How to Open a Bike Shop

Wondering how to open a bike shop and take advantage of the ever-increasing popularity of cycling? Wherever you are, there are certain steps you must take and issues to focus on before you can run a successful business. Here’s how.

Organize Your Business

Any new business must decide how best to organize: corporation, LLC, sole proprietorship, and so on.

You might decide to form a sole propriership for your cycling shop so that you can retain full ownership over the business. However, be advised that a sole proprietorship provides no form of liability protection: if a customer should sue your business, it is you personally who will be sued. And a sole proprietorship in most cases cannot be passed on; it remains connected to one person.

For this and other reasons, many bike shops form as limited liability companies: this business structure provides limited liability protection to its owners, flexible cash-flow options, and a reputable impression in the eyes of some consumers. An LLC can last forever, further reassuring customers.

Of course, every business is its own unique situation. It’s always best to seek professional advice tailored to your own small bike shop business when deciding whether to form a sole proprietorship, corporation, or limited liability company.

Sales vs. Cost of Goods

At the end of the day, when a struggling business just can’t get a let up and fails financially, the reason boils down to this: for whatever reason, the business doesn’t make that transition from operating at a loss into that elusive break-even point. The money coming in isn’t covering the money going out.

There is a period of time for which a new bike shop — any small business in general — should reasonably expect to not make a profit. Personal salaries are often sacrificed during this initial struggle to grow into the fulfilling, self-sustaining bike shop business you want. But you need to have a considered plan so that you have an accurate understanding of how long you can wait for your cycling shop to catch its momentum.

(The National Bicycle Dealers Association has put together a price breakdown for a typical bike shop’s annual expenses, which you should definitely take a peek at just as a self-check that your budget is on track.)

Business Plan

So how do you ensure a cost-effective business? Real-world results, of course, are impossible to predict — but your best defense is a solid business plan.

While compiling this document is, admittedly, a long and arduous process, it is an important road map to running a successful business. Each section will take a bit of research, some more than others. But when you’ve compiled your entire business plan, you’ll know you’re as prepared as possible to face the future.

The Maine Small Business Development Center has provided an excellent sample bike shop business plan that any bike shop will find valuable, no matter what state you’re in.

Local Rules and Regulations

Depending on your state, county, and city; your industry; and your organizational structure, you could be required to hold any number of business licenses or permits. Make sure you adhere to all jurisdictional requirements.

Get the word out!

Now that your bike shop is ready to operate, go make sure those cycling enthusiasts know who you are and what you do!