Tweet

Cycle City declares bankruptcy

Guest post by: George Torok

Article Overview: A lot of bargain hunters were picking up deals. I noticed one of the owners behind the parts 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.

Cycle City declares bankruptcy

My motorcycle dealer is bankrupt. The notice in the paper 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 parts 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.

Not my fault
When a business fails in tough times - the people responsible often 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.

Buyer beware
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?

How well do you know your market?
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.

Talk to me
I bought my motorcycle from Cycle City 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.

Demonstrate respect for customers
As a midlife renewed motorcycle owner I was aware of gaps in my knowledge, so I asked clarifying questions when I bought accessories. The parts manager was annoyingly sarcastic when I asked him to explain the high price of the special oil. I said nothing but I didn't forget it. Customer service can make you or kill you.

What is your real competition?
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 would not be “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.

Focus on profit not sales
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.

Offer extra value
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.

Are you observing and learning?
I'm sorry to witness the bankruptcy of Cycle City in Burlington. But let's be real. And reality can be brutal. It's not about the economy. Businesses fail because of mistakes by the business owners. Some learn from their own mistakes. The rest of us can learn from the mistakes of others.

Conclusion
Businesses don't go bankrupt because of the economy. Businesses go bankrupt because of bad management. Anybody can make money in a booming economy. It takes smarts to grow your business when times are tough.

Related Articles
  When Should I Consider Filing for Bankruptcy?
  What Are The Limitations of Filing for Bankruptcy?
  What is the difference between a Chapter 7 and a Chapter 13 bankruptcy?
  Instructions on Filing for Bankruptcy in New York
  When Managing Change - Understand The Grief Cycle

Article Tags: bankruptcy, business, marketing, motorcycle dealer, recession



Related Forum Posts
Re: Cultural Bankruptcy - [quote="mphcoach":qwr83vji]I get a sense that losing all your money and filing for bankruptcy in the US (i.e. the business fails) does not carry the stigma that it would do in the UK. [/quote:qwr83vji] Well, I don't know. I'm sure in the past people who had to declare bankruptcy were looked down upon as incompetent... but so many people can lose their business because of stuff beyond their control that now more and more people realize it's just bad luck as opposed to bad business. I do remember reading - (many years ago, and unfortunately I can't remember the title) - a book in which a guy was telling his readers how to make a fortune. And in this book he blithely said that he'd declared bankruptcy three of four times. After reading that sentence, I closed the book and never opened it again!!!
Re: About: product production! - At the end of the day, having a patent, copyright or trademark are pretty much useless because if the person who infringes on your legal rights and has more money than you... they'll bleed you dry (i.e. outlast you by being able to pay legal costs) long before you can finish the lawsuit. For instance, let's say the City of Toronto copied my artwork. Do you really think I can file a lawsuit and win against the City of Toronto?? Not a chance. Lawyers will try to tell you differently, but that's only because they want your business.
Still having problems? - Hi guys - sorry for the delay. I was in New York City for the week and got engaged! I've posted a few items today without issue - are you still experiencing problems?
Nu America - Entrepreneur Profile - Hi DeepThought, The September edition of Entrepreneur might be of some value to you. It highlights Nu America, a New York City advertising, marketing, and promotion agency focusing on the urban music market. Their projected sales for 2006 are $7 million.
Re: What financial education *do* kids receive in school? - [quote="OmnivoreInk":1fcmd8kg]Most American families are two paychecks away from bankruptcy....[/quote:1fcmd8kg] I think it's because businesses are training people to live on credit, rather than with the cash they actually have. On all of those shows where they profile couples on debt, they always have one thing in common: multiple credit cards.


Share this article with your friends. Fund someone's dream.

Leave a comment below or share on the left and you'll help support entrepreneurs in Africa through our partnership with Kiva. Over $50,000 raised and counting - Please keep sharing! Learn more.

Tweet

Newsletter

Get advice & tips from famous business
owners, new articles by entrepreneur
experts, my latest website updates, &
special sneak peaks at what's to come!

Name:
Email:

Popular Articles

Are You My Mentor

Fighting the Saw-Tooth Affect

Reverse Mentoring

Suggestions

Email us your ideas on how to make our
website more valuable! Thank you Sharon
from Toronto Salsa Lessons / Classes for
your suggestions to make the newsletter
look like the website and profile younger
entrepreneurs like Jennifer Lopez.