for the industry and for organizations like people for bikes. So before I forget, I just wanted to thank you for the opportunity to do this. Because my knowledge No one’s ever done this before, sort of layout the origins of this and try and put it together. So thank you for doing this. And thank you to NVDA really appreciate the opportunity.

Morgan Lommele  38:35

Certainly, my pleasure, and I don’t mean to sound trite or anything, but I always just learned something new and get new inspiration when I talk to you. So I guess that’s my final question. In moments when you felt down or felt like your advocacy efforts were fruitless. What did you tell yourself or who did you talk to? What did you read to kind of keep going and know that you know, every little bit counts and you just have to keep ongoing

Gary Sjoquist 39:00

Yeah, it’s hard. I think I mentioned earlier about, you know how I got into this, I was a little older, and I had a lot more experience. And that idea of the long view, you know, understanding that just takes time. And in many cases, and I think many advocates around us have learned this when you’re working with DOTS, or Department of Transportation, or Department of Natural Resources, those kinds of things. In some cases, you’re talking with people that you just can’t change, and you just have to just wait until they retire. And the good news is, when we retire, you’re going to get somebody new and younger, who probably rode bikes to college or whatever. And they’ll have a different perspective. I’ve lived many, many instances where that happens. So I think the first lesson is just to be patient because things can turn in a way that suddenly doors will open up in 2010.  When Oberstar lost after 34 years of Congress, it was just devastating, I mean, to lose his 34 years of institutional knowledge. But thankfully, there were other members of Congress who worked with him who learned those lessons guys like Peter Defazio, who’s now leading the How to unite committee. And so you just sort of recalibrate and keep going. And I’m so fortunate because  has been picking up my tab all these years, they just keep sending me checks. It’s wonderful. maybe it’d be a little harder lesson for me if an organization that I was leading, lost their funding and had to retrench completely. But fortunately for me, I haven’t had to deal with that. But you do have to have the long view and you do have to understand it was glacially slow. But it’s such a great cause. We’re so fortunate to be working. I think about this every time I’m in Congress, walking the halls, I’m so happy to be for something instead of against something, you know, if I was there fighting these pipelines or fighting against whatever, everybody’s eyes always light up. When you start talking about basically, they always have some kind of connection to basically, they may not support it at the federal level or using funding for it. But at least you can talk to them about bicycling, and I think that’s really energizing. I’ve always found that

Morgan Lommele  41:02

Good. Well, I so appreciate your time. And I know you’ve been trying to write all this down and just institutionalize your life lessons and how you got the industry to where we are today. And I know it was a team effort, but we wouldn’t be here today without you. So thank you for your lifelong commitment to the industry and for speaking with me today.

Gary Sjoquist  41:20

Well, thank you, I’m gonna get a lot of this stuff checked out by some people who are there, and so I just want to get it right. And so again, thank you for the opportunity.

Morgan Lommele  41:28

Take care, Gary. Right. Thank you. 

Rod Judd  41:31

This has been bicycle retail radio by the National Bicycle Dealers Association. For more information on membership and member benefits, join us @NBDA.com

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Dan Thornton

Tue, 8/18 10:46AM • 41:30

SUMMARY KEYWORDS

bikes, stores, p2, people, day, business, bicycle, run, orders, retail, bmx, employees, retailers, showroom, week, industry, road bikes, trails, numbers, years

SPEAKERS

Dan Thornton, Rod Judd, David DeKeyser, Kent Cranford

Rod Judd  00:10

You are listening to bicycle retail radio brought to you by the National Bicycle Dealers Association.

David DeKeyser  00:16

Hello and welcome to another episode of bicycle retail radio. My name is David DeKeyser and I do retail consulting for the NBDA is P2 Consult program. You can find more information on that program and all the other great benefits the NBDA provides on the NBDA website NBDA calm. Today’s guest is Dan Thornton on our Free Flight Bikes with locations in Marietta, Sandy Springs, East Cobb, Georgia starting 42 years ago as a skateboard shop. preflight has evolved tremendously over the years. And with that, thank you, Dan, for taking the time to join us today.

Dan Thornton  00:54

Oh, You’re quite welcome. Happy to be here.

David DeKeyser  00:57

First off, 42 years starting to skateboard shop. Can you kind of walk us through your business’s bio a little bit through the years and at the end of that finish up with where you stand day-to-day in the business?

Dan Thornton  01:12

Yeah, 42 years condensed down in a few minutes isn’t easy, but I’ll give it a shot here. We, being my father myself, opened up a skateboard shop in 1977. And did quite well actually for about a year year and a half we thought things were just going to keep going. And in 1978 things took a turn for the worse in that industry. It seemed that liability insurances skate parks and hindsight now you look back and skateboards are very, very cyclical through generations of kids. They come they go, they’re big. They’re small parts of our sporting activities. So we made the decision and 78 kinds of looked around and said, what’s next? And what do we do now that we have a retail storefront? We know enough about retail to be dangerous. What do we do and At that time, BMX was booming? The BMX scene was happening. tracks were popping up everywhere. teams were traveling and nationals were happening through both ABA and NBA. So we kind of jumped in with both feet, we bought a little tiny bike shop in our hometown that had closed that had you know, I think it was about $8,000 in inventory. We moved to a little better area that was the better-suited showroom for bicycles and BMX continued with skateboards for a while, but that didn’t last very long as BMX took over quickly. When the BMX scene hit, we were doing national mail order, we set up a mail-order catalog that we actually hand printed in the store with a little pictograph machine, mimeograph machine, whatever you call it, ran catalogs, mailed them out and put ads in the back of BMX action magazine or BMX plus back then and just really, it just took off on us and we didn’t really know what It hit us and it ran hard for quite some time we had a national team that traveled we had mailorder going in a retail showroom that was kind of the hotspot for BMX, in our marketplace. And just like anything, you know, it’s cyclical to that it had its run road bikes, we had a gentleman that ran the Eastpointe velodrome that came to me and said, Hey, you guys need to be sunken, some road bikes, it’s the next thing coming. And we got into road bikes. And we sold rode bikes pretty hard for quite some time and was doing quite well with road bikes. And then the next thing the mountain bike wave and the mountain bike scene hit and we were there. So we really just transition from product to product, always keeping what we started with, and that’s BMX and family bikes. So it’s a big part of our business today. We have three stores now my dad through my mom, she worked for IBM and she was transferred in 1982. And at that time, he came to me and said, What do you want to do? You know, we can try to sell it. There’s probably not much here to sell. We could liquidate, you could do whatever it is you want to do or You could continue to run it and pay me back my investment over time and we’ll see how it works. At that time, my wife 42 years as well, we looked at each other and said, let’s do this, let’s make it work. And she went to school and learn to do books and I went to the school of hard knocks and dug into the stores. So I never had a formal education, everything has been from high school on and just school of hard knocks. And the rest is somewhat history. We now have three stores and 30 plus employees that are top of season 26 at the low point of the season, so it’s been very, very good for our family. We’ve been rewarded greatly and trying times today for sure. It’s a different type of stress from other times we’ve seen in this industry that we’re dealing with today with the COVID issues and shut down and the bicycle rebirth or boom if you want to call it whatever so

David DeKeyser  04:50

Yeah, a personal story there is that in the 80s I was really into BMX and I remember the free flight and Name and the catalog showing up in my mailbox as a teenager probably in 1984 1985. So whenever I would see your name pop up, the name of the stores pop up over the years that always kind of had a fond memory for me because that was a nice time I think in my life. So it’s kind of neat how you’ve transitioned so much over the years. Nowadays, in your stores, what brands are you selling what’s kind of paint a picture of what your retail business looks like today.

Dan Thornton  05:31

We’re one of the top 50 TREK dealers and we do a primary TREK business. We also do very, very well. We’re one of the largest Santa Cruz dealers in the southeast. So those are our two primaries. We obviously like everybody to do a couple of specials of this and that custom frames in the roadside, but that’s our primary too. So we’re primarily a TREK retailer. 

David DeKeyser  05:53

With a Santa Cruz component there. Obviously, you must have some mountain bike trails or very good mountain bike trails. I’m assuming with In striking distance of some of the stores, 

Dan Thornton  06:03

Blankets Creek is about five miles from our largest location, our oldest and largest location. And the blink Creek trailhead is managed and run by Sorba which is the southern offroad bicycle Association. And it was one of their very early trails when they went into developing clubs in the region. So they have both blankets Creek, rope mill and Altoona Creek are all run by SORBA And then so Creek it’s closest to our other two stores. We’re in a hotbed of some of the top trails in the eastern region. It’s without question blankets Creek is one of the most visited trails pops up on a bunch of top trails and in mountain biking for us.

David DeKeyser  06:42

Do you have some recreational paths or rail trails or anything like that near any of your stores?

Dan Thornton  06:48

We did? Well, I say we’re kind of surrounded by what’s growing. It’s slow. As everyone knows, money’s the issue. In almost every case, there’s quite a bit of political will to do it. There’s not enough resources from a financial standpoint to do what they want to do, but yes, there are recreational paths trails, the silver comet trail runs from Summerlin, which is really where a skateboard shop started. It goes all the way to Birmingham, Alabama, it’s 60 miles of old railroad tracks that were pulled up, turned into a really nice dual-direction bikeway that’s just hugely popular, especially as you get closer towards Atlanta in the city in Smyrna. So yeah, we have Roseville there’s a Greenway and then there’s paths and trails and it’s been quite a movement over the last say 20 years quite a change. But a long way to go here in Georgia, that’s for sure.

David DeKeyser  07:36

How big are your stores,

Dan Thornton  07:38

our largest stores 7500 square feet. We like to call it our mothership. If we have large bulk orders come in, that’s where they come in. And then we have weekly distribution to our other stores via transfer. The other two stores one is a two-story building, which we purchased about 15 years ago, and that’s right at just under 5000 square foot freestanding building and then last Or most recent opening a six years old. And that’s in the city of Sandy Springs in the shopping center, and it’s 4300. So all 43 or greater

David DeKeyser  08:11

is three of the most stores that you’ve ever had. Have you had more than that? Kind of how did you arrive at that number of stores in your current locations?

Dan Thornton  08:20

That’s a good one for very, very short periods of time. We had four but it was typically when we tried to a location that didn’t work. We may have been there five years, tried to make it happen, couldn’t make it happen. And while we were closing it, we would turn around and begin opening a store in another area to give it a shot. See if we can make that we’ve done and this is definitely our three. It’s very interesting when you look at stores one’s easy. I mean, you know, hindsight is always 2020 and I some days I dream of a 20,000 square foot one single store that does it all has it all. Because you know when you take your staff and you have an amazing staff At one and you start taking your best of staff to go run another one, you just basically end up with three stores with great staff, but not always the best of staff and you kind of lose a little control and it takes several years to really get that. It’s not near as easy as it looks on the outside to open multiple.

Kent Cranford  09:20

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David DeKeyser  09:40

Are you guys pretty comfortable now with where you’re at? Or do you have plans if you saw the right location, the right spot? Would you move into that? Or have you settled into what the business is at this point?

Dan Thornton  09:53

I’ve looked at that we looked at it. There are times we feel like we’re a little bit too small to be big and we’re too big to be small and we feel like We’re kind of caught in the middle, there’s no doubt there are economies of scale that can be gained by multiple locations. The problem is having very tight controls on those. And it’s not easy. It’s very, very hard regardless of what database, what systems, what point of sale you use, the amount of management and control of that is the hardest part. And that’s the downside to multiple locations. So I respect those guys. You know, when you see people with 1520 3040 locations, it’s just amazing that they’re able to do that and maintain a high-quality level of service to the customer. Do you think that just comes down to they have such a solid operational handbook in a way of, you know, they can just pop open the door and they’re ready to roll? Yeah, you know, I that in the discipline. I think the real thing there is discipline and oversight management. It’s extremely hard to create a perfect customer experience. And as you move Apply, that just gets harder, there’s no doubt in my mind that that becomes harder and harder. The dream of perfect service for every customer and everything else. It’s near impossible to create the perfect customer experience time and time again, without those controls and management are extremely hard to do to have people in different locations. Always being consistent with the way you treat your customer is the hardest thing and you know, the big retailers know it without question when you start looking at big retailers to this level of service. So that’s one reason that when you look at our competitors online and the Amazons when they have their management and control under one place, they completely control the script and let people know exactly what they can and can’t do. It makes it hard on retail, and we are dealing as everyone in this podcast knows that we’re dealing with pay levels that do not that have a big business. And it makes it tough. We love what we do every one of us, but it’s also a hard job.

David DeKeyser  12:06

Do you have any ideas there on ways to bolster those pay levels?

Dan Thornton  12:13

Well, it’s a margin game. Everybody knows, you know, I have friends that are consultants. And here you have people that are consultants in different industries, they have absolutely zero inventory, their assets or laptops. And that’s it. When they sell their businesses, they’re selling it at eight and 10 times revenue of gross profit. And typically, I find that most are looking at three times at best. And that’s if they’re really, really good with really, really good books and fantastic profits. And that’s tough to deal with. So, to raise the pay scale of an employee, the only way it’s going to happen is to increase your income and volume to make sure that you’re highly profitable and as we all know in this industry, That’s typically not the case. It’s just typically not the case, we’re dealing with many, many retailers that if they break, even in a year, they consider it a very good year. And in many cases, they have spouses and other people that help cover their paycheck. You know, it’s just not the normal business. You know, we’re very lucky, though, that we’ve survived when most of the retail has failed, which gives me a glimmer of hope that there are places for retailers to continue to move along the path to profitability, slowly find their way into where their profits match their efforts because it’s hard. It’s not easy.

David DeKeyser  13:41

And there seem to be almost two different types of stores. There are the stores that are being run from a very businesslike standpoint and the stores that are trying but are missing the mark and there’s just not enough kind of meat on the bone. If you’re not firing on all cylinders, and some of those things areas with the amount of time that you guys have been doing this with your stores. Are you always working on TREK has that turret you know, they always use the term continuous improvement you kind of run into that? Or do you find yourself doing that? Where you’re continuously trying to get down to the bone with a scalpel and really find areas that you can make more money? Whether that’s with data, or however? Or do you feel like you’ve hit your stride as a business from what you can improve?

Dan Thornton  14:31

No, I believe fully that there’s always room for improvement. We’re continually It doesn’t matter what decision we make anything whether it be new canopies for our events or new fixtures for the walls. We look at everything from a financial standpoint, is there going to be ROI? Is there going to be a return on investment for what we’re getting ready to do here or is it just because we think it’s really cool to have and those decisions are made every single day based on what’s going to be better for us the processes we use for service check-in. And you know, I look at track as an amazing partner. I don’t really know where we would be today without that because I see comments on some of our industry forums where I can tell that retailers are operating the way we did 25 years ago, just seat of the pants, cash registers. And you know, many cases, I believe a lot of retailers have pointed sales, but really, they’re just very, very expensive cash registers. inventory is inaccurate. No maximums being used, service orders, and service tickets aren’t being controlled. It just goes on and on and on. And you don’t have to have a business degree. Obviously I don’t. And you don’t have to have a business degree to get it to do it to make it work. But you got to have a commitment. And it’s always a commitment to doing better. And I think so many retailers and I understand it, I get it. I’ve been there to wear every day you turn the key in your day is in your face and it doesn’t end when it does. End You have no time for anything, you go home, you’re exhausted. You start over the next day, there’s never time for continuous improvement. But that’s how it’s going to get better. And if you can’t find the time to do that, it’s a long road. Without profits, it’s very hard to be profitable. Right? Not enough margin.

David DeKeyser  16:20

That’s always going to be the hard thing, I think is to, as you said, there’s just not enough hours in the day if you’re being slammed. That brings us to today where most retailers seem to say that they’re exhausted with what has been happening in the last few months. And there’s been a few that sound almost invigorated by the challenge and everything. How are you doing? How are you personally handling this and how are you feeling kind of on a day to day basis right now?

Dan Thornton  16:51

For me, it’s been invigorating, there’s been nothing but invigoration coming from me, I have been for the last 10 or so years. Very, very backseat to our business, allowing my son who’s our general manager. And before him, even prior general managers to run 80%, probably more like 90% of this business. And when this happened, unfortunately, my son was out riding and took a hard crash and had to be taken out by ambulance because he broke his femur. And the day it happened, I’m like, oh, I look like I’m gonna be back on the retail floor. And I came into one of the stores that probably needed the most help. And just said, Okay, it’s time for me to get involved. I got very involved in everything that he would do. He was almost two weeks completely out of touch because of it just it was a pretty severe break and surgery by followed by, now, you know, rehabilitation therapy and things and he’s doing better. He’s activated again, but it’s activating to a point that I’m kind of excited to be back at it. I’m 62 years old and thought I was pretty much done with retail. I’m having actually more fun than I’ve had in many, many years doing what I do, and just a newfound passion for the showroom of retail. And it showed me an awful lot of where we are what we need. And, you know, we’ve taken the store that all of our stores are up substantially as a company, we’re up 52% on the year, we went into COVID, up about 17% thinking we were having the best year we’re going to have when it happened, we closed for three days thinking this is going to be devastating and the worst thing could ever happen to us. We modified our business, change the world we were doing change the way we did business, and had meetings with our managers and immediately opened up and the rest is history is just insanity every day, you know, we leave, you’re exhausted. we’ve modified our hours, not only our hours of a day, but we also modified our opening days to give every single employee the opportunity to have two days off. Could we be up 60 or 70%? Absolutely, but I think I threw that would have lost some really, really Good employees and lost their confidence in me as a decision-maker to keep the business going. It’s extremely hard as it is, I’m happy to say we’ve really lost no employees through this stressful time so

David DeKeyser  19:15

and that’s mainly due to having an extra day off or two days off, you think and producing those hours.

Dan Thornton  19:22

Will no employee ever worked more than five days a week. That’s our mantra. I want employees to ride their bikes, have fun, enjoy family, and do what they do. So we don’t drive anybody past we really don’t expect even managers to put in more than 45 hours a week. And nobody’s this most of our managers have been putting in less than typical. So by closing two days a week, it’s allowed us to have 100% full staff attendance every day of the week. So we don’t have those split schedules to where one day you have five people in the showroom, and one day you have three. One day you have to mechanics one day you have four based on seven days a week and the number of hours where Open typically. So what we’ve done is just gone 10 to five every day, and Tuesday through Saturday, every week. This week we’re stepping up because things we can see the tempo is starting to change. A lot of it’s based on product availability, bicycles aren’t available as they were early on. So with that happening, we’re modifying and we’re going to go 10 to seven. We’re here till seven every day anyway. We’re just here normally from five to seven, organizing for the next day building bugs cleaning up taking care of service, everybody has a role in a task, mopping cleaning touch surfaces, just doing everything we need to do to be prepared to turn the key the next day. So now what we’re going to do is go ahead and open up till seven. We think we’re still gonna have time for that sort of thing after because the volume has flowed our numbers are still quite good. Every day I keep saying we’re going to have the worst June we’ve ever had yet. We’re off the charts in June even though it feels like we don’t have inventory. We’re getting bikes. They’re just not enough. But we’re selling a lot of things that we probably wouldn’t have sold. So, you know, at this point, month to date, we’re up 116% over last June was huge. It’s crazy. Yeah, it’s crazy. So it’s a good time for the industry. But I think everybody has to take a deep breath and realize that no matter how you treat your people and what you do for your employees, we’ve been bonusing extra pay on an hourly basis. We’ve increased everybody’s pay through this for now. And we’ve also allowed all the employees that have goals and marks to hit on a monthly basis. We’ve just taken that off the table and said, instead, we’re just going to continue to pay the full bonus whether you hit those marks or not because some of them the way we’re handling services, not measurable. You know, we had service ticket sizes that we would bonus on, we had, you know, email capture rate that we would bonus on and things like that. So we just took all those bonuses and said we’re going to give them to you as long as you’re here every day working hard. We’re going to give you your full bonus regardless Have you hit your measurables? At some point that’ll change back and will go back to normal and, you know, employees will still be compensated well, but right now we feel like we owe it to our employees. So it’s been great.

David DeKeyser  22:13

So kind of looking forward over the next month or two, you noted that you’ve started to see a little bit of a slowing. And is that a slowing in the numbers due to product availability? Or is it a slowing in that people, the general public is starting to go back to work and there’s kind of normalization started to happen in society it? Yes, it’s both

Dan Thornton  22:39

Georgia was one of the early states to start opening back up. And we noticed almost immediately the traffic patterns started picking back up and were notorious for horrendous traffic. It’s still nothing like it was many, many office spaces are still closed and other things like that, but without question a difference in the number of door swings, we track traffic and we know our traffic counts are way, way off. The difference now is we’re a little more able to handle the customer without the ferociousness, you know, the people lined up outside and we’re just not as stressed on a day to day basis. So we’re able to take probably even better care of our customers yet still control traffic. We don’t have open showrooms. We’re allowing one customer to instill her, but they’re not lined up 10 deep, but we’re still seeing that those customers that are in are here to buy. And if we have what they need, they’re buying it. Services not quite as far back as it was. We’ve never been more than two and a half weeks. doing most of our while you wait for quick repairs. At the front door. We’ve set tents upfront kind of triage centers, and if it’s deeper than that, we let them come on back, talk to the mechanics and determine whether or not it’s something they want to leave for two weeks, but that’s about where we’ve stayed in two weeks for the most part on one service turnaround.

24:01

Have you heard of P2 groups and wondered what they are? P2 stands for the profitability project. And while profitability is that the focus of everything we do, we do so much more p to group members share their expertise and their insights. They ask questions and they exchange resources to make sure every member is profitable and successful in every aspect of bike shop ownership. Reach out today so we can tell you more.

David DeKeyser  24:36

As far as the locked showroom, and how you’re operating currently. Do you have any sense as to how long that will last? Is that something that you feel could continue as long as the virus seems to be circulating or is that something you feel you might wind back? Have you given that any thought at this point?

Dan Thornton  24:58

Yes or no? Definitely given a thought, a day, we have no clue. The difference now is on a typical Saturday in the season, there are times that you’re overrun with customers, and you don’t think about it twice. You just have people wandering the showroom waiting for somebody and it’s just as out of control the differences. There’s no order to the order. You have to have a pretty good showroom general that knows what’s going on and is always continually pointing and saying, okay, somebody would be right with you. What are you okay, Bill? Sue, will you help them? Can you help hurt you? And now what’s happening is they’re outside instead of inside, and when they come in, we have time to talk to them. It’s very unique and different to have to speed up a conversation when you can tell. Maybe they’re just COVID stir crazy and want to chat and get to that point where we’re like, Okay, well, you know, if you wanted to go ahead, we’ve shown you what we have. We’ve got other people waiting outside. If you’re not ready to make a decision. We understand we’re here. Come back or call us another time. You kind of has to escort them out because you can’t let somebody The phone is the worst part about our business right now is taking care of the phone. But you can’t let them come in and be the phone call that goes on and on and on to where they just want to talk about their last two months of lockdown. And that’s what’s happening is you just could sense that people want to chat sharing the point where

David DeKeyser  26:20

you’ve had a big increase in phone traffic as well.

Dan Thornton  26:23

It’s probably our biggest stress or concern right now. And there’s a point where you cannot get to all the calls. It goes to voicemail right now we’d love to you can’t obviously but you know the TREK Marlin is the hot bike. There’s the Marlin the bird and the FX are the three bikes that if I had an unlimited supply, I don’t even know what we do. We would have people lined up 50 deep and if we had an unlimited supply, but we don’t so you know, my part of me and I told the guys the other day in the manager’s meeting, Colin, I said I really love to put on this on the phone recording message that says thank you for calling free-float bicycles. We at this time don’t have Marlins. We Don’t have verbs and we don’t have the x’s. If that’s what you’re looking for, please call us back in two weeks click. And just because that’s what it is, all we do is explain and then they don’t understand why they think it’s because China makes the bikes and it’s all about the duty and import problems that have been going on. And it’s not it’s just nine months of bikes have been sold in 10 weeks, 12 weeks period. It’s hard for them to grasp that. Why can’t they just make more? You know,

David DeKeyser  27:26

how far out Have you placed orders now and it’s kind of a two-part question is How are you planning the next few months inventory wise? And is there some light at the end of the tunnel from an availability standpoint?

Dan Thornton  27:38

I don’t know how other companies are managing backorders I think truck I got to take my hat off to them. They have done an amazing job of fairly handing out bicycles and when I say fairly, if you have some business sense and you have the time to sit down and place your backorders, your bikes will come to you in the order you placed them. There’s no Cutting in line. There’s no favoritism to trick stores. And I thought at first that that was one of my big fears is like, oh boy, now we’re going to be competing to get bikes from people that own the stores, they’re going to get them first. And that hasn’t been true. If you place your orders now, it doesn’t mean they weren’t way ahead of us and getting some back orders and but it does mean that you get your bikes in the order you place them. So we’ve been placing orders weekly to kind of keep a flow of bikes coming. I mean anybody that went in and said on one 100, Marlin mediums, hundred smalls, they don’t have the ability to take on 400 mostly 400 bikes at any given time. So even if they could, they wouldn’t get them. But what we’ve been doing from the very start was placing orders all the way back to April. For bikes that we thought were going to be a problem so we keep getting them weekly. We’re getting shipments but it’s not enough. It’s just not when it’s going to get better. I’m seeing there are bikes that if you go to Trek’s website, it tells you right now, if you place an order today, that order would be placed and delivered on x. And right now there are bikes all the way out to November in December. If you don’t have bikes in the queue and you haven’t been aggressive on keeping orders in, it could be a very long year for you.

David DeKeyser  29:14

And I heard that the 2020 ones in not with the track but with another manufacturer that is already showing sold out. And I think that that’s kind of that same timeframe of November, December, January.

Dan Thornton  29:25

Yeah. So it seems like we’ve already been getting some 2021 bikes, both road and mountain bikes, but those are all bikes that like I said, we went in and placed what trek did was very wise was, let’s say the color was blue, and you placed orders and back orders for blue. And the new bikes coming in green. What they did was they just converted your order over rather than saying, Oh, you didn’t know about the new color yet you’re out to align. So the person that placed an order a month and a half later when the new model shows up. They don’t step in front of you. It’s obvious that they put a huge amount of time and energy thinking through the process to make sure that their dealers are treated fairly. I’m quite impressed. of all three companies, their shipments have been on time. I know most of our other vendors are struggling with three and four-day delays. Shimano East Coast so they have very few employees. And we’re, we’re seeing like six and seven-day delays from the time the orders picked at the time it leaves the door trick we’re still getting if we get it in by two or three, we’re getting the shipment out the same day. So I have to say I’m pleasantly surprised at what’s been going on with our partner.

David DeKeyser  30:30

That’s great to hear. You know, now everybody’s trying to look at the crystal ball a little bit. And I think that there’s some hope that you know, the one question that everybody keeps popping up, is this going to last? And I think that there are two parts to that where we’re already seen, like you said, with things loosening up, there are fewer people that only have bikes to go to. So that might soften up demand a little bit, but do you feel that have you gotten the For many of these people, that this is something that is going to become a regular part of their life. And we may have a rising tide of participants over the next few years.

Dan Thornton  31:10

I’m an optimist and believe Yes, I am seeing still more people on bikes, whether it be neighborhoods, bike paths, trails. I’ve started this week doing some group rides, we’re still you know, social distancing in the parking lot. We’re not getting on the wheel as we would normally do for road rides. But the numbers are greater. And I’m starting to see now in our sales, some high-end road bikes are going that weren’t going in the heat of all this. We’re seeing high in mountain bikes. Our Santa Cruz inventory has been depleted. We can’t wait until the announcements of the new product and about a week and a half, and orders placed. So my gut says that we’re going to continue to roll I really do not see. I know there’s a lot of pessimism out there. And I keep seeing people saying Yeah, you’re going to see all these bikes on the Facebook marketplace and eBay and another year. that’s gonna happen. I mean, there are definitely people that got caught up in this and said, I gotta have a bike, gotta have a bike. Now I have a bike, why buy a bike? I think there’s going to be a continuation of this. I think people are learning to vacation without going to Europe or going to the beach. The staycations have been a big part of our sales, families coming in buying for bikes on a bike rack. And I’m seeing more and more bikes on backs of cars as I go to the bank and go go grab lunch or whatever. There’s, without question, more activity. So I think long term, we’re all going to see a positive kick from this not just now but in the future. But there’s no crystal ball. I wish I had one. You know, like, we sold the whole bikes in April May. And our rec sales were just okay. People were coming and going, Oh, no, and you know, and they’re buying $600 $800 $900 bikes. And I think the money shock of buying a couple of bikes at $800 when most people were probably wishing they could have bought a $500 kept them away from buying a bike rack. Well, it was almost a boomerang effect. those same people are coming in now wanting racks and racks are out two months now. So what was a bike shortage is still a bike shortage but now there’s a rack shortage. There are no racks hardly to be had immediate shipping who could have predicted that you needed or Yakima sales doubled already this year more than doubled. And we can’t get more for a while. So it’s pretty shocking to see what’s going on. And those are those things that if you had a crystal ball, you could have said you know what’s gonna happen? All these people are gonna need a way to transport these bikes are buying but I doubt many people thought that way and didn’t bank orders and all of a sudden now, inventories dried up. So people are like, what, why can’t I get a rack? You know, it’s just not that easy.

David DeKeyser  33:46

let’s shift gears a little bit. I kind of want to touch base on your involvement with the NBA over the years if you want to give us a little history there.

Dan Thornton  33:56

Yeah, happy to gosh now it’s probably been 20 plus years because I’ve been off the board at least three years. And I’m not good with saying Oh, it was 19 X that I did x. But I was invited to be on the board of directors as a, just a board of directors. I was on the board for 17 years. So I went through the board was on the board for many years, and then slowly started taking officer positions from secretary-treasurer to VP. And then finally president, and then I was the chairman the year after passed after that. And then when that was over, I just said that that’s enough. I’ve done enough. It’s obviously anybody that knows anything about the NBA knows that it’s a nonprofit association, and there’s no compensation for the board, no stipends. And it wasn’t really about the money. It was just the fact that I had felt like I had done my time doing what I could do. My whole goal going into the NBA was to try to help dealers be better and see dealers that really wanted to reach out and figure out a way to make money be profitable. in this industry, we love to do that. And that was the whole design in the desire programs from everything, including those that know the PT program. That was my whole intent of being on the board was to just see this industry continue to prosper and raise all boats. I felt like we did some really good things while I was there. It was a good run I met some amazing people from J grades of the formal owner of the bike gallery, Chris Cagle, one of my best friends ever. Whelan, sprocket and on down the number of people that I served on that board with and got close to was just incredible and helped my business tremendously as well.

David DeKeyser  35:43

Why don’t you talk about that a little bit more? From a mentorship standpoint, you have three stores in Georgia. They’re good-sized stores, but some of the names that you just mentioned, you were rubbing elbows with, kind of the Titan so the bike industry in a way and What did that mentorship mean to you? And how much did that involvement? I know you were involved in the P2 groups talk about that a little bit. 

Dan Thornton  36:08

Sure, I’d be happy to well, it all started I think in about 1999. I was invited to go over to the Tour de France. And I believe that was the first year that Lance won the Tour. And I was there with some pretty heavy hitters that the industry that I had only read about at that time, my wife and I were there. Were there with Chris Kegel, Jay Graves the former owner of the bike gallery in Portland, Oregon, gossips Hill Able from Austin, Texas. And the list just goes on. And I hate that I left anybody out. But even Jimmy Hoyt from Texas is there and I realized quickly that these guys were no different than me. They just got an earlier start on growth and realize quickly that Yeah, there’s room for us to be bigger and better. And I started listening and talking and asking questions. About how they did this, how they did that. How did they come to this? How do they come to that? It wasn’t long before we got home, and we started really looking at our ability to grow. It was a huge turning point for us. When you can be in a room with the brains that I was able to spend a week with. You cannot get that back. There’s just no way that you can pay for that type of education. Not long after the NBDA, I was invited to be on the board of the NBA. And at that point, Chris Kegel said, Hey, I think Dan would be a good board member. Let’s ask them and bring them on. That’s when we started talking about the idea of the P2 group early on. And Jay Graves and I were the first two said absolutely. We actually cut a check before there was a P2 group and left it with Jay Townley and said Jay, get this thing started. Here’s a check. And he said on those checks for over a year before, I believe at that time, Fred Clements started working with Dan Mann as a consultant. And the decision was made to go ahead and let’s get this P2 things started. And it was the best money I’ve ever spent getting in the room with some really smart retailers. So we were involved in group one. group one was extremely successful in the P2 group. And we were meeting twice a year, we were talking on the phone on a regular basis, sharing of our numbers, I could see quickly that there was so much potential for us to be better and do better. All I had to do was listen and change the way I did business. And that’s the hardest part is making those changes. The listening parts easy. You know, anybody can go to a meeting, make a bunch of notes, and come back and do nothing. But changing them is what really helped us and visually seeing where we were compared to these guys. I was seeing numbers of margin different so I’m like what the heck you know, we’re not getting 42 points after everything. We’re not getting 46 points. We’re getting 38 points. So when we’re not making money, we’re not seeing growth here. Our labor as a percentage of sales is this, our rent as a percentage of sales is that and when you start seeing numbers that come out of P two, it’s eye-opening, that you’re doing something wrong. Or you’re doing something very right. Not everybody’s doing anything wrong. They’re just a confirmation that Yeah, we’re doing everything we can possibly do. Which means the P2 group isn’t for everybody. But the collaboration and sharing ideas was unreal. I’m no longer on it. I realized when I wasn’t that active in the day to day business that I had kind of run my time through and it seemed like I wasn’t getting back near as much as I was giving in the meetings, and the sharing of numbers and I just finally said, okay, I’ve done my time on the board. I’ve shared my numbers, I’ve shared my secrets of what’s helped us grow. Now it’s just time for me to kind of kick back and not really do this anymore, and have that extra expense. I looked at it as an expense at some point. But that Doesn’t mean everyone should it’s if you’re early in your career and you’re struggling to figure it all out, there’s not much better you can do than be a member of P2. It’s phenomenal.

David DeKeyser  40:10

Well, thank you, Dan. That was a pretty glowing endorsement of the P2 program number one, and fun history of both your involvement in the NBDA and the P2 group along with your business. And I think that anybody that listens to this is going to have an enjoyable few minutes learning more about your business and getting some ideas on how to be a better retailer. So thank you very much for joining us today. You’re quite welcome. enjoyed it. If you found this episode or others of bicycle retail radio insightful and informative, please consider joining the NBDA if you haven’t already by visiting nbda.com as the NBDA has benefits that can save you money and improve your business. Ultimately, your membership adds to the collective voice of this specialty bicycle retailer. In the NBDA his efforts to represent and advocate for your interests.

Rod Judd  41:04

Thank you everyone for listening. This has been bicycle retail radio by the National Bicycle Dealers Association. For more information on membership and member benefits, join us @nbda.com

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David DeKeyser and his wife Rebecca Cleveland owned and operated The Bike Hub in De Pere, Wisconsin, for nearly 18 years. In 2018, they sold the business and real estate to another retailer based in a nearby community. David now writes the Positive Spin series on Bicycle Retailer and Industry News and he writes articles for the NBDA’s blog, Outspokin’. David also provides business consulting through the NBDA’s P2 Consult Program.

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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.

Now is the time to become a member as we join together to make one another stronger. Whether you’re a retailer or an industry partner, your membership in the NBDA is one of the best investments you’ll make this year. 

Learn more about the benefits of being a member and join now.

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The post Continuously Improving w/Dan Thornton appeared first on National Bicycle Dealers Association.

Todd Cravens

Tue, 8/18 10:46AM • 32:53

SUMMARY KEYWORDS

retailers, business, bike, people, bike shops, pre-tax profit, buying, profitability, number, bit, factories, store, bicycle, inventory, items, sales, expense, margin, run, businesses

SPEAKERS

Todd Cravens, Rod Judd, Tara Kuipers, David DeKeyser, Kent Cranford

Rod Judd  00:10

You are listening to Bicycle Retail Radio brought to you by the National Bicycle Dealers Association.

David DeKeyser  00:16

Hello and welcome to another episode of bicycle retail radio. My name is David DeKeyser and I do retail consulting for the NBDA is P2 Consult program. You can find more information on that program and all the other great benefits the NVDA provides and the NBDA is website nbda.com. Today’s guest is Todd Cravens. Todd is the Vice President of Business Development at quality bicycle products. Todd has well over Forty years of industry experience. And with that, thank you, Todd, for taking the time to join us today.

Todd Cravens  00:45

Oh, thank you, David. I’m really pleased to be here.

David DeKeyser  00:48

First off, why don’t you give us a little bio on your experience over the years, and as you finish up, maybe you could go into what you’re doing day to day at QBP.

Todd Cravens  00:56

Okay, thank you. I was bitten by like bug about age 10 and not being able to sit shaken. So bicycles have been a personal passion of mine. And that morphed into working in stores through my youth in school and starting a store on campus in college and doing economic research on the common behavior of bike shops and businesses and college on to import work being a partner in a store in the Washington DC area in the 80s, working in manufacturer serrana. And then eventually coming to QBP. Working in customer service, product development, Product Management, purchasing sales, and in many cases, both things wrapped around retailer support at this point in my career. As the Vice President of Business Development, I’m the one tasked with looking to the future and developing things that will help our retailers and suppliers thrive. And so, on a daily basis, that does mean quite a bit of retailer contact both big and small.  That’s part of how we’re trying to keep our finger on the pulse of what it is that retailers are experiencing needing and wanting. And there are times when Someone says they want something. And I might actually disagree and think rather, that somebody actually may want something but maybe need something else. And that if we talk about what’s happening in the way our world has changed post-COVID, and how shopping habits have changed and what many retailers have had to do to attack. So you can kind of adjust to whether it’s a new normal or not the new conditions, I’m not sure many people would say that those are things they wanted. But if we talk about retailers being available to consumers a variety of ways, whether it’s online or social, I would argue those would be things that retailers need. And so, you know, a daily basis can also be things I said on our credit committee. So I see a lot of bicycle shop financial information, I mean, the sign off-chain there, and it’s something that kind of developed a bit of a knack for in terms of helping me to understand the financial health of our retailers. And that can go to margin conversations with vendors when a vendor develops an item and gives them an app and said what they think the margin should be for a retailer. I’ve consulted with a number of vendors and been able to share with them that that actually that margins down Enough based on what bike shops average expenses are. And what I find is that oftentimes vendors don’t know what that number is. But we have real data. So you know what they are. And it’s something that happens behind the scenes, but something that I’ve done as well. So those are maybe a few bits and pieces. It’s a bit of a mixed bag on a daily basis.

David DeKeyser  03:17

Excellent. Yeah, we’ll dig into that profitability thing here in just a little bit. I think that that’ll be very interesting. The first major topic right now, as of today in the industry, I think a lot of retailers are wondering about inventory levels, what that’s going to look like over the next few months. What you take us on that. And do you have any suggestions for what retailers could do either to prepare if we think we’re going to have shortages? So basically, how did we get to where we are at this point in time and what can we do going forward?

Todd Cravens  03:50

Right, thank you. I think that you know, part of how we got here was that 12 manufacturers and distributors had forecast badass growth for spring of 20 Nobody was expecting what would come the devastating effects of COVID not only in the tragic loss of life but all the economic disruption, particularly as things really lit up in the United States and march for a period of time, we saw sales drop off at a rate of 30%, which is really not sustainable for virtually any business. And we had to take some very drastic actions in our organization, as in other companies out there if we look at this general industry, it was pretty scary. The switch flip, though, and cycling seemed to be something that people could do. I think, in many cases, Mike’s offer a more affordable solution that a new bass boat or a new jet ski or a new car, whatever that is.  And so we saw, this has come roaring back through our retailers, many of the retailers we’ve worked with and spoken to, it talked about working hours and having the kind of business that those who have been around a long time experienced during the bike boom in the early 70s that they’ve been told about and to the point that has been so much growth for many people that is beyond stressful. It’s rather hard to continue to meet day after day. But as we go to some of the things that happened through this is starting to fall off a number of companies very quickly, canceled purchase orders or put them on the factories got this information and they made adjustments in many cases they were struggling with staffing their factories due to the closures and quarantines that staff had been in due to COVID issues in Southeast Asia. So as things kind of peeled back like that, a number of, again, factors you’re able to adjust. But when things very quickly flipped, and all of a sudden demand came roaring back. At that point, many of the light companies, ourselves included, came back to our factories and said, Oh no, we know you’re only at 80% capacity. But here’s 120 or 150% of what we originally thought we wanted, which kind of created a big gap for the factory to try to meet demand. If you throw in the fact that three of Shimano factories in Malaysia, Philippines and Singapore which make a lower-end middle-end product, very, very popular on the OEM side, high demand if you will, those factories were shuttered for anywhere from 30 to 45 days, and the That was a problem as well.  So we’ve seen these kinds of supply-side shocks and some demand-side shocks as well, both the fall off and then there’s roaring back. And that so there have been some gaps for the manufacturers, if you will, to try to catch up. So we’ve seen quite a bit of pressure on them. And that’s both on the bike side and on the PMA side. So that’s a bit of kind of where we got there, if that makes sense, and really about advice and dealing with it. It is so challenging for everyone, My heart goes out to everybody here. I really think this is the place where you do lead to the relationships you created. So hopefully the suppliers you’re working with you have a good credit relationship, you know, the credit managers are going to need to know that you’re likely going to need more credit because you’re buying more and buying more frequently. Hopefully, there’s enough cash flow is being generated that you can not only seek that but also continue to meet your credit obligations. We’re a big believer as a company and just in time inventory that gives retailers more flexibility, and we fund our inventory such that retailers can order more frequently from us get higher returns. And actually spin if you will more cash through the business but with a lower capital requirement, so we’re big believers and just in time inventory, we think you’ve got less at risk. I think that what we’re seeing right now with demand, this is a place where, especially on bread and butter items, retailers should probably take a longer view of days on-hand inventory, because they’re things you just don’t want to be out of, you don’t want to be added to you want to be out of tires, you want to be out of cables on the service side as an example.  But there are also accessory items that should go on every bike or that people should be buying from you that you also don’t want to be out of. So I think a retailer at this time should probably put more days on hand in stock. And that’s because the product is available. It’s certainly run out in some category, some items. And that’s been challenging again, for everybody because everybody wants it. I think those are a couple of ways to get at it traditionally. I think you have to be more comfortable with substituting out something maybe even a product line that you add a product line because it’s available and it’s filling a need that you have and it’s maybe not your first choice but you know, I was talking to a large retailer and NVDA member of course who made the comment to me that as well. suppliers run out of a poor group of bikes. And when he said, What should I do? I’m thinking about adding another brand. The vendor said, Oh, don’t do that. That’s a horrible idea. The retailer asked, Well, how long will he be? And he’s like at least five weeks. Well, that’s not acceptable. This retailer can’t be without bikes for five weeks. So he did bring on another line. And I’m not suggesting that retailers just kind of willy nilly jump lines. But I think you have to be open to meeting those opportunities as they become available to you. Does that make sense? Does that kind of get out at David?

David DeKeyser  08:29

Absolutely. Yep. I think that’s great advice. And it’s interesting to hear. I’ve heard a few people discuss where bikes were made and how that might affect where they’re coming from. But when you paint the picture of these parts are coming from there’s also parts included when you’re buying bikes, so it’s just that whole supply chain has been interrupted across the board.  So even if you could get parts of a bike, you may not get the whole bike. 

Todd Cravens  08:55

Well, that’s true. And the other piece to throw in there is it comes out of a tariff We as a bike industry has had to deal with is that a number of manufacturers, ourselves included, are in the process of moving our supply chains. And in a naive world, the feedback I’ve gotten from some retailers, it’s a little bit jaded. It’s like, I don’t know why to do that. I mean, it’s really easy. Just go to a different country, you know, kind of like a Burger Kings out, you go to McDonald’s kind of a thing, and it doesn’t quite work that way. And what we found is in the best possible instance, and that’s with everything working perfectly and working with existing people that you know, you’re 18 months, and you could easily be 22 to 24 months. Because you go to different countries, you’ve got to qualify, all of the manufacturing, you’ve got to qualify all the samples, and then your batch testing when you’re doing production. And so I wish it were easy but not and on the one hand, actually, it’s rather making it having all these hurdles, it slows you down to be sure, but particularly with the batch testing, it allows you to catch things upstream so they never hit the retailer and they never hit the consumer so you catch things before they’re a problem. It is a fairly involved thing. So yeah, that’s been a challenge for everyone.

David DeKeyser  10:03

So let’s kind of turn a corner here. You and I had had a conversation. And you would allude to this in your introduction about profitability. And what QBP has found the average stores pre-tax profits are overall what they are for good stores. Why don’t we kind of dive into that a little bit? I think that this is something that retailers would probably find interesting if they don’t know how they stack up to other retailers, A and B, what the potential is, or them profitability wise.

Todd Cravens  10:35

I’ve been in the industry, as you mentioned, for a very long time, ever since I can remember. So I started working in bike shops in eighth grade, I’ve always been told you can’t make a lot of money in the bike business, or, you know, kind of the old thing that we kidded about how do you make a small fortune start with a large fortune and you know, it’s like as I spent time as I did research and that as I owned a store and then as I continue to support retailers throughout my career, I have come across a number of retailers that have made a very comfortable living, and in some cases creating wealth. And they run really disciplined businesses. And they certainly work hard. We all work hard, but they pull it off. And so when I think about that, I know what’s out there. And in most cases, those retailers are running their business like a business and some retailers that I’ve spoken to take offense when I say that, and my intention is never to be offensive, but it’s rather to reflect on what it is you’re doing, and are you getting the result you want. And if you’re not, then you need to change and you change by looking at what’s causing your results. Right. So you know, we’ve seen pre-tax profit between 2.2 and 3.9%. On average, frankly, with sgma is from 35 to 45%, which is quite high. If you think of a vendor crowing about an item that is digit percent gross profit margin or that so keep what we have called Keystone over the years. You know, there’s not a lot left over frankly, yet. We have seen also retailers that are pushing 10 to 12% pre-tax those retailers and it’s not that you know, running on a shoestring or doesn’t have any overhead Don’t pay their staff or things of that nature. They’re significantly more efficient. They do run leaner, as it relates to SAS or their staff gets worked pretty hard. But they are also really operating on the three kinds of a leverage point to the income statement around how they maximize sales, how they maximize margin, and that comes out of how they buy. And then lastly, their expense Hawks. And now the expense part is the least alluring part of the job. If you like bikes, you don’t really want to be negotiating with your insurance broker and the people that provide your internet and your landlord and utility company on and on and on. But that’s what we found, as we’ve done the research and income statement says we’ve visited retailers as we’ve done work with v2, we did work with v2 over a period of time there were definitely those retailers that did that. And I think it goes back to, frankly, the basics of are you buying and selling items on which you can be profitable and again, that’s for some people. That sounds ridiculous to say it that way. I continue to be floored that retailers sell products on which they aren’t profitable. And then Kind of insult to injury is on which they do not know that they’re not profitable. And that’s a really, really scary combination.

David DeKeyser  13:07

One question I had that I kind of came back to after our last conversation was the pre-tax profits. The NBA, in their cost of doing business surveys, has a term owners’ compensation and profits to gross sales and those numbers that you’re talking about anywhere from 2.2% to 1012, or 15%. Those do not include the owner’s salary, is that correct?

Todd Cravens  13:30

Those numbers actually do include the owner. So do I do that there are what I would call a fully loaded income statement? And so no, they do, in fact, for that 2.2 to four-point or 3.9. These aren’t people that are writing a massive distribution at the end of the year, you know, and so, exact comp shoots off the page. You know, these are folks that are operating just above or just below average costs, and it’s kind of a precarious place to be the people that are running tidy your businesses with higher pre-tax profits, the difference we see that really drives at home The expense piece we’ll see a five-point Delta on the expense, sometimes seven points. And sometimes it’s because the retailer really did bread and water for the first several years and that retailer was able to get a mortgage to buy a building and eventually pay him or herself rent.  And at the end of a 35-year run, they didn’t just have a business with a pre-tax profit to sell. So there could be multiple, they had good inventory, even though it’s going to be written down on a sale, but they had a building they could either sell or rent. And so you know, they’ve got they’re building a tangible asset for which there’s a public market. You know, there are a lot of stores that are not making a lot of money that at the end of 30 years, if they’re operating maybe two to 4%, pre-tax, they’ve got okay inventory, they rent a building, even if they’re pulling down, let’s be generous and say 5% because the math is easier, and they’re doing a million dollars. And you say that somehow you talk somebody into paying, you have five times multiple, we’re retiring on what it would be a very small amount of money, so to speak, and so think it’s a bit of the battle. What you find on a daily basis, and that’s how you win the war at the end, if you will, maybe that language is through martial, but nonetheless, you’ve really got to be engaged, measuring regularly. So I still know retailers, they look at annual balance sheet income statement, they don’t look at monthly or weekly. And I’m a big believer in charting your progress because the sooner you find what your results are, if they’re what you want, we’ll do more of it. If they’re not what you want, figure out what’s causing it and change it so then you can get what you want.

Kent Cranford  15:29

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David DeKeyser  15:49

So one of the big discussions is always around the margin. And we talked about this a little bit and how to increase it and one of the topics you brought up was the idea of value pricing and you use the analogy sample from when you were a store owner. And I was wondering if you could kind of go through that real quick.

Todd Cravens  16:05

Sure, thank you be sure to qualify this for everybody I store in the 80s. It was before the internet, it wasn’t a Washington, DC suburbs, there was a strong personal income component. And it was during the 80s, which was kind of a gogo time in the economy, especially in Washington. But we were clear that there were certain items that customers didn’t shop you on, they just want to know that you had it and could fix it. For us. It was sealed 27 by one and a quarter chromed bolt-on roadwheels. We paid I think I want to say 865 if I remember right, and we sold them for 3499 all day.  And again, the question was always not how much is it? It was rather can you do this and get me back on the road right now that taught us a valuable lesson one we tried to position ourselves as a shop that offered exceptional value, not prices, but exceptional value. So we were customer-centric, checked into our community involved in our community as well of course, but we did look at a number of things where we believe we could make more money and so we mark things As such now where there are some things that were just kind of insanely competitive, absolutely, we could get those things for people, but we didn’t stock them because we wouldn’t make enough money on them. And so, while I was an enthusiast and liked all the neat bike parts, we were a business first and had to be profitable. So I think that approaching it that way, knowing what those items are, and often those are service items. But even if we take that step further, I have seen retailers let the items being sold say at service be determined by the service advisor or the service manager, not by what the retailer’s chosen for assortment, that is where the retail will be most profitable.  And I’ve often seen people sell things where they’re either trading dollars or losing money on a repair item when they should be making significantly a significant margin because again, they’re providing a service they can obviously pricing the labor to but it is a piece that can be a disconnect. So I think that value pricing matters as a way to approach your business. So do you have to know your market Absolutely? And yet No, but it will bear Yes, you do. So do you do some testing, of course, you’re going to probably lose a few people along the way customers that think that you’re not worth it? And we were very happy to tell you that we struggle with that at first because we didn’t really lose anybody. It was really, really hard when somebody accused us of charging too much. But interestingly, that didn’t ultimately have an impact that we could measure, as in proper sales down or things of that nature.

David DeKeyser  18:22

Fantastic. So in the big three items here for profitability, we’ve gone over expenses, which are the hard and somewhat boring part we’ve talked about. We’ve talked about margins when I’ve talked to retailers when I was a retailer, and now one of the things that always comes up, it’s just a very knee jerk way of improving their businesses to increase sales. And it seems like the easy way out, well, if I could just get my sales up and fill in the blank with the percentages, or the number of bikes, but you had stated that you need to be very mindful of the cost to increase those sales, and had discussed a multiplier of your pre-tax profits to determine if something actually works. And the example that we had discussed to me was so clear, and I think could be very helpful for retailers about an ad buy, and how you would determine if that was actually successful. And I think to give an idea to that increasing sales, you really need to increase sales if you’re going to spend money to increase the sales

Todd Cravens  19:29

agreed. And thank you, you know, it’s one of those things that I kind of struggle with getting to but I’ve seen it when people are considering an ad buy what for whatever medium you wish that’s agnostic, you spend $1,000, let’s say, which is not insignificant for any store. And I’ve seen retailers say, Well, I spent 1000, and I made about 1000 or 1100. dollars in sales. So you know, I just about broke, even so, I did okay because I got my name out there, you know, and first of all, I think that’s the wrong approach. When you’re evaluating any kind of expense and where you anticipate a return. You need to look at your pre-tax profit. If you can divide that into 100, to get an integer that tells you what the multiplier is how many sales dollars, you have to break even. And so again, because the math is easy in my head, you’ve got a 5% pre-tax profit. If you divide that into 100, you got a multiplier of 20 times that thousand dollars add by breaking, you even get to $20,000. If it doesn’t get you $20,000, you’ve lost money, because margins involved.  I think it’s a handy little tool to evaluate whether or not something is worth it because you can put a hard measure on did it return your sales that it actually makes you money? And I think we often have gotten this from people in the advertising and marketing world when they come to us to say, Oh, no, this is going to be great for you, you’re gonna have a great ROI. Well, you now have a tool to determine whether or not it’s a great ROI or whether or not it’s an ROI at all. Maybe it’s a loss, right. Again, not a particularly alluring thing, but I think it’s a powerful tool to help you be a steward of your business because really for the retailer, if not you who sets the old Harry Truman, the buck stops here. And so that kind of really takes me to. It’s not that you shouldn’t be looking for opportunities. But I’m a big believer in making a plan and then executing your plan. And as you’re executing, you’re measuring and if it’s not going the way you want, you find out what’s the pinch, what’s the area that’s causing the problem, you fix it, and you move forward and keep measuring. I’ve kind of had the belief that because of the feedback, I’ve gotten more people to know what their functional threshold power is, then what their top five expenses are, and most importantly, what they’re doing about those sub-five expenses, because every year those are going on, and even if it’s only 1%, two or 2%. There. And I’ve heard people say it’s not really very much WellQBP if your top 10 expenses all go up 2%. That’s a lot. 

David DeKeyser  21:44

Right.

Tara Kuipers  21:46

Have you heard of P2 groups and wondered what they are. P2 stands for the profitability project. And while profitability is that the focus of everything we do, we do so much more P2 groups Members share their expertise and their insights. They ask questions and they exchange resources to make sure every member is profitable and successful in every aspect of bike shop ownership. Reach out today so we can tell you more.

David DeKeyser  22:21

So I want to talk about competition a little bit between retailers. In a way, if you have two retailers in the same town, and they’re buying products, both from QBP, and they bought at the same product, and they hung up on the wall in their store, they have it priced the same. How can retailers either brand themselves or how do they compete at that point in time when basically the items are identical, the prices are identical, and even the place where they’re buying from is the same?

Todd Cravens  22:51

Yeah, that’s a great question. That’s a tough one too. I think it’s kind of easy to get mired in kind of call negativity around competition and the big believer that stores Have to differentiate themselves. And it’s really foundational to branding and I kind of hang it on as a retailer, how do you make yourself special, distinctive and memorable, and in doing in such a way that people will pay you? That’s kind of the essence of strategy. And you do have to figure that part out, a lot of retailers will say, Well, you know, we’re known for customer service, I can’t tell you how many have told me that some are really exceptional, most are not. Because if you say that you’re being held against how Lexus does service, for instance, regardless of whether or not your Lexus dealer and kind of the other service experiences retailers across the board have provided to this consumer. So I really think that you try to move away from competing on the thing, and more about how are you more alluring to the consumer? How are you working in the community in a way that is creating riders that are perhaps supporting the community? You know, one way to think about it? This is an old example. But when I owned a store, my wife taught at a private school, they had an auction every year we were a retailer. So people came for us to sponsor Little League and other things. We didn’t do that because it wasn’t like it didn’t make sense to us. But the bike made sense to us.  So we were involved in things that promoted cycling. And we donated, I was not clear that I wanted to do it. But I liked the school in one sport, my wife in school, so we donated an expensive road bike at the time. And those were popular. And a very interesting thing happened. And this is again, we learned a lesson here, we backed into it, we weren’t aware of it. Because we supported school. All of a sudden, teachers were buying bikes from us. And all of a sudden, parents were buying bikes for themselves and their children because we supported the school. And so when we cost out what we had put into it, we actually did get a very strong return in a long term way. And really, I think what this highlight is, again, what are you doing this making yourself distinctive? How are you reaching out to communities in a way that is important to them that is meaningful and that they would want to come back because a lot of retailers will give you a narrative on how well they do in every category across the board, whether it’s women or people of color or minorities and I would challenge Specifically, what are you doing that’s meaningful? And it should probably learn that from somebody else rather than just what you think if that makes sense, but I think the differentiation is a really big piece. And that’s a tough one. Because at that point, we’re selling commodities. We absolutely are.

David DeKeyser  25:12

So every day, you and QBP, obviously, are plugged in to what’s happening with retailers, and you’re speaking with retailers you’ve seen over your years, obviously a ton of great retailers and you’ve seen those who have struggled. Is there something that you have found that is just a foundational difference between these different stores and how they’re doing instead of mindset? Is that a certain skill? Is there anything that you’ve ever been able to distill down as to the difference between those who are really succeeding not just in their community, but also financially?

Todd Cravens  25:56

Gosh, I think the biggest piece and it may sound tedious but If that concept around business acumen really matters, and you know, it’s treating the business like a business on an everyday basis, and it is knowing your numbers, and it’s Frankly, I take it back to me in a step back further setting a goal, okay, I’ve set the goal, how do I get there? And so those retailers that have prospered, they lead into their business every day. And it’s not that they don’t take time off, but they are extraordinarily conversant. They do stay on top of business and trends in the industry. They have learned things like real estate, whether they’re renting or whether they’re buying, I can think of one who’s quite successful and he says location, location, location is not a cliche, and he’s right. He’s pretty savvy about where he puts a store. As an example, I think others lookout a little bit further into the future wondering how else they can be efficient. I can think of one who made a massive closeout cash buy which got him even a better origin.  This would have been in the middle 90s and he then computerized his business when computerization is more expensive. But in doing so that gave this retailer and his business partner extraordinary information to run the business even more efficiently and more effectively, again, being in the numbers. So I think that being in the numbers is probably it. And for some people, I know that’s gonna sound like, Oh, that’s not why I got in the bike business. And I would actually put it out there. It’s not either-or it should be and, and if you own the business, it kind of has to be an regardless of whether or not it’s your favorite thing. You just can’t pay attention to it. And as you get in the numbers, and as you understand your performance, and what drives it, and you increase that performance, you can ultimately become more profitable. And if you’re more profitable, I would argue that profit just represents a choice, the more your profit, the more choices you have. And that’s kind of a cool place to be able to have choice versus at the end of the year, having and if there’s any money left, that’s probably an inventory, which is typical, but you know, not really kind of having a paltry existence. So I think there’s an opportunity there, but I think it’s really learning your business. If you don’t know it. You’ll If you got a mentor, you work with another person in a business who understands it. There are things like community college classes just even on basic things like cost accounting, but otherwise, you know, you’re cooking a turkey in an oven, but you don’t have a thermometer. So you don’t know if it’s done or not. And that’s a problem.

David DeKeyser  28:13

Right? Right now it feels a little bit like retailers and everybody is kind of hitting the reset button. In a way, I think that inventories in the stores are they’re obviously able to sell through a lot of things. So they’re kind of able to clean house, but retailers are also and this has been discussed quite a bit is how tired everybody is right now. And even you guys there was an Instagram post and CBeebies Instagram page that I saw last week, it was all hands on deck, absolutely. packing boxes and everybody’s working longer and harder as far as the next several months or a year and nobody has a crystal ball obviously, but the things that retailers have learned in operating their businesses and how many times and how fast they’ve had to pivot in the last 60 or 90 days. Do you feel it? That’s going to be, ultimately, possibly a positive for how retailers and the whole industry has learned to completely change day to day in the beginning week to week and now kind of month to month. In the end, do you think it may be a net positive for operations? I believe so. Because to be sure, it’s hard. And I know retailers are beyond tired, and often 70-80 hours don’t get it. And so my heart goes out to them. I know, it’s a challenging time, I kind of think of stress on top of stress. And there are a lot of times in our personal life or in work, that we’re doing all these things that are the first time ever, but then successively, right. So that’s really stressful. And so I do believe that some of the things we’ve learned

Todd Cravens  29:45

will serve us one is just the ability to change and to pivot. Sometimes it’s forced upon us and I would argue that would be right now, other times there’s an opportunity and we take a risk, but if we think about it, you know, we worked hard to support people for bikes to get bike shops, nationally listed as essential businesses, because we deeply believe in our hearts bike shops are essential businesses, that was important for us because we believe that designation, a lot of a number of retailers to continue to do business if they chose some chose not to because they were worried about health, I totally understand and respect that. But a number did and add to, to your point change how they were doing business by appointment more online, through Facebook, any number of things that allowed them to serve their communities and be accessible to their customers. And, you know, even when I think about the numbers of customers that have chosen to sign up for a retail fulfillment, or they’ve created a stronger online presence, for a number of people, they had no interest in doing that, with these significant changes in public health policy and the challenges that we were all dealing with a number of people leaned in and based on the numbers we’re seeing, it seems to be making a difference. So I guess in the end, I think most people don’t like change. I know I’m in that boat. However, I know that being able to be open to change and then understanding how to Work through change might be one of the most important skills I’ve ever learned at QBP. Because it allows us to continue to develop and grow either again, because it’s forced upon us or because there’s an opportunity if that makes sense. Absolutely.

David DeKeyser  31:13

Todd, this has been very informative. We really appreciate that you took the time today. Do you have any final thoughts or last words for us here as we start to wrap this up?

Todd Cravens  31:23

Oh, gosh, Thanks, David. It’s just a pleasure to be on the podcast. And thank you so much. You know, I really just have such profound respect for our retailers out there and the services they provide the community, we really believe bikes solve a lot of problems. And we think that mic shops are positioned to be able to be part of the solution, which is really magical. Not all businesses can say or do that or even feel that good. So it’s just our great privilege to serve retailers out there as well as suppliers, getting the product to retailers. In both cases. These are really critical stakeholders that we want to support and continue to advocate on behalf of so I’d say thank you very much. Best of luck. I still think we have bright bright skies ahead of us. Excellent.

David DeKeyser  32:02

Well, everybody that was Todd Cravens, we thank him for being on the episode today. If you found this episode or other bicycle retail radio insightful and informative, please consider joining the NBA if you haven’t already by visiting nba.com as the NBA has benefits that can save you money and improve your business. Ultimately your membership adds to the collective voice so the specialty bicycle retailer in the NBA is efforts to represent and advocate for your interests. Thank you, everybody, for listening.

Rod Judd  32:29

This has been Bicycle Retail Radio by the National Bicycle Dealers Association. For more information on membership and member benefits, join us @NBDA.com

David DeKeyser and his wife Rebecca Cleveland owned and operated The Bike Hub in De Pere, Wisconsin, for nearly 18 years. In 2018, they sold the business and real estate to another retailer based in a nearby community. David now writes the Positive Spin series on Bicycle Retailer and Industry News and he writes articles for the NBDA’s blog, Outspokin’. David also provides business consulting through the NBDA’s P2 Consult Program.

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