Friday, 25 November 2016

Mobile Mechanics Article - The Figures

Ever wondered how much is it going to cost to setup your own mobile bike business?

This type of business is home-based with low setup and running costs compered to a bike shop. It’s important to understand the costs specific to your venture. Getting the number right will help you determine what financing you may need to get off the ground.

In this post I have been contacted by the Cycling Industry News Editor, which is always a good sign to get approached more than once in the same year. That they are interested to post an article about mobile bicycle mechanics businesses setup costs.
This post will help you better understand how to estimate the costs of starting your mobile bike business from scratch.

Mobile Mechanics Article - The Figures 

Hi Martin,
You may or may not have spotted, but we’re set to go to print shortly with our first ‘Trade Journal’. Within I want to revisit the topic of mobile mechanics, but with a particular focus on the numbers. 
I wondered could I give you a call to chat on this? Keen to find out a typical investment from the beginning, time to recoup, ongoing costs and any other realities that may be overlooked by those considering going mobile. 
Mark Sutton


The number of mobile bicycle mechanics:
In our growing national cycle service network, we have over 70 full time professional mobile bike mechanics. (Professional - means; fully kitted mobile workshop, ongoing training and part of our technical support network) At a good guess by the number of contacts, enquires, meetings I have and searches I do, there are well over 70 others working the streets full time, plus those doing this part time/hobby that I have no numbers for. Also, there are those doing collection and delivery service to their home workshop. Also see reply from Alf "The Bike Inn" below with his view on numbers of mobiles businesses. 
Like any business, there is always new start up's and those going bust, as well as those making a 
good living. 

Do read: Which Bicycle Mechanics Training Course
The Figures:     
This post can only be a guide from figures "The Minimum Costs" as it depends on the individuals 
circumstances, personal outgoings, the setup and how they run their business will have an impact 
to the figures. 
A new business setup as a mobile bicycle mechanic is no different than setting up a bike shop 
when it comes to working out the figures. 
As a sole trader, will be different to a limited Company. 
Will the business be VAT registered, will there be a need to borrow money or have savings or a partner who will support the business for the first 6 months and so on....................    

"People often overlook cash flow and are not prepared. Setting money aside each month can be difficult while building a new business, but is crucial to running any business long-term
How quick you can recover costs and make a profit will also depend on the setup, your location,
pricing your services, type of jobs, amount of travel, how quick you can get up to speed with 
mechanical skills, confidence, business skills, customer care, and making the right decisions.  

There is a north/south divide when it comes to charging. London, home counties, affluent areas and where it is geared up for cyclists (Parks and trails) can charge a better hourly rate for servicing and repairs, then those in low earning and high unemployment areas or where driving long distance to each job is involved on a daily basis. Also, those working in affluent areas see more bikes and higher-end, meaning they can also make a better margin with turning over more parts. 
But there is always the same problem "the busy fool" with many businessmen not charging enough for their services and not being a little flexible to each bike, number of bikes and customer they see. 
You should see the first 6 months of your new business as a big learning curve and a investment to learning the ropes!!!! 
This is where I make notes over a short period and act on it, by adjusting pricing till I feel I have got it right, there are many times you need to be a little flexible, but have a minimum charge and stick to it. (It's your time, tools, knowledge and your reputation) 


The Mobile Workshop Cycle Tech UK
               
We put the expenses in to two groups


"This is a Guide Only" Based on a mobile onsite service, working 5 1/2 days a week (30 hours productive) 45 weeks a year, working in an average location, working on entry and mid-end bikes charging £40/hour with a turnover of £60k in year 2. 
You would have to do your own calculations to your circumstances and how you want to setup your business as being professional or not!  
1. Setup Costs  
The minimum Costs. The Essentials: 
Used Van high top M/W/B £10,000 plus VAT 12,000
Training                                                            1,800
Tool kit                                                             2,000
Van racking, storage                                           500
Stock                                                                2,000
Sign writing                                                        500
Stationary (Invoices, business cards)                  300
Website                                                                 50                            

Total                                                              £19,150

Extras:
Cash flow (Back account)                                1000
Security locks                                                     200
Awning                                                               500
Marquee                                                             300
Accommodation (Training) 
Market research (Travel) 
Fees paid to professionals

2. Running costs (Yearly) 

Business insurance                                             300
Van insurance                                                     600
Road TAX                                                          180
Van service/maintenance                                   400 
Van fuel                                                            1500
Business bank charges                                       300
Advertising                                                        100
Admin, accounts                                                300
Consumables                                                       50
Specialist tools                                                  500
Ongoing training                                               200
Cash flow, savings for TAX, NI                        00  (year 2.     3600)
Buying parts, stock                                          6000 (year 2. 14,000+) 
Phone, internet                                                  500
Web/domain                                                        50
Total                                                             £10,980

Wages

Extras: 
Loan repayment and interest
Van leasing payment

  • If the costs are looking too high, revisit your expenses and look for ways to cut them. But don't buy cheap and have to buy twice, better to buy what you need by spreading the costs buying one at thing at a time as required.  
  • It's better to overestimate than underestimate. 
  • As well as thinking about your start-up costs, also consider how long it will take until your business will open its doors and you will be generating revenue.
Recover your costs and make a profit:

Many of these costs are tax deductible, including anything you bring to the business (Tools you may already have, computer, etc) Capital Expenditures – You’ll also incur one-time costs to purchase assets such as inventory, property, vehicles,etc. These don’t typically qualify for a deduction, but can be written off through depreciation. Do check on gov.uk/setupabusiness or talk with an accountant to see how best to setup and run your business.
Being serviced based, with low overheads and invoicing customers same day direct, giving your business a good cash flow, in-turn our mechanics are making a profit. It's quite normal to recover costs and make a small profit of about £10k in year 1. (There are not many businesses that can boast making a profit in their first year)
There are also no guarantees you will make any money or that you could even make a loss. But with the right support your chances are much higher. 


Cycling Industry News magazine article 
(Right click images to view in a new tab to view large)


Chris Froome and Mike Cycle Tech Hertfordshire
The reality:
  • Undercharging - in any business one of the hardest things is getting the pricing right, too cheap and you are devaluing your services and becoming a busy fool. ("You will need to have the courage after around 6 months of trading, to review your business and put your prices up to the going rate in balance with the value of service you now offering") 60% of your time is productive, the rest of your time is unpaid, that will consist of travel, looking up parts.......... also not allowing for holidays, sick days and cash-flow.
  • Managing money by being ready with a good cash flow forecast, ready for your year-end and those quite times over the winter months, until your business is established.
  • Is down to how committed you are and how you prepare yourself is essential to making the difference to your business survival. 
  • Not being prepared to work odd hours to what you have been use to, in this type of business, sometimes things move very slowly, and at other times – really fast. 
  • Not knowing the customers needs, knowing how to solve their problem and making them feel they have had value.  
  • Knowing how to survive the competition and being prepared to deal with each situation as they arise.
  • More miles then minutes - depending on location and if you are working from a workshop, spending more time driving then fixing bicycles.    
  • Not being fully mobile means not just doing extra miles, but missing out on doing extra work/jobs. Not unusual to have more bikes waiting then originally booked in and the neighbours will see you too. 
  • Not having a large enough van The Mobile Workshop - not being seen and not looking professional. Have a well equipped workshop, gives you pride and confidence in your workmanship.   
  • Not getting up to speed with product knowledge and building confidence to take on all types of jobs on site. 
  • Not knowing where and what to spend investment on wisely - The correct set up of essential parts and tools, where to advertise and where not to. 
  • Knowing how to market your business, being seen and found. One way is by buying the largest size van you can afford, is difficult for those looking at starting this type of business to understand, unless you are on a budget. As many people like to test the water first by having a cheap small van. The van is the image of your business and you need to be able to operate as a mobile workshop, carry tools, parts and bicycles. 
  • Looking for new customers is always good for any business, but don't forget the one's you have already invested your time in and they will always tell their friends bout you amazing services. (Many mechanics become comfortable with earning x amount of money and stop growing their business, by only taking on certain jobs and covering a smaller area)
  • Willingness to learn, organise your time and running day to day business with good customer care skills will have an impact on returning customers and them recommending you to other cyclists. 
"When I first worked in a family bike shop, the owner said to me, you do a 100 great jobs, and one person will be told, you do one bad job and 100 people will know" As we become busy, the chances of making a mistake is a lot higher, especially when you are doing a customer a favour to get his bike back in time. this is something you will learn. But if you do something wrong and do your best to sort the problem out, you will have a customer for life.

A day in the life of a mobile bicycle mechanic

From Alf - The Bike Inn
In gaining answers, I sent Alf at the Bike Inn a message for his knowledge, as he as been in the bike business a very long time teaching new bicycle mechanics. 

That will help with the article, that we highly recommend using for anyone looking to start a bike business as we always get good feed back and they always go the extra mile to get their students doing and learning more then any other training center........................

I asked Alf for his thoughts as he has a large number of students each year and been doing this for a very long time................... See History of The Bike Inn.  

Morning, Martin.
First – thanks for your interest and support in the various ways that you do.
Much appreciated and your recommendation with your back-ground and standing in the trade certainly adds to our prestige.
In some cases, to save some writing, will ‘insert’ answers into yours below. That will clarify our various notes.
Please keep in mind that I am more than happy for you to print my notes but insist that you keep them in context of the whole discussion.
"I do see many people think they can do this type of business setup in a few weeks, as you know if you don't have the skills already there is more to bikes then one first thinks"
With ten courses per year at seven per course, our yearly full time attendees are seventy.  Of these at least 60 are setting up their own business or charity projects.
Add to that, wheel building, hydraulics and other short seminars it often adds up to a total of 100 people we train and teach per year.
You will see my attachment of our Certificate of Attainment.  It gives an indication of the level we teach.   You, above every-one, will recognise that it is needed in present day bike mechanics.
As you say and rightly question – some people think because they have done a few jobs on their own bike, it is sufficient to start their own business.   We often tell our people that they will leave us with more knowledge and skills than many that are ‘bike mechanics’ in shops.  It is not our intention to discredit shop mechanics but we so often hear of bad (dangerous!) work that can only come from a complete lack of any training.
Even without naming a few establishments, the lack of knowledge and on-going follow-on advice and assistance leaves a lot to be desired for the fees they are paying.
Our strength comes from full and complete tuition in the ten days they are with us.  This is extended enormously by the on-going advice and help long after they have left us.
"The number of full time mobile mechanics including pickup and return in the UK?  I am thinking minimum of 170 - 200"  
Whilst actual ‘mobile mechanics’ was not original to us it is certainly one that we have promoted over the past twelve years, recognising we have been teaching full time since 1991.
So, in an effort to answer your question – if we take just the last ten years at 70 per year, of which an average of 90%, an accurate figure would be: 700 x 90% = over 600 setting up their own business, charity, shops or other.
OK – some may only want a small part-time business but the majority have become successful.  But your figures should be increased to at least 800 if you include our folks.
Sounds like a lot, but spread around the whole of the UK and Eire, still only scratching the surface.
I have not included the numbers of people that have come to us from other countries, purely to attend our course.
In the early days there was some friction between shops and mobile.  But that seems to have become a situation (encouraged by us) to develop a rapport between shops and our trained personnel that has and is working well.   We regularly have e-mails from our former students about this.
I would hope that with the useful info above you will have sufficient to write a good report on mobile bicycle mechanics.
Feel free to quote me, keeping in mind my request to keep all in context.
Alf The Bike Inn 

See Who needs bicycle sales anyway? (January is our second busiest month of the year)

See Index By reading all our Posts & Pages, will give you a better insight to costs of running your own mobile bike business.

Average set up costs are in the region of £20k. I did this 9 years ago on a shoestring, but I had mechanical skill's, worked in a bike shop, had contacts in the bike trade and run a mobile car repair business for 10 years before I decided to go back to bikes, that all helped me. Plus I knew what I wanted and I become very creative in making it work on a budget and keeping up with any market changes.  

Whatever your budget, Cycle Tech UK can help you get your business on the road. Email me today martin@cycle-tech.co.uk for a information brochure. We can talk in more detail and answer any questions you have.

Martin
Owner and travelling mechanic Cycle Tech UK


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1 comment:

  1. I really don't think they can deal with the big brands, even B-C is collect from a shop, most brands involve a buy and make money on selling bikes , they would loose dealers all over if they started by-passing them with these guys from Velofix, the online companies may but again that will optional and the customer paying direct. 90k for a franchise and start making profit after your first month , really ??

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