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 the 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.
  • Outspokin', member newsletter from the NBDA.
  • Get some one-on-one time with a successful shop owner! Our P2 Consult program is perfect for people just getting started. We’ve partnered with David DeKeyser, author of the Positive Spin series on Bicycle Retailer and Industry News, to provide you with personalized business coaching that is relevant and specific to the bicycle retail industry.

Join the NBDA! For only $195 per year for dealers, the NBDA offers discount programs, advocacy, education, monthly newsletter Outspokin’ and more.

National Bicycle Dealers Association (NBDA)
3972 Barranca Pkwy Ste J-423, Irvine, CA 92606
Phone: 949-722-6909

E-Mail: info@nbda.com
Website: www.nbda.com