How to Start a Luxury Bike Business

Start a luxury bike business by following these 10 steps:

1. Plan your Luxury Bike Business
2. Form your Luxury Bike Business into a Legal Entity
3. Register your Luxury Bike Business for Taxes
4. Open a Business Bank Account & Credit Card
5. Set up Accounting for your Luxury Bike Business
6. Get the Necessary Permits & Licenses for your Luxury Bike Business
7. Get Luxury Bike Business Insurance
8. Define your Luxury Bike Business Brand
9. Create your Luxury Bike Business Website
10. Set up your Business Phone System

We have put together this simple guide to starting your luxury bike business. These steps will ensure that your new business is well planned out, registered properly and legally compliant.

Exploring your options? Check out other small business ideas.

STEP 1: Plan your business

A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:

• What will you name your business?
• What are the startup and ongoing costs?
• Who is your target market?
• How much can you charge customers?

Luckily we have done a lot of this research for you.

What will you name your business?

Choosing the right name is very important. Read our detailed guide on how to name your business. We recommend checking if the business name you choose is available as a web domain and securing it early so no one else can take it.

What are the costs involved in opening a luxury bike business?

The major costs involved with opening a luxury bike business are going to be the bike store itself and purchasing inventory — the bikes and accessories. Since you want to sell luxury bikes, you are going to need a classy and luxury shop in which to sell them. This shop could cost as much as $350,000, depending on the size and location of your shop. You are going to need a sizable location because bikes can take up a lot of room. It may be best to have a storefront and purchase storage space elsewhere to keep most of your inventory.

What are the ongoing expenses for a luxury bike business?

You are going to have to pay for your building and utilities. If you have a staff, payroll will be an ongoing expense, and you will have to pay for insurance and licenses. 

Who is the target market?

Your target market is going to be someone with disposable income that is interested in biking, or maybe even new to biking, but is loyal to luxury brands.

How does a luxury bike business make money?

A luxury bike business makes money by purchasing and selling bikes. You will also make money on accessories and parts for bicycles. In addition, you can charge for repairing and customizing bikes.

How much can you charge customers?

The amount you can charge is going to depend on the bike. You can expect the luxury bikes to start for well over $5,000. If you can get the bike at a lower cost, then you can sell it for the retail price. Remember that customers are willing to pay lots of money for these luxuries, so ensure your business has an upscaled atmosphere. People expect quality service when purchasing quality products.

How much profit can a luxury bike business make?

The average retail margin for bikes is about 36%. The margin for luxury bikes may be slightly different. Between the bikes, accessories, repairs, and customization, you can expect a profit margin of around 40%.

How can you make your business more profitable?

You can expand your presence at community events to bring in more money. You can network with a different industry like yoga and fitness industries to create a partnership and promote your shop. Consider adding a coffee or smoothie bar in your shop as a way to make more sales. Furthermore, offering rental options may bring in profits and additional sales if customers enjoy using the bike during the rental period.

STEP 2: Form a legal entity

The most common business structure types are the sole proprietorship, partnership, limited liability company (LLC), and corporation.

Establishing a legal business entity such as an LLC or corporation protects you from being held personally liable if your luxury bike business is sued.

You can form an LLC yourself and pay only the minimal state LLC costs or hire one of the Best LLC Services for a small, additional fee.

STEP 3: Register for taxes

You will need to register for a variety of state and federal taxes before you can open for business.

In order to register for taxes you will need to apply for an EIN. It's really easy and free!

There are specific state taxes that might apply to your business. Learn more about state sales tax and franchise taxes in our state sales tax guides.

STEP 4: Open a business bank account & credit card

Using dedicated business banking and credit accounts is essential for personal asset protection.

When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.

Open a business bank account

Besides being a requirement when applying for business loans, opening a business bank account:

• Separates your personal assets from your company's assets, which is necessary for personal asset protection.
• Makes accounting and tax filing easier.

Get a business credit card

Getting a business credit card helps you:

• Separate personal and business expenses by putting your business' expenses all in one place.
• Build your company's credit history, which can be useful to raise money later on.

STEP 5: 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.

Make LLC accounting easy with our LLC Expenses Cheat Sheet.

STEP 6: 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.

STEP 7: Get business insurance

Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss.

There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face, begin with General Liability Insurance. This is the most common coverage that small businesses need, so it’s a great place to start for your business.

Another notable insurance policy that many businesses need is Workers’ Compensation Insurance. If your business will have employees, it’s a good chance that your state will require you to carry Workers' Compensation Coverage.

Is this Business Right For You?

This business is ideal for those who care about the environment, want to promote physical fitness, and love luxury cars and bikes. Not only is this ideal for bike enthusiasts but car enthusiasts as well.

What happens during a typical day at a luxury bike business?

You can expect your typical day to consist of running the day-to-day tasks at the bike shop. Monitoring your inventory and sales will be an important part of your job, and you will schedule appointments, make repairs, and perform customizations to bikes. Researching products and trends is important to ensure your business keeps up with market demands. You may need to educate customers and train staff.

What are some skills and experiences that will help you build a successful luxury bike business?

It is necessary for you to understand how to repair luxury bikes. You can hire staff to repair the bikes, but it is helpful if you have an understanding of the basics too. In addition, you need to be knowledgeable about the products you sell so that you can adequately promote them to interested customers. Given the extra cost of a luxury bike, customers want to feel that you are a dependable source of knowledge and can be of help if problems arise.

What is the growth potential for a luxury bike business?

The bike industry, in general, has seen a tremendous amount of growth. The luxury line of bikes is a newer twist on bike models; however, people that have a love for lavish cars and bikes are interested in purchasing these bikes.