The Art of Business: an open but serious thread about the framebuilding business

[11.4]

I agree with Richard, but might approach it a bit more specifically:

1. How many frames can you reasonably build in a year?
2. What price can you command for them, being realistic about your quality (quality of manufacturing, finish, and marketing)?
3. Can you sell all the frames you build -- how many purchased in advance (i.e., custom) and how many spec (for sale after finishing)?
4. How many frames will you sell as complete bikes?
5. What is your margin on custom frames, spec frames, complete bikes? Margin at, say, $75/hour for every hour you even look at a lathe or a torch or work on paperwork or shipping.
6. Do you have the capital (dollars) to support the costs of equipment, contracted paint jobs, frame components, equipment groups (for complete bikes), a few complete bikes for sponsorship and display and for test rides, plus advertising, shipping materials, and so on? If you don't have a dollar value next to each of these costs and don't know how you'll deal with the total at the bottom, you're in the wrong business.
7. Do you have the people resources to support what you're doing? Working alone is a very lonely business. You need motivation, support, someone to help do the books, someone to pack up frames while you're rushing to get some others done, someone to track payments and run to the bank, catch your mistakes, brainstorm crazy ideas, someone to stop at Chipotle when you're still brazing at 10 pm. (I work with a group that helps recently discharged veterans start successful businesses -- and my first piece of advice is always to find someone to do it with.).

Business is about hard realism. If you don't bring in the cash to cover your costs, you won't continue to be a frame builder. And you won't enjoy what you're doing. Those numbers for volume, sales, and cash flow are as important as the angles you build to. These threads tend to get general or theoretical or speculative or hopeful. None of that works when you have to make your frame building business succeed. You have to sell a spectacular frame to succeed, but you have to sell x frames a month at y dollars a frame at z dollars fully loaded cost per frame and the trends for all your numbers have to be pointed upwards. If not, you'll be welding lawn furniture next year.

[Stijl Cycles]

I was really hoping that there would be other questions. other than mine that is.
It's been a great read so far, but at a certain point it's kinda like kicking a dead mule.
When it goes from an engaged conversation to a sided debate, there probably isn't much to be learned other than the positions of those involved in the debate.

So, I'm going to pin up another target on the board-

Multiple in house brands vs. a singular brand with a diverse focus-

I chose to develop LocoMachine as a brand to provide distinction between the brand that made bikes and the brand that made parts. I was also concerned about whether other builders would be okay with purchasing components from another framebuilder.
Columbus has Cinelli / Chris King has Cielo / ect...
Also, should Stijl Cycles fade into obscurity I did't want the cycles part to get in the way. Kinda like Anvil Bikes I guess.
I have a lot of Anvil tooling, and I talk about it like that- Anvil Jig, Anvil Fixture, ect... but it really is an Anvil Bikes Jig.
anyway-
For the longest time, all my clients came through Stijl Cycles, no matter what I did. It took a lot of effort to change the perception and divide the two.
I'm still fighting it.
But recently I wonder if it was effort wasted or a bit misguided. As soon as you have more than one brand or identity, you have to split your focus. A split focus is less than half as good as a total focus.
There are some good things- I feel free to explore design or product that doesn't fit within what I had designated as the Stijl aesthetic. But all that really says is that I may have overly defined Stijl before I really knew what it was.
So, there is a part of me that feels that it's a great idea to create the distinction, but it's at odds with the side that feels it's a distraction.

[e-RICHIE]

I was really hoping that there would be other questions. other than mine that is.
It's been a great read so far, but at a certain point it's kinda like kicking a dead mule.
When it goes from an engaged conversation to a sided debate, there probably isn't much to be learned other than the positions of those involved in the debate.

So, I'm going to pin up another target on the board-

Multiple in house brands vs. a singular brand with a diverse focus-

I chose to develop LocoMachine as a brand to provide distinction between the brand that made bikes and the brand that made parts. I was also concerned about whether other builders would be okay with purchasing components from another framebuilder.
Columbus has Cinelli / Chris King has Cielo / ect...
Also, should Stijl Cycles fade into obscurity I did't want the cycles part to get in the way. Kinda like Anvil Bikes I guess.
I have a lot of Anvil tooling, and I talk about it like that- Anvil Jig, Anvil Fixture, ect... but it really is an Anvil Bikes Jig.
anyway-
For the longest time, all my clients came through Stijl Cycles, no matter what I did. It took a lot of effort to change the perception and divide the two.
I'm still fighting it.
But recently I wonder if it was effort wasted or a bit misguided. As soon as you have more than one brand or identity, you have to split your focus. A split focus is less than half as good as a total focus.
There are some good things- I feel free to explore design or product that doesn't fit within what I had designated as the Stijl aesthetic. But all that really says is that I may have overly defined Stijl before I really knew what it was.
So, there is a part of me that feels that it's a great idea to create the distinction, but it's at odds with the side that feels it's a distraction.

I asked questions.
And missed another memo.
When did this become a one-sided debate?
PS A very large part of my income is derived from other framebuilders using me as a materials supplier.
However, I only have one frame, not a line of them, or a second line of them...
Don't split your focus. Sharpen it.

[Stijl Cycles]

I asked questions.
And missed another memo.
When did this become a one-sided debate?
PS A very large part of my income is derived from other framebuilders using me as a materials supplier.
However, I only have one frame, not a line of them, or a second line of them...
Don't split your focus. Sharpen it.

good grief!
Sorry, other topics would have been a better choice of words.
Not one sided, but sided. people seem to have fallen to one side or another.

I was hoping you would talk about this a bit as I didn't want to call you out.
I observe that you have developed a way to create alternate revenue, while furthering the Richard Sachs brand. Brilliant!

[e-RICHIE]

good grief!
Sorry, other topics would have been a better choice of words.
Not one sided, but sided. people seem to have fallen to one side or another.

I was hoping you would talk about this a bit as I didn't want to call you out.
I observe that you have developed a way to create alternate revenue, while furthering the Richard Sachs brand. Brilliant!

I'm gonna get to the point -
What's the actual question here atmo?

[11.4]

good grief!
Sorry, other topics would have been a better choice of words.
Not one sided, but sided. people seem to have fallen to one side or another.

I was hoping you would talk about this a bit as I didn't want to call you out.
I observe that you have developed a way to create alternate revenue, while furthering the Richard Sachs brand. Brilliant!

I didn't think this was a moderated discussion. Most of the people here are asking a variety of questions and seem to have moved on from the original discussion on multiple lines of business. Multiple lines are very hard to pull off unless someone has one established very successfully and is being very careful about launching the next. Richard's business in frame components came about because he had to have them made for himself to meet his own quality standards, and to meet minimums and to help his friends he offered them to other builders. It's not that much of a leap, it's not marketing two brands to the same clientele, and it's leveraged by his frame building business. Most of the models proposed here don't work that way. Similarly, Sacha didn't try to build two different lines -- he contracted the second one out and lent his primary currency (design) to the second one and that's it. Everyone who wants to have two frame lines should be asking why they have the time to start a second line and address that problem first.

There were other questions here besides about dual brands, and they aren't getting heard. Let's give those topics an opportunity to get answered.

[Stijl Cycles]

okay - my bad.
Let's let those topics get their chance.

[Stijl Cycles]

Richard,
I'm not sure I really have a question. I just think it's interesting how you have approached it, is all.
Necessity is the mother of invention and all, but socks and bar tape are a bit different.
So if I did have a question it would be:
Where do you draw the line? At what point does the product development become a distraction to the framebuilding?

[e-RICHIE]

Richard,
I'm not sure I really have a question. I just think it's interesting how you have approached it, is all.
Necessity is the mother of invention and all, but socks and bar tape are a bit different.
So if I did have a question it would be:
Where do you draw the line? At what point does the product development become a distraction to the framebuilding?

It never does atmo. I build frames full time, and the rest of the goods (trinkets, as some call them) happen organically. To wit, I started my brand (we didn't use that term until the internet era...) in 1975 and had tee shirts and embroidered patches in the first year. I did some water bottles along the way. I started running a team in 1982 and from that point forward it was easy to look at racing clothing as a profit center. The same thing goes for complete bicycles. Just make a line in the sand and sell everything with a parts package. In the 1990s I tired of the materials available to my trade, but suffered with them regardless. I had already designed cast lugs for 2 other companies by then, and in 2002 I introduced my my first set FMBM (That's like FUBU - for us by us - but for me only. For Me By Me). Then, 18 months later, I decided to sell them to others. The PegoRichie stuff started in 2003 and we're many iterations from that now. I've added too many cast parts to the menu to even count without going to my site and checking lists. The socks, the messenger bags, the synergy with Cole Wheels, the RS tape from Cinelli, the RS/RGM North Pointer watch from 2008, the branded tubulars from Challenge - all of these are partnerships that come from the seeds planted by the cx team I run. The DVD that Desmond spent a year on, the book that Nick Z spent 14 months on, all the other stuff (trinkets...) are the work of others who want to use their talents to reach my market. The message here is that the framebuilding has its own life and is unaffected by all the other items. The work gets done. But if it doesn't, or I'm distracted, it's not because I'm sitting here sketching sock patterns.

[MarkC]

What else do you have?.

That is the point: rather than debate it and wonder what might have been, the folks thinking about these biz models should act rather than fret. Worse case they learn something, gain experience building a few more units and get a few more frames out. That's a better use of time than arguing on the Internet when one could be building their business and building frames.

The data point I meant to contribute is at least one shop that I know well is seriously considering an arrangement aligned to what A few of the guys here are considering too. That is data that might help one make a decision.

Cheers,

Mark (Curran)

Mobile post, excuse typos.

[dhoff]

Just a note here, not meaning to cause a drift. I have been following this thread and find it fascinating.

I am, when not volunteering as director of the UMCA a business consultant and coach. For 18 years I have worked with small business people, (and larger) to make their visions, happen. I have never built a frame, but I have ridden a little bit and worked with some known figures here.

I have worked with my clients in many of the areas that are being addressed, including multiple lines of business, branding issues, managing time and work flow, business development, etc.

I am not looking for work. And if any member who is actually building frames for a living or thinking of making the leap, wants to discuss their business, I will offer a one time, v'pede pro bono call. Whatever you are facing, you will come out of the call with new clarity or new questions.

At the least, I will have some reading material to recommend and a bit of counsel to offer.

PM me if you like.

Douglas Hoffman

[SteveP]

The hard part is running a small business.
The building frame part is by far easier.

If you focus on that portion... you will be bit in the arse later when the checkbook needs to be balanced.

Put me in the camp of... direct sales only, no stock inventory to a shop.
These days you are in direct competition with trek and specialized...
It is so easy for a dealer to pull down a built tarmac.. set with a few adjustments.. to go out the door.
And it is a great bike if it's the right bike for the customers needs
It has killed the build up a frame model from years past.
You have to figure out your own customers.

Too many framebuilders. Too few customers, imo.

Steve Pucci

[Will Neide]

Put me in the camp of... direct sales only, no stock inventory to a shop.
These days you are in direct competition with trek and specialized...
It is so easy for a dealer to pull down a built tarmac.. set with a few adjustments.. to go out the door.

I'm in complete agreement with this, and I think there should be a distinction in what kind of shops we are all talking about. I would in no way want to compete for floor space with a rack of Tarmacs/Venges/Evos/etc. Those shops aren't the right market, or at least that customer base isn't looking at boutique or custom. However, there are small boutique shops that do exist that cater to a different crowd who are looking for that something "different."

On a related financial topic about business models, does anyone foresee small scale building changing or evolving into 2-4 man shops and away from the one man shop? I've always thought Spectrum had this model right with a 2 man set-up (once a 4 man shop?). One painter, one builder, and you can offer services to outside work. Seems paint is one of the more expensive aspects of this whole endeavor and bringing it in-house surely opens up some options. Cost prohibitive? Does having 2 people exponentially complicate things?

It seems that alternate avenues of revenue are essential if one wants to comfortably support a family on one income, or business.

Just spitballing ideas here for discussion.

[Andrew R Stewart]

Douglas's offer is a very good one and any budding builder who's thinking about starting a business would be smart to take him up on it. When I started my LBS I attended a couple of small business association workshops (which were free). I took away a lot of start up needs and legal requirements and confirmed many of my already knows. While they also offered after workshops one on one help I concluded that the mentors (that I met) didn't have the experience in the type of business (bike retail and service) that I was involved with. So I went back to my previously established contacts with employers and suppliers (having been in the LBS work a day world for 10 years already) and move forwards with my plans.

All this talk about starting a business is very much needed for the first timers and those who have never had to manage a business before. But not mentioned is how to end a business without damage to you, your credit, your customers and suppliers. It's a sad fact that many of the bike business start ups fail within a few years. Once the initial capital (usually under financed) is gone all expenses are generated by sales. The easy year is the first. The hardest year is often year two or three. When I closed down my LBS after 15 years I didn't look over my shoulders expecting to see irate customers, credit managers or blindsided partners. I had those people many times not understanding my reasons but also many offered to help me out the next time I opened up a shop.

Just adding some fuel to this discussion. Andy.

[crumpton]

On a related financial topic about business models, does anyone foresee small scale building changing or evolving into 2-4 man shops and away from the one man shop? I've always thought Spectrum had this model right with a 2 man set-up (once a 4 man shop?). One painter, one builder, and you can offer services to outside work. Seems paint is one of the more expensive aspects of this whole endeavor and bringing it in-house surely opens up some options. Cost prohibitive? Does having 2 people exponentially complicate things?

evolve? no, both models and everything in between has existed as long as folks have been building frames.

[cardinal-creative]

The Outspoken Cyclist often has framebuilders on the podcast. Rody, Sachs, Dario have all been on the show recently.
I've learned a lot from these interviews over the years and they often touch on the business side. Kent Eriksen was on last week and shared some interesting data points that could feed into one's business planning, bearing in mind his model is a bit different than the one-man-shop approach.

[e-RICHIE]

Some food for thought atmo -

You Must Be Able To Sell, Too | RICHARD SACHS CYCLES



.

[11.4]

The hard part is running a small business.
The building frame part is by far easier.

If you focus on that portion... you will be bit in the arse later when the checkbook needs to be balanced.

Put me in the camp of... direct sales only, no stock inventory to a shop.
These days you are in direct competition with trek and specialized...
It is so easy for a dealer to pull down a built tarmac.. set with a few adjustments.. to go out the door.
And it is a great bike if it's the right bike for the customers needs
It has killed the build up a frame model from years past.
You have to figure out your own customers.

Too many framebuilders. Too few customers, imo.

Steve Pucci

Steve hits a number of important points. His best: "Too many frame builders. Too few customers, imo." I'd even go further, "Too many frames. Too few customers." Leaving out the bespoke frame builders, the Treks and Specializeds and such are fighting for customers with resources no frame builder can match. You need to define a niche where you are very strong and where your customers don't defect (too often, at least) to a high-end factory frame.

To a comment made above, even if you think you have a shop that is interested in carrying local custom frames, they will never be enough to help you survive. I used to have a very powerful shop as one of my sponsors, and they carried Serottas. With perhaps ten Serottas on the wall, they were lucky to sell ten in a year. As a standalone frame builder without a very established brand, you may do 3-5 frames (I know, you can surprise me, but I'm also being gracious -- they might sell two frames, one of them to an employee, and then drop you). It's really hard to sell to a lot of shops, and what Richard and others here aren't quite voicing are the frustration and cost of working through a shop. You get a frame fit that doesn't make sense, the shop makes the money on components, and you have little direct comprehension of what is exciting the customer or isn't so you don't know how to modify your offering. Shops are a distribution strategy, not a growth strategy. You'd almost be better off opening your own shop and building frames in it, a la Bill Davidson for many years. Stay away from shops.

(I have nothing at all against shops. I love my local shops and take business there. But by and large they usually don't carry frames from custom builders -- or at least nothing smaller than a Serotta (once upon a time) or a Parlee. That retail distribution channel simply makes your work harder, not easier.)

But it comes down to the fact that what used to be schlocky carbon fiber Treks and Specializeds are really damned nice bikes and everybody sees the pros riding them. The competition is ferocious and as bikes have gotten more expensive there are fewer opportunities to sell another custom bike. Look around. How much of your business is going to be people who talk to Richard and Tom and Sacha and Zank and so on. You'll talk a lot but will lose a lot of those sales to other builders, or to Cervelo. Can you afford that? You have to be able to focus 100% on making a frame business succeed, but honestly, I'd suggest you have a backup income source or a fallback career ready and waiting. Everyone who's doing it out there will tell you that even if you have a backlog, it's a tough business.

[Carl S]

This thread has covered a lot of ground but I'd like to add one thing to think about. When a person is looking at other brands as a benchmark, inspiration or what ever you want to call it, don't make the assumption that because it looks successful from the outside that they are. There are a lot of companies out there that look like they're doing great but are barely hanging on. I can think of a lot of examples of companies I thought were a great success that weren't .

[steve garro]

the issue of how to compete against the Specializeds and so on of the world.

You can't.

That's delusional for a one man shop.

- Garro.