Many bike businesses buy and refurbish old bicycles for resale in addition to selling new bicycles. Most stores also provide replacement components for the bicycles they sell, as well as a selection of safety equipment such as helmets, gloves, and luminous clothing. Bicycle stores promote riding as a healthy form of exercise, a fun social activity, and a clean alternative mode of transportation.
Follow these ten steps to open a bike shop:
Prepare your Bike Shop
Create a legal entity for your bike shop.
Tax Registration for your Bike Shop
Create a Business Bank Account and a Credit Card
Establish Accounting for Your Bike Shop
Obtain the Required Permits and Licenses for Your Bike Shop
Purchase Bike Shop Insurance
Create a Bike Shop Brand
Make a Website for Your Bike Shop
Configure your Business Phone System
Starting a company entails more than just registering it with the state. We’ve put up this easy-to-follow guide on launching your own bike store. These stages will guarantee that your new company is well-planned, correctly registered, and legally compliant.
STEP 1: Make a business plan.
A well-thought-out strategy is vital for entrepreneur success. It will assist you in mapping out the intricacies of your organisation and uncovering some unknowns. Consider the following crucial topics:
What are the initial and continuing expenses?
Who is your intended audience?
How much money may you charge your customers?
Fortunately, we have done a lot of the legwork for you.
What are the expenses of starting a bike shop?
Obtaining the necessary company licences and permissions is one of the early fees. Opening a bicycle business may cost as much as $350,000 or as little as $10,000, depending on location and size. Because a significant quantity of space is necessary, startup expenses are often cheaper in smaller cities with lower rents.
Once an appropriate location has been identified, it must be equipped to successfully show motorcycles and accessories. Purchasing initial inventory is also expensive, however many wholesale bicycle dealers provide shop owners with a line of credit at 0% interest for a certain period (typically 3-6 months), which helps finance the first inventory. Other items, such as safety gear, clothes, and accessories, must be bought in full.
What are the continuing costs of running a bike shop?
Ongoing costs include:
Rent
Fees for a licence and insurance
Inventory management expenses may be decreased by promoting more costly commodities in brochures rather than stocking them.
Freight costs may be lowered by employing local suppliers wherever feasible.
Bike shop-specific sales and inventory management software
Upkeep of tools
Employee education and compensation
Who is the intended audience?
People who appreciate cycling as a mode of transportation, a competitive activity, or a leisure pastime are preferred consumers.
What is the business model of a bike shop?
Bicycle businesses generate money by acquiring secondhand bicycles and riding equipment. Most stores also sell replacement components and provide bicycle maintenance services. Some places rent out bicycles as well as sell them. Customers depend on bicycle shop employees’ significant knowledge and skill to keep their bicycles in safe riding condition.
How much money may you charge your customers?
Bicycle repairs may range from $10 to $150, depending on the job’s intricacy and the cost of new components. Simple beach cruisers vary in price from $199 to $700, but complicated, robust mountain bikes may cost anywhere from $700 to $10,000. There are also hybrid electric bicycles on the market. Although they may be more expensive, most consumers prefer bicycle shops over large box stores because of the excellent quality of their goods, the better expertise of their personnel, and the high degree of customisation they provide.
What kind of profit can a bike business make?
The average retail profit margin for bike sales is 36%, however the margin for other sorts of cycling-related items, such as clothes and accessories, is somewhat higher. The typical bicycle store makes a profit margin of roughly 42 percent by selling a mix of bikes and other things.
How can you increase the profitability of your company?
Many bike shops have started to diversify their operations by making their locations accessible for various sorts of community activities. According to a recent study of 4,000 bike shops, 13% now have coffee bars, 11% provide cycling/spin courses, and almost 1% collaborate with other service providers to offer massage and yoga. Profits may rise in direct proportion to the amount of community participation enabled by your shop.
STEP 2: Establish a legal entity
Sole proprietorship, partnership, limited liability company (LLC), and corporation are the most frequent business structure forms.
Creating a formal company organisation, such as an LLC or corporation, shields you from personal liability if your bike store is sued.
STEP 3: File your taxes
Before you can begin for business, you must register for a number of state and federal taxes.
To register for taxes, you will need to get an EIN. It’s really simple and completely free!
Taxes on Small Businesses
Depending on the business form you choose, you may have multiple choices for how your company is taxed. Some LLCs, for example, may benefit from being taxed as a S company (S corp).
These guides will teach you more about small company taxes:
Taxes on LLCs
LLC vs. sole proprietorship
Corporation vs. LLC
S Corp vs. LLC
How to Form a S Corporation
S Corporation vs. C Corporation
There may be state taxes that apply to your company. In our state sales tax guides, you may learn more about state sales taxes and franchise taxes.
STEP 4: Establish a company bank account and credit card
Personal asset protection requires the use of distinct business banking and credit accounts.
When you combine your personal and business accounts, your personal assets (your house, vehicle, and other possessions) are at danger if your company is sued. This is known as penetrating your company veil in business law.
Furthermore, understanding how to develop corporate credit may help you get credit cards and other financing in your company’s name (rather than your own), lower interest rates, larger lines of credit, and other benefits.
Establish a business bank account.
Opening a business bank account is not only required when asking for business financing, but it also:
Separates your personal assets from the assets of your firm, which is required for personal asset protection.
It simplifies bookkeeping and tax reporting.
Create a net 30 account.
Net 30 accounts are used to develop and grow company credit while also increasing cash flow. Businesses use a net 30 account to purchase items and refund the whole debt within a 30-day period.
Many net 30 credit suppliers submit information to the main business credit agencies (Dun & Bradstreet, Experian Business, and Equifax Business Credit). This is how firms establish business credit in order to get approved for credit cards and other lines of credit.
Apply for a business credit card.
Obtaining a business credit card benefits you in the following ways:
Put all of your company’s costs in one location to separate personal and business spending.
Build your company’s credit history, which will be important for raising funds in the future.
STEP 5: Establish business accounting
Recording your numerous costs and sources of revenue is crucial to assessing your company’s financial status. Keeping precise and thorough accounting also makes yearly tax filing much easier.
STEP 6: Obtain all required permissions and licences
Failure to get appropriate permissions and licences may result in significant penalties or possibly the closure of your firm.
Requirements for State and Local Business Licensing
Certain state permissions and licences may be required to run a bike store. Visit the Small Business Administration’s reference to state licences and permits to learn more about licencing requirements in your state.
Bike businesses may also want to consider filing for a resale certificate, which permits merchants to buy products for resale without paying sales tax.
Furthermore, local licencing or regulatory restrictions may apply. For additional information on local licences and permissions, please visit:
Check with the clerk’s office in your town, city, or county.
Contact one of the local organisations mentioned in the US Small Business Associations database of local business resources for help.
Waiver of Liability
If a bike store wants to rent bikes, liability releases are required since customers will be in high-risk conditions, operating potentially deadly equipment. As a result, it is essential to demand protective equipment. A link to a generic informed consent form for a bike store is included.
Occupancy Certificate
A bike shop is often conducted out of a retail establishment. A Certificate of Occupancy is often required for businesses that operate from a physical site (CO). A certificate of occupancy certifies that all building rules, zoning laws, and government requirements have been satisfied.
If you intend to rent a bike shop:
In most cases, it is the landlord’s obligation to get a CO.
Before leasing, ensure that your landlord has or can get a valid CO for a bike store company.
A new CO is often required after a big remodelling. If your location will be refurbished before opening, incorporate wording in your leasing agreement saying that lease payments would not begin until a valid CO is given.
If you intend to buy or develop a bike shop:
It is your responsibility to secure a valid CO from a local government entity.
Examine all building regulations and zoning standards for the location of your company to guarantee that your bike shop will be in compliance and able to receive a CO.
STEP 7: Obtain commercial insurance.
Insurance, like licences and permits, is required for your company to operate safely and legally. In the case of a covered loss, business insurance protects your company’s financial well-being.
There are several sorts of insurance plans designed for various types of companies with varying risks. If you are unaware about the hazards that your company may encounter, start with General Liability Insurance. This is the most popular coverage required by small companies, so it’s a good place to start for yours.
Workers’ Compensation Insurance is another important insurance product that many companies need. If your company will have workers, your state may require you to purchase Workers’ Compensation insurance.
STEP 8: Establish your brand
Your company’s brand is what it stands for, as well as how the public perceives it. A strong brand will help your company stand out from the crowd.
How to Market and Promote a Bike Shop
Collaboration with other local companies to sponsor bicycle races and other community activities for charity purposes is an excellent way to advertise your company. Being outside and engaging with nature and other members of the community is part of what makes riding so appealing to individuals. Giving them additional opportunity to do so will undoubtedly boost your consumer base.
Social media networks like Facebook and Twitter are great places to promote both community and sales events. Many bike businesses now allow clients to buy things online by keeping a presence on Shopify or similar sales platform. Creating and maintaining a website is an excellent method to keep current consumers informed about new goods and services, as well as future discounts.
How to Keep Customers Returning
Buying used bikes from people of the local community is an excellent method to develop a local reputation, generate customer loyalty, and save inventory expenses. People who sell older bicycles that their children have outgrown are more likely to get a new one.
STEP 9: Create your company’s website.
After you’ve defined your brand and designed your logo, the next step is to build a website for your company.
While developing a website is an important step, some may be concerned that it is out of their grasp due to a lack of website-building skills. While this was a fair concern in 2015, online technology has made significant advances in recent years, making the lives of small company owners considerably easier.
The following are the primary reasons why you should not put off developing your website:
Every genuine company has a website, period. When it comes to bringing your company online, it doesn’t matter what size or sector it is.
Social media accounts, such as Facebook pages or LinkedIn company profiles, are not a substitute for your own business website.
STEP 10: Install your company phone system.
Getting a phone for your company is one of the finest methods to keep your personal and professional lives distinct and private. That isn’t the only advantage; it also helps you automate your company, provides it legitimacy, and makes it simpler for prospective clients to identify and contact you.