Mike's Bikes Africa

In the past, our Sister Shop plan was pretty simple.  Once we selected an entrepreneur, we would collect enough bikes to fill a container and ship it.  Then we time our trip to Africa to hopefully coincide with the container arrival (not an easy task).  While there, we would organize the container delivery, unload the container, work on the bikes, build the shop and train the shop owner.  This was all crammed into a week or so, which was obviously a huge logistical challenge and in retrospect, not the best way to do it. But with our families back home, not to mention our jobs at Mike’s Bikes, we just couldn’t afford more time away. This is why we’re so excited to be partnered with Bicycle Recycle, who will be providing distribution support. With them providing a huge amount of logistical assistance, we can focus our time and energy on developing our entrepreneurs in best business practices and mechanical expertise. Also, our old way of opening these shops, what we affectionately call Sister Shop 1.0, presented huge challenges to the local entrepreneurs. Trying to figure out how to handle a container full of 500 bikes is a daunting task for a brand new business owner, as is the psychological and accounting leap required to transition from the first load of “free” bikes to the more sustainable model of buying bikes to cover their shipping and duty cost.

So for the Lesotho shop, we sat down with Tumi and created an opening budget, which included a certain amount of bikes from Bicycle Recycle. This time, we’ll give Tumi the money to set up his store and to buy his opening inventory.  This has two main benefits, the first being he can order an appropriate amount of bikes based on his space, and it gets him in the habit from Day 1 of paying a cost for the bikes.  The idea that the business needs to conserve enough of its sales revenue to purchase more inventory is a concept that some of our guys have struggled with. We hope our new method will make that idea easier to conceptualize and follow.

It’s important to note that our friends at Bicycle Recycle are not making any money off of this model and, in fact, they have donated a considerable amount of their own time and money to set up a specific delivery network to all of our shops. The money they receive for the bikes helps cover the cost of shipping the container, unloading and storing the bikes, and delivering them to the shops. They believe in the project as much as we do and are committed to helping our guys succeed.  Again, more info about our relationship with them to come…

As for Tumi’s actual store, we decided that two 20’ containers in an L shaped configuration would work best.  On the fenced-in property, there is a large bushy tree that will provide great shade for the shop.  The tree will be right at the corner of the “L” and Tumi will also install a triangular canopy between the two containers for additional shade.  He can source the containers locally and that is included in our budget.  Another change from Sister Shop 1.0 to 2.0 is the idea of an Opening Budget.  In the past, we arrive with a bunch of cash to buy materials, hire workers (remember the Joiner from last year, we’re still not sure if he ever finished…), etc.  Our Sister Shop owners often had no idea how much was spent getting their store open and never had to deal with working within a budget.  Tumi will be given his budget and it’s up to him to find the best deals, weigh all his options, and make his own purchase decisions, providing valuable experience with deciding how to best spend each dollar (or Rand or Maluti).  We also included in the budget funds for modifying the container with a door, window, and all the interior furnishings required for a functioning bike store.  The plan is for Tumi to have his shop completed before we go back next year to complete his training and get him fully up and running.  We are confident this will happen on time based on the results of his first task.  Before we left him, he had a list of items to complete before we’d give him any money – register his business with the government, receive clearance from the local Chief, open his bank account, etc.  By the time we arrived in Joburg, we received this email from him:

Sent: Wednesday, November 2, 2011 2:07 PM

Subject: given fast service because i’m the star of the country

Hi Ken and Matt?

you can’t believe that i have opened an account and registered the business so they ask me to collect the license next week, at least i reduced my work before the next race.

And to think we had our fingers crossed that he would get this much done within the first month…

The rest of Tumi’s budget includes a basic laptop and 3G stick, a small office area, a starting marketing budget, work bench, proper tools, electricity to the container, installing lights and outlets, bike storage racks, shelving, an opening order of bikes, parts, and accessories, and a big sign to advertise on his busy road.  We plan to visit Tumi at some point next year to finish up his training, work with him in the shop, and look for areas where he can improve and grow.  In the meantime, we’ll be in constant contact with him as the shop is completed, the containers are placed, etc.  One requirement we have of all Sister Shops is regular communication and reporting on the health of the business.  These guys have no business or accounting experience, so this is an area where we leverage our experience to help guide them to success.  With our help, Tumi will develop his monthly operating budget, assign himself a salary, and start to make decisions on how many staff to hire, where to advertise, etc.

We’re really excited about this new model, and we’re confident that it will give Tumi a much better chance at success and provide a blueprint for future Sister Shops.

After spending a couple days with Tumi in Maseru, we got a good sense of the opportunity in front of him.  Having the chance to meet with a prospective Sister Shop owner and see their situation first hand is a luxury we’ve never experienced.  We got a chance to see the market potential, get a sense for how interested people are in bikes and what they’re able to spend, check out the existing bike and parts supply and see the location Tumi has proposed.

We spent two and a half days touring the city by bike and based on the reaction of people as we rode past, Tumi should do quite well.  People were very curious and excited to see our peloton cruise by.  Often rolling through with a pack of 10-15 people, we were quite a sight.  Every school we passed produced cheers of “bicycle, bicycle” as the kids ran to side of the road to watch.  Often the teacher would recognize Tumi from the work he’s done with the local kids and give us a big smile and wave.  When we were in more crowded parts of the city, Tumi seemed to know everyone and would tell them “these are the guys I was telling you about, I’ll have bikes to sell soon!”  Tumi’s success with racing over the years has made him a bit of a local celebrity.  He has a couple newspaper articles about him on the wall of his small workshop.  We found out towards the end of our trip that he represented Lesotho in the Commonwealth Games for cycling! So with the amount of interest in bikes for transportation and recreation, combined with a city perfectly suited for getting around by bike, we feel the sky’s the limit for Tumi.

In order to make our Sister Shops sustainable, they have to be able to buy bikes and sell them with enough markup to stay in business and grow.  That means their customers have to be able to afford to spend a certain amount on a bike.  After the initial inventory donation, we require the shops to cover the cost of shipping the donated bikes from California as a step toward true sustainability.  The total shipping cost and import duties for the container, divided by the number of bikes inside, usually comes to around $40 each (why it’s so important for us to pack as many as possible into the container).  So with an assigned cost of $40, Tumi will need to sell his bikes for $50 to $100, depending on the condition, quality, and features.  After a bit of market research, we determined this would be possible.  As we’ve seen in other markets where we have Sister Shops, there is availability of what are derisively referred to as “China bikes”.  These are usually relatively expensive and always of extremely poor quality.  And they are sold in what’s referred to here as “China shops” that also sell a myriad of other non-bike things.  There is zero support from a service or spare parts standpoint, which is a necessity for bikes this junky, so most people just choose to walk.  Maseru is no different, there is one of these stores in town and based on the condition of the 6 or so bikes lined up outside, we guessed they had been sitting there for quite a while.  The plastic front wheel of one kids bike appeared to have been stepped on by a passer-by and it was broken completely into two pieces, but still out available for sale!  These bikes were priced at $80 – $120, prices that a good chunk of the population could afford, but would consider a waste, knowing that these bikes won’t work and won’t last.  The local people are hungry for real bikes, are able to afford Tumi’s bikes, and are just waiting for them to actually appear here.

In order to complete our picture of Tumi’s chance of success, we had to see where he planned on putting his shop.  Maseru is a much less developed city than Gaborone or Bulawayo.  There is retail space to rent but there is also a solid “roadside” economy where people sell wares by the side of the road either in a little stand or on foot.  As we know all too well back home, spending too much money on rent means certain failure.  So Tumi has decided to do a containerized store on the property of his godfather, Mr. Sello.  Mr. Sello owns a security company just outside of downtown, but directly on the main road into town.  His office is a small building set back from the road a bit and he has offered to let Tumi put his container in his “front yard”, rent free!  This is huge.  And while a containerized shop is a step down from a proper retail space, not having to cover a large monthly rent expense increases Tumi’s chance of success dramatically.  If things go well, he can always move into a more typical retail space.  Add in the fact that Tumi’s bikes will be safely stored on the property of a security company, and you can see why we feel this is a perfect place to start.

So with a captive market starved of proper supply, a customer base that afford to pay a reasonable amount for a good bike, and a good enough location with no rent, we feel the situation is ripe for Tumi’s success.  Couple this with Tumi’s boundless energy, passion for bikes and his “celebrity”, it was time to set a plan to get him open!

Tumi is 29 yrs old and grew up in Maseru, Lesotho. He was raised solely by his mother, who has owned a craft stand at the border for many years. We haven’t met her yet, but from our conversations, it’s obvious that she is largely responsible for his entrepreneurial spirit and his understanding of basic business principles.

When Tumi was 15 yrs old, he started riding bikes.  A friend of his from Joburg brought him a BMX bicycle – and in Tumi’s words – “it changed my life.”  His mother would send him to other villages to get supplies and run errands and Tumi would rarely be seen without his bike. He immediately understood the impact this machine would have on his daily life, from transport to health and fitness. In 2002, a neighbor who had seen Tumi riding everywhere and everyday recommended he enter a competition, a road race from Maseru up into the mountains.  This neighbor even loaned him a mountain bike to train – this bike had been purchased 150km away in Bloemfontein, SA – even today, the closest place to get bikes or parts.  Could you imagine needing a passport to get new brake pads??

Tumi trained every day for the 86 km race, riding the course several times on this heavy full suspension mountain bike.  For the race, Tumi “converted” his BMX bike to a road bike, adding a cassette and r. derailleur, shifters, and skinny tires (we’re still not sure how this is possible but as you’ll see later, Tumi is extremely resourceful).  He finished well among the international pack of professional cyclists and hard core roadies with expensive road bikes. This was the point where he fell in love with cycling as a sport. He spent the next several years finding any information he could on bikes and cycling, and training to develop his skills as a racer and a mechanic.  During this time, he was working at a TV factory and after being forced to work overtime and with no time to train, Tumi quit.  It was time for him to pursue his dream and open his own bicycle repair shop.  There were some cheap and very poor quality “China bikes” here that needed repair but no one in the town, maybe even in the country, had the skills, the tools or the parts.

That was 2008 and shortly after opening his repair shop, armed with the knowledge of what the sport of cycling did for him, he started Tumi’s Bicycle Club.  His goal was to give other kids in his city the same opportunity that he got from his neighbor back in 2002.  One of the many amazing things about Tumi is his boundless generosity.  He truly believes in his community and has worked hard to uplift it.  His wasn’t the first cycling club in Maseru, but his was the first to focus on kids and on the local population while the others catered to adults and ex-pats.  He has since started 3 other sister clubs in the villages outside of Maseru, with over 60 members all together, almost all of them kids.

Tumi’s vision is to be the guy that can supply local riders and the kids in his clubs with quality affordable bikes, parts, and mechanical service.  He feels strongly that if he had an adequate supply he could get more people to use bikes for transport and for sport.  He is recognized all over town as the bike guy, and he is often stopped while training his kids and asked about where to get a good bike – soon, he will have a good answer.

We have two goals on this trip to southern Africa. First is to go to Lesotho, pronounced “Lesutu”, and meet with Tumisang (Tumi) Taabe, our next Sister Shop entrepreneur and THE bike guy in Maseru, the capital city. Lesotho is a small, mountainous country completely surrounded by S. Africa. The second part of this trip is to meet with our new partners, Rob and Andrew Carle, and improve and develop our bike distribution system for the existing Sister Shops.

Rob is our guide and will be taking us to Maseru for a couple days, then up to Johannesburg for the weekend and finally up to Gabs to see Bones and the plan for distribution, which will be based there.

The distribution plan is the next evolution of our Sister Shop program. Having successfully opened three shops over the last several years, we’ve passed the hurdle of how to get a shop up and running. The issue now is a lack of supply of parts and replacement bikes. Our original plan was to set up a supply chain of parts from existing regional distributors, but we underestimated the difficulty of both small quantity shipping and remote payments for goods within southern Africa. Milton in Zimbabwe can’t just pick up the phone and order more tubes and brake pads. And now that their shops are set up, they can’t handle an entire container of 500 bikes. They don’t have the space to securely store that many bikes, and they don’t have the funds available to make a meaningful contribution toward the shipping and duty expenses, which is a key part of our long term goal of sustainability.

It has become clear to us that a central distribution point that allows each shop to “order” in manageable amounts is what is needed. That is where Rob and Andrew come in, and they have been totally integral to setting this up. They own and operate a trucking company with warehouses in Joburg and Gaborone. Part of their business is to bring goods into S. Africa and distribute them all over southern Africa from both warehouses and to the same countries where we have Sister Shops. They both also happen to be serious MTB fanatics and they share a strong belief in our cause. Rob lives in Gaborone and has been invaluable in assisting Bones and Jerry with business practices at JonMol, and he has helped formulate this plan for central distribution of donated bikes, which we believe to be the first of its kind.