How to Write a Bike Shop Business Plan: Complete Guide

Whether you’re looking to raise funding from private investors or to get a loan from a bank (like a SBA loan) for your bike shop, you will first need to prepare a solid business plan.

In this article we go through, step-by-step, all the different sections you need in the business plan of your bike shop. Use this template to create a complete, clear and solid business plan that get you funded.

For more information on bike shops, make sure to check our guides below:
How Much Does It Cost To Open a Bike Shop?
How to Open a Bike Shop Business in 9 Steps?
How To Build a Financial Model For a Bike Shop

1. Bike Shop Executive Summary

The executive summary of a business plan gives a sneak peek of the information about your business plan to lenders and/or investors.

If the information you provide here is not concise, informative, and scannable, potential lenders and investors will lose interest.

Though the executive summary is the first and the most important section, it should normally be the last section you write because it will have the summary of different sections included in the entire business plan below.

Why do you need a business plan for a bike shop?

The purpose of a business plan is to secure funding through one of the following channels:

  • Obtain bank financing or secure a loan from other lenders (such as a SBA loan)
  • Obtain private investments from investment funds, angel investors, etc.
  • Obtain a public or a private grant

How to write your bike shop’s executive summary?

Provide a precise and high-level summary of every section that you have included in the business plan of your bike shop. The information and the data you include in this segment should grab the attention of potential investors and lenders immediately.

Also make sure that the executive summary doesn’t exceed 2 pages in total: it’s supposed to be a summary for investors and lenders who don’t have time to scroll through 40-50 pages, so keep it short and brief.

The executive summary usually consists of 5 major sub-sections:

  • Business overview: describe your business in detail, providing information about the business model (franchise vs. independent store) you intend to use and all the products (bikes, accessories, sportswear, etc.) and services (rental, repair, etc.) customers can find in your shop
  • Market analysis: the market analysis segment will contain an overview of the expected market size, target audience, and demography. Also provide here a quick overview of your competitors, your strengths & weaknesses (think SWOT analysis) and how your bike shop differ vs. competition
  • People: first, introduce your bike shop’s management. Provide a brief (no more than a couple of sentences each) of the experience and track record of the team. Also, speak about your hiring plans: in other words, how you intend to run the business (what are the different teams and how many employees will you hire?)
  • Financial plan: how much profit and revenue do you expect in the next 5 years? When will you reach the break-even point and start making profits? You can also include here a chart with your key financials (revenue, gross profit, net profit)
  • Funding ask: what loan/investment/grant are you seeking? How much do you need? How long will this last?
Source: Bike shop financial model template

Get a rock-solid business plan with the Bike shop financial model

  • 5-year financial plan already built
  • 20+ charts for your business plan
  • Video tutorial 🎥
  • 5,900+ downloads

2. Bike Shop Business Overview

This is the perfect time to give the lenders a detailed overview of your bike shop. What type of bike shop are you opening? What products and services will you offer? Use the following questions to guide you:

  • Why are you starting a bike shop today? 
  • Where exactly is your bike shop located? 
  • Why did you choose that location? 
  • What type of bike shop are you opening?
  • Which products and services will you provide? Will you sell bikes or rent them as well?
  • Will you offer repair services?
  • What will be your pricing strategy? 
  • What will be your opening days and operating hours? 
  • What will be the legal structure of your company?

a) History of the Project

Any business overview must start with explaining the history of the project. There are 2 components here:

  • Passion & experience of the business owner
  • Rationale behind starting a bike shop today

Passion & experience

There’s nothing more appealing to investors and lenders than finding a business owner who has a strong passion for the industry they evolve in. Same goes for cycling.

Prior experience will make your story more believable, making it easier for the lenders and other financial bodies to fund your project. There’s no harm if you don’t possess the relevant experience. But, if so, be sure to demonstrate your ability to run a successful business. 

Rationale

After demonstrating your ability to run the business, give enough justifications that this is the right time to invest in a bike shop business. For example, there may not be any specialised bike shop within a 25-mile radius selling high-quality bicycle racing brands and where bike lovers can get repair services from bicycle experts.

b) Business Model

What type of bike shop will you open? You can start a new bike shop from scratch or buy a franchise instead. But ensure you understand the pros and cons of every model and what’s best for the area where you plan to operate.

This section should address the following questions:

  • Will you sell and/or rent bikes as well?
  • Will you partner exclusively with selected brands to offer their bikes and accessories?
  • Will you target a specific age group? (children vs. adults)  
  • Will you provide special services/add-ons? (bike repair, servicing, advice, etc.)
  • Will you offer an online platform for selling your bikes (ecommerce)? 

Your store may target professional cyclers or local riders. Alternatively, you could be looking to start a large warehouse focusing on online sales. Similarly, you can stock all bicycles, including the electric types, or choose a single category. All in all, choose the best option for your target audience and the location where you plan to open your bike shop.

c) Products & Services

Now that you have gone in details about your bike shop business model, let’s now list out your products and services. In other words, what is your bike shop actually selling?

If the majority of the population are off-road biking enthusiasts, you may want to stock up on mountain bicycles. But if they are average cyclists looking for a a bike for a once-a-month sunday adventure, you might want to offer road bikes instead.

In addition to bikes, there are a number of products you may want to sell: accessories, sportswear, etc.

You may even want to create a one-of-a-kind flagship store with a coffee shop where bike lovers can spend time and meet bike aficionados in store.

Finally, you can offer other supplementary services inside your bike shop, including: bike repairs, parts replacement, routine maintenance and bike rental.

d) Pricing Strategy

In addition to products and services, make sure to add details about your pricing strategy.

For example, you can compile a pricing list outlining the average price per product and/or service. When it comes to the products, keep it simple and set a pricing range by category (road bike, mountain bike, hybrid bike, etc.).

Adding a pricing table is very useful as it helps lenders and investors to tie your pricing strategy with your financial projections later on. 

e) Legal Structure

Finally, your business overview section should specify what type of business structure you want. Is this a corporation or a partnership (LLC)? Who are the investors? How much equity percentage do they own? Is there a Board of Directors? If so, whom? Do they have experience in the industry?

Get a rock-solid business plan with the Bike shop financial model

  • 5-year financial plan already built
  • 20+ charts for your business plan
  • Video tutorial 🎥
  • 5,900+ downloads

3. Bike Shop Market Overview

Starting a bike shop business only makes sense if you understand the market you’re in.

For instance, if you’re setting up your facility near a college where many students need cheap bikes for frequent commuting, stocking budget-friendly models for road cycling might make more sense vs. expensive brands.

However, if the region is dominated by off-road enthusiasts obsessed with weekend adventures, prioritize the all-weather mountain bikes.

When assessing your market, be sure to address the following aspects: 

  • Bike shop industry size & growth: how big is the bike industry in your area? What is its growth/decline rate, and what factors contribute to its growth/decline?
  • Competition overview: how many competitors are there? How do they compare vs. your business? How can you differentiate yourself from them?
  • Customer analysis: who is your target market? What type of bikes / bike sports do they prefer? How regularly do they purchase/rent bikes? How much do they spend on average on bikes & accessories?

a) Bike Shop Industry Size & Growth

How big is the bike shop industry in the US?

The market size of the bike industry in the US is estimated to be about $6.9 billion in 2021, and is expected to grow at a CAGR of 6.1% from 2022 to 2027.

18.5 million bikes were sold in the US alone in 2021: that’s an average of $372 per bike.

When it comes to the bike shops, there were about 7,000 bicycle shops in the US: that’s an average annual turnover of $985,000 per bike shop.

How big is the bike shop industry in your area?

After getting a clear picture of the US biking industry, narrow down to your location. It’s possible that you won’t find the size of the market anywhere (at least not for free). In which case, read our article on how to estimate TAM, SAM and SOM for your startup. Let’s see how to do it below:

We know that the average bike shop has an annual turnover of $985,000. So if there are 10 bike shops in your city for example, you can assume that the bicycle industry in your city is worth ~$10 million.

How fast is the bike shop industry growing in your city?

Looking at publicly available reports online, we know that the average annual growth of the industry was 6.1% from 2017 to 2022. But what about where you live?

US national averages can be a great addition to your business plan, yet they don’t necessarily help to assess the biking industry where you plan to operate. For example, the industry might be growing in the US, but declining in your region for a number of reasons (decreasing population or disposable income, etc.).

Instead, you can use the number of bike shops as a proxy to find the market growth in your area. For instance, if there were 18 bike shops in 2018 and 20 in 2022, the average annual growth rate is ~3%, slightly lower than the US average.

b) Competition Overview 

You may face stiff competition when opening your bike shop. So before doing so you may want to learn from your competitors, identifying their strengths and weaknesses and the major reasons behind their respective successes and challenges. 

Get accurate information about their marketing strategies, products and services, and additional features that add value to their business. There’s no harm in visiting the stores in person to get first-hand information about your competitors.

Here is a sample table that you can use:

Competitor #1Competitor #2Competitor #3
Locationxxxxxx
Business modelIndependentFranchiseIndependent
Bikes offeredMountain bikes
Family bikes
Road bikes
BMX
Mountain bikes
Family bikes
Road bikes
Road bikes
Racing bikes
Repair servicesYesYesYes
Bike rentalNoNoYes (racing bikes only*)
Marketing strategySocial media content
PPC ads
Email marketing
Social media content
Loyalty rewards
Coupons, flyers
Social media content
PPC ads
Coupons, flyers
Google Rating4.2 (220+)4.3 (170+)4.7 (240+)
Bikes price range$450 – $2,500$250 – $3,000$500 – $5,000
Shop size1,500 sq. ft.2,000 sq. ft.2,400 sq. ft.
Staff324
* membership required ($500 a year minimum)

c) Customer Analysis

After assessing the level of competition in the region, switch your attention to your target market. Get a clear picture of your target customer by answering the following questions, among others:

  • Average spend on bikes (purchasing or renting) per year?
  • Frequency of visits (how often do they visit a bike shop?)
  • What type of bike(s) do they prefer?
  • What type of services do they need?
  • What do they like or dislike in the existing bike shops in the region?

Get a rock-solid business plan with the Bike shop financial model

  • 5-year financial plan already built
  • 20+ charts for your business plan
  • Video tutorial 🎥
  • 5,900+ downloads

4. Sales & Marketing Strategy

This is the segment where you outline your customer acquisition strategy. Try to answer the following questions:

  • What is your Unique Selling Point (USP)?
  • What are the different marketing strategies you will use? 
  • How do you intend to track the success of your marketing strategy? 
  • What is your customer acquisition cost (CAC)? 
  • What is your marketing budget? 
  • What introductory promos and offers do you intend to provide for attracting new customers? 

What marketing channels do bike shops use?

Some of the most popular marketing channels used by bike shops include:

  • Local listing & customer reviews (Google Business)
  • PPC ads, Facebook ads, etc. 
  • Signage
  • Content marketing on social media and blogs
  • Word of mouth, recommendations
  • Loyalty programs

What is Your Unique Selling Point (USP)?

In other words, how do you differentiate yourself vs. competitors? This is very important as you might need to win customers from competitors. A few examples of USPs are:

  • Pricing: you may have affordable prices vs. competitors for the bikes you’re selling and/or the services you offer
  • Extra services: add-on services like bike repairs competitors might not offer
  • Partnerships with leading brands that refer you to their customers (via email marketing) and/or offer you special rates for their products (bikes, accessories, sportswear).
  • Uniqueness: you may be the exclusive distributor of a well-known brand in the region
  • Location: your bike shop may be located closer to your target audience and/or closer to a busy street
  • Promos and offers: you offer discounts for frequent customers, etc.

5. Management & People

You must address two things here:

  • The management team and their experience/track record
  • The organizational structure: different team members and who reports to whom?

Management

Small businesses often fail because of managerial weaknesses. Thus, having a strong management team is vital. Highlight the experience and education of senior managers that you intend to hire to oversee your bike shop.

Describe here their duties, responsibilities, and roles. Also, highlight their previous experience and explain how they succeeded in their previous roles.

Organization Structure

Even if you haven’t already hired an assistant manager, salesmen, bike mechanics and other relevant staff members, you may want to provide a chart of the organizational structure defining the hierarchy of reporting like the one below.

An organizational chart example for a bike shop

6. Financial Plan

The financial plan is perhaps, with the executive summary, the most important section of any business plan for a bike shop.

Indeed, a solid financial plan tells lenders that your business is viable and can repay the loan you need from them. If you’re looking to raise equity from private investors, a solid financial plan will prove them your bike shop is an attractive investment.

There should be 2 sections to your financial plan section:

  • The startup costs of your project (if you plan to start a new bike shop, renovate your store, etc.)
  • The 5-year financial projections

a) Startup Costs

Before we expand on 5-year financial projections in the following section, it’s always best practice to start with listing the startup costs of your project. For a bike shop, startup costs are all the expenses you incur before you open your shop and start making sales. These expenses typically are:

  • The lease security deposit (if you rent) or the downpayment if you buy the real estate
  • Renovations and improvements
  • Furniture
  • Upfront Inventory

Of course, the startup costs depend on a number of factors: the size of your bike shop, its location, the quality of the existing shop, the furniture and design, whether you buy or rent the space, etc.

On average, it costs $47,500 to $237,500 to open a small bike shop (2,000 sq. ft.) with 3 employees in the US.

Note that these costs are for illustrative purposes and may not be fully relevant for your business. For more information on how much it costs to open and run a bike shop, read our article here.

Startup costAmount
Lease security deposit (or loan down payment)$11,000 (rent) – $40,000 (buy)
Renovation & design$0 – $100,000
Upfront inventory$25,000 – $75,000
Permits and licenses$1,500
Equipment$5,000 – $15,000
Marketing and advertisement$5,000 – $6,000
Total$47,500 – $237,500

Get a rock-solid business plan with the Bike shop financial model

  • 5-year financial plan already built
  • 20+ charts for your business plan
  • Video tutorial 🎥
  • 5,900+ downloads

b) Financial Projections

In addition to startup costs, you will now need to build a solid 5-year financial model for your bike shop.

Your financial projections should be built using a spreadsheet (e.g. Excel or Google Sheets) and presented in the form of tables and charts in the business plan of your bike shop.

As usual, keep it concise here and save details (for example detailed financial statements, financial metrics, key assumptions used for the projections) for the appendix instead.

Your financial projections should answer at least the following questions:

  • How much revenue do you expect to generate over the next 5 years?
  • When do you expect to break even?
  • How much cash will you burn until you get there?
  • What’s the impact of a change in pricing (say 15%) on your margins?
  • What is your average customer acquisition cost?

You should include here your 3 financial statements (income statement, balance sheet and cash flow statement). This means you must forecast:

  • The number of customers over time ;
  • Your expected revenue ;
  • Operating costs to run the business ;
  • Any other cash flow items (e.g. capex, debt repayment, etc.).

When projecting your revenue, make sure to sensitize pricing, the cost of goods sold (the cost you incur to buy the bikes from the manufacturer) and your sales volume. Indeed, a small change in these assumptions may have a significant impact on your revenues and profits.

Source: Bike shop financial model template

7. Use of Funds

This is the last section of your bike shop business plan. Now that we have explained what your bike shop’s business model is, what you sell and to whom, your marketing strategy, etc., this section must now answer the following questions:

  • How much funding do you need?
  • What financial instrument(s) do you need: is this equity or debt, or even a free-money public grant?
  • How long will this funding last?
  • Where else does the money come from? If you apply for a SBA loan for example, where does the other part of the investment come from (your own capital, private investors?)

If you raise debt:

If you raise equity

  • What percentage ownership are you selling as part of this funding round?
  • What is the corresponding valuation of your business?

Use of Funds

Any business plan for a bike shop should include a clear use of funds section. This is where you explain how the money will be spent.

Will you spend most of the loan / investment in paying your employees’ salaries? Or will it cover mostly the cost for the lease deposit and the upfront inventory costs?

We also strongly recommend using a pie chart like the one we have in our financial model template where we outline the main expenses categories as shown below.

Source: Bike shop financial model template

Get a rock-solid business plan with the Bike shop financial model

  • 5-year financial plan already built
  • 20+ charts for your business plan
  • Video tutorial 🎥
  • 5,900+ downloads