Bike Shop in Kent
Attention all you would-be-entrepreneurs out there, Kent needs a bike shop. OK, I admit I’m biased, I’m a mountain biker but even if I wasn’t I can’t help but notice that most college towns I’ve been in have great bike shops because college students tend to be riders, liberal faculty types tend to be bike riders and people that are drawn to college towns tend to be anti-car pro-bike people by nature. So there’s a niche that needs to be filled, all we’re missing is someone who wants to make money by filling it.
The good news is we’ve got resources right here in Kent that can help make things happen. Need help writing a business plan there’s business people at the Kent Regional Business Alliance (KRBA) waiting to write one with you. Need to get more educated about entrepreneural businesses, take a few courses at the Kent State Entrepreneural Center. Need financial contacts, the folks at KRBA know the bankers and investors that can make things happen. Need a store location, the City of Kent has an inventory of what’s available. Need tax breaks or a place to get started, the City of Kent has that too.
All we’re missing is you (and my bike shop).
There’s money in this here bike business, trust me I spend more than I should and I’ve seen the bikes that everyone is riding — these are not the cheap banana seat Schwinn’s of yesterday, these are high tech specialty items that are not cheap. But people of ages are buying them up in droves.
I went to my first mountain bike race a couple of weeks ago. It was called the Big Valley Race and it was being held in Peninsula. It drew hundreds of people from around Ohio (and even a few from out of state — which speaks to the tourism potential of a Kent bike race that brings dollars from outside our region into our economy which is always a good thing) and all of them had serious gear. I had recently upgraded my bike so I was feeling pretty proud of my ride but as I looked around the day of the race it was obvious that these people are serious about their bikes. Considering how muddy the track was I was happy to finish in one piece and place 16th out of the 35 entrants in my race class. (As a sidenote, City Firefighter Gary Lane finished 8th out of 35, major props to him).
Today is another mountain bike race day, this time in Medina. I wasn’t able to ride in it but I’m sure plenty of others will be there tearing up the track and their bikes both of which are great news for area bike shops. I want that to be great news to a Kent business.
I found a few examples of bike shop business plans to get you thinking. If you’re ready to get started, let me know and not only will I put you in touch with the professionals that do this for a living, I’ll likely be one of your first customers.
The ProBike Business Plan
Statement of Purpose
ProBike will be an independent bicycle dealership which will sell and service a wide array of bicycles. We intend to locate the business on the corner of Main Street and Bourne Avenue in downtown Abbotville.
ProBike is seeking a loan of $71,000 in addition to a $19,000 owner investment to finance the lease of a building, make renovations, purchase inventory and equipment, and provide working capital for growth and development. It is expected that the proceeds of the business will be adequate to repay the loan and that inventory, equipment and personal assets will provide adequate collateral to secure the loan.
Description of Business
ProBike will specialize in selling a variety of high quality bicycles to retail customers. We will also service the bicycles that we sell and carry a large selection of bicycle accessories.
The business will be open six days a week, from 10:00 a.m. to 6:00 p.m. on weekdays and from 10:00 a.m. to 8:00 p.m. on Saturdays. Demand for bicycles is seasonal and we may need to adjust our schedule as demand fluctuates, possibly closing the store for a month or so during the winter months.
We believe that we have found an ideal location for the business; a 2500 square foot building in Abbotville. We feel that Abbotville’s demographic characteristics and location make it an ideal place to open a bicycle shop. The city has a large population of children and young adults; segments of the population that are heavy users of bicycles. Also, with a large state university only three miles away, we expect to attract a number of college customers. This shop would also be the only independent bicycle dealership in the area. These factors lead us to believe that Abbotville is a perfect place to open a bicycle dealership.
The building itself will need some renovations in order to make it suitable for our needs. We intend to partition the building into the following areas: (1) showroom (1000 square feet); (2) office area (300 square feet); (3) service area (300 square feet); and (4) other space for restroom and storage (900 square feet). We feel that this building offers more than adequate space and will meet our needs for the foreseeable future.
The bicycle industry has benefited greatly from the public’s increased concern for their health and physical fitness. Bicycling is an excellent cardiovascular exercise and a great stress reliever. People have begun to realize the benefits of bicycling and are flocking to the sport. In 1995 there were an estimated 12.5 million bicycles sold in the United States–an increase of almost 3 million over the figures for 1993. Sales of bicycles and bicycle accessories have reached an astounding $3.5 billion per year. Currently, there are an estimated 55 million adults and 45 million children in the United States who own bicycles.
Information found in The Official Guide to Household Spending indicates that the average person in the United States spends approximately $14.50 per year on bicycles and bicycle accessories. With a population of 30,000, the citizens of Abbotville spend roughly $440,000 a year on bicycling. In addition to the local population, we would also expect to make sales to tourists and students at the university. The State Department of Tourism has estimated that we could reasonably expect sales to increase 25-35% during the tourist season. A conservative estimate would be for total sales to grow by 35% to compensate for tourism (25%) and college customers (10%). This brings the total amount of money spent on bicycles and bicycle accessories by the citizens of Abbotville along with tourists and students to $594,000. If ProBike is able to capture just 30% of market share, we could expect to have retail sales in the area of $190,000 per year, disregarding service income. We believe that this is an easily achievable goal given the lack of serious competition.
In order to become profitable and competitive, we will need to stay on top of industry trends and respond to customer demands. We initially plan to carry three different types of bicycles. We expect to sell a large number of mountain bikes as they accounted for 65% of all bicycles sold in the United States last year. Mountain bikes are designed for rough terrain and are primarily used for off-road riding. The prices of these bicycles will range from $200-$1200.
The second style of bicycle that we intend to sell is known as a hybrid bike. This bicycle is essentially a cross between a mountain bike and a road bike. In 1995, hybrid bicycles accounted for 12% of all the bicycles sold in the United States. These models are for the person who wants to ride their bicycle on different types of terrain, from asphalt roads to dirt trails. The prices of these bicycles will range from $150-$1200.
We will also carry a wide selection of children’s bicycles. Children’s bicycles account for the second largest portion of the bicycle market. The prices of these bicycles will range from $125-$400.
There are three businesses in the Abbotville area that will be directly competing with ProBike.
(1) George’s Department Store — This is a large nationwide discount retailer which offers a wide array of products including a limited selection of bicycle and bicycle accessories. The majority of their bicycles are geared towards those individuals seeking a relatively inexpensive product. This retailer does not service the bicycles they sell and they do not offer instruction on the safe and proper use of bicycles. George’s is located approximately two miles south of the proposed Probike location.
(2) Sports R Us — This is a retail chain specializing in sporting goods. They currently have a store three miles west of the ProBike location. We do not believe that this store will pose a significant threat as they rarely have more than seven or eight bicycles in stock at any given time. Like George’s, this business also does not service the bicycles that they sell. This retail chain has been experiencing significant financial problems in the past year and they have announced that they intend to close nine of their less profitable locations. However, we have been unable to determine if they plan to close their Abbotville store.
(3) The Cykel Shop — This is the only independent bicycle dealership in the area and is located fifteen miles west of downtown Abbotville. The Cykel Shop is a family owned business and was established in 1979. This is a small operation; they usually have less than thirty bicycles in stock and offer a limited selection of bicycle accessories. The Cykel Shop has been slow to adapt to the trends developing in bicycling and has just recently started selling mountain bikes, a product which accounted for 65% of all bicycle sales last year. Due to their distance from ProBike and their small size, we do not feel that The Cykel Shop will pose a significant threat to the success of ProBike.
Each of our direct competitors has a limited selection of bicycles and does not service the bicycles they sell. Abbotville does not have an independent bicycle dealership and those wishing to purchase a higher quality product or who want to service their bicycles have been forced to travel elsewhere. We feel that ProBike will fill a niche in Abbotville; we will be the only store in town which not only sells bicycles but services them as well.
Our location on the corner of heavily traveled Main Street and Bourne Avenue will provide us with excellent exposure. We intend to install a sign in the front of the building to advertise our presence. We plan to spend approximately $200 a month to advertise on local radio stations, in the local newspaper, and in the university newspaper. A small ad in the local business directory will provide us with some additional exposure.
We intend to conduct bike maintenance and safety clinics at the local elementary schools. Each workshop will include a bike safety trial ride and obstacle course. Participants will all receive a “ProBike” safety patch.
We have contacted town officials and they have been very enthusiastic about our proposal to sponsor a bicycle race at the annual “Abbotville Days” festival held every July. Additional promotional efforts will include sponsoring riders in several area road races. Their entry fees will be paid by ProBike in exchange for their wearing ProBike t-shirts and insignias.
A grand opening ceremony has been scheduled for March 1st. We will extensively advertise our grand opening by way of the local media. We intend to raffle off a new mountain bike at our opening in the hopes of attracting a large crowd.
Michael and Laurie Ross are a recently married couple who will be the owners of ProBike. In 1993, Mr. Ross earned a Bachelor’s degree in Accounting from a nearby university. Following college, he worked for two years at Sports Galore, a sporting goods retail outlet. Through his work at Sports Galore, Mr. Ross gained valuable experience in the areas of customer service, marketing and management. At ProBike, Mr. Ross will be responsible for store management, accounting and marketing.
Laurie Ross recently earned an Associate’s Degree in Physical Fitness. She has worked on a part-time basis for the past three years as a cashier at a local discount retailer. Mrs. Ross is an avid cyclist and has competed in numerous bicycle races. She is very familiar with bicycles and bicycle accessories, safety issues, as well as bicycle repair and maintenance. Mrs. Ross will be in charge of sales and bicycle service at ProBike.
Michael and Laurie strongly believe that with their combined knowledge and skills, they will be able to make this business a success. Their resumes are included on pages 11 and 12.
We will need to hire part-time employees to assist in sales and/or bicycle repair. As was mentioned earlier, bicycle sales are seasonal and we expect to hire part-time help for twenty to thirty hours per week during the busy season. We intend to find students at the nearby university who would be willing to work at ProBike. Starting pay would probably be in the range of $6.00-$7.50 per hour depending the individual’s skills and experience.
Specific Uses of Funds
We plan to start with an inventory of approximately 120 bicycles. The prices of these bicycles will range from $125-$1200. We also intend to carry a large selection of bicycle accessories. Of course, we will be able to order additional bicycles and accessories should we find an unexpected demand for a particular product. We should get a better feel for the right product mix as time passes.
Specialized tools and equipment will be needed to service some of the bicycles. Mrs. Ross has significant experience in bicycle repair and already possesses a number of tools.
The business will need some additional equipment including a cash register and some assorted supplies.
The renovations include: partitioning the building into four areas; installation of flooring in the showroom and service areas; replacing the existing heating system with a more modern and energy efficient one; installation of a counter and cash register; and, remodeling the restroom.
The working capital will enable ProBike to meet current expenses and insure the growth of the business.
After carefully examining the market conditions, we have come to the conclusion that there is a strong demand for an independent bicycle dealership in Abbotville. There are very few businesses in the area where an individual can purchase a bicycle. The stores that do sell bicycles have a limited selection and they do not service the products that they sell. ProBike will not only sell bicycles and bicycle accessories, but service them as well.
We feel that our promotional efforts and business location will generate the exposure necessary to enable us to achieve our sales goals. We firmly believe that our revenue and expense projections are realistic.
Bike Business Planning
The following outline for business planning has been provided by bicycle industry veteran Ed Benjamin, who owned and operated successful stores in Florida for many years. It is targeted for people who may be looking at buying or starting a bicycle retail business, but can also be very useful to existing bicycle stores.
By Ed Benjamin
Questions to consider before buying or starting a bicycle store…
By answering these, you will create a list of concerns, information and goals that you can use to start your business plan.
Goals and Lifestyle:
1. What are your personal, long and short term goals? Describe them in both lifestyle and dollar terms.
2. How long will the contemplated business serve these goals?
3. What is unique about you or your situation that will enable you to be successful at this business?
4. How much money do you have to invest?
5. What would be the consequences of losing that money?
6. What about this business would make it attractive to other investors?
7. What return do you expect?
8. What return do you think your investors (if any) will expect?
9. Where is your expertise?
10. What do you like to do the most?
11. What do you like to do the least?
12. In what areas do you need other’s expertise?
13. Are you willing to work longer, harder hours?
14. Are you willing to work weekends?
15. Are you wining to forgo vacations, or time off, perhaps for years?
16. How will longer harder hours, and few holidays affect your family or other relationships?
17. Who will help you?
18. How will you feel if your business is not successful?
19. What will you do, if your business is not successful?
1. What is the population within a 15 minute drive?
2. What is the income, and age demographics of that population?
3. What sort of bicycle facilities such as bicycle paths, BMX tracks, etc. exist?
4. What is the economic base of the community?
5. How many bike shops exist in the area?
6. How well are they doing?
7. How big is the local bicycle club?
8. Is there racing in the area?
9. Is there a local triathlon(s) every year?
10. How rapidly is the community growing (or not)?
11. What bicycle brands are represented by local shops already?
12. What brands are not represented?
13. Have you compiled an analysis of each bike shop? (including years in business, size of store, number of employees, volume of sales)
14. Have you talked the local reps for any of the bike lines?
15. Have you considered franchising?
16. Have you considered buying an existing store?
17. Have you talked to the staff of existing stores?
18. Have you considered hiring any of them?
19. Check the yellow pages, add to this information clippings of newspaper ads and notes about any advertising the other bike shops are doing. What conclusions have you come to about advertising in this market?
20. Have you subscribed to the bicycle trade magazines?
21. What trade shows have you attended?
22. Have you acquired the NBDA studies on the bike business?
23. Have you investigated banks, do you have a potential line of credit arranged?
24. Do you qualify. for any Federal or State assistance programs?
25. Have you investigated SBA loans?
26. Have you talked to merchants in similar businesses, in the local community, about their business experiences?
27. Do you have a mentor(s) that can help you with the bike business?
28. Do you have a CPA and a lawyer that you are comfortable with, and who have successfully worked with other small merchants for many years.
29. Do you have an insurance agent and advertising agency (or consultant) that you are comfortable with, and have successfully worked with other small merchants for many years?
30. What market share do you think existing shops have?
31. Have you made a list of every place that sells bikes in the area? (include grocery stores, sporting goods, bike shops, hardware stores, used bicycle outlets, everything)
32. What complaints do local cyclists have about existing stores?
33. Is any local store participating in the Catalyst Super Sale?
34. Is any local store participating in the Catalyst Cycling Guide?
35. Are any local stores parts of Bike Line or Performance??
1. Have you defined your business in 50 words or less?
2. What will you name your business?
3. Are you convinced that business planning is an absolute necessity?
4. Have you made a financial plan that defines the capital you will need, projects your sales and projects your profits?
5. Do you have a computer? Are you competent with spreadsheets?
6. What business structure do you plan to use?
7. Have you prepared your current financial. statements?
8. What is your current personal credit rating?
9. Do you have substantial personal assets to collateralize loans to the business?
10. What is your marketing plan?
11. What is your mission statement?
12. What trends in this business are forecast for the nation?
13. What plans do you have to acquire additional training for yourself?
14. How will you train your staff?
15. What vulnerabilities do you think you will have? What are your plans to deal with them?
16. Are there plans by local or state government that will affect your business? (example: widening a road in front of the site)
17. What is happening with the increase or decrease in supp1iers to the bike business?
18. How do you expect to exit this business? (sell it, liquidate it, die, etc.)
19. Have you investigated possible alternative locations?
20. Describe the basic lease terms offered or purchase price?
21. Have you talked to merchants who rent from this landlord, or are in the same immediate area about their experiences?
22. What marketing position do you expect to occupy?
Now take the information that you have accumulated by answering these questions and:
1. Describe the present situation of yourself and the market you want to enter.
2. Describe your objectives in starting this business, and how you will know if you reach them.
3. Describe the management team and organization you will create.
4. Describe the products you will offer, both merchandise and service.
5. Describe what equipment and facilities you will need
6. Analyze and describe the market.
7. Describe your marketing strategy.
8. Using a spreadsheet, create cash flow projections for five years.
9. Review all of the above, and write an executive summary.
Bike Business Advice