The following outline for business planning has been provided by bicycle industry veteran Ed Benjamin, who owned and operated successful stores in Florida for many years. It is targeted for people who may be looking at buying or starting a bicycle retail business, but can also be very useful to existing bicycle stores.
By Ed Benjamin
Questions to consider before buying or starting a bicycle store…
By answering these, you will create a list of concerns, information and goals that you can use to start your business plan.
Goals and Lifestyle:
1. What are your personal, long and short term goals? Describe them in both lifestyle and dollar terms.
2. How long will the contemplated business serve these goals?
3. What is unique about you or your situation that will enable you to be successful at this business?
4. How much money do you have to invest?
5. What would be the consequences of losing that money?
6. What about this business would make it attractive to other investors?
7. What return do you expect?
8. What return do you think your investors (if any) will expect?
9. Where is your expertise?
10. What do you like to do the most?
11. What do you like to do the least?
12. In what areas do you need other's expertise?
13. Are you willing to work longer, harder hours?
14. Are you willing to work weekends?
15. Are you wining to forgo vacations, or time off, perhaps for years?
16. How will longer harder hours, and few holidays affect your family or other relationships?
17. Who will help you?
18. How will you feel if your business is not successful?
19. What will you do, if your business is not successful?
1. What is the population within a 15 minute drive?
2. What is the income, and age demographics of that population?
3. What sort of bicycle facilities such as bicycle paths, BMX tracks, etc. exist?
4. What is the economic base of the community?
5. How many bike shops exist in the area?
6. How well are they doing?
7. How big is the local bicycle club?
8. Is there racing in the area?
9. Is there a local triathlon(s) every year?
10. How rapidly is the community growing (or not)?
11. What bicycle brands are represented by local shops already?
12. What brands are not represented?
13. Have you compiled an analysis of each bike shop? (including years in business, size of store, number of employees, volume of sales)
14. Have you talked the local reps for any of the bike lines?
15. Have you considered franchising?
16. Have you considered buying an existing store?
17. Have you talked to the staff of existing stores?
18. Have you considered hiring any of them?
19. Check the yellow pages, add to this information clippings of newspaper ads and notes about any advertising the other bike shops are doing. What conclusions have you come to about advertising in this market?
20. Have you subscribed to the bicycle trade magazines?
21. What trade shows have you attended?
22. Have you acquired the NBDA studies on the bike business?
23. Have you investigated banks, do you have a potential line of credit arranged?
24. Do you qualify. for any Federal or State assistance programs?
25. Have you investigated SBA loans?
26. Have you talked to merchants in similar businesses, in the local community, about their business experiences?
27. Do you have a mentor(s) that can help you with the bike business?
28. Do you have a CPA and a lawyer that you are comfortable with, and who have successfully worked with other small merchants for many years.
29. Do you have an insurance agent and advertising agency (or consultant) that you are comfortable with, and have successfully worked with other small merchants for many years?
30. What market share do you think existing shops have?
31. Have you made a list of every place that sells bikes in the area? (include grocery stores, sporting goods, bike shops, hardware stores, used bicycle outlets, everything)
32. What complaints do local cyclists have about existing stores?
33. Is any local store participating in the Catalyst Super Sale?
34. Is any local store participating in the Catalyst Cycling Guide?
35. Are any local stores parts of Bike Line or Performance??
1. Have you defined your business in 50 words or less?
2. What will you name your business?
3. Are you convinced that business planning is an absolute necessity?
4. Have you made a financial plan that defines the capital you will need, projects your sales and projects your profits?
5. Do you have a computer? Are you competent with spreadsheets?
6. What business structure do you plan to use?
7. Have you prepared your current financial. statements?
8. What is your current personal credit rating?
9. Do you have substantial personal assets to collateralize loans to the business?
10. What is your marketing plan?
11. What is your mission statement?
12. What trends in this business are forecast for the nation?
13. What plans do you have to acquire additional training for yourself?
14. How will you train your staff?
15. What vulnerabilities do you think you will have? What are your plans to deal with them?
16. Are there plans by local or state government that will affect your business? (example: widening a road in front of the site)
17. What is happening with the increase or decrease in supp1iers to the bike business?
18. How do you expect to exit this business? (sell it, liquidate it, die, etc.)
19. Have you investigated possible alternative locations?
20. Describe the basic lease terms offered or purchase price?
21. Have you talked to merchants who rent from this landlord, or are in the same immediate area about their experiences?
22. What marketing position do you expect to occupy?
Now take the information that you have accumulated by answering these questions and:
1. Describe the present situation of yourself and the market you want to enter.
2. Describe your objectives in starting this business, and how you will know if you reach them.
3. Describe the management team and organization you will create.
4. Describe the products you will offer, both merchandise and service.
5. Describe what equipment and facilities you will need
6. Analyze and describe the market.
7. Describe your marketing strategy.
8. Using a spreadsheet, create cash flow projections for five years.
9. Review all of the above, and write an executive summary.
There are a lot of people, including myself, who would tell you that the bike business has been good to them. The vendors, the dealers and the customers are a better than average bunch. They love what they do, they are healthy and pleasant. A well run bike shop can make money, and while no one ever got rich, a lot of dealers have been very comfortable.
But, this is a flat out warning. Going into business is dangerous to your lifestyle, your net worth, your relationships with family and friends, and to your peace of mind.
If I seem to overstate this, it is because I believe that I am doing you a favor by giving you simple honest advice that being an Independent Bicycle Dealer is not for everyone. And it may not be for you.
Before entering into a business, you should contemplate the following:
You are probably in a pretty good situation right now. You probably have adequate income, and you probably enjoy your life and the relationships you have around you. By starting a business, you may alter the fabric of your life so much that you will lose all the friends you have, and be taken over by the interests of your business to such a degree that you (and others) will find your life monotonous or stressful to a unpleasant degree. You may make money, but you may also lose everything you have, and wind up bankrupt or with crushing debts.
You do not have to start a business, it is a choice. If you choose not to start a business, that may be the better of the two decisions.
You must believe this to the point where if the plan does not shape out to meet your goals, you will drop the business idea, and smile while you do so.
People who find problems in the planning stages and go ahead anyway are usually doomed to failure. By telling yourself it is OK to not start the business, you make your chances of a successful business much more likely.
Once upon a tune, a friend came to me and said, "Ed! I need your help." When asked what was the matter, he replied: "I bought this bike shop, and now I have to start work long before starting time, and I have to stay long after quitting time, and I have to work weekends, and now my wife has to help me!"
"So?" I inquired.
"And I'm not making any money," he complained.
"Welcome to being self employed," I replied.