On Fri, 21 Apr 2017 09:35:12 -0700, Joerg <
ne...@analogconsultants.com>
wrote:
>On 2017-04-20 20:21, John B Slocomb wrote:
>> On Thu, 20 Apr 2017 08:12:29 -0700, Joerg <
ne...@analogconsultants.com>
>> wrote:
>>
>>> On 2017-04-19 19:52, John B Slocomb wrote:
>
>[...]
>
>>>> Or maybe you are going to tell us that you operate out of your hip
>>>> pocket and pay cash for all your business transactions? You must
>>>> either be exceedingly rich or exceedingly small time.
>>>>
>>>
>>> Neither. I made a calculated decision about 30 years ago and that turned
>>> out to be a good decision. Yes, it was tough back then. However, my
>>> business was steady and didn't come and go like cheapskate sales outlet
>>
>> "Business" is a very flexible word but essentially means (more or less
>> ) the activity of providing goods and services in return for pay.
>>
>> Thus, you are in the business of providing a service in return for
>> payment. A store is in the business of providing material objects in
>> return for payment.
>>
>
>A good bike shop has service as a significant percentage of their
>revenue. My LBS sells bikes _and_ services them, as well as bikes not
>bought there.
I wonder about the percentage of income generated by (1) sale of
material, and(2) sale of services. I'm not in the retail business but
it does seem to me that normal markup must be in the neighborhood of
30%.
When I was in the consulting business we had to charge nearly double
the consultant's salary just to break even - salary, living costs,
transportation costs, allowance for annual vacation, insurance,
medical, etc.
It would appear to me hat if one paid a bike mechanic $10/hour that
one's billing to equate to profit on parts would have to be in the
neighborhood of $26/hour.
I have idea whether one can get sufficient work at $26/hour, or part
there of, to generate a profit, but in my youth I worked weekends in a
service station greasing cars and changing oil. I know that we billed
the price of the oil in the can for an oil change so to the station my
wages were simply an additional expense.
>> The difference is that the Serviceman needs only the equipment
>> necessary to accomplish the task he is hired to do. The kid next door
>> and his snow shovel in one discussion. The Storekeeper on the other
>> hand has to purchase and store everything that he plans to sell.
>>
>
>Not true. Just like I need a lot of parts stock in my lab a bicycle
>service shop cannot tell every customer "Well, that'll be a couple of
>weeks because I've got to order almost all the parts".
What's not true? That a shop selling parts doesn't need to keep aid
parts in the warehouse? You are being over simplistic, or you don't
understand what is going on. Fixing a bicycle entails two basic
things. The service (labour) involved and the supply of parts. So the
bicycle fixing business entails both service and supply of material.
>
>
>> Thus the Serviceman with his limited inventory of equipment that
>> usually remain useful for a long periods of time is not normally
>> concerned with inventory although I remember electronics shops turning
>> down jobs because it would require buying test instruments that they
>> did not normally use.
>>
>
>That goes for the lawn care guy but not for a serious repair shop. It's
>hard to earn a living in the field of non-inventory simple service folks
>because everybody and their brother does it.
>
Ah, you have grasped the concept. Now then, how does one maintain the
inventory of spares without it costing you money.
The fact that a shop does or does not maintain an inventory has
nothing to do with the fact that it costs money to maintain an
inventory.
>
>I knew a previous owner, Frank Fausel, until he passed away at 102-1/2.
>Great guy and he knew how to really run a business. He taught his son
>who ran it later, who in turn taught his grandson who runs it now. Oh,
>and if have a desire to step back into 1850 and do some gold panning,
>yep, they still got the stuff you need for that. In fall they also sell
>delicious pears and apples from their family farm.
>
>Online it's similar. When I need to replenish specialty parts there are
>three large online dealers which carry almost any electronics part,
>including lots of "slow movers". Plus two other places for mechanical
>engineering. I do not have time to find out who has what and cobble
>together 4-5 orders. Therefore, I just place the complete order at one
>of those "We've got it all" places and be done with it. All other
>engineers I know do the same. You might not believe it but these
>distributors are all profitable since decades. The Placerville Hardware
>Store since centuries.
So what? There are a great many businesses which stock parts and sell
parts which has nothing to do with the cost of stocking parts.
Amazon, on the other hand does not stock parts nor does Alibaba and
I'd guess that both of them has lower costs and higher profits then
your 3rd generation shop keeper.