Sunday, 20 April 2014

Setting Up A Bike Shop

Starting up any high street business and to make a profit from it, is not for the faint hearted!

In the bike trade they say "To make a million, you need to invest 2 million"

But if it is your dream to own your own bike shop, you will need to know how to run the shop to make a profit. To pay you an income, to cover your private monthly out goings, just like most other people in the UK.
You will probably find you will be working longer hours, working 6 or even 7 days a week and not all the work you are going to be doing is going to be productive (Making money from) You may even need to have your wife work a few hours a day to free up your time. Nothing wrong with hard work, as long as you are making money or in the beginning you can see your business establishing itself.

You need to think long and hard about want you want from your new business, is it profit? Lifestyle? To achieve this you will need to know how to manage your time and start your business off on the right foot:
  • Location
  • What brands 
  • Competition
  • Having a niche market
  • Market changes
  • Internet sales
  • Having a business partner
  • Your long term goals
You may like to read.New bike business stories

You will need to think what part of your new business will have value? 
All of the above points will have a positive or negative effect with your business success, for example: High Street location is not as important if your main business is internet based. Shopping on-line is the way many people like to do business these days, but many people who shop on-line, only buy for the lowest price! Can you afford to give discounts? And how many businesses are there selling on-line? Amazon and others spend fortunes on sophisticated pricing software that trawls the internet to ensure they are selling at the lowest price. Smaller bike shops that sell on-line, look at selling those brands that are not all over the internet. But this is short term as any great idea soon catches on, as the larger on-line shops have a supple line and warehouse to cope with next day deliverers and returns making it more convenient to shop at their on-line store. The damage to a well know brand could be caused by being sold on-line with no support in the situation of being sold purely on a price basis.

You may like to read Setting up a bike business.

As many high streets shops have closed, you should be able to get a deal for reduced rent.
You will also have other business outgoings:
  • Business Rates 
  • Insurance
  • Advertising
  • Accounts, TAX, VAT 
  • Bank Charges
  • Electricity 
  • If you employ someone, you will also need to pay them, plus holiday pay. 
And the business setup costs:
  • Stock
  • Shop fixings and displays 
  • Tools
  • Training 
  • Security 
Buying the correct stock and at the best price from wholesale suppliers is going to be what make's or breaks your business. You may even find what you want to stock can be found on-line cheaper than what you can buy trade. You will need to make minimum of 30% profit from your stock. 

Once you’re satisfied that you can set prices that meet market expectations and give you a return on your investment, calculate if you can realistically meet ongoing financial obligations and commitments to ensure that everything runs smoothly. You then can workout what you need to charge per hour, to cover all the business costs and pay yourself for all your hard work. This could be around £45/hour. 

Yearly overheads of running your business

Put your business figures in below to see how much to charge per hour.

For example, you want an annual income of £30,000 and consider 1350 chargeable hours realistic (30 hours a week for 45 weeks of the year, taking into account holidays and time off sick).

£30,000 divided by 1350 = £22.22

If overheads are £15,000, divide that by 1350 to give the amount you need to charge to recover in a year (£11.11).

Now add in a margin for the risk of being in business of say £7,000 (again, divide by 1350 hours, which equals (£5.19).

So to cover your £30,000 income, £15,000 overheads and £7,000 profit you’ll need to charge £38.52 plus VAT an hour (£22.22 + £11.11 + £5.19).

Still feasible? Compare this with your direct competition.

As a service-based business, even though people might be paying you for your ideas, expertise or specialist knowledge, essentially you’re selling your time.
Given that you (and any staff) will need to take holidays and spend time on administration, business planning and other non-chargeable tasks, avoid basing your calculations on 40 hours of chargeable time every week for 52 weeks every year. This is both unrealistic and unsustainable. Be realistic about how many hours worked each week will actually be chargeable.
Note: There is a mark up on selling parts. This profit can be used to cover hidden costs, stock of parts and Tax.  But you need to have a good stock control.

With experience and demand you can expect to charge more

Also work out what you will pay tax per year and divide by 12. And deposit this amount monthly in to a savings or an ISA. You can do this to include business insurance.

Once your business is established, you can pay yourself a monthly salary in to your Private Bank account and have a good cash flow in your business account. 

Do you still want to open a Bike Shop?

You may want to think about starting as mobile bike business first, as business running costs are much lower, you can establish yourself first and build a customer base, before opening a shop. 3 of our Members are now running shops offering a pick up and delivery service to their old and new customers.

You like to work for yourself for Profit or Lifestyle?
For me time is more important than money. Yes I like my job very much but I don't let it take over my life, I make the business work for me, how I like to live my life! Where time is important for me, as I like to travel, cycle, cook and spend time with family & friends. So I need to manage my private time and business hours to the maximum and this can only be done by thinking differently. In that I have my own mind, don’t believe in everything I hear or read. These days we get bombarded with adverts telling us otherwise and what we should spend our money on! But I look for other options that not only save me money, but also time. I really THINK that working on something you really believe in, is where you should put your effort.

Does not matter what job you are in or if you don't have the skills, you can start you bike business as the training is available. Unrecognised life experiences are going to be very important to the way you think and manage your time. Those who have been to university, will have the skills and qualifications needed for job's that require 80 hour weeks and deadlines!

I believe less =  more. This is true in business and in your private life. Less Is Not Laziness. Doing less meaningless work, so that you can focus on things of greater personal importance.
Having less things, you will have more money and more time. From having less things to maintain, having less bills, and having less debt this means you will be able to save money instead of spending it. By keeping it simple and by spending less then you earn, you will be free of debt and be happy. I am not saying you have to be tight with your money but by being careful. Borrowing money is fine, if you borrow within your means and is spent on something constructive and not on a wild two week holiday!

You may like to read. Stuck in a job and feel like you are going nowhere

A mobile bike business has added value of being convenient for customers needs and provides a service you can't buy on-line.

The advantage of being mobile, you can manage your time better and only have to work 4 hours a day to cover costs and make a profit. This will take time for your business to run in this manor, it's not going to happen overnight. Start thinking outside the box for the results needed to support your business goals and most importantly, discipline almost always pays off.
Being overwhelmed with bike repairs, may sound like the ideal position to be in, but is often as unproductive as doing nothing, and is far more unpleasant. Focus on the important job's, by being selective, doing less and you will find the path of productive. The key to not feeling rushed and to remember that lack of time is actually lack of priorities.

Basically you can charge the same per hour or per job and make the same money per year as a shop, you will also make a profit from selling parts to the bikes you are working on. But you only have to work 24 hours a week plus some travel time and replying to emails. Also to make £30k a year, your turn over will be less than £70k. Which is under the £81k VAT threshold and making you more profitable! Also there are other ways of saving money, like bank charges. Being a sole-trader you can have a separate current account for business, as long as you don't go overdrawn you wont be charged. Saving a pound is the same as earning a pound, it takes a long time to earn but you can soon spend it!

You may like to read. If money was no issue 

If you are thinking of opening a bike shop or mobile bike business, then I can help you with what you should be stocking and giving you contacts with suppliers.

As a network we get loads of support from our suppliers that we work with them, not just for discounts, but also technical support, for their next day delivery service which can save time and time is money!

I am happy to meet you and discus your business plan or a brief chat first on the phone or on Skype. I can offer a package to join our network or a consultancy fee for the information you need to get your new business of the ground and running. Email NOW

For more info on Starting your own bike business HERE

And I urge you to read our F.A.Q Page

Martin Founder of Cycle Tech UK

Add your Business details to our data base
It's free to be added to our data base for approved cycle assembly group of mobile mechanics
National strength local service; for those who want their bike business to be found on the Internet. You will be added to our Map & Postcode search
Our corporate business partners and customers looking for a bike mechanic in your area will be directed to you. 

By joining Cycle Tech UK Network:

  • You will have the reassurance that comes from operating a proven system that will give you the income and lifestyle you deserve
  • Being part of our group and the ability to draw on the experiences of others in the network you will never feel alone
  • Our great branding and marketing that will quickly help you gain customers 
We are looking for passionate individuals to become our network partners operating their own local mobile repair business in territories that complement our established network throughout the UK

If you would like to receive a copy of our information brochure which provides further details, joining fee, including an overview of our business model then please contact the Managing Director Martin Wilkins

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