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Retail Bicycle Shop Business Plan

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University Cycle Works

Executive summary executive summary is a brief introduction to your business plan. it describes your business, the problem that it solves, your target market, and financial highlights.">.

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 normally has a turnover/growth of approximately 25% each year. The secondary market is the university faculty and staff, and the tertiary market is the greater Metroburg community.

Hubert “Hub” Freewheeler has been the assistant manager of University Cycle Works for five years, with an additional seven years of bicycle industry retail sales and service experience. Hub first began investigating the ownership of a bike business two years ago, however, the local Metroburg market seemed saturated with shops. Realizing that a more practical option would  be to buy an existing shop, Hub approached his current boss. The result of two years of negotiations will be the sale of University Cycle Works to Hub taking effect July 1, 2001. The goal will be a seamless transfer of ownership, with staff, bike lines, location, and operations unchanged. 

This business plan is being prepared for presentation to Metroburg Business Bank, and to the store’s major suppliers of new bicycles, accessories, and parts. A substantial part of the past year’s planning has been negotiations with these suppliers to maintain the current financial agreements as the business changed hands. These negotiations benefited greatly by the good working relationships Hub had developed with the various suppliers’ sales representatives, who advocated on Hub’s behalf. The suppliers have provisionally granted continuation of existing terms and dating programs, pending review of this business plan. 

Note: Names, proprietary information, and some financials have been disguised in this sample plan.

1.1 Objectives

The objectives for University Cycle Works are:

• Continue to provide the high quality of sales and services that University Cycle Works is known for.
• Manage a seamless transfer of ownership.
• Maintain a financially healthy business and validate the trust and advocacy of other people in support of this business purchase.
• Repay the start-up loan provided by family members within the first year.
• Achieve monthly and yearly sales equal to or better than the previous year under the former owner.
• Aim to improve sales of bicycle specific garments and rainwear over the year.
• Focus marketing on new student influx to maintain current growth in sales and service revenue.

1.2 Keys to Success

Our premier, high visibility location immediately adjacent to the State University in Metroburg has been critical to our success as the bicycle sales and service purveyor of choice to the university community.

The continuance of established accounts payable, sales programs, and co-op advertising resources by suppliers of bicycles, accessories, and parts makes the financial plan reasonable and attainable. Without this support, the purchase of the business would be unacceptably risky.

Buying and continuing to use the recognized, well respected name University Cycle Works provides continuity for the customers, the owner, and the employees.

Retaining and promoting the current employees of the shop is as important as any other item here. They are the life of University Cycle Works. Long-term relationships with customers have always been a hallmark of the University Cycle Works experience. We recognize and address our customers by name, and want to be part of their university experience. 

Company Summary company overview ) is an overview of the most important points about your company—your history, management team, location, mission statement and legal structure.">

University Cycle Works is a subchapter S corporation, and is currently owned by Han Delbar. Hubert “Hub” Freewheeler, current assistant manager of University Cycle Works, is purchasing University Cycle Works from Delbar, acquiring existing inventory, and assuming outstanding accounts payable and dating program debts to suppliers, location lease, customer base and information, and University Cycle Works’ business name and goodwill. The business will continue to be a subchapter S corporation. Exchange of ownership will occur on July 1, of this year.

To establish an accurate accounting of existing inventory and outstanding debts, the prior year’s closing inventory and year end financial statement as reviewed by the business’ CPA were used as benchmarks. The sales, orders placed, deliveries received, and accounts payable payments made have been tracked each month, and a trial balance of these will be run June 15 to establish the final purchase price for inventory on hand, and the amount of Accounts Payable assumed. The figures presented here are conservative, realistic estimates used for planning purposes.

2.1 Start-up Summary

The current owner, Han Delbar, has sold the business to Hub for $140,000. To help determine this price, a business valuation specialist was hired. This professional priced existing store fixtures, tools, and mobile leasehold improvements. These included bicycle wall racks, display cases, track lighting, repair and assembly tools, supply cabinets and storage shelving, air compressor, etc., and are part of the purchase price.

The value of the existing company, its reputation, assumption of the business name, existing client base, etc. is recognized as part of the purchase. It appears as a start-up expense in the following table as Down Payment. The balance appears as a long-term liability. Additional payments shall be made monthly.

Inventory, accounts payable, and invoices were tracked for five months to determine an accurate price of current inventory and amounts of accounts payable assumed.

A deposit equal to one month rent was required by the landlord as assurance in continuing the current lease to the new owner. It appears as a short-term asset.

Hub is investing some of his own money, partially a home equity loan, in the company. An additional amount is being invested, as short-term interest free loans, by family members. This plan calls for these loans to be repaid in the first year.

2.2 Company Locations and Facilities

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.

Products and Services

Retail Sales

• Bicycles . We sell new bicycles, predominantly in the mountain bike style, retro-cruiser is a close second, and sport/touring/racing road bikes a distant third. We also sell some used bikes which we take in on trade as a service to our customers who are buying new bikes.
• Accessories . We offer a wide variety of accessories. Locks, computer speedometers, fenders, cargo racks, comfortable seats, headlights, helmets, water bottles, panniers/back packs/messenger bags, child seats and trailers, bike storage racks, and auto roof rack systems all fall in this category. It is not possible to carry every possible accessory, so we try to carefully chose those which will be most useful or desired by our target markets. When we receive special requests for a new item, we’ll often order several to test the local demand, and if adequate, will add it to our regular stock.
• Clothing . Clothing appeals to all cyclists, whether it is a logo emblazoned T-shirt or a piece of waterproof rainwear. At University Cycle Works, we rotate our clothing based on the season. Just before the autumn rains we stock jackets and Gore-Tex. Come winter we offer helmet covers and liners, insulated jerseys and pants, gloves, and shoe covers. And when spring arrives and the first crocus appears through the melting snow, we start displaying summer jerseys, and racing shorts.
• Parts . Parts generally refers to pieces or materials necessary to the basic functioning of the bicycle. Generally, parts are installed during service [see below] and are an additional charge beyond the service fees. Some, like cranksets, pedals, tires, derailleurs or brakes, are both integral parts and upgrade accessories. Others, such as headsets, bottom brackets, spokes, chains, cables, and cable housings are strictly maintenance, though some will be sold to cyclists who prefer to work on their bikes themselves.

University Cycle Works is a full-service specialized bicycle shop. Our service offering includes, but is not limited to:

• Free 30-day/100-mile tune up with every new bike sold.
• Quick repairs for flat tires, broken chains, brake cables, etc.
• Scheduled tune-ups, replacement of all bearing surfaces, repacking of lubricants, and adjustments of derailleurs and brake systems.
• Installation of all accessories.
• Authorized warranty repairs on the bikes.
• Custom wheel building.
• Frameset repairs by outsourcing to Via Porco custom frame builders.

3.1 Competitive Comparison

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.

3.2 Fulfillment

There are three mainstream bike lines and three specialty brands carried at University Cycle Works.

• Litespeed Titanium–Serious top-of-the-line bicycles of unique materials and the very best components for road racers, tourists, and mountain bikers who will spend whatever they need to get the performance enhancing machine they want.
• Via Porco (Road Hog)–Custom sizes and framesets, fillet brazed by a local frame builder, for cyclists looking for the perfect fit and a long-term investment.

Parts for the repair and maintenance of bicycles are available from a variety of suppliers. Four that we regularly order from are listed here.

• United Bicycle Parts
• United Bicycle Tools–a supplier of specialty tools for the bicycle industry. They sell shop grade tools, and consumer grade tools for retail sales by bike shops.

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.

• Trek Bicycle Corporation

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.

3.3 Future Products and Services

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.

Market Analysis Summary how to do a market analysis for your business plan.">

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.

4.1 Market Segmentation

The university students are our main target market.

• They are mostly undergraduates, so there is a 25% annual turnover.
• The lack of parking in the university area and the general ease of bike mobility throughout Metroburg motivates them to use bicycles as inexpensive transport. Athletic pursuits draw them, and the nearby areas for use of mountain and trail bikes provides a great place to ride.
• There is a new enthusiasm for retro Cruiser bikes, and higher tech cruiser-style bikes with multiple gears, good brakes, etc. among the college age population.
• Also, main market for racks, locks, throughout, pannier/bags, fenders, rainwear, etc.
• They want convenience for sales and service.

University employees are another prime market segment.

• Small growth and turnover, but on the whole, the group is pretty stable.
• Are willing to commute by bicycle to work.
• They want a stable, comfortable bike and a full range of accessories.
• When their bikes need service and maintenance, local drop off/pickup convenience is important.
• They have families who ride bicycles also, and will patronize a shop that gives personal service.

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.

4.2 Target Market Segment Strategy

We’ve chosen our target market segments, the greater university population because:

• They are contained in one area with a high daily population density. 
• Are easily reached with advertising, such as outdoor displays on main street next to campus.
• Have discretionary income.
• They have a regular turnover of population/influx of new potential customers.
• Are, in general, athletically/physically active, and often performance oriented.
• In need of quick, efficient, maneuverable, alternative transportation.
• Like toys, especially expensive toys.
• Are image and brand conscious. 
• Respond to convenience, especially highly visible, easy access convenience, with impulsive purchases.

4.2.1 Market Trends

Trends in the bicycle industry usually last for a time. Some of them have been:

• 1960s – Big rush on 10 speeds.
• 1970s – Touring bikes became popular.
• 1980s and 1990s – Huge growth of mountain bikes
• 1990s – The rumored but exaggerated death of “road bikes” and the unfulfilled prophesy of a boom in the tandem market.
• 2000s – Popularity of retro ‘cruisers.’

4.2.2 Market Growth

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.

4.2.3 Market Needs

Our market niche has several needs which we strive to meet:

• Quality bikes at several price points.
• Various styles and sizes of bikes, leaning heavily toward the styles most popular with the student population.
• Range of accessories most practical in the local setting, such as locks, fenders, lights, tires, seats, rainwear, etc.
• Plenty of replacement components and service parts.
• Friendly personal relationships between cyclists and shop staff.
• Prompt and convenient service from on-the-spot flat tire fix, to drop in repairs, to scheduled major maintenance, where the rider can drop their bike off, head to class or work, and be assured that their bike will be ready for the ride home.

4.3 Service Business Analysis

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. 

4.3.1 Main Competitors

Setting aside the discount department stores, University Cycle Works has the following direct competitors.

• 1 local multi-sport store at the local megamall
• 1 statewide chain of bicycle shops which started out as Schwinn-only shops, but has had to take on other brands and products.
• 1 used bike store that has made a fine business reputation for itself, dealing strictly in used bikes.
• 3 local, including the oldest shop in town.
• 1 local multi-location chain, that has specialized in opening shops in small local malls in areas of new housing development.
• Several garage mechanics offering service only.

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.

4.3.2 Business Participants

The bicycle industry has many players large and small all over the world. A few are listed below.

Big bicycle manufactures

• Giant – one of the largest manufacturers in China. Private label manufacturer that sells under its own name.
• Huffy – The largest manufacturer and seller of bikes in the U.S. under its own private labels.
• Cannondale – U.S. company that was in early on the “Made in USA” movement in the 1970s.
• Trek – Heavily marketed U.S. company that has expanded to offer bikes, clothes, accessories, road support for events, training for shops, and other services.

Big component manufacturers

• Shimano – largest manufacturer of cranksets, derailleurs, drive trains, brake sets, hubs. HQ in Japan with offices, distribution, and factories world wide.
• Campagnolo – Premier Italian producer of the finest component gruppos for almost 100 years.

Big accessory distributors

• Specialized
• Bell Sports
• Quality Bike Parts

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.

• Performance
• Bike Nashbar

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.

• GI Joe’s

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.

Strategy and Implementation Summary

Information on our sales and marketing efforts are discussed in the following sections.

5.1 Competitive Edge

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.

5.2 Marketing Strategy

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.

5.2.1 Marketing Programs

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.

5.2.2 Web Plan Summary

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:

• Monthly maps and directions for both a road and a mountain bike ride.
• Bicycling Magazines

5.2.3 Pricing Strategy

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:

• Flat Tire — $7.50
• Install Fenders — $10.00
• Brake Adjustment — $25.00
• Tune-up — $65.00
• Overhaul — $100.00

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.

5.3 Sales Strategy

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. 

• Spring . This coincides with both the return of nice weather, and beginning of Spring term. We feature new bicycles, and repair/maintenance/tune-up specials. It is important to us to have a good selection on hand at this time. When people decide they want that new bike, they want it now. If we don’t have the bike then, and make the sale immediately, many riders will decide that they really can get another season out of their old bike, and will spend their discretionary income on some other purchase.

Additionally, we have some special buys available for June graduation.

We get some small monthly revenue from these sources:

• Monthly service contract for repairs and parts with the University Security Office.

5.4 Strategic Alliances

• Bicycle manufacturers – continuation of dating programs and financial agreements.
• Accessory suppliers – continuation of financial agreements.
• Metroburg Parks Dept. – we sponsor printed map of city bike paths to publish on our website.
• University Security Office – maintenance, supply service contract for cycle security.
• HooDaThunkIt – website design and maintenance, search engine placement.

Management Summary management summary will include information about who's on your team and why they're the right people for the job, as well as your future hiring plans.">

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:

• Continental Shelf Bank.
• Newt Ria, a partner at Weasel, Stoat, Muskrat who advised on the sale/purchase arrangements.

6.1 Personnel Plan

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.

Financial Plan investor-ready personnel plan .">

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.

7.1 Important Assumptions

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:

• Interest rates will fluctuate only slightly.
• The level of discretionary income will remain steady or increase.
• The current enrollment at the university will continue at or above its current level.
• That the lack of auto parking in the university area will continue.
• That gasoline prices will continue to encourage alternative transportation, e.g. bicycle commuting.
• World trade treaties will continue to allow shipping of material and product across all borders, continents and oceans.

7.2 Key Financial Indicators

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.

7.3 Break-even Analysis

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.

7.4 Projected Profit and Loss

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.

7.5 Projected Cash Flow

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.

7.6 Projected Balance Sheet

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.

7.7 Business Ratios

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.

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How to Write a Bike Shop Business Plan: Complete Guide

• January 11, 2023

Whether you’re looking to raise funding from private investors or to get a loan from a bank (like a SBA loan) for your bike shop, you will first need to prepare a solid business plan.

In this article we go through, step-by-step, all the different sections you need in the business plan of your bike shop . Use this template to create a complete, clear and solid business plan that get you funded.

1. Bike Shop Executive Summary

The executive summary of a business plan gives a sneak peek of the information about your business plan to lenders and/or investors.

If the information you provide here is not concise, informative, and scannable, potential lenders and investors will lose interest.

Though the executive summary is the first and the most important section, it should normally be the last section you write because it will have the summary of different sections included in the entire business plan below.

Why do you need a business plan for a bike shop?

The purpose of a business plan is to secure funding through one of the following channels:

• Obtain bank financing or secure a loan from other lenders (such as a SBA loan )
• Obtain private investments from investment funds, angel investors, etc.
• Obtain a public or a private grant

How to write your bike shop’s executive summary?

Provide a precise and high-level summary of every section that you have included in the business plan of your bike shop. The information and the data you include in this segment should grab the attention of potential investors and lenders immediately.

Also make sure that the executive summary doesn’t exceed 2 pages in total: it’s supposed to be a summary for investors and lenders who don’t have time to scroll through 40-50 pages, so keep it short and brief.

The executive summary usually consists of 5 major sub-sections:

• Business overview : describe your business in detail, providing information about the business model (franchise vs. independent store) you intend to use and all the products (bikes, accessories, sportswear, etc.) and services (rental, repair, etc.) customers can find in your shop
• Market analysis : the market analysis segment will contain an overview of the expected market size , target audience , and demography. Also provide here a quick overview of your competitors, your strengths & weaknesses (think SWOT analysis ) and how your bike shop differ vs. competition
• People : first, introduce your bike shop’s management. Provide a brief (no more than a couple of sentences each) of the experience and track record of the team. Also, speak about your hiring plans: in other words, how you intend to run the business (what are the different teams and how many employees will you hire?)
• Financial plan : how much profit and revenue do you expect in the next 5 years? When will you reach the break-even point and start making profits? You can also include here a chart with your key financials (revenue, gross profit, net profit )
• Funding ask : what loan/investment/grant are you seeking? How much do you need? How long will this last?

Bike Shop Financial Model Template | Excel Spreadsheet

Download an expert-built 5-year Excel financial model for your business plan

2. Bike Shop Business Overview

This is the perfect time to give the lenders a detailed overview of your bike shop. What type of bike shop are you opening? What products and services will you offer? Use the following questions to guide you:

• Why are you starting a bike shop today? 
• Where exactly is your bike shop located? 
• Why did you choose that location? 
• What type of bike shop are you opening?
• Which products and services will you provide? Will you sell bikes or rent them as well?
• Will you offer repair services?
• What will be your pricing strategy ? 
• What will be your opening days and operating hours? 
• What will be the legal structure of your company?

a) History of the Project

Any business overview must start with explaining the history of the project. There are 2 components here:

• Passion & experience of the business owner
• Rationale behind starting a bike shop today

Passion & experience

There’s nothing more appealing to investors and lenders than finding a business owner who has a strong passion for the industry they evolve in. Same goes for cycling.

Prior experience will make your story more believable, making it easier for the lenders and other financial bodies to fund your project. There’s no harm if you don’t possess the relevant experience. But, if so, be sure to demonstrate your ability to run a successful business. 

After demonstrating your ability to run the business, give enough justifications that this is the right time to invest in a bike shop business. For example, there may not be any specialised bike shop within a 25-mile radius selling high-quality bicycle racing brands and where bike lovers can get repair services from bicycle experts.

b) Business Model

What type of bike shop will you open? You can start a new bike shop from scratch or buy a franchise instead. But ensure you understand the pros and cons of every model and what’s best for the area where you plan to operate.

This section should address the following questions:

• Will you sell and/or rent bikes as well?
• Will you partner exclusively with selected brands to offer their bikes and accessories?
• Will you target a specific age group? (children vs. adults)  
• Will you provide special services/add-ons? (bike repair, servicing, advice, etc.)
• Will you offer an online platform for selling your bikes (ecommerce)? 

Your store may target professional cyclers or local riders. Alternatively, you could be looking to start a large warehouse focusing on online sales. Similarly, you can stock all bicycles, including the electric types, or choose a single category. All in all, choose the best option for your target audience and the location where you plan to open your bike shop.

c) Products & Services

Now that you have gone in details about your bike shop business model, let’s now list out your products and services. In other words, what is your bike shop actually selling?

If the majority of the population are off-road biking enthusiasts, you may want to stock up on mountain bicycles. But if they are average cyclists looking for a a bike for a once-a-month sunday adventure, you might want to offer road bikes instead.

In addition to bikes, there are a number of products you may want to sell: accessories, sportswear, etc.

You may even want to create a one-of-a-kind flagship store with a coffee shop where bike lovers can spend time and meet bike aficionados in store.

Finally, you can offer other supplementary services inside your bike shop, including: bike repairs, parts replacement, routine maintenance and bike rental.

d) Pricing Strategy

In addition to products and services, make sure to add details about your pricing strategy.

For example, you can compile a pricing list outlining the average price per product and/or service. When it comes to the products, keep it simple and set a pricing range by category (road bike, mountain bike, hybrid bike, etc.).

Adding a pricing table is very useful as it helps lenders and investors to tie your pricing strategy with your financial projections later on. 

e) Legal Structure

Finally, your business overview section should specify what type of business structure you want. Is this a corporation or a partnership (LLC)? Who are the investors? How much equity percentage do they own? Is there a Board of Directors? If so, whom? Do they have experience in the industry?

3. Bike Shop Market Overview

Starting a bike shop business only makes sense if you understand the market you’re in.

For instance, if you’re setting up your facility near a college where many students need cheap bikes for frequent commuting, stocking budget-friendly models for road cycling might make more sense vs. expensive brands.

However, if the region is dominated by off-road enthusiasts obsessed with weekend adventures, prioritize the all-weather mountain bikes.

When assessing your market, be sure to address the following aspects: 

• Bike shop industry size & growth : how big is the bike industry in your area? What is its growth/decline rate, and what factors contribute to its growth/decline?
• Competition overview : how many competitors are there? How do they compare vs. your business? How can you differentiate yourself from them?
• Customer analysis : who is your target market ? What type of bikes / bike sports do they prefer? How regularly do they purchase/rent bikes? How much do they spend on average on bikes & accessories?

a) Bike Shop Industry Size & Growth

How big is the bike shop industry in the us.

The market size of the bike industry in the US is estimated to be about $6.9 billion in 2021, and is expected to grow at a CAGR of 6.1% from 2022 to 2027.

18.5 million bikes were sold in the US alone in 2021: that’s an average of $372 per bike.

When it comes to the bike shops, there were about 7,000 bicycle shops in the US: that’s an average annual turnover of $985,000 per bike shop.

How big is the bike shop industry in your area?

After getting a clear picture of the US biking industry, narrow down to your location. It’s possible that you won’t find the size of the market anywhere (at least not for free). In which case, read our article on how to estimate TAM, SAM and SOM for your startup. Let’s see how to do it below:

We know that the average bike shop has an annual turnover of $985,000. So if there are 10 bike shops in your city for example, you can assume that the bicycle industry in your city is worth ~$10 million.

How fast is the bike shop industry growing in your city?

Looking at publicly available reports online, we know that the average annual growth of the industry was 6.1% from 2017 to 2022 . But what about where you live?

US national averages can be a great addition to your business plan, yet they don’t necessarily help to assess the biking industry where you plan to operate. For example, the industry might be growing in the US, but declining in your region for a number of reasons (decreasing population or disposable income, etc.).

Instead, you can use the number of bike shops as a proxy to find the market growth in your area. For instance, if there were 18 bike shops in 2018 and 20 in 2022, the average annual growth rate is ~3%, slightly lower than the US average.

b) Competition Overview 

You may face stiff competition when opening your bike shop. So before doing so you may want to learn from your competitors, identifying their strengths and weaknesses and the major reasons behind their respective successes and challenges. 

Get accurate information about their marketing strategies, products and services, and additional features that add value to their business. There’s no harm in visiting the stores in person to get first-hand information about your competitors.

Here is a sample table that you can use:

c) Customer Analysis

After assessing the level of competition in the region, switch your attention to your target market. Get a clear picture of your target customer by answering the following questions, among others:

• Average spend on bikes (purchasing or renting) per year?
• Frequency of visits (how often do they visit a bike shop?)
• What type of bike(s) do they prefer?
• What type of services do they need?
• What do they like or dislike in the existing bike shops in the region?

4. Sales & Marketing Strategy

This is the segment where you outline your customer acquisition strategy. Try to answer the following questions:

• What is your Unique Selling Point ( USP )?
• What are the different marketing strategies you will use? 
• How do you intend to track the success of your marketing strategy? 
• What is your customer acquisition cost (CAC)? 
• What is your marketing budget? 
• What introductory promos and offers do you intend to provide for attracting new customers? 

What marketing channels do bike shops use?

Some of the most popular marketing channels used by bike shops include:

• Local listing & customer reviews (Google Business)
• PPC ads, Facebook ads, etc. 
• Content marketing on social media and blogs
• Word of mouth, recommendations
• Loyalty programs

What is Your Unique Selling Point (USP)?

In other words, how do you differentiate yourself vs. competitors? This is very important as you might need to win customers from competitors. A few examples of USPs are:

• Pricing : you may have affordable prices vs. competitors for the bikes you’re selling and/or the services you offer
• Extra services : add-on services like bike repairs competitors might not offer
• Partnerships with leading brands that refer you to their customers (via email marketing) and/or offer you special rates for their products (bikes, accessories, sportswear).
• Uniqueness : you may be the exclusive distributor of a well-known brand in the region
• Location : your bike shop may be located closer to your target audience and/or closer to a busy street
• Promos and offers : you offer discounts for frequent customers, etc.

5. Management & People

You must address two things here:

• The management team and their experience/track record
• The organizational structure : different team members and who reports to whom?

Small businesses often fail because of managerial weaknesses. Thus, having a strong management team is vital. Highlight the experience and education of senior managers that you intend to hire to oversee your bike shop.

Describe here their duties, responsibilities, and roles. Also, highlight their previous experience and explain how they succeeded in their previous roles.

Organization Structure

Even if you haven’t already hired an assistant manager, salesmen, bike mechanics and other relevant staff members, you may want to provide a chart of the organizational structure defining the hierarchy of reporting like the one below.

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. If you’re looking to raise equity from private investors, a solid financial plan will prove them your bike shop is an attractive investment.

There should be 2 sections to your financial plan section:

• The startup costs of your project (if you plan to start a new bike shop, renovate your store, etc.)
• The 5-year financial projections

a) Startup Costs

Before we expand on 5-year financial projections in the following section, it’s always best practice to start with listing the startup costs of your project. For a bike shop, startup costs are all the expenses you incur before you open your shop and start making sales. These expenses typically are:

• The lease security deposit (if you rent) or the downpayment if you buy the real estate
• Renovations and improvements
• Upfront Inventory

Of course, the startup costs depend on a number of factors: the size of your bike shop, its location, the quality of the existing shop, the furniture and design, whether you buy or rent the space, etc.

On average, it costs $47,500 to $237,500 to open a small bike shop (2,000 sq. ft.) with 3 employees in the US .

Note that these costs are for illustrative purposes and may not be fully relevant for your business. For more information on how much it costs to open and run a bike shop, read our article here .

b) Financial Projections

In addition to startup costs, you will now need to build a solid 5-year financial model for your bike shop.

Your financial projections should be built using a spreadsheet (e.g. Excel or Google Sheets) and presented in the form of tables and charts in the business plan of your bike shop.

As usual, keep it concise here and save details (for example detailed financial statements, financial metrics, key assumptions used for the projections) for the appendix instead.

Your financial projections should answer at least the following questions:

• How much revenue do you expect to generate over the next 5 years?
• When do you expect to break even?
• How much cash will you burn until you get there?
• What’s the impact of a change in pricing (say 15%) on your margins?
• What is your average customer acquisition cost?

You should include here your 3 financial statements (income statement, balance sheet and cash flow statement). This means you must forecast:

• The number of customers over time ;
• Your expected revenue ;
• Operating costs to run the business ;
• Any other cash flow items (e.g. capex, debt repayment, etc.).

When projecting your revenue, make sure to sensitize pricing, the cost of goods sold (the cost you incur to buy the bikes from the manufacturer) and your sales volume. Indeed, a small change in these assumptions may have a significant impact on your revenues and profits.

7. Use of Funds

This is the last section of your bike shop business plan. Now that we have explained what your bike shop’s business model is, what you sell and to whom, your marketing strategy, etc., this section must now answer the following questions:

• How much funding do you need?
• What financial instrument(s) do you need: is this equity or debt, or even a free-money public grant?
• How long will this funding last?
• Where else does the money come from? If you apply for a SBA loan for example, where does the other part of the investment come from (your own capital, private investors?)

If you raise debt:

• What percentage of the total funding the loan represents?
• What is the corresponding Debt Service Coverage Ratio ?

If you raise equity

• What percentage ownership are you selling as part of this funding round?
• What is the corresponding valuation of your business?

Use of Funds

Any business plan for a bike shop should include a clear use of funds section. This is where you explain how the money will be spent.

Will you spend most of the loan / investment in paying your employees’ salaries? Or will it cover mostly the cost for the lease deposit and the upfront inventory costs?

We also strongly recommend using a pie chart like the one we have in our financial model template where we outline the main expenses categories as shown below.

Related Posts

How Much Profits Can you Make with a Bike Shop?

• February 22, 2023

How To Build a Financial Model For a Bike Shop

Opening a Bike Shop Costs $47,500 to $237,500

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• Sample Business Plans
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Bike Shop Business Plan

People pursue bike riding for several reasons. It can be for passion, for staying fit, or a hobby that helps you feel more connected to nature or feel happy.

Whatever the reason, we all know that several people enjoy riding bikes regardless of their age.

If you are planning to start a new bike shop, the first thing you will need is a business plan. Use our sample Bike Shop Business Plan  created using upmetrics business plan software to start writing your business plan in no time.

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, and so on has led to the growth of the biking industry. The increasing attention paid to health and fitness and the usage of bikes as an environment-friendly alternative for transport is also a major contributing factor to the growth.

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Things to Consider Before Writing a Bike Shop Business Plan

Finding out what would be the cost of setting up and running your shop at the beginning itself can take you a long way. After all, it gives you an ample amount of time to figure out what amount you have, what amount you would need in funds, and what are the various resources of funding.

Also, this practice would ensure you don’t face cash crunches or financial instability in your business.

Figure out the costs

Finding out what would be the cost of setting up and running your shop at the beginning itself can take you a long way. After all, it gives you an ample amount of time to figure out what amount you have, what amount you would need in funds, and what are the various resources of funding .

Find out which brands are in demand

This step is essentially important for bike shops. As people are going to invest some cash in it, they want the best possible product. And there are a few fixed brands all of us tend to trust. Hence, finding out what kinds and brands of bikes are in demand helps you cater to your customers better.

Know your target audience

A bike store has a wide variety of target audiences. It can be anyone from fitness enthusiasts to nature lovers, teenagers, people who pursue cycling as a hobby, and so on. Knowing who is your target audience is necessary for you to have the right product, the right marketing strategy, and additional services.

Build your website

Building your website early on helps you get a headstart with your business promotions. Through the website, you can grab attention by sharing information related to your business, cycling in general, etc. It helps you have an audience even before you have set up your store. It also helps you connect with your audience and understand them better.

Chalking out Your Business Plan

If you are here, chances are that you are someone who’s passionate about bikes and is ready to take their passion to the next level by making it a business.

And although you might already know a lot about bikes and what kind of bike would work for whom, you’ll need one more thing. A bike shop business plan to help you through the business aspect of things.

Reading sample business plans will give you a good idea of what you’re aiming for and also it will show you the different sections that different entrepreneurs include and the language they use to write about themselves and their business plans.

We have created this sample bike shop business plan for you to get a good idea about what a perfect bike shop business plan should look like and what details you will need to include in your stunning business plan.

Bike Shop Business Plan Outline

This is the standard bike shop business plan outline which will cover all important sections that you should include in your business plan.

• Mission Statement
• Vision Statement
• Keys To Success
• Business Structure
• Startup cost
• Accessories
• Market Trends
• Target Market
• SWOT Analysis
• Advertising Strategy
• Pricing Strategy
• Important Assumptions
• Brake-even Analysis
• Profit Yearly
• Gross Margin Yearly
• Projected Cash Flow
• Projected Balance Sheet
• Business Ratios

After  getting started with Upmetrics , you can copy this sample business plan into your business plan and modify the required information and download your bike shop business plan pdf and doc file. It’s the fastest and easiest way to start writing your business plan.

The Quickest Way to turn a Business Idea into a Business Plan

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Download a sample bike shop business plan

Need help writing your business plan from scratch? Here you go;  download our free bike shop business plan pdf  to start.

It’s a modern business plan template specifically designed for your bike shop business. Use the example business plan as a guide for writing your own.

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About the Author

Upmetrics Team

Upmetrics is the #1 business planning software that helps entrepreneurs and business owners create investment-ready business plans using AI. We regularly share business planning insights on our blog. Check out the Upmetrics blog for such interesting reads. Read more

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