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In addition to selling new bicycles, many bike shops also purchase and restore used bicycles for resale. Most also stock replacement parts for the types of bicycles they sell as well as a variety of safety equipment such as helmets, gloves, and reflective gear. Bicycle shops help promote cycling as a beneficial exercise, a positive social activity, and a clean alternative form of transportation.
Who is this business right for?
This business is ideal for environmentally conscious people who want to promote physical fitness and enjoy interacting with others.
What happens during a typical day at a bike shop?
Bicycle shop owners perform a wide variety of activities, including:
- Tracking sales and inventory
- Purchasing bicycles and accessories
- Scheduling and performing bicycle customization and repairs
- Creating sales promotions
- Arranging and participating in community events
- Researching new products and current trends in cycling
- Training staff
What is the target market?
Preferred customers are people who enjoy cycling as a form of transportation, a competitive sport, or a recreational hobby.
How does a bike shop make money?
Bicycle shops make money by purchasing bicycles and cycling accessories for resale. Most shops also offer replacement parts and bicycle repair services. Some offer bicycle rentals as well as sales. Customers rely on the extensive knowledge and expertise of bicycle shop staff members to maintain their bicycles in safe riding condition.
What is the growth potential for a bike shop?
The bicycle industry is demonstrating continuous growth, with the majority of bicycle manufacturers enjoying an increase in profits for 2016. Depending on location, it is possible to achieve enough growth to offer franchise opportunities.
What are some skills and experiences that will help you build a successful bike shop?
Some skills that will help you succeed in this type of business include:
- Bicycle repair
- Customer service
- Knowledge of cycling products and accessories
- Accounting skills
- Managerial skills for training staff
What are the costs involved in opening a bike shop?
One of the initial costs is obtaining any required business license and permits. Depending on the location and size of your shop, opening a bicycle shop can cost as much as $350,000, or as little as $10,000. Startup costs are usually lower in smaller cities where rents aren’t as high, since a substantial amount of space is required.
Once a suitable space is located, it must be outfitted to effectively display bikes and accessories. Purchasing initial inventory is also costly, but many wholesale bicycle dealers offer shop owners a line of credit at 0% interest for a limited time (usually 3-6 months), which helps finance the initial inventory. Other goods, such as safety equipment, clothing, and accessories must be purchased outright.
Read our bike shop purchasing guide to learn about the materials and equipment you'll need to start a bike shop, how much to budget, and where to make purchases.
What are the steps to start a bike shop?
Once you're ready to start your bike shop, follow these steps to ensure that your business is legally compliant and avoid wasting time and money as your business grows:
- Plan your business. A clear plan is essential for success as an entrepreneur. A few important topics to consider are your initial costs, your target market, and how long it will take you to break even.
- Form a legal entity. Establishing a legal business entity prevents you from being personally liable if your bike shop is sued.
- Register for taxes. You will need to register for a variety of state and federal taxes before you can open for business.
- Open a business bank account. A dedicated checking account for your bike shop keeps your finances organized and makes your business appear more professional to your customers.
- Set up business accounting. Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.
- Obtain necessary permits and licenses. Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.
- Get business insurance. Insurance is highly recommended for all business owners. If you hire employees, workers compensation insurance may be a legal requirement in your state.
- Define your brand. Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.
- Establish a web presence. A business website allows customers to learn more about your company and the products or services you offer. You can also use social media to attract new clients or customers.
Select your state below for an in-depth guide on completing each of these steps in your home state.
Where can I find a business mentor?
One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.
Having a support network in place to turn to during tough times is a major factor of success for new business owners.
Recommended: Fizzle.co offers video courses and a supportive online community of like-minded entrepreneurs. Try one month membership for free.
How to promote & market a bike shop
A great way to promote your shop is by partnering with other local businesses to sponsor bicycle races and other community events for charitable causes. Part of what makes bicycling so attractive to people is being outdoors, interacting with nature and other members of the community. Providing more opportunities for them to do that is sure to increase your customer base.
Social media sites such as Facebook and Twitter are excellent platforms to advertise both community and sales events. Many bike shops also make it possible for their customers to purchase items online by maintaining a page on Shopify, or another sales platform. Creating and maintaining a website is a good way to inform regular customers about new products and services, as well as upcoming sales.
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How to keep customers coming back
Purchasing used bikes from local community members is a good way to build a local reputation, establish customer loyalty, and lower your inventory costs. People who sell older bicycles that their children may have outgrown are apt to use the money to purchase a new one.
How and when to build a team
It’s important to build a team from the beginning. Typically, a team includes a lending institution, and at least one staff member knowledgeable about cycling products, and skilled in bicycle repair.
State & Local Business Licensing Requirements
Certain state permits and licenses may be needed to operate a bike shop business. Learn more about licensing requirements in your state by visiting the Small Business Administration’s reference to state licenses and permits.
Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, check out our informative guide, Sales Tax for Small Businesses.
Bike shops may also wish to look into applying for a resale certificate, as a resale certificate allows retailers to purchase goods intended for resale without paying sales tax.
In addition, certain local licensing or regulatory requirements may apply. For more information about local licenses and permits:
- Check with your town, city or county clerk’s office
- Get assistance from one of the local associations listed in US Small Business Associations directory of local business resources
If a bike shop is considering renting bikes, liability waivers are essential since consumers will be in high risk environments, operating potentially dangerous machinery. For this reason, it is best to require protective gear. Attached is a link to a general informed consent form for a bike shop.
Certificate of Occupancy
A bike shop business is generally run out of a retail store. Businesses operating out of a physical location typically require a Certificate of Occupancy (CO). A CO confirms that all building codes, zoning laws and government regulations have been met.
- If you plan to lease a bike shop:
- It is generally the landlord’s responsibility to obtain a CO.
- Before leasing, confirm that your landlord has or can obtain a valid CO that is applicable to a bike shop business.
- After a major renovation, a new CO often needs to be issued. If your place of business will be renovated before opening, it is recommended to include language in your lease agreement stating that lease payments will not commence until a valid CO is issued.
- If you plan to purchase or build a bike shop:
- You will be responsible for obtaining a valid CO from a local government authority.
- Review all building codes and zoning requirements for your business’ location to ensure your bike shop will be in compliance and able to obtain a CO.
How much can you charge customers?
Bicycle repairs can cost anywhere from $10 to $150, depending on the complexity of the job and the cost of the replacement parts. Simple beach cruisers cost anywhere from $199 to $700, while complex, rugged mountain bikes can range from $700 up to $10,000. There are also hybrid electric bicycles. Although they may charge more, most people choose bicycle shops over big box stores for the quality of their products, the superior knowledge of the staff, and the high level of customization they offer.
What are the ongoing expenses for a bike shop?
Ongoing expenses include:
- License and insurance fees
- Inventory maintenance costs, which can be reduced by advertising more expensive items in brochures, rather than keeping them in stock
- Freight charges, which can be reduced by using local wholesalers whenever possible
- Sale and inventory management software designed specifically for bike shops
- Tool maintenance
- Staff training and salaries
How much profit can a bike shop make?
On average, the retail profit margin for bike sales is 36%, although the margin is somewhat higher for other types of cycling-related products, such as clothing and accessories. By selling a combination of bikes and other goods, the average bicycle shop earns a profit margin of about 42%.
How can you make your business more profitable?
Many bike shops have begun expanding their businesses, by making their stores available for other types of community events. According to a recent survey of 4,000 bike shops, 12% now have coffee bars, 11% offer cycling/spin classes, and nearly 1% partner with other service providers to offer massage and yoga. Your profits can increase in direct proportion to the community involvement your store makes possible.