The System Has Been Broken Since 2008

Stop pretending next year will be different if you keep doing this

Jay Townley was right. On a recent industry podcast talking through the latest NBDA Cost of Doing Business numbers, he made an offhand observation that's been buried for years: low inventory turns have been a chronic problem in bike retail and nobody talks about it.

Two inventory turns a year. That's the industry average, according to the NBDA data going back to 2008. Two turns means your money is sitting on your shelves for six months at a time. It's in the back room. It's the spare stock you bought because the distributor offered free shipping. It's the wheels you ordered in March that you're still selling in September.

I have a theory that the shops that crushed it in 2020 and 2021 had the most inventory on hand and the lowest turns. They got lucky. Our industry doesn't have good data from that period to prove it, but I've watched it play out. Demand was so high that products moved before the bills came due. But luck isn't a strategy. Once demand normalized, many of those shops stayed stuck with the buying habits they'd built during the shortage.

I know this landscape. In 2022 I started working with the NBDA P2 program, facilitating meetings and handling data for groups tracking Key Profit Indicators. In 2023 I introduced inventory turn tracking. It wasn't perfect, but it mattered. What I learned over the next year was this: inventory turns aren't tracked because POS systems made it hard, and even when the data existed, most shops didn't have clean inventory to begin with. If you haven't counted in two years, your numbers are garbage. If you're not using POs or SKUs for every purchase, they're worse. Add in used bikes and the occasional tech pulling product off the floor without logging it, and the data problem compounds.

But bad data is only half the problem.

The Candy Stand Math

Let's say you're running a candy stand for a year. Three items: Gummy Nerds, Beef Jerky, and Reeces Pieces. Each pack retails for $10, wholesale for $5. You've done your math. You're going to sell $100,000 at retail across 12 months. That's $50,000 in cost of goods sold.

Your wholesaler calls with an offer. Buy the full $50,000 today, get free shipping and a 5% discount. Plus 180-day terms. It looks irresistible. You place the order.

Month one rolls smooth. You're selling a mix of everything, tracking right on pace. Month two, Beef Jerky starts to slow. You figure it's temporary. By month six, Jerky sales have tanked completely. Meanwhile, the Gummy Nerds movie came out and kids can't get enough. You've sold through all your Gummies and you owe your full $50,000 note today. Half your Reeces are gone. You're drowning in Jerky.

You needed cash to chase Gummy Nerds. You don't have it. You're paying for Jerky you don't want while you watch money walk out the door because you can't stock the product that's actually selling.

On your way home, you drive past the movie theater. A Live Action Fun Dip film is dropping next month. You could clean up on Fun Dip. But you have no cash. Your money is tied up in Jerky.

The Math

You planned to sell 10,000 packs across the year. That's about 833 packs per month, or $8,333 in retail sales, or roughly $4,167 in wholesale cost per month.

What you needed to buy was one month of supply. Gummy Nerds, Beef Jerky, Reeces Pieces. One month each. Maybe one and a half months if your lead time was longer. That's roughly $4,167 to $6,250 in initial inventory.

What you actually bought was 12 months of supply all at once. $50,000.

If you'd calculated months of supply upfront, you'd have kept $43,750 in cash. By month two, when the demand shifted, you'd have had the money to pivot. You'd have restocked Gummies, moved Jerky at a loss if you had to, and kept cash in the bank for Fun Dip.

Months of supply isn't a theoretical number. It's the bridge between what you need to buy and when you need to have cash available.

In Your Shop

Your bike shop is running 12 months of supply on most categories. Not intentionally. It's what happens when you buy what your distributor offers, what fits in the shipment, what your rep suggests, and what you think you'll need in March.

Two inventory turns a year means six months of supply. Your cash is tied up in wheels from last quarter. It's sitting in components that haven't moved. It's in the back room as spares. It's on the wall as impulse stock. Meanwhile you're short on the things that are actually selling right now.

Before You Prebook 2027

You're looking at your 2027 orders right now. Your reps are calling. Your distributor is offering early-buy discounts. Your team is pulling last year's orders and bumping them up 10 percent. This is where the candy stand decision happens again.

Before you lock in a single order for next year, know your months of supply for 2026. If you're running six months on wheel inventory and your lead time is 90 days, you don't need to buy more wheels in January. You need to buy based on what's actually moving in November and December. The money you don't spend on wheels in January is the money you use to chase the category that's working.

This year's inventory mistake becomes next year's cash crisis. Don't buy 2027 the way you bought 2026.

Next

If you don't know your months of supply by category, you can't fix this alone. The math isn't hard. The discipline is. You need someone who's done this enough times to see where you're actually stuck and call it out without the consultancy theater.

That's where I come in. We'll pull your 2026 numbers, calculate your real months of supply, and show you exactly where the cash is sitting. Then we talk about what changes for 2027. If you're running six months of supply on wheels and three months on tires, we fix that first.

The work is real. The payoff is cash in your pocket.

Schedule a 20-minute call. Bring your last 12 months of sales by category if you have it.