Similar experience but in a different field, namely Photography. I spent 15 years tinkering before investing in a studio 5 years ago, and haven't looked back. Like any business it has its ups and downs, but you HAVE to have the capital and cash-flow to get through the downs. Most businesses don't close through lack of performance, its lack of marketing and or cash flow that does it. Whats been key for me at least is standing out quality wise against the competition, retaining good staff and securing decent retail finance for clients.
The benefit of the Bike industry is you can also support your turnover with online sales even if simply through Ebay or similar.
While business has certainly decreased over the past couple of years, what has stood the test of time for myself is maintaining the highest level of service, which sorry to say seems to be the first thing that is cut back on here in the UK. A prime example is a shop here in Sheffield, with a window full of expensive machinery, that you are not allowed to look at! I recently went in to look over a potential purchase, and was told that you couldn't go into that area of the shop. It came across as pure arrogance. I've come across this so many times, from purchasing everything from equipment for work, to new cars. Never judge a book by its cover, and never be to busy to assist ... or you will lose business as a result.
By comparison the Bike Tree, which is 2 minutes up the road are the opposite end of the spectrum, you are always warmly greeted, there is always time for a chat or a piece of advice. I have ALWAYS been an internet shopper but increasingly find myself heading there and am quite happy to pay a bit extra for the atmosphere. Hopefully soon I will be brave (read fit) enough to join them on their wednesday hit out.
As others have suggested, you have to find your hook in the market, why are people going to come to you, and how are you going to convince them to do so, and to keep doing so. As an example of savvy thinking several Australian clothing stores now have Man creches, a nice comfy sofa, a games console / sports TV and a rack of magazines. While the bloke is entertained the SO can relax, browse, and up her spending.
Going back a couple of years here, but my local bike shop in New Zealand ALWAYS had the best coffee, and it was free, and warmly offered. There was always something decent on the TV's and tools and guidance were keenly offered to those that frequented the shop. They had a fantastic stock of sold on behalf items and it became the norm just to pop down simply to hang out. The range of shiney bits on display ensured their turnover reflected their popularity.
I'd strongly suggest talking to your Business Banking Manager, they know what is happening in most retail sectors, and can give real world advice. You will need enough capital to cover ALL the overheads of the business for the first six months (including your own wages). On top of this factor in premises, shoplift, lease bonds (averaging 12 months at the minute). Personal guarantees on everything (scary as hell) and recruitment.
Good luck !
