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Hitting the open road, with nothing but a motorcycle and a few essentials, has long been a favored American pastime. Those active within the motorcycling community regularly require maintenance and repair on their motorcycles and enjoy spending their hard-earned money on accessories that enhance their riding experience. From selling new and used parts, to bike repair and rebuilds, motorcycle shops offer a variety of goods and services that fit the immediate and long-term needs of bike enthusiasts.
Who is this business right for?
If motorcycles and their subculture are your passion and you possess both the knowledge and drive to manage your own business, opening a motorcycle shop may be the perfect fit for you. The motorcycle community is a tightly-knit group of people; so entrepreneurs who are well-known and respected within this circle are set up to realize the most significant long-term success.
What happens during a typical day at a motorcycle shop?
You and your team’s daily activities will be defined by the services you offer and how you structure your business. In addition to administrative duties, such as paying bills and answering customer questions, the shop must be properly managed and client’s needs should be attended to. Once implemented, marketing strategies will need to be tweaked regularly, to ensure your target audience is reached. Much of your shop’s marketing will require taking advantage of networking opportunities, such as community rides, fundraisers, and meetings.
What is the target market?
Men falling in the 18 - 25 and 40 - 65 age brackets represent more than 80% of motorcycle sales. While your shop will generate revenue from novice bikers, the bulk of your marketing campaign should be geared towards experienced bikers.
How does a motorcycle shop make money?
Your shop will generate income based on the goods and services offered. Some businesses operate on a local level only, while others sell goods online, expanding their reach to a much broader audience.
What is the growth potential for a motorcycle shop?
The biking industry has expanded significantly over the last decade, reaching a previously untapped customer base. As the number of motorcyclists increases, so does their need for bikes, both new and used, as well as parts and accessories. Entrepreneurs with strong business acumen should utilize this unique opportunity, expanding their businesses on both a local and national level.
What are some skills and experiences that will help you build a successful motorcycle shop?
Those considering embarking on this new business path must possess significant knowledge of motorcycles. You should be educated on parts, repair, various models, and safety, as well as the community and its history. Most motorcycle shop owners have been fully immersed in the culture for many years, having built a positive reputation in the process. Previous experience in repair and sales shops will provide you with the knowledge and experience to care for your customers and maneuver through the obstacles that come with running your own business.
What are the costs involved in opening a motorcycle shop?
Veteran motorcycle shop owners recommend a budget of approximately $55,000. This number could vary significantly, depending upon the inventory you choose to carry and services you intend to offer.
Initial investments should include:
- Shop location - first and last month’s rent is typically required
- Inventory - engine and electrical parts, accessories, parts for repair services, and motorcycles
- Display equipment
- Legal fees
- Marketing supplies and a website
If your intention is to manage a larger dealership, your start-up budget should be significantly higher. Prior to writing your business plan, focus on building relationships with wholesale retailers. They set the prices and can offer valuable insight into what your initial and ongoing investment should be.
What are the steps to start a motorcycle shop?
Once you're ready to start your motorcycle 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 motorcycle 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 motorcycle 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. Save 15% when you create a business website with Weebly.
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.
What are some insider tips for jump starting a motorcycle shop?
Veteran motorcycle shop owners offer some valuable advice:
- While it can prove beneficial to keep some of your inventory on display outside of the shop, consider the elements before doing so. Keep motorcycles outside for short periods of time to avoid a loss in value.
- Prior to opening your own shop, work with someone else in the community. Learn as much as you can about every aspect of the business. Even if you are required to work for free, this will prove to be a worthy investment.
- Building a successful shop requires stellar service and fair prices. Find out what others in the community are charging and charge 20-30% less.
- The retail and service industry requires a really thick skin; particularly in the motorcycle community.
- Require all repair jobs to be paid in full before the customer leaves the shop.
How to promote & market a motorcycle shop
Bike shop owners who generate the most sales have an established and respected reputation within the community. They are active in local motorcycle organizations and are known for their skills in repairing and/or customizing bikes and for their extensive knowledge on the culture and history. Because this is such a tightly knit community, much of your marketing will be through word of mouth and staying active. An involved and informative social media presence will be critical in reaching potential customers that might otherwise be unaware of your sound reputation. Online registries and ads in motorcycle magazines will also assist you in reaching a broader audience.
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How to keep customers coming back
Motorcycle shops often morph into much more than just a place of business. They become social hubs, attracting regular business and, ultimately, like a family. While this is a retail and repair shop, it would prove beneficial to create a space that is comfortable for those who wish to socialize during shop hours. Offering a discount to local motorcycle organizations will also help ensure repeat customers.
How and when to build a team
Given the family like atmosphere of these establishments, your team will likely build itself organically. As you get to know the skills and knowledge of those within the community, you will be able to assemble a crew that helps solidify your business’ reputation in the industry.
State & Local Business Licensing Requirements
Certain state permits and licenses may be needed to operate a motorcycle shop business. Learn more about licensing requirements in your state by visiting SBA’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, read our article, Sales Tax for Small Businesses.
For 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.
Maintain Personal Asset Protection
Don’t think that just forming an LLC, or any other type of business, will save your personal assets in case of a lawsuit or other matter by itself.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your LLC is sued. In business law, this is referred to as piercing your corporate veil.
Two of the simplest steps that will protect your business, and yourself, are to:
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.
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.
Certificate of Occupancy
A motorcycle shop business is generally run out of a standalone building. 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 location:
- 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 motorcycle 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 location:
- 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 motorcycle shop business will be in compliance and able to obtain a CO.
How much can you charge customers?
Fees for maintenance, repair, and bike customization are based on labor and parts. Parts and accessory price are generally marked up 100%.
What are the ongoing expenses for a motorcycle shop?
As a repair and retail establishment, you will be facing a number of ongoing expenses. In addition to the standard rent, utilities, phone, and Internet, you will need to budget for the following:
Established shop owners indicate a break even budget of $16,000 per month.
How much profit can a motorcycle shop make?
Unlike many businesses, motorcycle shops often see a profit in the first year. While the first three years may generate a profit of $13,000 to $17,000, this is a positive sign and sets the business up for long-term growth and success. Total annual profits vary, depending upon the specifics of what services you offer, what parts and accessories you sell, and how you plan to sell them. Annual profits can range between $35,000 to $64,000 or more.
How can you make your business more profitable?
Many motorcycle shop owners report having significant success operating an online motorcycle parts business. Since bike shops are often a place to congregate, offering food and drinks, along with a comfortable seating area, will ensure your customers are comfortable and happy. This is an effective way to increase your profits without a large increase in overhead costs. Shop owners have also realized success by offering airbrushing services, selling second-hand bikes, and offering motorcycle tutorials to educate those interested in learning more about their hobby.