How to write a successful business plan for a bike shop

Are you passionate about cycling and feel you can barely go a day without it? It may have even become such an integral part of your life that you're ready to share your expertise and love of cycling with your local community - by opening your very own bike shop. 

You may know a thing or two about bikes, but to really ensure that your bike shop business is a success, you'll need a solid business plan.

If you're unfamiliar with the process of writing a business plan and don't know where to begin, then you've come to the right place. From market research to creating a financial forecast, we guide you through all the steps needed to create a business plan for your bike shop.

Why write a business plan for a bike shop?

A business plan is a document that will tell you, before opening your bike shop, whether or not it's a financially sound business idea. A bike shop owner has one main objective: to make a profit. Without a business plan, you'll have no concrete way of ensuring this - so it's a pretty big deal.

A business plan enables you to take a detailed look at your business model and identify exactly what steps you'll need to take to launch your bike shop - as well as how much cash is required. 

The plan also gives a realistic estimate of how your business is likely to perform in its first 3 to 5 years of operation, giving you a clear path of progression as you go through the first, fumbling stages of its opening, allowing you to adjust your financial forecast as and when is needed. 

You'll also (most likely) need to obtain funding. This again is where the business plan comes in handy - as it's the document with which you'll present your idea to potential investors to convince them to follow you on your entrepreneurial adventure. Whether it's a bank or a private investor, there's no two ways about it, a business plan is essential for securing the financing needed to launch your shop.

Information needed to create a bicycle shop business plan

Drafting a bicycle shop business plan business plan requires research so that you can project sales, investments and cost accurately in your financial forecast, and convince the reader that there is a viable commercial opportunity to be seized.

Below, we'll focus on three critical pieces of information you should gather before starting to write your plan.

Carrying out market research for a bike shop

Before you begin writing your business plan for a bike shop, conducting market research is a critical step in ensuring precise and realistic financial projections.

Market research grants you valuable insights into your target customer base, competitors, pricing strategies, and other crucial factors that can impact the success of your business.

In the course of this research, you may stumble upon trends that could impact your bike shop.

Give two examples of trends that market research might reveal for your bike shop. Do not use a numbered or bulleted list. Talk in second person. Express possibility instead of certainty (may, could, might).

Such market trends play a pivotal role in revenue forecasting, as they provide essential data regarding potential customers' spending habits and preferences.

By integrating these findings into your financial projections, you can provide investors with more accurate information, enabling them to make well-informed decisions about investing in your bike shop.

Developing the sales and marketing plan for a bike shop

As you embark on creating your bicycle shop business plan, it is crucial to budget sales and marketing expenses beforehand.

A well-defined sales and marketing plan should include precise projections of the actions required to acquire and retain customers. It will also outline the necessary workforce to execute these initiatives and the budget required for promotions, advertising, and other marketing efforts.

This approach ensures that the appropriate amount of resources is allocated to these activities, aligning with the sales and growth objectives outlined in your business plan.

The staffing and equipment needs of a bike shop

Whether you are at the beginning stages of your bike shop or expanding its horizons, having a clear plan for recruitment and capital expenditures (investment in equipment and real estate) is vital to ensure your business's success.

To achieve this, both the recruitment and investment plans must align coherently with the projected timing and level of growth in your forecast. It is essential to secure appropriate funding for these plans.

Give an example of the possible staffing and equipment costs that a bike shop might incur. Use full sentences.

To create a financial forecast that accurately represents your business's outlook, remember to factor in other day-to-day operating expenses.

Now that you have all the necessary information, it's time to dive in and start creating your business plan and developing the financial forecast for your bike shop.

What goes into your bike shop's financial forecast?

Once this information is gathered, you're ready to set up the financial forecast of your cycle shop business plan. The financial forecast consists of several tables. You can read about them in a little more detail below.

Projected P&L for your bike shop

With this table, you'll get an overview of your bike shop's sales growth and monitor changes in the cost structure, enabling you to evaluate its profitability (including gross profit, EBITDA, and net income).

Viewing the P&L alone is not sufficient to understand the overall financial position of the company. You will have to analyze it in conjunction with the other tables of the financial forecast.

Projected balance sheet

The projected balance sheet is made up of two parts: 

1. Your company's assets at the end of the year
2. Your company's liabilities (debts) at the end of the year 

Essentially, this table lets you see your business's financial structure by showing a breakdown of the company's equity and financial debts. This enables you to both verify whether the indebtedness is reasonable, and evaluate the company's liquidity (in other words, its capacity to pay back its short-term commercial and financial debts. 

Projected cash flow statement

The projected cash flow statement enables you to observe the amount of cash consumed or generated by the company. 

With this table, you can verify whether the company has sufficient cash flow to meet its financial commitments (especially when it comes to loan repayments) and regularly renew its equipment. 

Start-up capital 

This table gives you a clear vision of the start-up capital needed to launch your business and how the money will be used (for example, for stock or buying furniture to kit out the premises.)

Your bank or investors will then be able to quickly understand how much you're contributing to your business and how much you need to finance the rest. 

The written part of a cycle shop business plan

The written section of your business plan can't be neglected because it puts the figures presented in the financial part into context - allowing those reading the plan to understand the risks and assets of your business model. 

It will allow you to show potential investors that you've thought deeply about every aspect of your bike shop, from the actions you'll put in place to attract customers to a solid contingency plan.

The editorial part of a business plan for a bicycle shop is composed of the following sections:

The executive summary

Much like a cover letter on a job application, the executive summary is the very first thing an investor will come across when reading your business plan. 

Its purpose is to present your business model by telling your story - who you are, where you're based, what product or service you're selling, and, most importantly, what you need from the reader to make it come to life. 

The executive summary should make the reader want to find out more about the project, so make it as compelling and concise as possible. 

Company

This section is used to present your company, including its legal structure, business partners, and the company's location. 

Presenting your team to the reader is very important. By highlighting your respective skills and levels of expertise in the field in which you're launching the business, you can demonstrate your ability to successfully carry out the project.

Products and services

Depending on the concept you choose, you'll sell bikes or offer repairs, or do both. You will then detail these as the products and services being sold in your store. 

Market research

Market research is useful in highlighting the existence of a business opportunity in your area of choice. 

In this section, you'll also analyse the competitions and any regulations your store will be subject to, proving to your potential investor that you've thought carefully about the project. 

Strategy

In this part, you'll reveal three key plans: 

1. Your sales strategy - the prices you'll set 
2. Your marketing strategy - the actions you'll take to attract customers and build customer loyalty 
3. Your risk management strategy - how you'll minimise the risks related to your business

Operations

The day-to-day operation of your bike shop is highlighted in this section - from your recruitment plan to opening hours and suppliers used.

Financial plan

Like we said, numbers need context. In this section, you'll illustrate the various financial tables and the assumptions you've made for them.

3 tips for a successful bike shop business plan

Opening a bike shop requires you to think carefully about certain elements that are specific only to your business. To ensure you leave no stone unturned, here are 3 insider tips for running a successful bike shop:

Work with several suppliers

Relying on a single supplier for your bikes or accessories is a risk. If this supplier goes bankrupt, you'll have to scramble to find another one as soon as possible. That's why we suggest striking up agreements with several suppliers so you're not dependent on just one. 

Check out hot trends on the market

From the rising popularity of eBikes, Dutch city bikes, and electric scooters, the bicycle market is constantly evolving. 

So keep an eye on the latest trends and be ready to adapt your product range to move with the needs and desires of your customers. 

Define your store's concept

There are many cyclists within the UK, but they all have very different needs. You can, therefore, decide to keep the concept of your shop quite broad so you can cater to these various needs or you can specialise in a niche market (by targeting university students or mountain bike enthusiasts). 

If there's a customer segment whose needs aren't being met by your competitors, such as parents wanting to invest in bikes for their children, then you could use this as an opportunity to set yourself apart by ordering in smaller bicycles.

What tool should I use to write my business plan for a bicycle shop?

Several options are at your disposal when it comes to drafting up your business plan, such as:

Building your forecast on a spreadsheet

Using Excel and Word to create your business plan is the cheapest solution, but not the most efficient.

Without a background in accounting, it's likely you'll have trouble building a realistic financial forecast without errors. If your Word and Excel skills are average, then you may also end up spending a lot of time on it and it will quickly, become a very dull task.

Hiring a consultant or chartered accountant to write the business plan

Calling on professionals to help you draft your business plan is an effective solution because they're used to making them. 

However, make sure you choose an expert in the bike shop sector, so they can make a critical judgment of the revenues and cost assumptions you've made. 

It's also important to bear in mind that the financial forecast often needs to be modified after your first few meetings with the bank. Each of these modifications will be invoiced by the accountant, so account for these expenses in the budget.

To decrease the size of the bill: you can make the forecast yourself and then ask a chartered accountant to look over it. 

Using an online business plan software

Another possible solution is to use online business plan software, like the one we offer here at The Business Plan Shop.

There are several advantages to using specialized software:

• You are guided through the writing process by detailed instructions and examples for each part of the plan.
• You can be inspired by already written business plan templates.
• You can easily create your financial forecast by letting the software take care of the calculations for you.
• You get a professional document, formatted and ready to be sent to your bank.

If you are interested in this type of solution, you can try our software for free by signing up here.

Now that our guide is coming to an end, we hope that you have a clearer idea of how to write the business plan for your bike shop.

If you’d like more advice on any of the points mentioned above or any other element related to the creation or takeover of a bicycle shop, please don’t hesitate to get in touch.

Bike shop business plan template

It's much easier to begin with a bike shop business plan example rather than a blank page - especially if you haven't drafted a business plan before.

Which is why you can draw inspiration from our bike shop business plan template to write your own plan in no time.

Our cycle shop business plan template contains:

• A complete three-way financial forecast (P&L, balance sheet and cash flow forecast)
• A complete written business plan detailing all aspects of the company

Load the sample bike shop business plan template directly in our software and simply replace the text and numbers with your business' details to make it your own.

Takeaways

1. Using business plan software is a modern and cost-effective way of writing and maintaining business plans.
2. A business plan is not a one-shot exercise as maintaining it current is the only way to keep visibility on your future cash flows.
3. A business plan has 2 main parts: a financial forecast outlining the funding requirements of your bike shop and the expected growth, profits and cash flows for the next 3 to 5 years; and a written part which gives the reader the information needed to decide if they believe the forecast is achievable.

We hope that this in-depth guide met your expectations and that you now have a clear understanding of how to write your bike shop business plan. Do not hesitate to contact our friendly team if you have questions additional questions we haven't addressed here.

Also on The Business Plan Shop

• Business plan template for a bike shop
• 5-year business plans explained
• How to open a bike shop
• How to take over a bike shop in 10 easy steps
• One-page business plan template
• Key assumptions in your business plan
• Business plan personnel plan

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