Business Plan of Biker’s Point
A house of exclusive bikes
Type of Entrepreneurship: Sole proprietorship
COMPANY AND INDUSTRY
Biker’s Point is a retail bike shop located in Dhanmondi, Dhaka. The shop, operating from a 3,000 square foot building in prime location, is solely owned by a long time bicycle enthusiast, Istiak Ahamed Shakib. Shakib has many years of experience in the retail bicycle industry, as well as a business degree from University of Dhaka.
PRODUCTS & SERVICES
Biker’s Point is the exclusive dealer of Hero Honda, TVS, and Yamaha. This shop will sell all these types of bikes. In addition to bike sales, the shop offers services, accessories and parts, which are installed by certified mechanics. Biking hats and apparel are also available.
The shop is conveniently located in the heart of the city, which has so many bikes enthusiastic. The primary market is the city population, which has a regular turnover of 25%. As the exclusive dealer for three big manufacturers, the company also markets to the surrounding population of over 100,000 people in the surrounding Cities, which includes three other cities. In the area, there are three competing bike shops; however, none are able to offer the popular brands that are exclusive to Biker’s Point.
STRATEGY & IMPLEMENTATION
Biker’s Point will rely heavily on its location to attract customers. Dhanmondi area has a strong outdoor lifestyle culture. The students of this area and the shop will work together on student riding programs and events. The owner will also form several key partnerships with suppliers and industry experts that will ensure the long term success of the company.
Biker’s Point is managed by Rick Austin, the company’s founder and sole owner. Rick has over 20 years of experience in the industry, as well as business education. Biker’s Point also has two full-time certified mechanics on staff and a part-time sales force to assist with customer service.
Projections for Biker’s Point show the company generating nearly tk500,000 in sales in Year 1 and becoming cash flow positive early in Year 2. The company will maintain low overhead and minimal liabilities. The business will be debt free within five years.
FUNDS REQUIRED & USE
Biker’s Point is pursuing a tk175, 000 SBA loans which will be used for building renovations, inventory purchases, initial marketing and working capital. The owner has invested tk25, 000 in cash plus $20,000 in tools and supplies to begin the venture.
LEGAL ENTITY & OWNER
Biker’s Point is a limited liability company registered with the Company act 1994 under the name of “Sakib’s Cycling”. The company is solely owned by Istiak Ahamed Shakib, a lifelong bicycle mechanic.
The company will maintain top-of-the-line inventory of bikes, parts and apparel. Other assets include tools, cash register, computer, retail displays and signage. Intangibles, such as experience, relationships and location will prove to be the most valuable components of Biker’s Point.
PRODUCTS OR SERVICES
Biker’s Point has two primary ways of generating revenue: retail sales and service. Retail sales consist of new bikes from Hero Honda, TVS, and Yamaha brands. Bikes are available in many styles, including: mountain, downhill, commuter, beach cruiser, and road. In addition to bike sales, many accessories (locks, racks, water bottles, etc.) and clothing (jerseys, gloves, shoes, casual wear, etc.) are stocked on a continual basis. Finally consumers can find a wide range of parts to fix or upgrade their bikes.The service department has two full-time certified mechanics to help with any bike repairs and maintenance, including tune-ups, flat repairs and accessory installation and warranty repairs.
FEATURES & BENEFITS
By shopping at Biker’s Point, customers receive many features not found at competing stores. All new bikes come with two free tune-ups to ensure the bike is functioning properly after purchase. Biker’s Point is also the only bike store in the area to regularly stock all disciplines of bikes, as well as a full array of accessories and parts. Additionally, Biker’s Point is very active in the bicycling community and offers weekly group rides and community-building activities. For competitive riders, the shop also offers discounts on products and services.
Direct competition in Pullman is minimal. A Giant brand dealer is located across town. This is a smaller shop and is inconvenient for the city bikers. In the nearby area of Gulshan there are two other bike shops, which concentrate on mountain bikes. Biker’s Point has exclusive distribution agreements and a preferred location for Dhanmondi dwelers. These factors will allow Biker’s Point to overcome its competition.
In the surrounding areas, indirect competition consists of mass retailers, such as zahid motors, Bike house and Shopno. All of these have significantly lower prices; however, the quality of their bikes is much lower than what Biker’s Point offers. None of these large retailers have service capabilities.
Biker’s Point has several competitive advantages, including location, certified mechanics and exclusive distribution agreements with popular brands. Competing companies are not able to match these capabilities.
In the long term, Biker’s Point expects to open new locations in every part of the city. Locations will be selected where customer demand is high and exclusive distribution rights are available.
Biker’s Point’ primary target market consists of the people of Dhanmondi area. This segment is made of 18-26 year olds that are active and participate regularly in outdoor activities. As the campus is relatively confined, with few students driving, most all students walk or ride bikes to and from class. A secondary market consists of the rest of the population of the Quad Cities. This area is well known for its mountain bike trails, river paths, greenbelts and road cycling groups.
Biker’s Point serves a regional population of 100,000 people. With only three other bike shops in this area, Biker’s Point will be able to capture a large amount of the market share due to its unique location and exclusive distribution agreements.
The bicycle market is always evolving. The latest trend is the growing demand for beach cruisers and mountain bikes, both of which have relatively high margins. In addition, with fuel prices increasing, more people have chosen bicycles for commuting to work and school. This has caused an increase in demand for bicycles and accessories, where markups are often 50% or greater. Service sales have also increased as more people are tuning up old bikes and regularly maintaining their new ones.
Strengths: location near main road, specialized exclusive distribution rights; certified mechanics; low lease rates
Weaknesses: Most of the target markets depend on their parents for money.
Opportunities: lack of competition with certain brands will allow higher margins; group rides, events and races will attract new customers; 4 colleges in area provide large and ever-changing market
Threats: competing bike shops already have established customer bases; trends my shift away from bicycling if gas prices drop; weather (too hot, rainy or snowy) causes fewer people to ride
STRATEGY & IMPLEMENTATION
Biker’s Point will be the Quad Cities’ premier bicycle shop, offering a cycling solution for everyone from the mountain biking enthusiast to the daily commuter. It will be “a one-stop-shop for all your cycling needs.”
Biker’s Point does not intend to use its internet presence to drive retail sales, like so many other e-commerce sites. Rather, the company focuses on the immediate needs of its customers and the ability to fulfill those needs rapidly. A web site will include the store location and hours, promotions, local trails and links to related sites. Customers will also be able to research each bike and brand that Biker’s Point sells, allowing customers to make better purchasing decisions.
An aggressive marketing strategy will be employed that will leverage the location of Biker’s Point and the people specially students who are most interested in biking. The company will work closely with the universities and colleges to provide bike clinics, group rides and other community-building events. Eid & Puja will be offered to make it easier for customer a new bike. The company will also advertise in the newspapers and promote events through the Activities Planning Board and area Chambers of Commerce.
Sales in the bicycle industry are very cyclical, varying with seasons, weather& festivals. For this reason, most sales efforts will take place during the festival time, especially in the time of Eid and Puja. More than 85% of sales will be made in-person at our retail shop. The staff will be motivated by sales bonuses for each bicycle sold.
Biker’s Point has secured an ongoing contract with the City corporation security department to provide all new bikes and service to its officers. The staff will pursue other bulk sales opportunities as well.
Operations of Biker’s Point will be led by Shakib. He will oversee daily transactions, as well as inventory levels, marketing, bulk sales and other miscellaneous duties. The remainder of the staff, which will be adequately trained in product knowledge and sales, will be responsible for ensuring customer satisfaction and achieving sales goals. The store will be open daily from 10am until 7pm, with a reduction in hours during non-school sessions.
Provide high quality service and products to the customer
Achieve tk500,000 in first year sales
Interact with the customers to provide training and programs for them
Organize regular group rides to meet new people and build customer relationships
Biker’s Point is managed by its owner, Istiak Ahamed Shakib. Shakib is a lifelong bicycle enthusiast with many years of experience riding and working on bikes. He spent much of his teenage years working in a bike shop in his hometown of kishoregang, where he gained many contacts and inside knowledge of the bike industry. He attended University of Dhaka and received a Bachelor of Business Administration focusing on Entrepreneurship.
Along with Rick, Biker’s Point will employ two full-time certified mechanics. These mechanics will provide all repair and service work that comes through the shop. Three to five part-time sales people will be hired to assist customers and ring up purchases. The staff will adjust in size and hours to meet the seasonal demand. The part-time staff will likely be university students who are looking to supplement their income by working at a fun store.
The company receives advice from various friends and business professionals. These include a CPA for financial and accounting matters, as well as an attorney for any legal requirements, such as liability waiver forms for events. In addition, Rick consults with some of his former business professors who taught him at University Of Dhaka.
In order for Biker’s Point to successfully open with the required inventory and staff, the company will need tk200,000 in capital. Rick Austin has invested tk25,000 of personal money into the company, plus many of the required tools and equipment. The remainder of the funding will come in the form of an SBA loan, originated from a local bank.
USE OF FUNDS
The startup capital will be used to fund several expenses, including building renovation and fixtures. Rick will purchase an adequate amount of inventory, including bikes, accessories and apparel. A portion of the funds will be used for a grand opening marketing campaign. These startup costs will account for tk115, 000 of the initial capital. The remaining cash will be used for working capital for wages, rent, utilities and operational costs for the first year of business.
INCOME STATEMENT PROJECTIONS
First year sales are projected to be tk500,000 with approximately 250 bikes sold, accounting for tk125,000 in revenues. Service sales will account for tk175,000 in income. Parts, accessories and apparel will generate the remaining revenues. Gross margin on bicycle sales will average 30%, while parts, accessories and apparel will be sold at a 50% margin. First year losses are expected to be tk25,000. In Year 2, revenues will grow to tk600,000 with profits of tk55,000. Year 3 will see revenues of tk750,000 and profits of tk90,000.
With fixed monthly expenses equaling tk25,000, and a combined average margin of 62%, the business will break even at approximately tk40,000 per month in revenues. This will be achieved on a monthly basis before the end of Year 1.
PROJECTED CASH FLOW
Biker’s Point strongest months will be August through December and March through May. These months will be cash flow positive and will carry the company through the slower months. Biker’s Point will end Year 1 with approximately tk60, 000 in the bank.
Biker’s Point’ balance sheet will show total assets of approximately tk220,000, including cash, inventory, equipment and leasehold improvements. Liabilities will be tk175,000, plus any bank lines of credit. In the event that suppliers extend credit to the business, the balance sheet will reflect an increase in inventory and an equal adjustment to liabilities.
Setting up a bike showroom is a fashionable business to start one’s carrier as an entrepreneur. We have chosen this keeping this in mind. This sector has is on the rise in recent years. Young people are getting interested in bikes. That is why this business has high potential of success.