Saturday, December 20, 2008

Cycle City Declares Bankruptcy

Cycle City in Burlington declares bankruptcy

My motorcycle dealer is bankrupt. The notice in the newspaper screamed that message and announced the two-day bankruptcy sale. By “my” dealer I mean the one where I bought my motorcycle.

Naturally I was unhappy to read that news because now I would have to look elsewhere for motorcycle service. My bike is a Suzuki and Cycle City was the only Suzuki dealer in Burlington.

I attended the bankruptcy sale and noticed that there were some real deals on motorcycle clothing and accessories. I picked up a $40 manual for $10. The bikes were already gone.

A lot of bargain hunters were picking up deals. I noticed one of the owners behind the part's counter dispensing friendly advice to a customer. At least he didn’t seem bitter about his failed business venture.

While browsing about the store I heard at least one person comment on the bankruptcy that “it was a sign of the times.” I couldn’t help but wonder what this bankruptcy might be really a sign of.

Here are some of the random thoughts that occurred to me.

When a business fails in tough times – the people responsible absolve themselves of responsibility and blame their failure on the economy. Yet they claimed responsibility for their growth in a growing economy. Why were they so smart in a growing market and so blameless in a declining market? GM, Ford and Chrysler demonstrate this “not my fault’ syndrome well.

The current owners bought the business less than two years ago. I believe that it was a father and son team. After the previous owner ran the business for over 20 years which included some bad times why did it fail now? Did the new owners pay too much for the business? Were they qualified to run this type of business? What assumptions did they make that blindsided them? What part of the business did they neglect?

The fastest growing segment of motorcycle buyers is the aging baby boomers. These are folks who have grown their own business or career. They have money to treat themselves. Their children have probably left the nest and the mortgage is manageable or nonexistent. If they want a motorcycle they will buy one. If they are downsizing their expectations then they are more likely to buy a Suzuki instead of a more expensive Harley Davidson.

I bought my motorcycle from Cycle City in Burlington more than three years ago. I have never received a communication from them. That includes the previous owner as well as the “current owners”. They did not remind me to come in for my spring tune-up or winter storage program. They never invited me to their open houses or demo ride days. Why did they not realize that their greatest asset is their database of customers? When the new owners started – a note, email or phone call would have made me feel important. But none of that happened.

As a midlife renewed motorcycle owner I was aware of gaps in my motorcycle knowledge, so I asked clarifying questions when I bought accessories. The parts manager at Cycle City was annoyingly sarcastic when I asked him to explain the benefits of the special oil. Customer service can make or kill your business. I wonder how many other customers that parts manager pissed off.

I wondered if the new owners of Cycle City understood the changing nature of their business. Did they really know what business they were in? The answer is not “motorcycles”. Nobody buys a motorcycle because they need it. They buy because they want it. And the competition for your customers’ money is not necessarily other motorcycle dealers.

Even if sales of new motorcycles were declining – that would not kill the business. In the business of selling rolling stock – automotive, motorcycles and farm equipment – there are two ways to make profit. That is the sale of used goods and the sale of service. Those are the profit generators in these types of business. Competition for new goods is so competitive that little profit is made on that. The value is in the customer database. What else can you sell them?

What other programs, events or value did they offer to the clients on their database? Judging from what I received from them – none. Smart business owners offer their clients extra value – value that the competition hasn’t even thought about yet.

Cycle City used to have a pretty good website. It was especially good for their listing of used bikes. But lately I can't even find it when searching on Google. And the new owners didn't seem to upgrade the web presence. If you're new - we expect you to offer something new. Imagine if they posted a YouTube video every month.

I’m sorry to witness the bankruptcy of Cycle City in Burlington. But let’s be real. It’s not about the economy. Businesses fail because of mistakes by the business owners. Some learn from their mistakes. The rest of us can learn from the mistakes of others.

George Torok
Motorcycle Rider
Marketing Expert
Motivational Business Speaker


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