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Starting a Bike or Any Other Kind of Business from Home

Part Three: Sourcing

by John Neugent

Tech articles | Commentary articles | Starting a businees Part 1 | Starting a Business Part 2 | Starting a Business Part 4

John Neugent probably knows more about bicycle wheels than anyone else alive. Maybe more about bikes as well. He's spent his life in the bike business, at every level. He now owns Neugent Cycling, a firm devoted to delivering world-class equipment at the lowest possible price. If you are in the market for a set of wheels, please, check out John's site. He really knows his stuff. —Chairman Bill

John Neugent

Author John Neugent

Once you decide you want to start a business that sells products, as opposed to services, you need to decide what to sell. It’s not as straightforward as you may think. In the bike industry online selling is extremely challenging because there are companies that sell products at wholesale prices which are probably what you would pay for them. They can do this because most brands have pricing tiers. The more you buy the less it costs. Without getting into too many details, every country has its own laws regarding pricing and distribution and the global aspect of the Internet has erased borders. So in the past the US Market was one unified market, the EU another, China another, etc…. Now they are all mixed together.

For this reason, I would suggest another option – selling you own brand. This may sound complicated but it’s pretty straightforward. Many manufacturers in Asia have “open mold” products. Those are products that anyone can buy without investing in development and tooling. Minimum order quantities vary widely. It’s relatively simple to buy an unbranded product and apply your own decals. The obvious advantage of this is your profit margin should be much greater than if you were to just be a reseller of someone else’s brand.

One very important point that took me a long time to learn. I was always under the impression that I had to have something unique. I thought that if I had a great idea I could introduce a new product that would be so compelling that everyone would want to buy it. In fact, most people want to buy something they are familiar with, not something new. There are always a few people who want the newest thing but not many. Think in terms of herd mentality. I was with companies that tried to introduce disc brakes and electric bikes before their time. Both companies got out of those markets long before they became profitable categories. There is a saying in product development that says cutting edge products are for people who want to bleed. A much safer and more profitable strategy is to sell products that are similar to designs that are well established.

If I were starting out from scratch right now and didn’t know any factories, I would start with Alibaba. See if there are any makers who sell products that you would be interested in. While most of the makers on their site are Chinese, they may have connections with some Taiwan factories and between those two countries you can pretty much get whatever you want. The Chinese and Taiwanese are very resourceful and aggressive.

One final bit of advice. Never take a risk you can’t afford to lose. There is no such thing as knowing you are going to sell a lot of something. Start as small as you can, even if the cost is higher. Most likely you will have three or four losers before you have a winner. Plan for that in advance and don’t let the small failures get you down.

Hopefully, this series of articles has given you some background into setting up your own small business. The beauty of a successful small Internet business is that you can do it from home anywhere in the country, and maybe the world. You can do it part time and keep your day job. It gives you lots of options. Good luck and have fun.

John Neugent was was one of the first to establish quality hand building in Taiwan around the turn of the century. He now owns Neugent Cycling, a firm devoted to delivering world-class equipment at the lowest possible price.