Start-up Funding | |
Start-up Expenses to Fund | $13,300 |
Start-up Assets to Fund | $181,500 |
Total Funding Required | $194,800 |
Assets | |
Non-cash Assets from Start-up | $86,500 |
Cash Requirements from Start-up | $95,000 |
Additional Cash Raised | $0 |
Cash Balance on Starting Date | $95,000 |
Total Assets | $181,500 |
Liabilities and Capital | |
Liabilities | |
Current Borrowing | $2,000 |
Long-term Liabilities | $130,000 |
Accounts Payable (Outstanding Bills) | $27,800 |
Other Current Liabilities (interest-free) | $10,000 |
Total Liabilities | $169,800 |
Capital | |
Planned Investment | |
New Owner | $25,000 |
Investor 2 | $0 |
Other | $0 |
Additional Investment Requirement | $0 |
Total Planned Investment | $25,000 |
Loss at Start-up (Start-up Expenses) | ($13,300) |
Total Capital | $11,700 |
Total Capital and Liabilities | $181,500 |
Total Funding | $194,800 |
University Cycle Works is located in Metroburg, a major city on the east/west Interstate. Metroburg is also home to the main univeristy campus. Outdoor recreation is very popular in the area; there are bicycle friendly country roads leading to parks and lakes, as well as an extensive array of mountain biking trails for the more adventurous.
The store is 2,000 sq. ft. of interior space with covered outside space adjacent to the heavily trafficked sidewalk. Used bicycles are displayed in this space. One or two new bikes are displayed as well as a visual draw. All are secured with lock and cable. As a service to all cyclists, a hose from the air compressor and a pressure gauge are present under the overhang next to the sidewalk. This primes the pump for quite a bit of spontaneous walk-in business.
Retail Sales
University Cycle Works is a full-service specialized bicycle shop. Our service offering includes, but is not limited to:
In almost any retail industry a specialty shop will be slightly more expensive than a mass retailer, due to the higher prices charged by suppliers. University Cycle Works is no exception. The prices we charge for bicycles, parts, and accessories is higher than the prices charged by a K-Mart, GI Joe’s, Target, or by mail-order.
What we do offer, which these large retail outlets cannot match, is friendly, knowledgeable service. We are passionate about bicycles. People do not go into the bicycle business because they want to get rich quickly. They enter the bicycle industry because they love bicycles. That kind of passion and committment comes across to customers when they find a sales person who can fit them to a bicycle so they feel comfortable and want to ride it. Someone who recognizes you and remembers your name is a welcome feature at a specialty store.
Local service is a major drawing factor for a specialty store such as ourselves. A mega retail can sell a bicycle, but it takes a trained service technician to keep it in fine running order. University Cycle Works staff provides the kind of personal, professional service people want, and are willing to pay for. We base our shop time fees on an industry standard, which we then adjust for our target market. This shop rate is comparable to other specialty bicycle shops in Metroburg.
Our location is a competitive advantage for us. Our customer base is predominantly university students and staff. We are almost part of the campus. They walk and ride past us every day, often several times. The convenience of local sales and service brings our customers in. They know they can get the service they need by dropping their bike off on the way to campus and picking it up on their way home: fast, convenient, reliable service.
There are three mainstream bike lines and three specialty brands carried at University Cycle Works.
Parts for the repair and maintenance of bicycles are available from a variety of suppliers. Four that we regularly order from are listed here.
Accessories are a huge part of the retail sales in the bike industry. Everything from helmets to headlights, panniers to computer speedometers, water bottles to locks and cables. Three of the largest suppliers are listed here.
Bicycling clothing can be either technology-oriented or simple. Anything from cotton cargo shorts to gel padded, multi-panel cycling shorts is acceptable for cycling. T-shirts and moisture wicking nano-fiber jerseys ride side by side, and when the weather turns inclement, there are nylon shells, plastic ponchos, and Gore-Tex jackets, pants, gloves, and shoe covers for the commuter who needs dry office attire, or the continental tourist who needs thousand-mile protection. University Cycle Works regularly stocks these brands. We also regularly purchase small lots of other brands to test their popularity in our market.
Wheels can be anything from wire spokes to aerodynamic discs. Clothes range from high-tech moisture wicking synthetic fiber jerseys and Gore-Tex rainwear to traditional wool or cotton shorts.
Each year the major component companies such as Shimano, Mavic, and Campagnolo introduce new parts gruppos. The marketing has become as strident as that of the automobile industry. This means that the bike shop must maintain replacement parts to repair old groups, stock parts for early replacements of new models, and have an inventory of high priced gruppos for the equipment-focused bike nobs who want to upgrade their bikes with the newest and greatest. Additionally, the shop must regularly order manuals and specialty tools to service the new bikes and components.
Following the trends in technology and futuristic products is as much fun as it is work for Hub and his staff. They work on bicycles because they love bicycling.
The predominant market segment for University Cycle Works is the university student population. We also cater to the university staff, local business employees, and, along with every other bicycle shop in town, the greater Metroburg population.
In part the local market is driven by the lack of parking. Bicycle transportation is more economical, as well as time and space efficient in the university neighborhood. Part of the market is price constrained and another part is hooked on the latest fad, be it frame style, number of gears, or portrayed image. As long as new students arrive each year at the State University at Metroburg, our market segment growth is assured.
The university students are our main target market.
University employees are another prime market segment.
Greater Metroburg population.
This segment has a choice of going to any bike shop in Metroburg, and will probably choose a shop located closer to their home. They are not the main target market segment of University Cycle Works, and we market to them casually, only as a collateral effect to our university-oriented efforts.
Market Analysis | |||||||
Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |||
Potential Customers | Growth | CAGR | |||||
University Students | 4% | 27,500 | 28,600 | 29,744 | 30,934 | 32,171 | 4.00% |
University Employees | 1% | 6,500 | 6,533 | 6,566 | 6,599 | 6,632 | 0.50% |
Greater Metroburg Population | 2% | 160,000 | 163,200 | 166,464 | 169,793 | 173,189 | 2.00% |
Other | 0% | 2,000 | 2,000 | 2,000 | 2,000 | 2,000 | 0.00% |
Total | 2.22% | 196,000 | 200,333 | 204,774 | 209,326 | 213,992 | 2.22% |
We’ve chosen our target market segments, the greater university population because:
Trends in the bicycle industry usually last for a time. Some of them have been:
The bulk of University Cycle Works’ market growth is the regular matriculation of students from the State University in Metroburg. While the overall market numbers change in small increments, usually less than 10%, the market has a turnover of 22-26% yearly. In a longer time frame the number of students and the number of university employees grows and shrinks with economic changes, and with population demographics.
For the next three years we foresee a slow but steady growth in the overall university population as well as continued growth of Metroburg as a desirable place to live.
Our market niche has several needs which we strive to meet:
The bicycle industry is a world wide concern. The Pacific Rim is a huge producer of framesets, components, tires, and accessories. European countries have a long and honored tradition of producing the finest in road touring and racing bikes and parts. The United States has probably the largest number of producers of high-tech, exotic metal, jewelry components, and handbuilt custom framesets.
Transportation of all these various pieces and fully assembled bikes across continents and oceans brings the industry its international flavor. It also adds a certain cost all products. Interestingly enough, some of the least expensive bicycles are imported from the People’s Republic of China, and some of the most outrageously expensive pieces are made in the U.S. and are handbuilt at a small shop that uses CNC machining to make titanium bolt, nut, and screw sets for the bike nob who wants to reduce the weight of his bike that last 143 grams.
Setting aside the discount department stores, University Cycle Works has the following direct competitors.
The two strongest competitors are the Oldest Shop in Town which carries the cache of being the most stable, and most well known — a Metroburg institution. The Mountain Bike Specialist targets the same athletic, young, performance and image conscious rider that we target in the university student population. These cyclists are particular about their bike and will go where the name brand they want is sold, or will try every bike and then buy the one that fits best, regardless of store loyalty.
The bicycle industry has many players large and small all over the world. A few are listed below.
Big bicycle manufactures
Big component manufacturers
Big accessory distributors
Mail order/Online companies who began selling through the mail and now have extensive Web presence as well. They offer great prices, but no installation or services.
Discount stores are the usual outlet for Huffy bikes in several guises. These are the $100 bikes which are assembled by minimally trained clerks, and frequently end up at specialty shops being reassembled and serviced for the owners. The price bargain usually isn’t by the time the bike rides well and safely.
Specialty bike store such as University Cycle Works, where bicycles are our focus and passion. Trained and knowledgeable sales people, service techs, and avid riders in their own right.
Custom frame builders, smaller specialized manufacturers of folding bikes, tandems, trailers, racing bikes, and custom components.
Information on our sales and marketing efforts are discussed in the following sections.
The foremost competitive advantage of University Cycle Works is our university location. The State University at Metroburg is over 100 years old and as it has grown, Metroburg has grown around it. Parking is almost nonexistent, with all campus parking permit or meter controlled, and local streets filled to capacity with the vehicles of residents. Bicycles are an obvious and popular transportation solution.
Our location, in the first block off campus in a commercial area featuring the university Bookstore, a private bookstore, bank, cafes, coffee shops and popular watering holes is ideal. We get constant, daily visual exposure. Students and staff throng the sidewalk outside our door, and we reap the benefits. Our nearest competitor is almost a mile away. For the student customer, on foot, in a hurry, University Cycle Works is the immediate solution to their needs.
After that first parking ticket, we are the first bike shop the new pedestrian sees. We are conveniently located when a cyclist gets a flat tire on the way to class. The first time a rider gets to class with a wet back they come in at lunch for a set of fenders and a rain jacket.
The negotiations of the past two years also brings the advantage of continued financial agreements with major suppliers. This is an advantage over a start-up bicycle shop, but, is more a leveling of the bike path when compared to other established shop in Metroburg. Traditionally a start-up store will be placed on a Cash On Delivery (COD) status by bicycle manufacturers and parts/accessories suppliers. The COD status stays in effect until the new shop demonstrates its ability to manage its orders and cash flow. This also means the new shop must have more funding to be able to write checks on a moments notice, for large amounts.
University Cycle Works will be continuing an established system of dating programs, ordering, delivery, and invoicing/accounts payable, stabilizing our funding needs and monthly cash flow.
Our marketing strategy seeks to optimize our advantage of prime location. We want the university population to see us as their bike shop, even our name says so, University Cycle Works. We want them to see us as part of their daily experience, and a shop they can depend on for quick repair and maintenance service.
Our marketing programs are locally focused, where we can effect our main target market.
Back to school specials , at the beginning of each term, including perhaps a free Kryptonite lock with a new bike purchase. We will try to have a special purchase of an economy value bike for each term.
Spring special . This coincides with the beginning of spring term, but we will direct some of our advertising at the wider population as people hang up their skis and tune up their bikes.
Coupons . Once every other month we will run a coupon for a service special in the university newspaper, the Daily Hyperbole . We also run this coupon as a banner ad in the Daily Hyperbole Online .
Website . Our content site will also serve as a marketing medium. We offer downloadable maps of the city bike routes, maps of rides outside the city area, give information about the store, and announce sales. We believe that cyclists will regularly access our site for the valuable information we will provide, and this will reinforce their of awareness of University Cycle Works, and we will become their bike shop of choice.
Print advertising . In addition to our coupons, we will keep a small 3 column inch ad appearing on a recurring schedule in the Daily Hyperbole . To boost citywide awareness of our sales specials we will also run slightly larger ads in the Metroburg Bombast-Obfuscator during the weekends prior to the sale.
University Cycle Works’ website is designed to be a content site. We have neither the desire nor the time to attempt a full-blown e-commerce site. There are several large mail order/e-commerce companies, such as Performance, Bike Nashbar, and REI, and many smaller companies who are well established in the marketplace. We could never compete successfully against them.
Our target markets are immediate. They are within cycling and walking distance of us, so we are providing locally topical information to them. We are using HooDaThunkIt Search Engine Consultants for the design and upkeep of our site, and especially for their expertise in gaining favorable listings of our website in the Internet search engines. Just putting up a website is not enough. Without the proper coding and search engine linking, a website will never appear in a Yahoo! or Hotbot search. We don’t have the money to buy our way to a top three listing on every search, but HooDaThunkIt can get us into the search engines, and appearing higher than our local competitors.
First, we will have our store information: hours, location, phone number, brands sold, etc. Sales and current promotions will also be featured.
Downloadable files:
Pricing of bicycles is very tight with a markup of between 30% and 40% depending upon the brand and model. Many people believe that bicycles are priced like automobiles and are open for negotiation, and make almost insulting offers. The shops have little leeway here.
Parts and accessories are generally keystone priced. Some small items cost more in handling and sales than they do to buy from supplier. These can be double and triple keystoned, because customers won’t buy them if they don’t have a minimum perceived value. On the plus side, these are great “throw-in” items used to close the sale of a bike. When new technology arrives in bicycles, and if the supply is limited, almost any price can be demanded. This was the case in the mid-1990s when RockShox introduced suspension forks for mountain bikes. The bike nobs would pay whatever was asked just to get those forks. Of course, in this type of situation the price, both wholesale and retail, lowers.
Other accessories, such as step-in pedals, pannier racks, helmets, or headlights are sometimes heavily marketed by the manufacturers. While this drives demand and brings people into the shop to get these items, the suggested manufacturer’s retail price may limit markup.
The markup on clothes, shoes, jackets, gloves can vary from keystone to triple keystone, depending upon product, manufacturer, country of origin, and customer perception of value. Pearl Izumi and Burley Design rainwear can demand premium prices as top-of-the-line garments, but many budget conscious students can only afford a $35 nylon windbreaker. It has been and always will be a demanding job for us to adequately stock garments at the various price points.
We try to maintain a basic “Hourly shop rate” at $45/hour. Standard repairs are then priced based upon an average time for completion. Some repairs, such as a flat tire, are limited by customer perception of difficulty. Examples:
All parts used in repairs are priced at keystone, and added to the labor service charge.
With several other bicycle shops in the city, there are some price constraints based on competition. Coupons and specials can balance price ceilings by drawing in customers.
Sales vary season to season and with the academic school year. Surprisingly, summer is the slowest season because there are fewer students in town. Business picks up in August with the return of the students and staff, and flourishes in September. Accessories and rainwear sales increase in the autumn and early winter. Repairs and maintenance are steady. Holiday sales are brisk, though generally leaning again to accessories, parts, rainwear, gloves, helmets, headlights, etc. Winter sales are moderate, and then pick up in springtime as people put away their skies and look forward to local outdoor activities, longer daylight hours, and drier weather.
We have three large sales promotions each year.
Additionally, we have some special buys available for June graduation.
We get some small monthly revenue from these sources:
Sales Forecast | |||
Year 1 | Year 2 | Year 3 | |
Sales | |||
New Bicycles | $116,000 | $133,400 | $153,410 |
Accessories and Parts | $150,000 | $172,500 | $198,375 |
Clothing | $68,000 | $78,200 | $89,930 |
Repair and Service | $166,000 | $190,900 | $219,535 |
University Patrol Service Contract | $1,200 | $1,380 | $1,587 |
Total Sales | $501,200 | $576,380 | $662,837 |
Direct Cost of Sales | Year 1 | Year 2 | Year 3 |
New Bicycles | $78,880 | $90,712 | $104,319 |
Accessories and Parts | $75,000 | $86,250 | $99,188 |
Clothing | $23,800 | $27,370 | $31,476 |
Repair and Service | $0 | $0 | $0 |
University Patrol Service Contract | $0 | $0 | $0 |
Subtotal Direct Cost of Sales | $177,680 | $204,332 | $234,982 |
The current assistant manager, Hub Freewheeler, is buying University Cycle Works, and will manage the business. Hub has a B.S. degree in Economics and an M.A. in Comparative Literature. His passion however has always been cycling. He originally worked at his local bike shop when he was in college. After several years trying to find suitable work in his degree field, Hub gave up chasing the chimera of these fields and decided to work with something substantial, and returned to his youthful enjoyment of bicycles.
He attended two of the major bicycle mechanic training programs, at New England Bicycle Academy and the United Bicycle Institute. These courses covered mechanical service and maintenance, frame building and repair, wheel building, and shop organization, sales, and management. He has 12 years of progressively responsible experience in bicycle shops with the last five at University Cycle Works.
One of the other full-time employees, Vel O’Cipede has expressed interest in learning more about the bike industry and she will be promoted to be the new assistant manager. Vel has been with us for three years. She graduated from State University at Metroburg with tandem B.S. degrees in Exercise Physiology and Recreation Management. She loves to cycle, and has kept her contacts at the university active. Her knowledge and expertise draws many women bicyclists to our store where they know they will get the care and attention which is usually missing from traditionally male staffed shops.
The current owner, Han Delbar will be available as a resource.
Additional resources are:
The staff will consist of Hub Freewheeler, the new assistant manager, Vel O’Cipede, and two other full-time employees Dee Raylure, and Jean-Baptiste Kapsyze.
To meet the need for additional help during the year, University Cycle Works hires two to four part-time employees from the university population. We look for people who are enthusiastic about cycling, and who have a mechanical aptitude. Some of these folks have worked for us throughout their entire college sojourn. Their hours vary depending on the stores’ needs and their class schedules.
Personnel Plan | |||
Year 1 | Year 2 | Year 3 | |
Hub Freewheeler | $34,800 | $36,540 | $60,000 |
Vel O’Cipede | $27,000 | $28,350 | $30,000 |
Dee Raylure | $23,400 | $24,570 | $25,799 |
Jean-Baptiste Kapsyze | $19,800 | $20,790 | $21,830 |
Part-time Employees | $18,900 | $25,200 | $25,200 |
Total People | 5 | 7 | 7 |
Total Payroll | $123,900 | $135,450 | $162,828 |
This financial plan was developed based upon previous years’ data for the existing store, tracking trends in revenues and expenses. A five-month track of sales, accounts receivables and payables, and inventory from a year-end benchmark was made.
The seller, buyer, and the accountant worked together on the plan to balance optimism with reality.
An attorney was consulted on specifics of the sale contract.
The topics which follow present specific projections.
Payment days are averaged at 45. This is an average figure used for planning purposes. Bicycle manufacturers and some accessories suppliers offer dating programs where shops order product at the annual trade show in September for delivery in February or March so that new product will be available to customers at the beginning of the cycling season. Shops are invoiced for payment due, depending upon the program, somewhere between May and July.
The financial projections presented here are based on the assumption that suppliers will continue their current invoicing programs with University Cycle Works. We are thankful for the active support and advocacy of the various sales representatives who deal with us.
Other products are ordered on a monthly basis to replace items sold, such as tires, tubes, aptitude and cages, ball bearings, drive chains, etc. These are invoiced at net 30. Some special orders are C.O.D.
We also assume that:
General Assumptions | |||
Year 1 | Year 2 | Year 3 | |
Plan Month | 1 | 2 | 3 |
Current Interest Rate | 10.00% | 10.00% | 10.00% |
Long-term Interest Rate | 7.00% | 7.00% | 7.00% |
Tax Rate | 25.42% | 25.00% | 25.42% |
Other | 0 | 0 | 0 |
The following chart compares five key indicators as they change over time. The indicators include sales, gross margin, operating expenses, inventory turnover, and collection days. The chart uses indicator values that are set to compare changes with the base year showing up as 1.00 and all other years showing up as multiples from the base.
The Average Percent Variable Cost and Estimated Monthly Fixed Cost figures in the break-even table and chart below are drawn from data in the Profit and Loss and Sales Forecast tables. The table and chart give us a rough estimate on how much product and service we need to sell each month to cover all our expenses.
Break-even Analysis | |
Monthly Revenue Break-even | $37,354 |
Assumptions: | |
Average Percent Variable Cost | 35% |
Estimated Monthly Fixed Cost | $24,112 |
In negotiating the smooth transition in ownership, the landlord agreed with Hub to continue the current lease unchanged. As surety, one month’s rent was required as a deposit at the time of sale. This is shown in the Start-up table. Further, the landlord agreed that if, after 11 months operation the new company was solvent and current in lease payments, that the deposit could be applied to the twelfth month’s rent.
The mid-summer months of July and August are slow months when a large part of the university population is gone on summer break. The mid-winter months are traditionally loss months. The weather is the most inclement and discretionary income is at its lowest after the holiday binges. However, we try to keep our entire staff on board to work on our own inventory, store refurbishing, and staff training.
Pro Forma Profit and Loss | |||
Year 1 | Year 2 | Year 3 | |
Sales | $501,200 | $576,380 | $662,837 |
Direct Cost of Sales | $177,680 | $204,332 | $234,982 |
Other | $0 | $0 | $0 |
Total Cost of Sales | $177,680 | $204,332 | $234,982 |
Gross Margin | $323,520 | $372,048 | $427,855 |
Gross Margin % | 64.55% | 64.55% | 64.55% |
Expenses | |||
Payroll | $123,900 | $135,450 | $162,828 |
Sales and Marketing and Other Expenses | $24,866 | $27,420 | $30,521 |
Depreciation | $12,000 | $13,500 | $15,000 |
Leased Equipment | $1,800 | $1,800 | $1,800 |
Utilities | $3,600 | $3,600 | $3,780 |
Insurance | $4,200 | $4,500 | $4,725 |
Rent | $88,000 | $88,000 | $88,000 |
Payroll Taxes | $30,975 | $33,863 | $40,707 |
Other | $0 | $0 | $0 |
Total Operating Expenses | $289,341 | $308,132 | $347,361 |
Profit Before Interest and Taxes | $34,179 | $63,916 | $80,494 |
EBITDA | $46,179 | $77,416 | $95,494 |
Interest Expense | $8,433 | $6,730 | $5,040 |
Taxes Incurred | $6,445 | $14,296 | $19,178 |
Net Profit | $19,302 | $42,889 | $56,276 |
Net Profit/Sales | 3.85% | 7.44% | 8.49% |
The Cash Flow chart and table reflect the seasonality of bicycle sales and the varying payment programs. At times, the business is inventory heavy, stocking up for the beginning of school rush, or specific sales. At other times, there is substantial negative cash flow as long-term accounts payable, net 90, net 60 payments coincide with regular net 30 invoices.
Pro Forma Cash Flow | |||
Year 1 | Year 2 | Year 3 | |
Cash Received | |||
Cash from Operations | |||
Cash Sales | $501,200 | $576,380 | $662,837 |
Subtotal Cash from Operations | $501,200 | $576,380 | $662,837 |
Additional Cash Received | |||
Sales Tax, VAT, HST/GST Received | $0 | $0 | $0 |
New Current Borrowing | $0 | $0 | $0 |
New Other Liabilities (interest-free) | $0 | $0 | $0 |
New Long-term Liabilities | $0 | $0 | $0 |
Sales of Other Current Assets | $8,000 | $0 | $0 |
Sales of Long-term Assets | $0 | $0 | $0 |
New Investment Received | $0 | $0 | $0 |
Subtotal Cash Received | $509,200 | $576,380 | $662,837 |
Expenditures | Year 1 | Year 2 | Year 3 |
Expenditures from Operations | |||
Cash Spending | $123,900 | $135,450 | $162,828 |
Bill Payments | $335,368 | $377,512 | $426,127 |
Subtotal Spent on Operations | $459,268 | $512,962 | $588,955 |
Additional Cash Spent | |||
Sales Tax, VAT, HST/GST Paid Out | $0 | $0 | $0 |
Principal Repayment of Current Borrowing | $1,800 | $200 | $0 |
Other Liabilities Principal Repayment | $10,000 | $0 | $0 |
Long-term Liabilities Principal Repayment | $22,000 | $24,000 | $24,000 |
Purchase Other Current Assets | $0 | $0 | $0 |
Purchase Long-term Assets | $1,200 | $0 | $0 |
Dividends | $0 | $0 | $0 |
Subtotal Cash Spent | $494,268 | $537,162 | $612,955 |
Net Cash Flow | $14,932 | $39,218 | $49,882 |
Cash Balance | $109,932 | $149,150 | $199,033 |
Our goal is to repay the loans from our family within the first year, and we project paying Han Delbar his entire purchase price within five years. Other balance sheet information is shown in the table below.
Pro Forma Balance Sheet | |||
Year 1 | Year 2 | Year 3 | |
Assets | |||
Current Assets | |||
Cash | $109,932 | $149,150 | $199,033 |
Inventory | $16,748 | $19,260 | $22,149 |
Other Current Assets | $0 | $0 | $0 |
Total Current Assets | $126,680 | $168,410 | $221,181 |
Long-term Assets | |||
Long-term Assets | $62,700 | $62,700 | $62,700 |
Accumulated Depreciation | $12,000 | $25,500 | $40,500 |
Total Long-term Assets | $50,700 | $37,200 | $22,200 |
Total Assets | $177,380 | $205,610 | $243,381 |
Liabilities and Capital | Year 1 | Year 2 | Year 3 |
Current Liabilities | |||
Accounts Payable | $38,178 | $47,719 | $53,214 |
Current Borrowing | $200 | $0 | $0 |
Other Current Liabilities | $0 | $0 | $0 |
Subtotal Current Liabilities | $38,378 | $47,719 | $53,214 |
Long-term Liabilities | $108,000 | $84,000 | $60,000 |
Total Liabilities | $146,378 | $131,719 | $113,214 |
Paid-in Capital | $25,000 | $25,000 | $25,000 |
Retained Earnings | ($13,300) | $6,002 | $48,891 |
Earnings | $19,302 | $42,889 | $56,276 |
Total Capital | $31,002 | $73,891 | $130,167 |
Total Liabilities and Capital | $177,380 | $205,610 | $243,381 |
Net Worth | $31,002 | $73,891 | $130,167 |
Business ratio analysis for our first three years appears in the table below. For comparison, industry standard ratios for Standard Industrial Classification (SIC) code 5941, Sporting Goods and Bicycle Shops, are presented as well.
Ratio Analysis | ||||
Year 1 | Year 2 | Year 3 | Industry Profile | |
Sales Growth | 0.00% | 15.00% | 15.00% | 4.20% |
Percent of Total Assets | ||||
Inventory | 9.44% | 9.37% | 9.10% | 40.20% |
Other Current Assets | 0.00% | 0.00% | 0.00% | 24.30% |
Total Current Assets | 71.42% | 81.91% | 90.88% | 81.10% |
Long-term Assets | 28.58% | 18.09% | 9.12% | 18.90% |
Total Assets | 100.00% | 100.00% | 100.00% | 100.00% |
Current Liabilities | 21.64% | 23.21% | 21.86% | 44.70% |
Long-term Liabilities | 60.89% | 40.85% | 24.65% | 13.00% |
Total Liabilities | 82.52% | 64.06% | 46.52% | 57.70% |
Net Worth | 17.48% | 35.94% | 53.48% | 42.30% |
Percent of Sales | ||||
Sales | 100.00% | 100.00% | 100.00% | 100.00% |
Gross Margin | 64.55% | 64.55% | 64.55% | 31.80% |
Selling, General & Administrative Expenses | 60.70% | 57.11% | 56.01% | 19.00% |
Advertising Expenses | 0.75% | 0.69% | 0.68% | 1.90% |
Profit Before Interest and Taxes | 6.82% | 11.09% | 12.14% | 1.40% |
Main Ratios | ||||
Current | 3.30 | 3.53 | 4.16 | 1.97 |
Quick | 2.86 | 3.13 | 3.74 | 0.75 |
Total Debt to Total Assets | 82.52% | 64.06% | 46.52% | 57.70% |
Pre-tax Return on Net Worth | 83.05% | 77.39% | 57.97% | 3.40% |
Pre-tax Return on Assets | 14.51% | 27.81% | 31.00% | 8.20% |
Additional Ratios | Year 1 | Year 2 | Year 3 | |
Net Profit Margin | 3.85% | 7.44% | 8.49% | n.a |
Return on Equity | 62.26% | 58.04% | 43.23% | n.a |
Activity Ratios | ||||
Inventory Turnover | 10.91 | 11.35 | 11.35 | n.a |
Accounts Payable Turnover | 9.06 | 8.11 | 8.11 | n.a |
Payment Days | 44 | 41 | 43 | n.a |
Total Asset Turnover | 2.83 | 2.80 | 2.72 | n.a |
Debt Ratios | ||||
Debt to Net Worth | 4.72 | 1.78 | 0.87 | n.a |
Current Liab. to Liab. | 0.26 | 0.36 | 0.47 | n.a |
Liquidity Ratios | ||||
Net Working Capital | $88,302 | $120,691 | $167,967 | n.a |
Interest Coverage | 4.05 | 9.50 | 15.97 | n.a |
Additional Ratios | ||||
Assets to Sales | 0.35 | 0.36 | 0.37 | n.a |
Current Debt/Total Assets | 22% | 23% | 22% | n.a |
Acid Test | 2.86 | 3.13 | 3.74 | n.a |
Sales/Net Worth | 16.17 | 7.80 | 5.09 | n.a |
Dividend Payout | 0.00 | 0.00 | 0.00 | n.a |
Sales Forecast | |||||||||||||
Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
Sales | |||||||||||||
New Bicycles | 0% | $9,500 | $14,000 | $14,000 | $9,500 | $6,500 | $10,000 | $7,500 | $6,500 | $8,000 | $9,500 | $11,000 | $10,000 |
Accessories and Parts | 0% | $11,000 | $17,500 | $16,000 | $11,000 | $10,000 | $15,000 | $9,500 | $8,000 | $13,000 | $15,000 | $11,000 | $13,000 |
Clothing | 0% | $3,500 | $3,500 | $4,500 | $6,500 | $10,500 | $7,500 | $4,500 | $3,500 | $4,500 | $6,500 | $7,500 | $5,500 |
Repair and Service | 0% | $11,000 | $11,000 | $13,000 | $14,000 | $12,000 | $11,000 | $12,000 | $14,000 | $16,000 | $18,000 | $18,000 | $16,000 |
University Patrol Service Contract | 0% | $100 | $100 | $100 | $100 | $100 | $100 | $100 | $100 | $100 | $100 | $100 | $100 |
Total Sales | $35,100 | $46,100 | $47,600 | $41,100 | $39,100 | $43,600 | $33,600 | $32,100 | $41,600 | $49,100 | $47,600 | $44,600 | |
Direct Cost of Sales | Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | |
New Bicycles | 68% | $6,460 | $9,520 | $9,520 | $6,460 | $4,420 | $6,800 | $5,100 | $4,420 | $5,440 | $6,460 | $7,480 | $6,800 |
Accessories and Parts | 50% | $5,500 | $8,750 | $8,000 | $5,500 | $5,000 | $7,500 | $4,750 | $4,000 | $6,500 | $7,500 | $5,500 | $6,500 |
Clothing | 35% | $1,225 | $1,225 | $1,575 | $2,275 | $3,675 | $2,625 | $1,575 | $1,225 | $1,575 | $2,275 | $2,625 | $1,925 |
Repair and Service | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
University Patrol Service Contract | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Subtotal Direct Cost of Sales | $13,185 | $19,495 | $19,095 | $14,235 | $13,095 | $16,925 | $11,425 | $9,645 | $13,515 | $16,235 | $15,605 | $15,225 |
Personnel Plan | |||||||||||||
Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
Hub Freewheeler | 0% | $1,800 | $3,000 | $3,000 | $3,000 | $3,000 | $3,000 | $3,000 | $3,000 | $3,000 | $3,000 | $3,000 | $3,000 |
Vel O’Cipede | 0% | $2,250 | $2,250 | $2,250 | $2,250 | $2,250 | $2,250 | $2,250 | $2,250 | $2,250 | $2,250 | $2,250 | $2,250 |
Dee Raylure | 0% | $1,950 | $1,950 | $1,950 | $1,950 | $1,950 | $1,950 | $1,950 | $1,950 | $1,950 | $1,950 | $1,950 | $1,950 |
Jean-Baptiste Kapsyze | 0% | $1,650 | $1,650 | $1,650 | $1,650 | $1,650 | $1,650 | $1,650 | $1,650 | $1,650 | $1,650 | $1,650 | $1,650 |
Part-time Employees | 0% | $0 | $700 | $1,400 | $2,100 | $2,100 | $2,100 | $2,100 | $2,100 | $2,100 | $2,100 | $1,400 | $700 |
Total People | 4 | 5 | 6 | 7 | 7 | 7 | 7 | 7 | 7 | 7 | 6 | 5 | |
Total Payroll | $7,650 | $9,550 | $10,250 | $10,950 | $10,950 | $10,950 | $10,950 | $10,950 | $10,950 | $10,950 | $10,250 | $9,550 |
General Assumptions | |||||||||||||
Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
Plan Month | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | |
Current Interest Rate | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | |
Long-term Interest Rate | 7.00% | 7.00% | 7.00% | 7.00% | 7.00% | 7.00% | 7.00% | 7.00% | 7.00% | 7.00% | 7.00% | 7.00% | |
Tax Rate | 30.00% | 25.00% | 25.00% | 25.00% | 25.00% | 25.00% | 25.00% | 25.00% | 25.00% | 25.00% | 25.00% | 25.00% | |
Other | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Pro Forma Profit and Loss | |||||||||||||
Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
Sales | $35,100 | $46,100 | $47,600 | $41,100 | $39,100 | $43,600 | $33,600 | $32,100 | $41,600 | $49,100 | $47,600 | $44,600 | |
Direct Cost of Sales | $13,185 | $19,495 | $19,095 | $14,235 | $13,095 | $16,925 | $11,425 | $9,645 | $13,515 | $16,235 | $15,605 | $15,225 | |
Other | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Total Cost of Sales | $13,185 | $19,495 | $19,095 | $14,235 | $13,095 | $16,925 | $11,425 | $9,645 | $13,515 | $16,235 | $15,605 | $15,225 | |
Gross Margin | $21,915 | $26,605 | $28,505 | $26,865 | $26,005 | $26,675 | $22,175 | $22,455 | $28,085 | $32,865 | $31,995 | $29,375 | |
Gross Margin % | 62.44% | 57.71% | 59.88% | 65.36% | 66.51% | 61.18% | 66.00% | 69.95% | 67.51% | 66.93% | 67.22% | 65.86% | |
Expenses | |||||||||||||
Payroll | $7,650 | $9,550 | $10,250 | $10,950 | $10,950 | $10,950 | $10,950 | $10,950 | $10,950 | $10,950 | $10,250 | $9,550 | |
Sales and Marketing and Other Expenses | $1,618 | $2,073 | $4,268 | $1,798 | $1,738 | $1,998 | $1,698 | $1,528 | $1,813 | $2,313 | $1,993 | $2,028 | |
Depreciation | $1,000 | $1,000 | $1,000 | $1,000 | $1,000 | $1,000 | $1,000 | $1,000 | $1,000 | $1,000 | $1,000 | $1,000 | |
Leased Equipment | $150 | $150 | $150 | $150 | $150 | $150 | $150 | $150 | $150 | $150 | $150 | $150 | |
Utilities | $300 | $300 | $300 | $300 | $300 | $300 | $300 | $300 | $300 | $300 | $300 | $300 | |
Insurance | $350 | $350 | $350 | $350 | $350 | $350 | $350 | $350 | $350 | $350 | $350 | $350 | |
Rent | $8,000 | $8,000 | $8,000 | $8,000 | $8,000 | $8,000 | $8,000 | $8,000 | $8,000 | $8,000 | $8,000 | $0 | |
Payroll Taxes | 25% | $1,913 | $2,388 | $2,563 | $2,738 | $2,738 | $2,738 | $2,738 | $2,738 | $2,738 | $2,738 | $2,563 | $2,388 |
Other | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Total Operating Expenses | $20,981 | $23,811 | $26,881 | $25,286 | $25,226 | $25,486 | $25,186 | $25,016 | $25,301 | $25,801 | $24,606 | $15,766 | |
Profit Before Interest and Taxes | $935 | $2,795 | $1,625 | $1,580 | $780 | $1,190 | ($3,011) | ($2,561) | $2,785 | $7,065 | $7,390 | $13,610 | |
EBITDA | $1,935 | $3,795 | $2,625 | $2,580 | $1,780 | $2,190 | ($2,011) | ($1,561) | $3,785 | $8,065 | $8,390 | $14,610 | |
Interest Expense | $774 | $761 | $748 | $735 | $722 | $709 | $696 | $683 | $670 | $658 | $645 | $632 | |
Taxes Incurred | $48 | $508 | $219 | $211 | $14 | $120 | ($927) | ($811) | $529 | $1,602 | $1,686 | $3,244 | |
Net Profit | $113 | $1,525 | $657 | $633 | $43 | $360 | ($2,780) | ($2,433) | $1,586 | $4,805 | $5,059 | $9,733 | |
Net Profit/Sales | 0.32% | 3.31% | 1.38% | 1.54% | 0.11% | 0.83% | -8.27% | -7.58% | 3.81% | 9.79% | 10.63% | 21.82% |
Pro Forma Cash Flow | |||||||||||||
Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
Cash Received | |||||||||||||
Cash from Operations | |||||||||||||
Cash Sales | $35,100 | $46,100 | $47,600 | $41,100 | $39,100 | $43,600 | $33,600 | $32,100 | $41,600 | $49,100 | $47,600 | $44,600 | |
Subtotal Cash from Operations | $35,100 | $46,100 | $47,600 | $41,100 | $39,100 | $43,600 | $33,600 | $32,100 | $41,600 | $49,100 | $47,600 | $44,600 | |
Additional Cash Received | |||||||||||||
Sales Tax, VAT, HST/GST Received | 0.00% | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
New Current Borrowing | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
New Other Liabilities (interest-free) | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
New Long-term Liabilities | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Sales of Other Current Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $8,000 | |
Sales of Long-term Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
New Investment Received | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Subtotal Cash Received | $35,100 | $46,100 | $47,600 | $41,100 | $39,100 | $43,600 | $33,600 | $32,100 | $41,600 | $49,100 | $47,600 | $52,600 | |
Expenditures | Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | |
Expenditures from Operations | |||||||||||||
Cash Spending | $7,650 | $9,550 | $10,250 | $10,950 | $10,950 | $10,950 | $10,950 | $10,950 | $10,950 | $10,950 | $10,250 | $9,550 | |
Bill Payments | $18,533 | $18,893 | $36,063 | $37,919 | $28,809 | $24,601 | $31,000 | $26,371 | $19,577 | $26,863 | $33,930 | $32,810 | |
Subtotal Spent on Operations | $26,183 | $28,443 | $46,313 | $48,869 | $39,759 | $35,551 | $41,950 | $37,321 | $30,527 | $37,813 | $44,180 | $42,360 | |
Additional Cash Spent | |||||||||||||
Sales Tax, VAT, HST/GST Paid Out | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Principal Repayment of Current Borrowing | $150 | $150 | $150 | $150 | $150 | $150 | $150 | $150 | $150 | $150 | $150 | $150 | |
Other Liabilities Principal Repayment | $0 | $0 | $0 | $1,000 | $1,500 | $2,500 | $1,000 | $0 | $0 | $0 | $2,500 | $1,500 | |
Long-term Liabilities Principal Repayment | $0 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | |
Purchase Other Current Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Purchase Long-term Assets | $100 | $100 | $100 | $100 | $100 | $100 | $100 | $100 | $100 | $100 | $100 | $100 | |
Dividends | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Subtotal Cash Spent | $26,433 | $30,693 | $48,563 | $52,119 | $43,509 | $40,301 | $45,200 | $39,571 | $32,777 | $40,063 | $48,930 | $46,110 | |
Net Cash Flow | $8,667 | $15,407 | ($963) | ($11,019) | ($4,409) | $3,299 | ($11,600) | ($7,471) | $8,823 | $9,037 | ($1,330) | $6,490 | |
Cash Balance | $103,667 | $119,074 | $118,111 | $107,092 | $102,683 | $105,982 | $94,382 | $86,912 | $95,734 | $104,771 | $103,442 | $109,932 |
Pro Forma Balance Sheet | |||||||||||||
Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
Assets | Starting Balances | ||||||||||||
Current Assets | |||||||||||||
Cash | $95,000 | $103,667 | $119,074 | $118,111 | $107,092 | $102,683 | $105,982 | $94,382 | $86,912 | $95,734 | $104,771 | $103,442 | $109,932 |
Inventory | $17,000 | $14,504 | $21,445 | $21,005 | $15,659 | $14,405 | $18,618 | $12,568 | $10,610 | $14,867 | $17,859 | $17,166 | $16,748 |
Other Current Assets | $8,000 | $8,000 | $8,000 | $8,000 | $8,000 | $8,000 | $8,000 | $8,000 | $8,000 | $8,000 | $8,000 | $8,000 | $0 |
Total Current Assets | $120,000 | $126,170 | $148,518 | $147,115 | $130,750 | $125,088 | $132,599 | $114,950 | $105,521 | $118,601 | $130,630 | $128,607 | $126,680 |
Long-term Assets | |||||||||||||
Long-term Assets | $61,500 | $61,600 | $61,700 | $61,800 | $61,900 | $62,000 | $62,100 | $62,200 | $62,300 | $62,400 | $62,500 | $62,600 | $62,700 |
Accumulated Depreciation | $0 | $1,000 | $2,000 | $3,000 | $4,000 | $5,000 | $6,000 | $7,000 | $8,000 | $9,000 | $10,000 | $11,000 | $12,000 |
Total Long-term Assets | $61,500 | $60,600 | $59,700 | $58,800 | $57,900 | $57,000 | $56,100 | $55,200 | $54,300 | $53,400 | $52,500 | $51,600 | $50,700 |
Total Assets | $181,500 | $186,770 | $208,218 | $205,915 | $188,650 | $182,088 | $188,699 | $170,150 | $159,821 | $172,001 | $183,130 | $180,207 | $177,380 |
Liabilities and Capital | Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | |
Current Liabilities | |||||||||||||
Accounts Payable | $27,800 | $33,108 | $55,180 | $54,370 | $39,622 | $36,666 | $47,567 | $34,948 | $29,202 | $41,946 | $50,420 | $47,089 | $38,178 |
Current Borrowing | $2,000 | $1,850 | $1,700 | $1,550 | $1,400 | $1,250 | $1,100 | $950 | $800 | $650 | $500 | $350 | $200 |
Other Current Liabilities | $10,000 | $10,000 | $10,000 | $10,000 | $9,000 | $7,500 | $5,000 | $4,000 | $4,000 | $4,000 | $4,000 | $1,500 | $0 |
Subtotal Current Liabilities | $39,800 | $44,958 | $66,880 | $65,920 | $50,022 | $45,416 | $53,667 | $39,898 | $34,002 | $46,596 | $54,920 | $48,939 | $38,378 |
Long-term Liabilities | $130,000 | $130,000 | $128,000 | $126,000 | $124,000 | $122,000 | $120,000 | $118,000 | $116,000 | $114,000 | $112,000 | $110,000 | $108,000 |
Total Liabilities | $169,800 | $174,958 | $194,880 | $191,920 | $174,022 | $167,416 | $173,667 | $157,898 | $150,002 | $160,596 | $166,920 | $158,939 | $146,378 |
Paid-in Capital | $25,000 | $25,000 | $25,000 | $25,000 | $25,000 | $25,000 | $25,000 | $25,000 | $25,000 | $25,000 | $25,000 | $25,000 | $25,000 |
Retained Earnings | ($13,300) | ($13,300) | ($13,300) | ($13,300) | ($13,300) | ($13,300) | ($13,300) | ($13,300) | ($13,300) | ($13,300) | ($13,300) | ($13,300) | ($13,300) |
Earnings | $0 | $113 | $1,638 | $2,295 | $2,929 | $2,972 | $3,332 | $552 | ($1,881) | ($295) | $4,510 | $9,568 | $19,302 |
Total Capital | $11,700 | $11,813 | $13,338 | $13,995 | $14,629 | $14,672 | $15,032 | $12,252 | $9,819 | $11,405 | $16,210 | $21,268 | $31,002 |
Total Liabilities and Capital | $181,500 | $186,770 | $208,218 | $205,915 | $188,650 | $182,088 | $188,699 | $170,150 | $159,821 | $172,001 | $183,130 | $180,207 | $177,380 |
Net Worth | $11,700 | $11,813 | $13,338 | $13,995 | $14,629 | $14,672 | $15,032 | $12,252 | $9,819 | $11,405 | $16,210 | $21,268 | $31,002 |
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Starting a bike shop is a rewarding career if you have the passion and skills. A bike business is a line of work where even a simple operation can generate substantial profits.
Want proof? We interviewed two business owners who took different approaches to starting a bike shop.
Armen, founder of the Glendale-based Bicycle Pit Stop , started his business in high school to make some extra money and fill his time. He used the common garage, a business strategy that many entrepreneurs use.
Meanwhile, Troy Rarick started Over the Edge Sports (OTES) using a business-minded approach that involved creating a business plan, securing investors, and developing a marketing strategy to pull people into his small town on their way to Moab, Colorado.
From there, Troy has expanded OTES to multiple locations across the globe.
Whether you are more like Armen or Troy, there is an opportunity for you to start a shop focused on bikes. We’ll discuss the steps to start a bike business and share insights from both Troy and Armen.
The cycling industry generated over $12 billion dollars in 2020 and is expected to grow 5% by 2029, generating opportunities to find your niche in the industry and help other enthusiasts get on bikes.
If bicycles are your passion, this guide will help you start a bike shop.
An operational bike shop often comes with the equipment, inventory, and location all in one, and is a faster way to get started.
Conduct research to determine what is right for you. Your bicycle store should be run in a way that works for you, but will also satisfy your customer’s desires.
You may want to run a store focused on professional cyclers, one that caters to local riders, or you may want a warehouse where you focus on online sales.
You aren’t limited to just one type, but the type of business you choose will impact every decision you make going forward.
Bicycle Pit Stop focuses on all bicycles, including electric ones, but excluding motorcycles. Meanwhile Over the Edge rents and sells mountain bikes to ride on their trails.
Many consumers start their shopping experience online, so a shop that can sell a bike in person or online is a good way to start your bike business.
Mountain Bikes are the largest segment of bike sales, with over 25% of cyclists saying their next bicycle purchase will be a mountain bike. Make sure you have a good variety because mountain bikes will be an easy sell.
In fact, mountain bikes were what inspired Troy to start his business. While he was working on getting the funding to start the business, he was also buying land and building trails to give a unique experience to bike riders.
To learn more about bike terms, check out the glossary of terms .
I can’t stress enough the importance of a bike business name. Keep reading for best practices when naming a bike business.
Bicycle Pit Stop includes the products serviced as well as what it does, Pit Stop (a reference to the quick service provided in racing).
Make sure your business name is easy to remember when using a search engine.
A crazy name like Quasimodo Bikes makes searching for your business difficult. Register domain names for common misspellings and forward them to your website.
Including your state, county, or city identifies you as a local business. For example, Las Vegas Mountain Bikes would be a business located in Las Vegas.
Does your name fit your branding? Some business owners focus on visual ideas for a logo before a name. Las Vegas Mountain Bikes might have a logo with mountains, the strip, and bikes. It’s about communicating ideas, right?
Find a name for which the .com domain is available. It’s the most recognizable. You can conduct a search by clicking here .
See how people like it. Make sure to check what happens if people shorten it. You wouldn’t want to name a business Destin Off-Road Klub because it would get shortened to DORK, and that isn’t what you want to communicate.
Check Google Trends. Read articles like Five Tools for Naming a Business. Finally, register your business name with the government.
You need a bike shop business plan to help define your vision, objectives, and strategy.
Its purpose is to drive the direction of your business by guiding decisions, securing financing, and developing partnerships with other businesses.
Armen told us:
In the beginning there was no plan. Just make everything as nice as possible. Then the plan started forming. I looked at it as the future of the business. I always stuck to service. The plan always changes. It grows and evolves into an art.
Having a flexible business plan that is constantly evolving is a great approach to the process and allows for businesses to pivot when necessary. Here are some resources to help with this step.
These business plan templates focus on helping small businesses succeed. Want to know the best part? They are all free!
It gets better! Enjoy free and low-cost resources about writing successful business plans:
You have a business plan and name. Now you need to establish the legal structure for your bike business.
For best results, hire legal representation that has experience starting a business, like an attorney, accountant, or tax specialist. They’ll help you get your business started quicker so you can start selling bikes faster.
Each location has different licenses, permits, or tax forms required. Use the SBA License and Permits page to identify what your bike shop needs. Let’s look at different legal structures for bike businesses.
A sole proprietorship is the easiest way to start a bike business. The bike company doesn’t protect the owner’s personal assets, meaning if the company has legal issues, you could lose your home as well as your business.
This structure should only be used if you cannot afford an LLC because bike companies have work that can cause injuries.
To start a sole proprietorship, fill out a special tax form called a Schedule C. Sole proprietors can also join the American Independent Business Alliance.
LLC is the most common business structure used in the United States because the company protects the owner’s personal assets.
It’s similar to partnerships and corporations but can be a single-member LLC in most states. An LLC requires a document called an operating agreement.
Partnerships and corporations are typically for massive organizations or legal firms.
Unless there is a specific reason you need a partnership, it is better to do a multi-person LLC. Investopedia has good information about partnerships and corporations here .
There are several opportunities to purchase bike franchises.
Franchising.com has two franchise opportunities in the United States and two in Australia that allow you to start a bike business using a reputable company’s name and business processes.
This makes it where an entrepreneur can benefit from the reputation of a bike business that has already worked out many of the kinks of starting from scratch.
Your bike business is an entity now, but you still need more. The order you do the rest of the steps will depend on the resources you have, your skill sets, and the type of bicycle business you are running.
There are five areas of business you will need to focus on to get your shop running:
Finding a location will vary based on the bike business. For instance Armen started repairing bikes out of his garage while Troy was building trails for people to ride their mountain bikes.
When deciding to rent a space for a bicycle-based business, consider:
When opening a bike shop, you will probably need to rent space in your city. To find spaces to rent in your area, contact a local commercial real estate agent. You can search for them by your area here.
Each city and state has different requirements for where a business is allowed to be located. Local ordinances might not allow a bike business to be home-based.
How am I supposed to start my shop with so many rules about bikes? Just search Municode Library to find your city regulations.
When looking for a space to rent, take into consideration your ideal client and what stores they might frequent.
For instance, they might want coffee or a smoothie after a long bike ride. Finding the right place will take some research, which will be much easier after considering your marketing efforts.
A new shop requires inventory. Whether it is new bikes, replacement parts, or product displays for your store, there will be some costs associated with selling and repairing bikes.
Each of the business owners we talked to while researching this article took different approaches.
Armen started his business with virtually no inventory. He’d order it off of Amazon when he needed a part. This kept his upfront costs low.
Troy decided to go a different route and have inventory upfront so that people could rent or buy bikes to ride the trails he’d built.
To find a list of major bike manufacturers, check out this article .
Tools and product displays can often be found at huge discounts if you buy them used. You can find used tools and product displays through most online markets, pawnshops, going out of business sales, and other places.
If you are considering buying an existing business, they should be included in the purchase price. Learn more about valuing an existing business in our guide about buying businesses.
Troy emphasized the importance of good people, saying:
An open bicycle shop might need employees. Depending on your financial position when starting, you can work all the hours yourself or hire employees.
Either way, there are some things you’ll be required to do. Keep reading for more info.
Get an Employer Identification Number (EIN) from the IRS to identify your company. Apply here or call 800-829-4933.
Federal and state tax filing requirements apply to new employers. You must keep records of employment taxes for at least four years, including special forms and accounting for state taxes.
Don’t worry! We’ve got you covered! Check out the IRS guide for employers here .
Unemployment Insurance Tax is required. It is a program under the Social Security Tax for employers.
All employers must display Workplace Posters , which you can download from the website.
Other requirements include:
Hiring people requires posting “now hiring” signs and posting on prominent job boards. Some places you can start posting job requirements are:
Having a prepared list of questions for interviews can make hiring the right people easier. Indeed offers a variety of resources to help you make better hiring decisions. Read their guide: How to hire your first employee.
Employees are typically a company’s biggest expense. Let’s take a closer look.
There are 3 common pay structures in business. Each fits different scenarios.
Flat weekly/monthly rate based on a person working a specific number of hours. This is typically reserved for owners, managers, and some admin roles. You might want to assign this to yourself for budgeting purposes.
This pay structure just tracks the hours an employee works and pays them a set hourly rate. This pay structure is solely based on time, not performance.
This pay structure is used for mechanics and other tradespeople where billing is based on the expected time it takes to complete a task.
This is a way of combining performance and time into the pay structure because those who complete a job successfully in less time have more opportunities to work on other projects.
This also protects the company from overcompensating for the learning curve.
Typically used in sales to give employees a percentage of revenue. It is a strictly performance compensation model.
Hybrid models combine two pay structures. For instance, hourly and commission to compensate for time and performance.
The hourly rate will typically be lower than an hourly rate without commission, but the commission should make it where good performing employees make more than they would without commission.
These structures also help reduce the variability of pay from week to week.
Paying employees an hourly wage works for most positions if your new bike business doesn’t require salespeople.
The article , “How to Create a Pay Structure That Promotes Team and Company Growth” offers some insights into thinking about pay structure.
A crucial portion of successfully starting a small business is managing the financial aspect of the bike store. Armen told us when he started his bike shop:
That is a pretty risky way of starting a business that requires financial discipline because credit cards have high interest rates. To find banks that work with small businesses, use this resource .
Let’s look at some tricks you can use to help your bike shop become profitable.
A budget is the most important tool you can use in business. Without it, your bike shop might not make it through the first few years.
While Armen started Bicycle Pit Stop with a shoestring budget, Troy says:
Troy spends a good bit of time discussing his budgeting strategy so I’ve put together a table to help you understand how he budgets.
Basically, he uses rules of thumb to keep his net profit margins around 10%. The table below shows what each of his budgets would be for $100,000 revenue in a bike business.
Troy loves Quickbooks because it lets him “develop budgets quickly without an accounting degree.” To learn more about budgets, check out low-cost courses from Udemy
Starting a bike shop doesn’t cost a fortune. The initial investment in owning a bike shop can be one year of savings.
Funds to start your bike shop can come from:
The SBA offers free courses on financing options and funding programs . For info on using personal funds to start a business, check out this article from The Hartford.
Alternative sources of funding include:
How you price your bikes and services will impact how many people you draw to the shop. If your prices are too high, they’ll go elsewhere. Too low, you’ll lose money.
Based on the rules of thumb presented by Troy in his interview, you’ll make about $10-27k for every $100k in sales if you use a 50% markup, which is pretty standard amongst businesses.
Shops will often sell their products or services for a lower price to bring in new customers. Be careful about this.
If you sell your bikes for a discount and they tell others, you might have to sell another bike for the same price. People love a good deal! Just make sure it is sustainable for your bike shop.
Inflation occurs every year. To keep your business running, raise your prices 5% per year. It gives you room to increase wages and to make some extra money. Makes sense, right?
Your Bike shop is open. You have bikes to sell, parts to fix bikes that people bring in, but no clients!
How are you going to let people know about your company?
Marketing is crucial for all new businesses. Both Armen and Troy spent a good bit of time discussing their marketing strategies with us. Let’s look at what they have to say!
Armen tells us he started with Yelp, then gradually added Google. Over time, he has also added Instagram to market his bike shop. He thinks:
It sounds like Yelp’s pricing forced him to look for less costly alternatives and drove him to Google My Business and Instagram where he can do marketing without paying to show off his shop and bikes to people.
Troy uses a variety of methods to market his bike company. While he doesn’t discuss his social media marketing, a little research shows each of their locations has thousands of followers and hundreds of posts.
It’s obvious that they put some effort into social media to advertise their shop. Bike enthusiasts can share their photos as well.
Troy uses some innovative ways of marketing as well. He discusses how his bike company got to be known throughout the biking world by hosting the lunch at a bike convention:
USA Cycling offers resources for clubs that can help with marketing influence. You can join one or start your own. Another common marketing tool is social media influencers.
For a list of cycling influencers, check this article out or use a hashtag generator to get the attention of cycling enthusiasts on your social media channels.
To recap this guide on how to start a bike business, ask yourself the following questions:
Take the next step. Now that you know how, start a bicycle sales or repair business! The truth is, all it takes is a great idea, some skills in repairs and sales, and a good marketing strategy to get started. As Armen told us:
Let us know in the comments below if you have any questions—we’ll be more than happy to help!
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Are 2 to 3 employees good enough to start a bike shop? Thanks!
That should be enough. It depends on the hours you have, whether you want full-time or part-time employees, and the services you offer. I would use the formula (shop hours x positions need each hour) divided by 40 hours to calculate the needed Full-Time Equivalent Employees. Then I would add at least one extra employee to make sure you are never short staffed.
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Start your 10-day free trial of the UpFlip Academy and learn how to start your own business from scratch.
Here is a free business plan sample for a bicycle shop.
Are you passionate about cycling and considering turning that passion into a profitable business? Look no further.
In the following paragraphs, we will present to you a comprehensive business plan sample tailored for a bicycle shop.
As an aspiring entrepreneur, you're likely aware that a robust business plan is crucial for steering your venture towards success. It serves as a roadmap, outlining your business's purpose, objectives, and strategies.
To jumpstart your journey, you can utilize our bicycle shop business plan template. Our team is also on standby to provide a free review and fine-tuning of your plan.
A good business plan for a bicycle shop must reflect the unique aspects of this type of retail business.
To start, it is crucial to provide a comprehensive overview of the cycling market. This includes offering up-to-date statistics and identifying emerging trends in the industry, as illustrated in our bicycle shop business plan template .
Then, you should articulate your business concept effectively. This encompasses your vision, pinpointing your target market (such as urban commuters, sports enthusiasts, families), and the distinctive positioning of your bicycle shop (high-performance, electric, custom builds, etc.).
The next section should delve into market analysis. This requires a thorough understanding of local competitors, market dynamics, and consumer preferences.
For a bicycle shop, particular emphasis should be placed on the range of products and services you plan to offer. Detail your inventory - bikes, accessories, gear - and services such as repairs, fittings, and maintenance, and explain how they cater to the needs and interests of your target customers.
The operational plan is also vital. It should outline the location of your shop, the layout of the retail and service areas, relationships with bike manufacturers and parts suppliers, and the service workflow.
For a bicycle shop, it is important to highlight the quality of the bicycles, the expertise of the staff, and the level of customer service.
Then, address your marketing and sales strategy. How will you draw in and keep customers? Consider advertising tactics, customer loyalty programs, and cross-promotions with local events or cycling clubs.
Adopting digital strategies, such as an e-commerce platform or a robust social media presence, is also crucial in the modern marketplace.
The financial framework is another critical component. This includes the initial investment, projected sales, operating expenses, and the point at which the business will become profitable.
In a bicycle shop, margins can vary widely across different products and services, so it is essential to plan carefully and have a solid grasp of your financials. For assistance, you can refer to our financial forecast for a bicycle shop .
Compared to other business plans, a bicycle shop's plan must pay special attention to inventory management, seasonal fluctuations in sales, and the potential for offering classes or community events.
A well-crafted business plan will not only help the entrepreneur to define their strategy and approach but also to attract investors or secure loans.
Lenders and investors are looking for thorough market research, realistic financial projections, and a clear plan for day-to-day operations.
By presenting a detailed and substantiated plan, you showcase your professionalism and dedication to the success of your bicycle shop.
To achieve these goals while saving time, feel free to complete our bicycle shop business plan template .
Here, we will provide a concise and illustrative example of a business plan for a specific project.
This example aims to provide an overview of the essential components of a business plan. It is important to note that this version is only a summary. As it stands, this business plan is not sufficiently developed to support a profitability strategy or convince a bank to provide financing.
To be effective, the business plan should be significantly more detailed, including up-to-date market data, more persuasive arguments, a thorough market study, a three-year action plan, as well as detailed financial tables such as a projected income statement, projected balance sheet, cash flow budget, and break-even analysis.
All these elements have been thoroughly included by our experts in the business plan template they have designed for a bicycle shop .
Here, we will follow the same structure as in our business plan template.
Market data and figures.
The bicycle industry is a dynamic market with a strong growth trajectory.
Recent estimates value the global bicycle market at approximately 65 billion dollars, with expectations for continued growth due to rising health consciousness and environmental concerns. The popularity of cycling as a form of exercise and a sustainable mode of transportation is driving this trend.
In the United States, there are over 15,000 bicycle retail establishments, generating an annual revenue of about 6 billion dollars. This underscores the significant role that bicycle shops play in the American lifestyle and economy.
These figures highlight the robust nature of the bicycle market and its potential for new entrants.
The bicycle industry is experiencing several key trends that are shaping its future.
Electric bikes (e-bikes) are gaining momentum, with advancements in battery technology making them more accessible and efficient. This trend is expanding the market to include older demographics and those looking for an easier commute.
Urban cycling infrastructure improvements are encouraging more people to consider bicycles as a viable transportation option, leading to increased demand for city bikes and related accessories.
There is also a growing interest in cycling for health and fitness, which has boosted the sales of road and mountain bikes, as well as cycling gear and wearables that track performance.
Moreover, the rise of online shopping has led to an increase in direct-to-consumer sales, although many customers still prefer the personalized service and expertise that physical bicycle shops offer.
Sustainability is another important trend, with consumers showing a preference for eco-friendly products and brands that demonstrate a commitment to reducing their environmental impact.
These trends are indicative of a market that is rapidly evolving to meet the needs of modern consumers who value health, sustainability, and convenience.
Several factors contribute to the success of a bicycle shop.
Quality of products is paramount. Shops that offer durable, high-performance bicycles and accessories are more likely to build a loyal customer base.
Innovation in product offerings, such as the latest e-bike models or cutting-edge cycling gear, can differentiate a shop from its competitors.
Location is critical, with shops situated in areas with a strong cycling culture or near popular cycling routes having a distinct advantage.
Exceptional customer service, including knowledgeable staff and reliable maintenance services, is essential for customer satisfaction and repeat business.
Effective inventory management and competitive pricing are also important to ensure profitability and market competitiveness.
Lastly, embracing current industry trends, such as offering sustainable products and organizing community cycling events, can help a bicycle shop stay relevant and attract a wider customer base.
Project presentation.
Our bicycle shop project is designed to cater to the increasing number of cycling enthusiasts and commuters looking for reliable, high-quality bicycles and gear. Situated in an area with a strong cycling culture or near popular bike trails, this shop will offer a diverse range of bicycles, from road and mountain bikes to electric and children's bikes, all from reputable brands.
We will emphasize the quality, performance, and safety of our products to ensure an outstanding cycling experience for our customers.
This bike shop aims to become a hub for the local cycling community, providing not only equipment but also a space for cyclists to connect and share their passion for biking.
The value proposition of our bicycle shop project is centered on delivering top-tier cycling products and services that cater to both avid cyclists and casual riders.
Our dedication to offering a wide selection of bikes, accessories, and maintenance services ensures a comprehensive cycling experience, while promoting a healthy, eco-friendly mode of transportation.
We are committed to fostering a community around cycling, providing expert advice, organized rides, and workshops to engage and educate our customers about the joys and benefits of cycling.
Our bicycle shop strives to be a cornerstone of the community, offering a sustainable and enjoyable transportation alternative and enhancing the quality of life for our customers.
The project owner is an avid cyclist with a strong grasp of the cycling industry and the needs of fellow riders.
With a background in bicycle retail and a passion for all things cycling, he is determined to create a bicycle shop that stands out for its dedication to quality, customer service, and community involvement.
Driven by a vision of sustainability and health, he is committed to providing a selection of bikes and gear that will encourage more people to take up cycling, whether for recreation, fitness, or commuting.
His commitment to the cycling lifestyle and his expertise in the field make him the driving force behind this project, aiming to enhance the cycling experience for everyone in the local community.
Market segments.
The market segments for this bicycle shop are divided into several categories.
First, there are professional and amateur cyclists who require high-quality bicycles and gear for their sporting activities.
Next, there are everyday commuters who are looking for reliable and efficient bicycles to navigate the urban environment.
The market also includes families seeking bicycles for leisure activities and outdoor bonding experiences.
Finally, fitness enthusiasts who use cycling as a form of exercise represent another key segment, as well as environmental advocates who prefer bicycles as a sustainable mode of transportation.
A SWOT analysis of this bicycle shop project reveals several aspects.
Strengths include a wide range of bicycle models and accessories, knowledgeable staff, and a strong focus on customer service.
Weaknesses could include the seasonal nature of bicycle sales and the potential for high inventory costs.
Opportunities lie in the growing trend towards eco-friendly transportation, the increasing popularity of cycling for fitness, and the potential for community engagement through workshops and cycling events.
Finally, threats could include competition from online retailers and fluctuations in the economy that may affect consumers' discretionary spending.
Competitor analysis in the bicycle retail sector reveals a mix of competition.
Among direct competitors are other local bicycle shops, as well as large sporting goods stores and online retailers.
These players compete on price, selection, and convenience.
Potential competitive advantages include personalized customer service, expert bike fitting and maintenance services, community involvement, and a strong online presence.
Understanding competitors' strengths and weaknesses is crucial for carving out a niche in the local market and building a loyal customer base.
Our bicycle shop's commitment to providing high-quality bicycles and accessories is central to our business model.
We offer a wide selection of products catering to different cycling needs, from road racing to mountain biking and everything in between.
Our knowledgeable staff are passionate about cycling and provide expert advice and personalized service, ensuring that customers find the perfect bike and gear for their needs.
We also offer value-added services such as professional bike fitting, maintenance workshops, and organized community rides, which help us to build a strong and engaged local cycling community.
You can also read our articles about: - how to start a bicycle shop: a complete guide - the customer segments of a bicycle shop - the competition study for a bicycle shop
Development plan.
Our three-year development plan for the bicycle shop is designed to cater to the needs of cycling enthusiasts and commuters alike.
In the first year, we will concentrate on building a strong local customer base by offering high-quality bicycles, accessories, and repair services. We will also focus on establishing our brand as a community hub for cycling enthusiasts.
The second year will involve expanding our product lines to include electric bikes and high-performance gear, as well as hosting workshops and cycling events to increase community engagement.
In the third year, we plan to explore opportunities for online sales and possibly open additional locations in areas with a high demand for cycling products and services.
Throughout this period, we will remain dedicated to providing exceptional customer service, expert knowledge, and a passion for cycling that resonates with our customers and strengthens our market position.
The Business Model Canvas for our bicycle shop focuses on serving cycling enthusiasts, commuters, and families looking for quality bikes and related services.
Our value proposition is centered around offering a wide range of bicycles, expert repair services, and personalized customer experiences.
We will sell our products and services through our physical shop and an online platform, utilizing key resources such as our knowledgeable staff, repair workshop, and a curated selection of products.
Key activities include sales, bike servicing and repairs, and community engagement through events and workshops.
Our revenue streams will be generated from the sale of bicycles, accessories, and service fees, while our costs will be associated with inventory, staffing, and marketing efforts.
Find a complete and editable real Business Model Canvas in our business plan template .
Our marketing strategy is centered on community involvement and lifestyle branding.
We aim to become a local hub for cyclists by offering not just products and services but also knowledge and a place to connect with other cycling enthusiasts. Our strategy includes hosting community rides, repair workshops, and sponsoring local cycling events.
We will leverage social media to showcase our products, share cycling tips, and highlight customer experiences. Influencer partnerships with local cyclists will help us reach a wider audience.
Additionally, we will offer loyalty programs and promotions to encourage repeat business and word-of-mouth referrals.
The risk policy for our bicycle shop is designed to mitigate risks associated with inventory management, service quality, and market fluctuations.
We will implement a robust inventory system to ensure we have the right products in stock without overinvesting in slow-moving items. Our staff will be trained to provide high-quality repairs and customer service to maintain our reputation.
We will keep abreast of market trends to adapt our product offerings accordingly and avoid obsolescence. A conservative financial management approach will help us navigate economic uncertainties.
Additionally, we will secure comprehensive insurance to cover potential liabilities related to product warranties and service guarantees. Our focus is on delivering safe, reliable products and services to our customers.
We are committed to launching a bicycle shop that meets the growing demand for sustainable transportation and recreational activities.
With our focus on quality products, expert services, and community engagement, we believe we can carve out a significant niche in the cycling market.
We are excited to foster a vibrant cycling culture in our area and to build a successful business that promotes a healthy, active lifestyle.
We are adaptable and ready to respond to the evolving needs of our customers and the market, and we look forward to the road ahead for our bicycle shop.
You can also read our articles about: - the Business Model Canvas of a bicycle shop - the marketing strategy for a bicycle shop
Of course, the text presented below is far from sufficient to serve as a solid and credible financial analysis for a bank or potential investor. They expect specific numbers, financial statements, and charts demonstrating the profitability of your project.
All these elements are available in our business plan template for a bicycle shop and our financial plan for a bicycle shop .
Initial expenses for our bicycle shop include the cost of securing a retail space, purchasing an initial inventory of bicycles, parts, and accessories, investing in tools and equipment for bike repairs and maintenance, staff training to ensure expert customer service and technical knowledge, as well as expenses related to branding and launching targeted marketing campaigns to build a customer base.
Our revenue assumptions are based on a thorough analysis of the local market demand for bicycles, considering factors such as the popularity of cycling in the area, the presence of cycling communities, and the potential for year-round sales.
We anticipate a steady growth in sales, starting with a conservative estimate and increasing as our reputation as a reliable and knowledgeable bicycle shop spreads.
The projected income statement outlines expected revenues from bicycle and accessory sales, service charges for repairs and maintenance, production costs (inventory procurement, labor, utilities), and operating expenses (rent, marketing, salaries, etc.).
This results in a forecasted net profit that is essential for assessing the long-term profitability of our bicycle shop.
The projected balance sheet reflects assets specific to our business, such as inventory, tools, and equipment, and liabilities including loans and anticipated expenses.
It provides a snapshot of the financial health of our bicycle shop at the end of each fiscal period.
Our projected cash flow statement details the inflows and outflows of cash, enabling us to predict our financial needs at any given time. This will assist us in managing our finances effectively and preventing cash flow issues.
The projected financing plan identifies the specific sources of funding we intend to use to cover our startup costs.
The working capital requirement for our bicycle shop will be meticulously monitored to ensure we have sufficient liquidity to support our daily operations, such as inventory purchases, managing stock levels, and paying employee wages.
The break-even point for our venture is the level of sales required to cover all our costs, including initial investments, and to begin generating a profit.
It will signal when our business is expected to become financially sustainable.
Performance indicators we will monitor include the profit margin on bicycle sales and services, the inventory turnover rate to assess the efficiency of our stock management, and the return on investment to evaluate the profitability of the capital invested in our shop.
These metrics will aid us in assessing the financial performance and overall success of our bicycle shop.
If you want to know more about the financial analysis of this type of activity, please read our article about the financial plan for a bicycle shop .
You love bikes, you think you’re business savvy and a window of opportunity exists to go it alone and open a bike shop. So, it’s business plan time. Duncan Moore puts himself in the shoes of the upstart and details all the micro considerations that must be addressed before you pass go…
When COVID first hit and the world went into lockdown it was boom time for the cycle industry; everyone wanted to start riding again and bikes sales soared alongside workshop service and repair work. This didn’t go unnoticed by the general public either as people working from home or idling hours away on furlough began to think about what they wanted from life and the chatter on various forums and Facebook groups suggests opening a bike shop seems like a really good idea. But what is the reality of making that dream come true?
There’s a joke in the cycle industry that gets rolled out every time some asks about opening a bike shop – How do you make a small fortune in the bike trade? Start with a large one. The sad thing is that it is all too easy for this to be the reality of opening a bike shop but how can you avoid the mistakes that make this less of a joke and reality for many who try?
If I was being cruel, I could say don’t open a shop and in so doing save yourself a whole load of heartache and financial misfortune, but if you’re reading this that’s not what you want to hear. So, let’s take a look at how to open a shop without losing your shirt…
When it comes to opening a bike shop, just like starting any other business, the first thing you need to do is put together a business plan. It needn’t be a scary as it sounds either. Basically, it is a way of outlining your idea and justifying it to others (such as your bank manager). It’s all about the how what and whys of what you plan to do. Don’t think of it as a chore that has to be done before you can get on with the fun stuff but view it more as a set of guidelines and goals that can be ticked off as each piece plan is completed. Don’t be afraid to show it to friends either, a second set of eyes may spot a glaring error that you’ve missed or be able to provide valuable insights and suggestions.
That’s as far as I’m going to go with telling you about having a business plan. A comprehensive guide to writing one could be a feature in its own right. However, what I’ll do is talk about the points to consider when putting your plan together.
It’s all very well deciding that you want a bike shop but what is the point of it? Why should people come to your store? What is your USP (unique selling point)? If you have a Halfords nearby then forget about concentrating on kids’ bikes as you’ll never get near the big H on price. However, you could make high-end service work your USP as that is something that is perceived as not being a Halfords’ specialism. What’s the local scene like where you are thinking of setting up? If there’s a strong road club then MTBs are not going to sell very well, if the market isn’t there the product won’t sell.
And while you’re looking at what other shops in the area think about where they are located and what their target market is. If you think a workshop-based business is the way forward for you, targeting the commuter market then an out-of-town location isn’t going to work. On the other hand, if you’re planning on concentrating on bike sales then think about how customers are going to get to your store. Is there plenty of parking space available for those looking to collect their new ride?
Now you know where you want to be it’s time to start drilling down into the nitty gritty. Have you considered how long the lease will be on the property? What if you want to leave before the term is up because you’ve been really lucky and made a success and need bigger premises or it’s failed and you simply need to get out. How much are the business rates and utilities and how much will you need to make each year to cover these and all the other costs we’ve yet to discuss?
Okay, so you now know what market sector you’re going to be targeting and where you’ll be doing it but will you be able to get the brands you want to make this work? This is another piece of homework to do when you first think about opening a shop; what brands are available locally? Manufacturers and distributors can be choosy about who they supply and territory plays a big part in this decision.
Do not even think about trying to get any of the big bike brands, they have their dealer networks in place and do not need to concern themselves with new accounts. Now add in ongoing supply chain issues, with even well-established operations having trouble getting bikes, and see how far you get ordering stock. However, do not be tempted to go to the other extreme and get an account with an obscure brand that no one has heard of. The public won’t be interested and what happens with quality control and warranty support when you have problems?
Once you do find bike and P&A suppliers who are happy to work with you, you’re going to need deep pockets to get started. While established businesses can and do get credit any new operation will be on pro forma terms – you place an order, you pay for it and then it’s delivered. Can you afford to have all of your capital tied up in stock?
Here’s another thought on stock, what do you need to carry? Once again, it’s time to consider your potential customer base. Will you need to carry 11- and 12-speed chains or will you need to have plenty of old fashioned seven- and eight-speed chains? Now do this again for wheel sizes so you know which innertubes to hold; calliper brake pads and disc brake pads; and on and on with all service and consumable parts.
Realistically, the only way you can truly get an understanding of what you need to carry is to get experience in an existing shop. Yes, you might think you know all there is to know about retail and you’ve always done your own bike repairs there will be lots of things waiting to trip you up.
On the retail side of things do you know how to reconcile the shop till and card machine at the end of the day? In fact, have you considered how much you’ll have to pay for a card machine and associated bank charges every time you pay the week’s takings in? Oh yes, it’s those hidden costs again.
This is probably a good time to mention the ACT. The Association of Cycle Traders , to give it its full name, is the business organisation for cycle retailers and once you’ve paid your annual membership it can provide help and assistance with numerous issues. The ACT can help with training, customer credit options, merchant services and much more.
Now back to what you need to know and let’s suppose you have experience in retail but what about the mechanical side of the business? How comfortable are you doing PDI checks? Can you bleed hydraulic brakes and service Di2 and eTap systems? What about rebuilding an old Sturmey Archer three-speed hub? Of course, you can sign up for one of the accredited cycle mechanic training courses, again the ACT can help here, but again this is more expense that you night no not have at first considered. Don’t think that just because you’re planning on employing a mechanic that you don’t need to have a deep understanding of cycle mechanics. What happens when the mechanic is off sick, takes a holiday or just leaves? You’ll have to cover his work.
Tax returns, VAT submissions, supplier invoices all of these need to be taken care of too and you can either add them onto your already exhaustively long workday or get someone else to do it for you. That’s why it’s a good idea to use an accountant, which is another cost. However, a good accountant should be able to help you in ways you’d never imagine and save you money in the long term.
While you’re considering the cost of employing an accountant take a moment to think about other services that you might think you can look after yourself but would be better off having some else deal with. For example, once you’ve chosen a name for your business and registered that matching domain name, another hidden cost there, are you confident in designing a website for the shop? Sure, lots of ISPs and hosting companies offer template packages but will that work for you and what happens if you need to make updates or changes?
You also need to consider what you want the website to do for you. Will it just be a way to let people know where you are, what you stock and what services you offer, or do you plan to offer online sales too? If it’s the latter option, then you’ll also have to invest in electronic stock control and point of sale and at the risk of sounding repetitive, that’s another cost to consider.
Nor is this the end of the costs that you might not have considered. Have you thought about the stationery you’ll need, letterheads, receipts, business cards, and how much you’ll need to spend on them? What about the shopfront signage and then when you’re back indoors will the existing fittings, assuming you’re taking over an existing retail unit, work for a bike shop? Sure, suppliers will provide point of sale displays but to qualify for them as freebies you’re going to have to buy a lot of stock. How are you going to display your bikes and store the ones in the workshop awaiting repair or collection? While you’re looking at the cost of those racks take a look at the price of a professional level repair stands too. If you think that’s bad wait until you start totalling up all the tools you’re going to need, just basics stuff like bottom bracket and freewheel removal tools, never mind the specialist kit like reamers and cutters for headtubes and bottom bracket shells.
If I haven’t put you off opening a bike shop by now here’s one last consideration – forget about riding your own bike. I speak from personal experience here if you’re not too tired from working all day every day when you do get some time to yourself you’ll want nothing to do with a bike. That’s the reason I write about bicycles and cycling these days rather than selling and repairing them…
Further reading – advice from those bike shop owners who have been there and done it before.
Starting a successful bike shop requires more than just passion and dedication - it requires a solid business plan. With the right resources and guidance, any aspiring entrepreneur can create and execute a plan with success. The #1 Bike Shop Business Plan Template & Guidebook is the perfect starting point for anyone looking to launch their own bike shop business. This comprehensive guidebook provides a road map for everything from setting up shop to securing financing and maximizing online visibility. With its step-by-step guidance and helpful resources, this template and guidebook serve as an invaluable asset for anyone launching their own bike business.
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1. describe the purpose of your bike shop business..
The first step to writing your business plan is to describe the purpose of your bike shop business. This includes describing why you are starting this type of business, and what problems it will solve for customers. This is a quick way to get your mind thinking about the customers’ problems. It also helps you identify what makes your business different from others in its industry.
It also helps to include a vision statement so that readers can understand what type of company you want to build.
Here is an example of a purpose mission statement for a bike shop business:
Our purpose at [Bike Shop] is to provide a wide selection of quality bicycles, parts, and accessories at reasonable prices, while delivering excellent customer service and fostering a love of biking in our community.
The next step is to outline your products and services for your bike shop business.
When you think about the products and services that you offer, it's helpful to ask yourself the following questions:
You may want to do a comparison of your business plan against those of other competitors in the area, or even with online reviews. This way, you can find out what people like about them and what they don’t like, so that you can either improve upon their offerings or avoid doing so altogether.
If you don't have a marketing plan for your bike shop business, it's time to write one. Your marketing plan should be part of your business plan and be a roadmap to your goals.
A good marketing plan for your bike shop business includes the following elements:
Next, you'll need to build your operational plan. This section describes the type of business you'll be running, and includes the steps involved in your operations.
In it, you should list:
The second part of your bike shop business plan is to develop a management and organization section.
This section will cover all of the following:
This section should be broken down by month and year. If you are still in the planning stage of your business, it may be helpful to estimate how much money will be needed each month until you reach profitability.
Typically, expenses for your business can be broken into a few basic categories:
Startup Costs
Startup costs are typically the first expenses you will incur when beginning an enterprise. These include legal fees, accounting expenses, and other costs associated with getting your business off the ground. The amount of money needed to start a bike shop business varies based on many different variables, but below are a few different types of startup costs for a bike shop business.
Running & Operating Costs
Running costs refer to ongoing expenses related directly with operating your business over time like electricity bills or salaries paid out each month. These types of expenses will vary greatly depending on multiple variables such as location, team size, utility costs, etc.
Marketing & Sales Expenses
You should include any costs associated with marketing and sales, such as advertising and promotions, website design or maintenance. Also, consider any additional expenses that may be incurred if you decide to launch a new product or service line. For example, if your bike shop business has an existing website that needs an upgrade in order to sell more products or services, then this should be listed here.
A financial plan is an important part of any business plan, as it outlines how the business will generate revenue and profit, and how it will use that profit to grow and sustain itself. To devise a financial plan for your bike shop business, you will need to consider a number of factors, including your start-up costs, operating costs, projected revenue, and expenses.
Here are some steps you can follow to devise a financial plan for your bike shop business plan:
Why do you need a business plan for a bike shop business.
A business plan for a bike shop business is essential because it can provide direction and structure to setting up the business. It can serve as a guide on how to implement new ideas and strategies while allowing you to assess the potential success of the venture. Additionally, if you plan on seeking out financing for your bike shop, you will likely need a comprehensive business plan in order to demonstrate the potential success of your business.
It is a good idea to seek out professional help from an experienced business consultant, financial advisor, or accountant. Additionally, many local business and economic development organizations offer free or low-cost consulting services to help entrepreneurs create their business plan.
Yes, it is possible to write your own business plan for a bike shop. It will require research into the industry, an analysis of the current market and competitors, and a detailed financial plan. Additionally, you'll need to consider the types of bikes and accessories you will sell, the costs associated with purchasing inventory and managing a store, marketing and advertising strategies, customer service policies, and any other relevant information. A comprehensive business plan can help ensure a successful launch for your bike shop.
We're newfoundr.com, dedicated to helping aspiring entrepreneurs succeed. As a small business owner with over five years of experience, I have garnered valuable knowledge and insights across a diverse range of industries. My passion for entrepreneurship drives me to share my expertise with aspiring entrepreneurs, empowering them to turn their business dreams into reality.
Through meticulous research and firsthand experience, I uncover the essential steps, software, tools, and costs associated with launching and maintaining a successful business. By demystifying the complexities of entrepreneurship, I provide the guidance and support needed for others to embark on their journey with confidence.
From assessing market viability and formulating business plans to selecting the right technology and navigating the financial landscape, I am dedicated to helping fellow entrepreneurs overcome challenges and unlock their full potential. As a steadfast advocate for small business success, my mission is to pave the way for a new generation of innovative and driven entrepreneurs who are ready to make their mark on the world.
By: Author Tony Martins Ajaero
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Are you about starting a bicycle shop? If YES, here is a complete sample bicycle shop business plan template & feasibility report you can use for FREE .
Okay, so we have considered all the requirements for starting a bicycle shop. We also took it further by analyzing and drafting a sample bicycle shop marketing plan template backed up by actionable guerrilla marketing ideas for bicycle shops. So let’s proceed to the business planning section.
No doubt, there are businesses that someone with little schooling, little training and no serious business background can start.
One of such businesses is to open a bicycle dealership and repair shop. The basic things you would need to have in place to make success from this type of business is technical training on how to fix bicycles, bicycle repair tool box, a good location, easy access to wholesale supply of bicycles and bicycle spare parts and good customer service skill.
Generally, if your shop is located in an area with good human and vehicular traffic, and you have stocked in your different types and sizes of bicycles from different brands, you may not have to struggle to get people to visit your shop and make purchase and repairs.
So, if you have decided to open a bicycle dealership and repair shop, then you should ensure that you carry out feasibility studies and also market survey.
This will enable you properly locate the business in a good location and then hit the ground running. Business plan is yet another very important business document that you should not take for granted in the bid to launching your own business.
Below is a sample bicycle shop business plan template that can help you to successfully write your own with little or no difficulty.
1. industry overview.
Players in the Bicycle Dealership and Repair Shops industry primarily sell new bicycles, bicycle parts and accessories. A good number of bicycle dealership shops also provide repair and maintenance services.
Despite the fact that revenue for the Bicycle Dealership and Repair industry has grown over the last half a decade, many bicycle dealers had difficulty staying in business during the period of recession . No doubt, the industry has fared well overall as cycling has gained popularity for its health and environmental benefits, and as rising disposable income has encouraged consumer purchases.
Nevertheless, despite rising consumer demand, external competition for bicycle sales from mass merchandisers, which can provide less expensive bicycles from low-cost brands, has steadily increased.
While this competition is expected to continue to temper sales somewhat over the next five years, as consumers earn higher incomes and are better able to afford luxury items like specialty bicycles, sales and profit for bicycle dealers are expected to grow.
The Bicycle Dealership and Repair industry is indeed a thriving and profitable industry in most countries of the world. It is a major sector of the economy of the united states of America and they generate a whooping sum of well over 1 million annually from more than 13,927 bicycle dealership and repair shops scattered all around the United States of America.
The industry is responsible for the employment of well over 84,282 people. Experts project that the industry will grow at a 3.1 percent annual rate between 2011 and 2016. No establishment can boast of having the lion share of the available market in this industry. The industry is open for fair competition.
A recent report published by IBISWORLD shows that the Bicycle Dealership and Repair industry has a very low level of industry concentration, with no major industry players dominating industry revenue in 2016. The report stated that the industry is highly fragmented, and is made up of a large number of small independent dealerships conducting business from only one or two establishments.
So also, The National Bicycle Dealers Association reported that 84.0 percent of specialty bicycle retailers had one location, while 92.8 percent had no more than two locations.
The report further stated that over the past five years, industry concentration has remained low as operators are primarily single-location shops or niche stores that cater to specific demographics or categories. Going forward, the total number of enterprises has increased at an average annual rate of 2.2 percent to 13,927.
Over and above, the Bicycle Dealership and Repair industry is a profitable industry and it is open for any aspiring entrepreneur to come in and establish his or her business; you can choose to start on a small scale in a street corner or you can choose to start on a large scale with several outlets in key cities through the United States of America and Canada retailing quality bicycles from top brands.
Alpha Blonde Bicycle Shop®, Inc. is a standard and registered bicycle dealership and repair shop that will be located in one of the busiest streets in Little Rock – Arkansas.
We have been able to lease a facility that is big enough to fit into the design of the kind of standard bicycle dealership and repair shop that we intend launching and the facility is located in a corner piece facility in the center of the commercial hub in Little Rock – Arkansas.
Alpha Blonde Bicycle Shop®, Inc. will be involved in Retailing new bicycles (Mountain bicycles, Road bicycles, Hybrid/cross bicycles and other bicycles), bicycle parts and accessories from different manufacturers (brands) from the United States and abroad and also providing bicycle repair and maintenance services. We are set to sell our products to a wide range of customers in and around Little Rock – Arkansas.
We are aware that there are several large and small chains of bicycle dealership and repair shop outlets all around Little Rock – Arkansas, which is why we spent time and resources to conduct a thorough feasibility studies and market survey so as to be well positioned to favorably compete with all our competitors. We have an online – service option for our customers, and our outlet is well secured with various payments of options.
Alpha Blonde Bicycle Shop®, Inc. will ensure that all our customers are given first class treatment whenever they visit our shop.
We have in place, a CRM software that will enable us manage a one on one relationship with our customers no matter how large the numbers of our customers’ base may grow to. We will ensure that we get our customers involved in the selection of tire brands that will be in our shops and also when making some business decisions.
Alpha Blonde Bicycle Shop®, Inc. will at all times demonstrate her commitment to sustainability, both individually and as a firm, by actively participating in our communities and integrating sustainable business best practices wherever possible.
We will ensure that we hold ourselves accountable to the highest standards by meeting our customers’ needs precisely and completely whenever they patronize our products. We will cultivate a working environment that provides a human, sustainable approach to earning a living, and living in our world, for our partners, employees and for our customers.
Alpha Blonde Bicycle Shop®, Inc. is a family business that is owned by Alfred Gordon and his immediate family members. Alfred Gordon has a B.Sc. in Business Administration from University of Southern Maine – Portland, with well over 5 years of experience in the bicycle dealership and repair shops industry, working for some of the leading brand in the United States.
Although the business is launching out with just one outlet in Little Rock – Arkansas, but there is a plan to open other outlets and sell franchise all around major cities in the United States and Canada.
Alpha Blonde Bicycle Shop®, Inc. is in the Bicycle Dealership and Repair Shop Industry to service a wide range of corporate and individual clients and of course to make profits, which is why we will ensure we go all the way to make available a wide range of bicycles and accessories from top manufacturing brands the United States and other countries of the world.
We are in the Bicycle Dealership and Repair Shop industry to make profits and we will ensure that we do all that is permitted by the law of the United States to achieve our aim and ambition of starting the business. Our product and services offerings are listed below;
Our Business Structure
Alpha Blonde Bicycle Shop®, Inc. do not intend to start a bicycle dealership and repair shop business like the usual mom and pop business around the street corner; our intention of starting a bicycle dealership and repair shop business is to build a standard and one stop bicycle dealership and repair shop outlets in Little Rock – Arkansas and other key cities in the United States of America and Canada. We will make that we put the right structure in place that will support the kind of growth that we have in mind while setting up the business.
We will ensure that we hire people that are qualified, honest, customer centric and are ready to work to help us build a prosperous business that will benefit all the stake holders ( the owners, workforce, and customers ). As a matter of fact, profit-sharing arrangement will be made available to all our senior management staff and it will be based on their performance for a period of ten years or more.
In view of that, we have decided to hire qualified and competent hands to occupy the following positions;
Merchandize Manager
Sales and Marketing Manager
Information Technologist
Chief Executive Officer – CEO:
Admin and HR Manager
Shop Manager:
Accountant / Cashier:
Sales Agents / Client Service Executive
Bicycle Repair Technicians:
Our plan of starting with just one outlet of our bicycle dealership and repair shop in Little Rock – Arkansas is to test run the business for a period of 2 to 5 years to know if we will invest more money, expand the business and then open other chains of outlets all over major towns in Arkansas and key cities in the United States and Canada.
We are quite aware that there are several bicycle dealership and repair shops all over Little Rock – Arkansas and even in the same location where we intend locating ours, which is why we are following the due process of establishing a business.
We know that if a proper SWOT analysis is conducted for our business, we will be able to position our business to maximize our strength, leverage on the opportunities that will be available to us, mitigate our risks and be welled equipped to confront our threats.
Alpha Blonde Bicycle Shop®, Inc. employed the services of an expert HR and Business Analyst with bias in retailing to help us conduct a thorough SWOT analysis and to help us create a Business model that will help us achieve our business goals and objectives.
This is the summary of the SWOT analysis that was conducted for Alpha Blonde Bicycle Shop®, Inc.;
The location of our shop, the business model we will be operating on both (physical store and online store), varieties of payment options, wide range of bicycles from different manufacturers and our excellent customer service culture will definitely count as a strong strength for Alpha Blonde Bicycle Shop®, Inc. So also our team of highly qualify staff members is also a plus for us.
A major weakness that may count against us is the fact that we are a new bicycle dealership and repair shop outlet in Little Rock – Arkansas and we don’t have the financial capacity to compete with multi – million dollars bicycle dealership and repair shop outlets when it comes to retailing at a rock bottom prices for all their tires.
The fact that we are going to be operating our bicycle dealership and repair shop in one of the busiest streets in Little Rock – Arkansas couple with the rising number of people and household switching to cycling as against driving provide us with unlimited opportunities to sell our bicycles to a large number of individuals and corporate organizations.
We have been able to conduct thorough feasibility studies and market survey and we know what our potential clients will be looking for when they visit our bicycle dealership and repair shop outlets; we are well positioned to take on the opportunities that will come our way.
Just like any other business, one of the major threats that we are likely going to face is economic downturn. It is a fact that economic downturn affects purchasing / spending power. Another threat that may likely confront us is the arrival of a new bicycle dealership and repair shop outlet in same location where ours is located. So also, unfavorable government policies may also pose a threat to businesses such as ours.
The Bicycle Dealership and Repair Shop Industry, just like most businesses in the retailing industry, depend on strong consumer spending to spur the demand for industry products. Over the last half a decade, the economy has begun recovering from recessionary declines with both the Consumer Confidence Index and disposable income increasing.
Going forward, as the economy of the United States continues to recover and consumers are expected to loosen their discretionary budgets, the industry is anticipated to thrive. This is why raising disposable income, healthy lifestyle and climate change cum global warming will support demand for industry products and services.
Truly the industry has fared well overall as cycling has gained popularity for its health and environmental benefits, and as rising disposable income has encouraged consumer purchases.
Lastly, in recent time, the bicycle dealership and repair shops landscape has seen tremendous changes in the last 20 years; it has grown from the smaller outlets to a more organized and far reaching venture. The introduction of franchise and online store makes it easier for bicycle dealership and repair shops to reach out to a larger market far beyond the areas where a physical bicycle dealership and repair shop is located.
Possibly it will be safe to submit that the bicycle dealership and repair shops industry has a wide range of customers; every individual and corporate organization (cyclist clubs) who owns bicycles would at one point or the other call for repair and replacement of parts.
In view of that, we have positioned our bicycle dealership and repair shop to service the residence of Little Rock – Arkansas and every other location where franchise cum outlets of our bicycle dealership and repair shops will be located all over key cities in the United States of America and Canada. We have conducted our market research and feasibility studies and we have ideas of what our target market would be expecting from us.
We are in business to retail a wide range of new bicycles and bicycles spare parts and accessories to the following groups of people and corporate organizations;
Our competitive advantage
A close study of the bicycle dealership and repair shops industry reveals that the market has become much more intensely competitive over the last decade. As a matter of fact, you have to be highly creative, customer centric and proactive if you must survive in this industry.
We are aware of the stiffer competition and we are well prepared to compete favorably with other leading bicycle dealership and repair shops in Little Rock – Arkansas and throughout the United States and Canada.
Alpha Blonde Bicycle Shop®, Inc. is launching a standard one stop bicycle dealership and repair shop that will indeed become the preferred choice of residence of Little Rock – Arkansas and every other location where our outlets will be opened.
Our bicycle dealership and repair shop is located in a corner piece property on a busy road directly opposite one of the largest residential estates in Little Rock – Arkansas. We have enough parking spaces that can accommodate well over 20 cars per time.
One thing is certain; we will ensure that we have a wide range of new bicycles and bicycle spare parts and accessories from leading manufacturers available in our shop at all times. It will be difficult for customers to visit our shop and not see the type and size of bicycle they are looking for.
One of our business goals is to make Alpha Blonde Bicycle Shop®, Inc. a one stop bicycle dealership and repair shop for both individual and corporate organizations. Our excellent customer service culture, online store, various payment options and highly secured facility will serve as a competitive advantage for us.
Lastly, our employees will be well taken care of, and their welfare package will be among the best within our category (startups bicycle dealership and repair shops) in the industry meaning that they will be more than willing to build the business with us and help deliver our set goals and achieve all our aims and objectives. We will also give good working conditions and commissions to freelance sales agents that we will recruit from time to time.
Alpha Blonde Bicycle Shop®, Inc. is in business to retail a wide range of bicycles and bicycle spare parts and accessories to the residence of Little Rock – Arkansas and every other location our shop will be opened. We are in the bicycle dealership and repair shops industry to maximize profits and we are going to go all the way out to ensure that we achieve or business goals and objectives.
In essence, our source of income will be the retailing of a wide range of new bicycles and bicycle spare parts and accessories at affordable prices. Alpha Blonde Bicycle Shop®, Inc. will generate income by;
One thing is certain when it comes to bicycle dealership and repair shop business, if your shop is well stocked with various types of bicycles, bicycle spare parts and accessories from different brands and centrally positioned, you will always attract customers cum sales and that will sure translate to increase in revenue generation for the business.
We are well positioned to take on the available market in Little Rock – Arkansas and we are quite optimistic that we will meet our set target of generating enough income / profits from the first six month of operations and grow the business and our clientele base.
We have been able to critically examine the Bicycle Dealership and Repair Shops Industry and we have analyzed our chances in the industry and we have been able to come up with the following sales forecast. The sales projections are based on information gathered on the field and some assumptions that are peculiar to startups in Little Rock – Arkansas.
Below are the sales projections for Alpha Blonde Bicycle Shop®, Inc. it is based on the location of our business and other factors as it relates to bicycle dealership and repair shops start – ups in the United States;
N.B : This projection is done based on what is obtainable in the industry and with the assumption that there won’t be any major economic meltdown and there won’t be any major competitor retailing same bicycle brands and customer care services as we do within same location. Please note that the above projection might be lower and at the same time it might be higher.
Before choosing a location for Alpha Blonde Bicycle Shop®, Inc. we conduct a thorough market survey and feasibility studies in order for us to be able to be able to penetrate the available market and become the preferred choice for residence of Little Rock – Arkansas. We have detailed information and data that we were able to utilize to structure our business to attract the numbers of customers we want to attract per time.
We hired experts who have good understanding of the bicycle dealership and repair shop industry to help us develop marketing strategies that will help us achieve our business goal of winning a larger percentage of the available market in Little Rock – Arkansas.
In other to continue to be in business and grow, we must continue to sell the bicycles, bicycle spare parts and accessories that are available in our store which is why we will go all out to empower or sales and marketing team to deliver.
In summary, Alpha Blonde Bicycle Shop®, Inc. will adopt the following sales and marketing approach to win customers over;
Despite the fact that our shop is well located, we will still go ahead to intensify publicity for the business. We are going to explore all available means to promote our bicycle dealership and repair shop.
Alpha Blonde Bicycle Shop®, Inc. has a long term plan of opening outlets in various locations all around Arkansas and key cities in the United States and Canada which is why we will deliberately build our brand to be well accepted in Little Rock before venturing out.
As a matter of fact, our publicity and advertising strategy is not solely for winning customers over but to effectively communicate our brand. Here are the platforms we intend leveraging on to promote and advertise Alpha Blonde Bicycle Shop®, Inc.;
Aside from quality, pricing is one of the key factors that gives leverage to retailing business such as bicycle dealership and repair shops, it is normal for consumers to go to places (bicycle dealership shop outlets) where they can get bicycles, bicycle spare parts and accessories at cheaper price.
We know we don’t have the capacity to compete with big players in the industry, but we will ensure that the prices and quality of all the bicycles, bicycle spare parts and accessories that are available in our shop are competitive with what is obtainable amongst bicycle dealership and repair shops within our level.
The payment policy adopted by Alpha Blonde Bicycle Shop®, Inc. is all inclusive because we are quite aware that different customers prefer different payment options as it suits them but at the same time, we will ensure that we abide by the financial rules and regulation of the United States of America.
Here are the payment options that Alpha Blonde Bicycle Shop®, Inc. will make available to her clients;
In view of the above, we have chosen banking platforms that will enable our client make payment for farm produces purchase without any stress on their part. Our bank account numbers will be made available on our website and promotional materials to clients who may want to deposit cash or make online transfer for purchase of bicycles, bicycle spare parts and accessories and for repair and maintenance services.
In setting up any business, the amount or cost will depend on the approach and scale you want to undertake. If you intend to go big by renting / leasing a big facility, then you would need a good amount of capital as you would need to ensure that your employees are well taken care of, and that your facility is conducive enough for workers to be creative and productive.
This means that the start-up can either be low or high depending on your goals, vision and aspirations for your business.
The tools and equipment that will be used are nearly the same cost everywhere, and any difference in prices would be minimal and can be overlooked. As for the detailed cost analysis for starting a bicycle dealership and repair shop business; it might differ in other countries due to the value of their money.
These are the key areas where we will spend our start – up capital;
We would need an estimate of $750,000 to successfully set up our bicycle dealership and repair shop in Little Rock – Arkansas. Please note that this amount includes the salaries of all the staff for the first month of operation.
Generating Funds / Startup Capital for Alpha Blonde Bicycle Shop®, Inc.
Alpha Blonde Bicycle Shop®, Inc. is a private registered business that is solely owned and financed by Alfred Gordon and his immediate family members. They do not intend to welcome any external business partner which is why he has decided to restrict the sourcing of the start – up capital to 3 major sources.
These are the areas we intend generating our start – up capital;
N.B: We have been able to generate about $250,000 ( Personal savings $200,000 and soft loan from family members $50,000 ) and we are at the final stages of obtaining a loan facility of $500,000 from our bank. All the papers and document have been signed and submitted, the loan has been approved and any moment from now our account will be credited with the amount.
The future of a business lies in the numbers of loyal customers that they have the capacity and competence of the employees, their investment strategy and the business structure. If all of these factors are missing from a business (company), then it won’t be too long before the business close shop.
One of our major goals of starting Alpha Blonde Bicycle Shop®, Inc. is to build a business that will survive off its own cash flow without the need for injecting finance from external sources once the business is officially running. We know that one of the ways of gaining approval and winning customers over is to retail our wide range of quality bicycles, bicycle spare parts and accessories a little bit cheaper than what is obtainable in the market and we are well prepared to survive on lower profit margin for a while.
Alpha Blonde Bicycle Shop®, Inc. will make sure that the right foundation, structures and processes are put in place to ensure that our staff welfare are well taken of. Our company’s corporate culture is designed to drive our business to greater heights and training and re – training of our workforce is at the top burner.
As a matter of fact, profit-sharing arrangement will be made available to all our management staff and it will be based on their performance for a period of six years or more. We know that if that is put in place, we will be able to successfully hire and retain the best hands we can get in the industry; they will be more committed to help us build the business of our dreams.
Check List / Milestone
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Marketing Plan. Traditionally, a marketing plan includes the four P's: Product, Price, Place, and Promotion. For a bicycle shop business plan, your marketing strategy should include the following: Product: In the product section, you should reiterate the type of bicycle shop that you documented in your company overview.
An organizational chart example for a bike shop. 6. Financial Plan. The financial plan is perhaps, with the executive summary, the most important section of any business plan for a bike shop. Indeed, a solid financial plan tells lenders that your business is viable and can repay the loan you need from them.
A business plan serves as a guiding light, illuminating the path forward, enabling bike shop owners to: Set Clear Objectives. A comprehensive business plan establishes clear objectives, providing both short-term and long-term direction. This foresight is crucial in industries like biking, which might face seasonal demands or trends.
A business plan has 2 main parts: a financial forecast outlining the funding requirements of your bike shop and the expected growth, profits and cash flows for the next 3 to 5 years; and a written part which gives the reader the information needed to decide if they believe the forecast is achievable. We hope that this in-depth guide met your ...
Writing a bicycle shop business plan is a crucial step toward the success of your business. Here are the key steps to consider when writing a business plan: 1. Executive Summary. An executive summary is the first section planned to offer an overview of the entire business plan. However, it is written after the entire business plan is ready and ...
Before you start writing your business plan for your new bike shop business, spend as much time as you can reading through some examples of retail store-related business plans.. Industry Overview. The global bike market stood at a massive market value of 65.43 billion US dollars in 2019 and has grown at a rapid rate going forward too.. The growth of hobbies like nature rides, mountain biking ...
March 5, 2024. Business Plan. Creating a comprehensive business plan is crucial for launching and running a successful bike shop. This plan serves as your roadmap, detailing your vision, operational strategies, and financial plan. It helps establish your bike shop's identity, navigate the competitive market, and secure funding for growth.
Bike shop business plan: A guide for business owners in the bicycle industry; Why bike shops are flourishing 🚲; 1. Understanding the target market for your new bike shop 🎯; 2. Finding the ideal location for your bike store 📍; 3. Mastering inventory management for your bike shop business plan 🚴♂️; 4.
Executive Summary. University Cycle Works is an established bicycle specialty store, offering retail sales of new bicycles, parts and accessories, clothing, and maintenance and repair service. It is located in a heavily trafficked, university-focused area. The primary market for University Cycle Works is the university student population, which ...
Step 4: Establish a legal structure. You have a business plan and name. Now you need to establish the legal structure for your bike business. For best results, hire legal representation that has experience starting a business, like an attorney, accountant, or tax specialist.
A good business plan for a bicycle shop must reflect the unique aspects of this type of retail business. To start, it is crucial to provide a comprehensive overview of the cycling market. This includes offering up-to-date statistics and identifying emerging trends in the industry, as illustrated in our bicycle shop business plan template .
In a simplified way, a business plan for a bike shop is made up of two major components: A financial forecast that aims to highlight the expected profitability of the business and the initial financing requirement. A written part that presents, in detail, your project, the team, your business strategy, and your medium-term objectives.
Opening a bike shop: a business plan checklist for upstarts. Monday, 21 March 2022 Mark Sutton. You love bikes, you think you're business savvy and a window of opportunity exists to go it alone and open a bike shop. So, it's business plan time. Duncan Moore puts himself in the shoes of the upstart and details all the micro considerations ...
The #1 Bike Shop Business Plan Template & Guidebook is the perfect starting point for anyone looking to launch their own bike shop business. This comprehensive guidebook provides a road map for everything from setting up shop to securing financing and maximizing online visibility. With its step-by-step guidance and helpful resources, this ...
BUSINESS PLAN [YEAR] Bike Shop Always keeps your life moving like a bicycle John Doe 10200 Bolsa Ave, Westminster, CA, 92683 (650) 359-3153 [email protected] https://upmetrics.co. Table of Contents Executive Summary 4 Mission Statement 5 Vision Statement 5 Keys To Success 6 Objectives 6 Company Summary 7
A Sample Bicycle Shop Business Plan Template. 1. Industry Overview. Players in the Bicycle Dealership and Repair Shops industry primarily sell new bicycles, bicycle parts and accessories. A good number of bicycle dealership shops also provide repair and maintenance services. Despite the fact that revenue for the Bicycle Dealership and Repair ...
The executive summary is a critical component of your bike shop business plan. It offers a concise yet comprehensive view of your business within the bike retail and service market, including competitive analysis and financial forecasts. This section is crucial for attracting investors and partners, as it highlights your business's potential and strategic plans.
A bike shop business plan is a written document that sets out the commercial, operational and financial objectives of the company over the next 3 to 5 years. It consists of two main parts: A written part that presents, in detail, your bike shop business, the team, ...
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A residential and industrial region in the south-east of Mocsow. It was founded on the spot of two villages: Chagino (what is now the Moscow Oil Refinery) and Ryazantsevo (demolished in 1979). in 1960 the town was incorporated into the City of Moscow as a district. Population - 45,000 people (2002). The district is one of the most polluted residential areas in Moscow, due to the Moscow Oil ...
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Cities near Elektrostal. Places of interest. Pavlovskiy Posad Noginsk. Travel guide resource for your visit to Elektrostal. Discover the best of Elektrostal so you can plan your trip right.