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Want to Start a Bike Shop?

The National Bicycle Dealers Association (NBDA) regularly receives requests from people interested in starting their own retail bicycle businesses. While this is not an undertaking to be taken lightly, there are numerous resources and well-established bicycle retail metrics and resources available to aid in a serious exploration of the subject.

Our advice would be to spend serious time on this and use all the resources available to learn about small business basics. Research and build a sound business plan. Planning, organizational skills, and high energy are prerequisites for success in the bicycle business.

Financial management can be challenging in a low-margin, highly competitive industry, and studies show the most profitable shops today deliver excellence while also controlling costs. An average break-even point of 37% in a world where bike margins are 36% or less, is a prescription for financial strain.

AVERAGE EXPENSES FOR SPECIALTY BICYCLE RETAILERS

(From NBDA Cost of Doing Business Survey, expressed as a percentage of gross annual sales)

Payroll Expenses — 20.5%
Occupancy Expenses — 7.7%
Advertising/Promotion — 3.%
Auto and Delivery — 0.5%
Depreciation — 0.9%
Insurance — 0.8%
Licenses/Other Taxes — 0.5%
Professional Services — 0.5%
Office Supplies/Postage — 1.2%
Telephone — 0.6%
Travel/Entertainment — 0.4%
Other operating expenses— 1.3%
TOTAL OPERATING EXPENSES — 37.7%
NET INCOME BEFORE TAX — 4.2%
GROSS MARGIN ON BICYCLE SALES — 36%
GROSS MARGIN ON CLOTHING SALES — 43%
GROSS MARGIN OTHER EQUPT. — 48.1%

We can recommend some additional resources to you:

  • The NBDA Cost of Doing Business Survey, from the NBDA for $150 ($75 for NBDA members). Detailed financial study of bicycle retailing, complete with average costs, profit margins and more.
  • The Bicycle Retailer and Industry News Industry Directory, from Bicycle Retailer and Industry News, www.bicycleretailer.com, or phone 949-206-1677.
  • Interbike Trade Expo, held in September in Las Vegas, Nevada, Web site: www.interbike.com. This show is open to the trade only and for 2013 invited consumers.

Trade magazines:

  • Bicycle Retailer and Industry News, 25431 Cabot Rd., Suite 204, Laguna Hills, CA 92653, 949-206-1677. Internet: www.bicycleretailer.com
  • Outspokin', member newsletter from the NBDA.

Join the NBDA! For only $150 per year for dealers, the NBDA offers discount programs, advocacy, education, monthly newsletter Outspokin’ and more.

National Bicycle Dealers Association (NBDA)
3176 Pullman St. #117
Costa Mesa, CA 92626
Phone: 949-722-6909
Fax: 949-722-1747
E-Mail: info@nbda.com
Web site: www.nbda.com

 
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