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Tell me about owning an M/C dealership (Business advice needed.)

1100 Views 11 Replies 7 Participants Last post by  flyinlow
I know there have been some fun threads in the past about this, but I'd like some serious feedback.

A good friend and co-worker of mine have been tossing around the idea of either starting a motorcycle dealership, or possibly buying an existing Kawasaki store. All of this is in the infancy stage but we're taking a serious look at it. Realistically, it could be a few years away before we make any move. The Kawasaki shop is not "officially" for sale, but my friend and I have known the owner for quite a few years. The business is in desperate need of a makeover and expansion. This is a man and wife business which has been around for at least 25 years, and looks it. It is owned by a motorcycle enthusiast who doesn't care much about sales or customer service.

We believe the opportunity exists to capitalize on the current state of the business.

Both my friend and I have extensive mechanical backgrounds (his is more M/C oriented than mine,) have both been mid-level managers, and are both currently in sales/marketing/contract negotiation/etc. I consider us both to be very business savvy and we each have a clear understanding of how business works and how to manage people. With that said, neither of us have owned a retail business or actually worked in a motorcycle store.

I would like to hear some constructive and candid advice from anyone in the know. Please know that motosports are (and have been) our passion. It has been said to do what you love. I would like to follow that path, but have a family to consider.

Thank you all.
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Read this first.


lots of very helpfull advice
Will do, BP, thanks.
My advice would be to give me an incredibly smokin' deal on a ZX6RR for my track bike. And then a sponsorship to help support my bad racing habit....Look at it this way, if you did that, I could give you midwest exposure.

Glad I could help.

My dad had a few dealerships (Honda, Suzuki, Kawasaki) when I was a kid. Not that that qualifies my opinion, but I did see a lot over the years.

First - Passion is good but, well directed and informed passion is better. Make sure you balance that love of two wheels with a well grounded business plan and approach. Ask yourself if you want to make this passion your work life. In the end being in the business could kill the passion!

I may be off base here (No one's shy here I'm sure they'll chime in) but - the real key at this point in the game has nothing to do with new bike sales, it hasn't been for years. Cost of capital, floorplanning, slim margins, your showroom isn't going to keep the lights on although I'm not negating the money to be made. The real money is in "Relationships". Customer development, cultivation, relationships are the real key. If you can pull together a team who live for the product and exude that passion, building an incredible reputation for honest high quality service will fuel not only service business but parts and accessories as well. Of course that will also fuel new bike sales. Build a reputation for tuning, support local racing teams with in-kind service and support, get involved in the community etc.

I've seen the service / parts side change so dramatically. There was a point in time where dealers actually stocked the most esoteric bits and pieces (in quantity at that!) - all OEM from the factory. Just in time inventory delivery, alternate sources, after market etc. has really changed the game.

It almost doesn't matter if you're an M/C dealer or selling cleaning supplies - it's about your people and how you treat your customers. Of course I'm assuming steel trap business sense into the mix too.

No brain surgery here but, since you asked I figured I would chime in. I think my dad was at his happiest in those days even with all the usual customer service headaches. So if you think you can pull it off - go for it. Those were some pretty amazing days, especially for a kid hanging out in the service department or on the off occasion that they let me tag along on a ride.
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ducatizzy said:
The biggest part of success is just luck.

I beg to differ.

Inventing (ha) the pet rock, and people thinking it's cute, and buy'n it...yeah luck, but starting up a business (the correct way), and having it be a success, is pretty simple. It's all in the research and prepwork.

Researching the market..... formulating a business strategy and mapping out your vision, prior to even starting up a business, are some of the steps one can take, that will help ensure a success.
Is the market flooded..... is there even a market.... how much time are you willing to invest..... what jobs within the company, are you willing to perform....... what jobs are there to do that you can't do? There are a ton of questions that you have to ask yourself, that need realistic answers, prior to opening up doors.

Having enough money and backing to start a shop, and loving bikes....... is a tiny...TINY, part of running a successful business.

Planning right...picking right...and doing right.
Talk to the reps, manufacturer and after-market suppliers. They are a source of key information regarding market, competition, pro's and con's of local competitors, strengths and weaknesses of existing business, un-tapped opportunities, etc.

Prepare to work a lot of hours and micro manage dollars. MSRP vs. net cost on the dealers showroom floor results in about a 14% GPM, which means you're not going to make it on bike sales alone, especially if your dealer allotments are small on hot selling models.

The typical dirt bike rider is thrifty to say the least and they expect discounts and have little loyalty. Rocky Mountain, MotoSport Outlet, and other internet accessory vendors are your competition on products that offer reasonable margins.

Recreational, farm, and commercial ATV sales and accessories may be your bread and butter depending on the market. Outdoor power equipment, watercraft, and snowmobiles are other opportunities that may not be tapped in an existing business. But access to lines/brands in the market is determined by the manufacturer. Done right, a service department can provide a reasonable return on investment. Finding and keeping good mechanics is an industry wide challenge though.

Do a business plan and determine building/insurance/employee compensation/equipment/advertising/merchandising/vehicle and parts inventory expenses to give you an idea of sales volume and margin requirements.

Perform a thorough investigation of the local competitions strength and weaknesses and determine if there's a niche to capitalize on.

Good luck.
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bobspapa said:
This one is a good book to read too! A very very successful friend of mine recommended it:
Blue Ocean Strategy: How to Create Uncontested Market Space and Make Competition Irrelevant: Books: W.

Not a step by step type book, but it does give you a different perspective on things.
Thank you all for the valuable and well thought responses. I realize this won't be easy but it's something I want to take a serious look at.

Please keep the advice coming.
Count Desmo said:
Thank you all for the valuable and well thought responses. I realize this won't be easy but it's something I want to take a serious look at.

Please keep the advice coming.
I either read or saw something on TV once about a dealership that had a very different approach. I will try to look around my old motorcycle mags for the article, but basically they were very successful by re-thinking the idea of a dealership. I think they turned the place into a really fun place to hangout for the weekends. People would come by & check out the bikes like it was the thing to do. I don't recall if they served drinks or something there or what else they exactly did, but it did not fit the mold of a traditional dealership.

I also saw an episode on TV once about this HUMOUNGOUS Harley-Davidson store somewhere in the midwest. People would come from all parts of the country to visit it.

I do think that both places catered to the Cruiser Bike crowd.

Oh well, hope that helps.

we use to have a vendor who's product was made by prisoners.... almost zero manufacturing costs.... the state came in and changed the prison from a minimum to a maximum security, taking away it's workforce, and it ****ed a ton of peoples business'.

we switched gears at that point ;D
I have had similar conversations with friends about starting a shop. I agree with what BigRedDog says, the key is creating an environment where your customers want to be. The money is going to come from your service dept. as well as offering tuning, aftermarket installations, etc.

Also, you will want to read this book


If you've never heard of John Wyckoff, you need to get to know him. In fact, it may not hurt to hire him as a consultant for a day or two if you get really serious about opening the dealership. He has an amazing amount of knowledge on this industry. I have read alot of articles he has written and he makes so much sense. Alot of the things he writes about I see the dealerships around here doing wrong.
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