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Jax Owner Emphasizes Efficiency

Published November 10, 2008

IRVINE, CA (BRAIN)—Jax Bicycle Center owner Dave Hanson got his start as a bicycle shop owner in a rather unusual place—television’s “The Newlywed Game.”

He and his wife won the game show in 1986 and sold their prize for a down payment on their first home. They later borrowed against the equity in the home so Hanson could buy his first shop.

Fast forward almost two decades, and he’s built up his company to include seven Southern California bike shops with an eighth in the works.

He recently broke ground store on the new store in Murrieta, which is slated to open April 1. The new shop is the first he’s built from the ground up, and the logistics—from planning and permits to responding to concerned neighbors—have proven challenging.

“It’s the hardest thing I’ve ever done in business,” Hanson said.

The new building is 16,000 square feet, but Hanson plans to lease half the space. He will dedicate 1,500 square feet of the new space to a women’s specific store to help capitalize on that demographic.

“I don’t know how to do women’s business,” Hanson admitted. “By going that direction, it will really force us to sink or swim.”

Hanson is a gregarious man who speaks in a booming voice and gestures excitedly as he describes his business practices. He prides himself on honesty and shares the shops’ financial figures with his 80 employees three times a month.

His goal is to run his business as efficiently as possible and he’s taken numerous steps over the years to achieve that goal.

In 2005, he was working with 101 vendors and his top three suppliers were Specialized, Trek and Electra. He decided to simplify and transitioned his stores to the Trek concept model. Within 30 days, he’d dropped to 23 vendors.

In 2006 and 2007, he scaled back his marketing, implemented a payroll budget at his shops, reduced the number of employees in his business office from eight-and-a-half to three and began receiving shipments at individual stores instead of taking products in at a central location then redistributing orders to his various stores.

He also reduced his inventory by 14.5 percent and raised prices 2 percent on products like tubes, floor pumps and helmets.

His adjustments seem to have paid off. Although he started the year in the red due to a slow second half of 2007, so far in 2008, profits are up 61 percent, although sales are down 8.5 percent. He expected to break even or profit during the month of October for the first time in many years. His margin for October averaged 51 points.

In the year ahead, he’s planning remodels at four stores as well as opening the Murrieta location. While it may seem a bit hectic, it’s all part of what attracted Hanson to the bicycle industry more than 30 years ago.

“I like working for myself,” he said. “I like figuring stuff out.”

—Nicole Formosa

Photo: Jax Bicycle Center owner Dave Hanson describes his business model to Pedro's Chris Zigmont and BRAIN publisher Marc Sani during BRAIN's Dealer Tour.

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