Start a luxury bike business by following these 10 steps:
You have found the perfect business idea, and now you are ready to take the next step. There is more to starting a business than just registering it with the state. 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.
Check out our How to Start a Business page.
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 are the startup and ongoing costs?
- Who is your target market?
- How much can you charge customers?
- What will you name your business?
Luckily we have done a lot of this research for you.
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.
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.
STEP 2: Form a legal entity
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.
Form Your LLC
Read our Guide to Form Your Own LLC
Recommended: You will need to elect a registered agent for your LLC. LLC formation packages usually include a free year of registered agent services. You can choose to hire a registered agent or act as your own.
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!
You can acquire your EIN for free through the IRS website, via fax, or by mail. If you would like to learn more about EINs and how they can benefit your LLC, read our article, What is an EIN?.
Small Business Taxes
Depending on which business structure you choose, you might have different options for how your business will be taxed. For example, some LLCs could benefit from being taxed as an S corporation (S corp).
You can learn more about small business taxes in these guides:
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.
Additionally, learning how to build business credit can help you get credit cards and other financing in your business's name (instead of yours), better interest rates, higher lines of credit, and more.
Open a business bank account
- This separates your personal assets from your company's assets, which is necessary for personal asset protection.
- It also makes accounting and tax filing easier.
Recommended: Read our Best Banks for Small Business review to find the best national bank, credit union, business-loan friendly banks, one with many brick-and-mortar locations, and more.
Open net-30 accounts
When it comes to establishing your business credit, net-30 vendors are considered the way to go. The term "net-30," which is popular among vendors, refers to a business credit arrangement where the company pays the vendor within 30 days of receiving goods or services.
Net-30 credit terms are often used for businesses that need to obtain inventory quickly but do not have the cash on hand.
Besides establishing business relationships with vendors, net-30 credit accounts get reported to the major business credit bureaus (Dun & Bradstreet, Experian Business, and Equifax Business Credit). This is how businesses build business credit so they can qualify for credit cards and other lines of credit.
Recommended: Read our guide on the best net-30 vendors so you can start building business credit now, so you never have to worry about cash flow in the future. Keep in mind that poor cash flow is the #1 reason businesses fail!
Get a business credit card
- This helps you separate personal and business expenses by putting your business' expenses all in one place.
- It also builds your company's credit history, which can be useful to raise money and investment 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.
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.
Learn more about General Liability Insurance.
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.
STEP 8: 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.
If you aren't feeling confident about designing your small business logo, then check out our Design Guides for Beginners, we'll give you helpful tips and advice for creating the best unique logo for your business.
How to promote & market a luxury bike business
The best way to promote your luxury bike shop is to use social media, especially sites that appeal to high-end shoppers. Additionally, you want to create a website that is easy to use and well maintained. Make sure your contact information is prominent, and respond in a timely manner to emails and phone calls.
How to keep customers coming back
You want to build a solid reputation in the community and with your customers. Many people that indulge in luxury items have friends that will do the same, so ensure that you have satisfied customers in order to continue growing your business. Word of mouth is a strong advertising tool.
Still unsure about what kind of business you want to start? Check out the latest Small Business Trends to help inspire you.
STEP 9: Create your business website
After defining your brand and creating your logo the next step is to create a website for your business.
While creating a website is an essential step, some may fear that it’s out of their reach because they don’t have any website-building experience. While this may have been a reasonable fear back in 2015, web technology has seen huge advancements in the past few years that makes the lives of small business owners much simpler.
Here are the main reasons why you shouldn’t delay building your website:
- All legitimate businesses have websites - full stop. The size or industry of your business does not matter when it comes to getting your business online.
- Social media accounts like Facebook pages or LinkedIn business profiles are not a replacement for a business website that you own.
- Website builder tools like the GoDaddy Website Builder have made creating a basic website extremely simple. You don’t need to hire a web developer or designer to create a website that you can be proud of.
Using our website building guides, the process will be simple and painless and shouldn’t take you any longer than 2-3 hours to complete.
STEP 10: Set up your business phone system
Getting a phone set up for your business is one of the best ways to help keep your personal life and business life separate and private. That’s not the only benefit; it also helps you make your business more automated, gives your business legitimacy, and makes it easier for potential customers to find and contact you.
There are many services available to entrepreneurs who want to set up a business phone system. We’ve reviewed the top companies and rated them based on price, features, and ease of use.
Recommended: Find the best phone system for your business; check out our review of the Best Business Phone Systems 2021.
Start A Luxury Bike Business In Your State
Select your state below for an in-depth guide on completing each of these steps in your home state.
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.
Want to know if you are cut out to be an entrepreneur?
Take our Entrepreneurship Quiz to find out!
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.
TRUiC's YouTube Channel
For fun informative videos about starting a business visit the TRUiC YouTube Channel or subscribe below to view later.
Take the Next Step
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.
Learn from other business owners
Want to learn more about starting a business from entrepreneurs themselves? Visit Startup Savant’s startup founder series to gain entrepreneurial insights, lessons, and advice from founders themselves.
Resources to Help Women in Business
There are many resources out there specifically for women entrepreneurs. We’ve gathered necessary and useful information to help you succeed both professionally and personally:
If you’re a woman looking for some guidance in entrepreneurship, check out this great new series Women in Business created by the women of our partner Startup Savant.
What are some insider tips for jump starting a luxury bike business?
You want to be smart about the purchases you make. You may not want to blow your budget and purchase the most expensive bikes until you are sure you can sell them. You can always order bikes for customers – they just may have to wait a little longer. Customers that purchase high-end cars are used to waiting for them to arrive.
How and when to build a team
You are going to want to build a small team from the start. You are going to need at least one staff member knowledgeable about your products and bicycle repair to work when you are not in the shop yourself.