Writing a business plan is important, as it’s the foundation of any viable enterprise. Your business plan should be a living and breathing document that contains your goals and your plan for reaching them.
In the early planning stages of your business however, you may want to consider starting with a simpler, one page business plan. Use our bike business plan sample to help you create yours.
Let’s look at a sample business plan to help you get your business started!
BOB’S RENT-A-BIKE, LLC
(DATE)
CONTACT:
Bob Adams, Founder
1000 Main Street
617-385-9000
This business plan is confidential.
Related: A Guide to Writing Your First Business Plan
SUMMARY
Business Concept
We will be part of the large and growing bicycle rental industry. Our target market is summer visitors to Cape Cod, particularly central Cape Cod. We will be differentiated from competitors in that we will deliver rental bicycles directly to our customers at their motels, campsites, or summer rental residences.
Current Situation
We are a start-up business founded as a Limited Liability Company (LLC). At this point we have assembled a detailed operating plan, including promotional plans. We have arranged access to a station wagon to deliver bicycles and a garage to store them in. We have started to carefully buy used bicycles in excellent quality at very reasonable prices.
We have available capital of $2,500 from the founder’s personal savings and we seek an additional $7,500 investment from outside investors in order to be able to complete the purchase of our rental fleet.
Key Success Factors
What will really set us apart from the competition is that while our competitors rent bicycles from fixed rental locations, we will deliver our bicycles directly to our customers’ motels, campsites, and summer rental residences.
Another important differential is that our cost base is dramatically lower than that of our competitors. For one, we are going to buy used bicycles in a very disciplined way to build our rental fleet, whereas our competitors buy new bicycles. We estimate that we can buy quality used bicycles for approximately half the cost our competitors spend for new bicycles.
We will also have very little labor cost. Bob will draw a salary of just $10 per hour. There are other employees. Bob has ridden bicycles for many years, is handy with tools, and believes he can do most basic bicycle repairs himself.
Bob is young, energetic, and willing to work 24/7 to make this business a success!
We will also have very low overhead costs. We will store bicycles in an old garage (previously converted from an outhouse) on our family property. Bob will use the family station wagon, only paying for gas, to service the business.
Bob also has a good neighbor and friend, Harold Perethian, who runs a large bicycle wholesale business, who lends additional advice and provides wholesale prices for accessories and parts.
Financial Needs
The business will require a total of $10,000 in financing. The founder, Bob Adams, is contributing his personal savings of $2,500 and he is seeking an additional investment of $7,500. Of the total $10,000 in financing, approximately 75 percent will be invested in building a rental fleet of high-quality, carefully selected and negotiated used bicycles.
We expect the business to be highly profitable and for investors to potentially earn back their investment very quickly.
VISION
Vision Statement
Over the next few summers, we expect Bob’s Rent-A-Bike to become one of the leading players in the highly profitable and growing market for bicycle rentals on Cape Cod. By reinvesting part of our profits from our initial summers, we plan to expand our fleet and increase our advertising, eventually expanding our promotional activity throughout the entire area.
Milestones
MARKET ANALYSIS
The Overall Market
The overall sale of bicycles and related items in the U.S. in 2015 was estimated to be $6 billion, according the National Bicycle Dealers Association. However, with the average bicycle dealer deriving just 0.8 percent of their revenue from rentals, the market for bicycle rentals would be about $48 million.
Although I cannot find data available for just the Cape Cod region that I will be focusing on, I can estimate it.
I start with my estimated number of bicycles available for rental of about 1,300.
The majority of rentals are single-day rentals. For simplicity, I will assume all rentals are single-day rentals.
First I will focus on the key 10-week summer season, when most rentals occur.
I estimate from anecdotal information and limited personal observation that, including off-weather days, rental bicycles average a 40 percent utilization rate during the summer season, or in other words, are rented for an average of 28 days.
Therefore, the total rental days during the summer season are 28 days per bicycle x 1,300 rental bicycles = 36,400 rental days.
Then I adjust for off-season rentals. I estimate that 85 percent of the rentals occur during the summer season, so the total rental days including the off-season would be 36,400/0.85 = 42,800.
Then I estimate the average daily rate to be $25. Multiplied by 42,800 rental days, I therefore estimate the total current market for bicycle rentals on Cape Cod to be $25 x 42,800 = $1,070,000.
Also, I believe the total possible market is larger, particularly because many rentals are an impulse decision. So every time a new rental stand is set up, I believe the market incrementally expands. Furthermore, with my introduction of bicycle rentals delivered to motels, campsites, and summer residences, the market may expand further.
Changes in the Market
I believe the market for bicycle rentals on Cape Cod is continuing to grow and is fueled by a number of favorable factors.
The rail trails, old railroad lines converted into bicycle trails, are becoming increasingly well known and popular and especially important to the segment of the population that will only take on the expense of a rental bicycle if they can ride it on a dedicated bicycle trail.
People are generally pursuing more healthy lifestyles, especially on vacations, and are increasingly more likely to want to bicycle on vacation.
Many people are becoming increasingly discerning about the quality and type of bicycle that they wish to rent.
Market Segments
There are a number of different ways you could segment the market for people seeking to rent bicycles.
By Quality and Price
First you could segment it by quality and price. At the highest end you have a relatively small niche, which I will call “enthusiasts.” I estimate this segment to be less than 15 percent of potential Cape Cod renters; they are seeking to rent a high-end premium bicycle designed for a bicycle enthusiast, not a casual rider, and are willing to pay a significant premium if necessary to do so. The rental market for this rider is particularly small because this kind of rider is most likely to bring his or her own bicycle on vacation on a rack on the back of the car.
Next you have what I will call “the big middle.” I estimate this segment to be 60 percent of the market. The most common bicycle renter is typically above average income, is not too price conscious if he or she considers the price to be more or less reasonable, and expects a good-quality bicycle but not the high-end bicycle that the enthusiast would.
Finally, you have what I call the “price shoppers.” These are usually families or at least couples looking to rent bicycles for more than one person and are willing to spend at least some effort shopping around to save a little money. I estimate this segment to be roughly 25 percent of the market.
By Rental Time
I estimate the following average rental durations on Cape Cod:
By Mobile Delivery
Currently, I believe no rental firm is delivering bicycles to the customers’ location. I believe there is absolutely a demand for this because people who don’t bring their bicycle on vacation also do not bring their bicycle rack and cannot easily transport bicycles in their car, and people generally don’t even consider renting a bicycle rack.
Target Market and Customers
Our target market is people who want to have bicycles delivered to their motel, campsite, or summer residence.
Because there will be some expense in making this delivery, we will primarily focus on customers interested in renting bicycles for more than one day. Even though in my analysis of the market I estimated that only about 20 percent of rentals are for more than one day, the revenue from such rentals is significantly higher. In fact, with the price for two days usually being exactly double one day, and a week being substantially higher than two days, for example, the market for rentals of more than one day may be over 40 percent of the market in dollar terms.
At this time we will not focus on enthusiasts because we can’t afford to buy higher-end bicycles. We will, however, try to capture some of the price-shopping market, especially because people who rent bicycles for longer periods of time may tend to be more price conscious.
Customer Characteristics
With our customers looking to have bicycle rentals delivered to them, and generally renting for periods longer than a day, these people will be quite a bit different than the person who might rent a bicycle for an hour from a roadside stand.
People renting bicycles for an hour from a roadside stand are generally young—often in their twenties—and frequently single but usually in the company of one or more friends.
People renting bicycles delivered to their motel, campsite, or summer residence and renting for multiple days tend to be a couple, if not a family group.
Customer Needs
Targeting customers wanting mobile rentals for multiple days means that we will need a wide mix of bicycles to serve full family needs. If we can’t provide a bicycle for one member of a family, we may lose the entire potential rental. So we need bicycles of all sizes and we need plenty of baby seats!
The mobile rental customer is not as much of an impulse customer as someone renting from a roadside stand is. So having the shiniest and newest bicycles is not really going to help us get rentals. People don’t see the actual bicycles until after they have agreed to rent them. But the bicycles need to work and work well. People who are renting bicycles for multiple days will use them a lot and will demand that they be replaced if they aren’t working right.
COMPETITIVE ANALYSIS
Industry Overview
The bicycle rental industry on is dominated by U Pedal It, Inc. Although they have a storefront near the harbor in Hyannis, most of their rentals are from dozens of agent-operated locations all over Cape Cod.
Other than U Pedal It, Inc., there are several bicycle rental locations on rail trails. And there are a handful of bicycle retail shops on Cape Cod that also rent bicycles.
Nature of Competition
The nature of competition is focused on location and displaying bicycles, to apparently appeal to impulse renters—those who did not necessarily plan on renting a bicycle as part of their vacation, but take a look at the shiny outdoor bicycles lined up at rental locations and say, “Wouldn’t that be fun!”
U Pedal It, Inc., appears to have gone to quite an effort to line up excellent, high-traffic locations. In addition, the several rental firms that are located on bicycle trails are basically betting their business on their proximity to a great bike riding location.
There does not appear to be much price competition. Everyone offers about the same price for a standard bicycle. I don’t see price mentioned on signage at rental locations or in advertising.
Changes in the Industry
As the market for bicycles rentals on Cape Cod has grown, so has the competition. The popularity of the rail trails has led to more rental locations near the rail trails. And the increased emergence of bicycle enthusiasts looking for high-end rentals has further splintered the market and created a rental niche for high-end bike dealers.
Primary Competitors
Our primary competitor is U Pedal It, Inc. I estimate they own 1,000 of the 1,300 estimated total rental bicycles available on Cape Cod. They have at least double if not triple the combined locations of the rest of the industry put together.
Their strategy is to dominate Cape Cod by making agreements with agents, such as gas stations, motels, etc., to rent their bicycles in exchange for a percentage of the revenue. They have very carefully selected their rental agents and will negotiate the percentage of revenue, particularly if the location is highly successful.
They rent high-quality Raleigh bicycles. They completely renew their fleet every two years or so.
They are also the leading advertiser for bicycle rentals on Cape Cod.
Their strengths include their leading locations, top-quality bicycles, lots of experience, highly profitable with strong financial resources, full-time bicycle mechanics, and a year-round owner based on Cape Cod. They also have only one type of bicycle, the very recognizable Raleigh brand, which looks great and holds up well during rentals, and because they use a single brand, their bicycles are easier to maintain.
A possible weakness is that U Pedal It, Inc., is successful and so dominant that they will likely not feel the need to respond to a small new competitor, either by trying to match new services or to match lower prices.
Competitive Products/Service
Our primary competitor, U Pedal It, Inc., is renting relatively new zero- to two-year-old, high-quality, brand-name Raleigh bicycles.
While U Pedal It, Inc., does a fair amount of advertising, its most important promotional strategy is the shiny displays of new rental bicycles in front of the busy commercial properties of its many rental agents. These displays appeal not only to impulse renters but also to more contemplative renters, who are constantly reminded about the availability of the U Pedal It, Inc., rental locations.
Opportunities
The clearest need I see in the market is for the delivery of bicycle rentals directly to motels, campsites, and summer residences. Although costs will not make this practical for very short (i.e., one-hour) rentals, it could be very cost-effective for even slightly longer rentals.
Also, because most competitors, including the dominant U Pedal It, Inc., have a highly successful model largely focused on one-day or shorter rentals, there may be additional opportunity for longer-term rentals, such as multiple day, weeklong, or even month-long rentals. Because such longer-term rentals can become rather expensive, potential renters are more likely to shop around for a competitive price. And U Pedal It, Inc., having a highly successful business model, would probably not feel a need to respond to a tiny, new competitor competing for just a small portion of the overall market.
Threats and Risks
The biggest threat would be if a highly established player, especially the dominant U Pedal It, Inc., decided to respond directly to Bob’s Rent-A-Bike and match our delivery offer or our pricing. However, as I have outlined previously, I think this is highly unlikely because their model is highly successful and we are just gearing up for a sliver of the market.
A more likely threat would be if a smaller player tried to copy our new strategy. This is possible, but I think it is unlikely, especially during the first season. Also, for an existing player with an existing location, it is a lot more work to deliver rental bicycles. Not everyone wants to work as hard as Bob Adams.
STRATEGY
Key Competitive Capabilities
Being the “new kid on the block,” I can enter the industry with a whole fresh approach and a whole new business model, serving the unmet needs of some customers and better serving the needs of others.
Unlike my competitors, I don’t have an established way of doing business. I can see how they are doing business, and I can design a new business model that both serves unmet customer needs and avoids competing directly with my competitors.
I don’t have a lot of money and I don’t plan on raising very much. But I’m resourceful. I know how to get a great value buying used bicycles. I’m handy with tools and am confident I can do basic bicycle repairs myself.
My mother is going to allow me to use the family station wagon for this business, as long as I pay for gas and can work around her schedule. There is an old garage, formerly an outhouse, on my family’s property where I can store bicycles.
So even though I’m probably the smallest competitor, my cost structure has got to be the lowest.
I’m willing to work as many hours as it takes this summer, day or night, weekday or weekend, to make this business succeed!
Key Competitive Weaknesses
My competitors’ advantages include more experience, more financial resources, better and newer bicycles, experience in advertising, excellent locations, and year-round availability on Cape Cod.
Competitive Strategy
My strategy is to deliver rental bicycles to my customers’ doorsteps, to their motel, campsite, or summer residence.
I am going to target customers who are interested in renting bicycles for two days or longer.
I believe much of the longer-term, deliverable bicycle rental market will be families, so I will make an effort to build a rental fleet with bicycles for all ages and also have plenty of baby seats.
I am going to be flexible in pricing for longer periods of time, such as a week or a month, when the rental fee might come close to being as high as my entire purchase price for my average used bicycle.
Because I am not renting bicycles on impulse from highly visible bicycle stands and customers will not see my bicycles until after they have requested a rental delivery, and because I have very limited resources, I will build a rental fleet of used bicycles instead of new ones. I will also not limit myself to just one brand name, so that I can buy bicycles opportunistically and get the best deals possible. Given that large quantities of my bikes will not be displayed to the public at once, it won’t matter that they don’t match and that I have all kinds of different brands and colors.
Finally, especially because I have limited finances, I am going to keep my operating costs rock bottom by using my mother’s station wagon and by using the family’s old garage for bicycle storage. I am going to design my own advertising.
Bumper Sticker Strategy
My bumper sticker strategy is “mobile bike rentals.”
PRODUCTS/SERVICES
Product/Service Description
Our service is renting bicycles. We will rent by the day, by the week, or by the month. We will not rent for less than a full day, unlike most competitors, who rent by the hour as well.
We will rent two types of bikes only, adult bikes and children’s bikes. Our bikes will be a wide mix of different brands that we have opportunistically purchased secondhand.
All adult bikes will be ten speed or more. All adult bikes will have conventional, non-racing handlebars.
Children’s bikes will be one speed. Some will have high-rise handlebars.
All bicycles will have full and working safety equipment as required by law, including reflectors and an operable bell or horn. Brakes will be checked prior to each rental. All bikes will also be equipped with a basket.
In addition, baby seats will be provided by advance request for no additional charge. These seats can be relatively easily installed and removed in order to keep the rental fleet flexible.
Positioning of Products/Services
We will position ourselves as the only alternative for people on Cape Cod looking to have bicycles delivered directly to them, be it their motel, campsite, or summer residence.
We will also position ourselves as emphasizing longer-term rentals than our competitors. Unlike our competitors, we will not rent bicycles for less than one day. We will offer lower rates on extended rentals such as for a week or longer.
We will also position ourselves as family friendly, with a good variety of bicycles for not just adults, but kids of all ages. We will rent kids’ bikes for half the price of adult bikes. We will have a good supply of baby seats that we will provide for no additional charge.
Competitive Evaluation of Products/Services
The most important competitive metric for us is the availability of delivery to the customers’ location. This is how we will stack up:
Delivery available?
U Pedal It, Inc.: No
Bike trail–located rental competitors: No
Bicycle shop rental competitors: No
Bob’s Rent-A-Bike: Yes
Another important competitive metric for us is the competitive pricing of longer-term rentals:
Daily rental rates (comparable adult bicycles)
U Pedal It, Inc.: $25
Bike trail–located rental competitors: $25
Bicycle shop rental competitors: $25
Bob’s Rent-A-Bike: $25
Weekly rental rates
U Pedal It, Inc.: $90
Bike trail–located rental competitors: $85
Bicycle shop rental competitors: $90
Bob’s Rent-A-Bike: $77
This is how the quality of our bikes compares:
Bike quality
U Pedal It, Inc.: New, high quality, one brand (Raleigh)
Bike trail–located rental competitors: Relatively new, good quality, one or two brands
Bicycle shop rental competitors: New, high quality, mixed brands
Bob’s Rent-A-Bike: Good working quality, but slightly used
Future Products/Services
Looking out to future summers, we aim first to grow our customer base for our current product offerings. At some point in future summers, we may begin to buy new, high-quality bicycles and to standardize our fleet. We may also test demand for higher-end bicycles for the enthusiast.
SALES AND MARKETING
Marketing Strategy
The main marketing message we want to send is that, unlike our competitors, we deliver rental bikes right to the customer’s location.
There are other ways that differentiate us from our competition, such as lower rates for longer-term rentals and a little more effort to be family friendly. But what makes us stand out much more clearly from our competitors is our delivery of bicycles, so that’s what we are going to overwhelmingly emphasize in our marketing.
We don’t have time or money to invest in building an image. Our marketing is designed to “ring the register” with bicycle rentals today, not for building an image for tomorrow.
Being an all-new business and having only a 10-week summer season, we are going to immediately try and test a whole bunch of marketing alternatives. We just don’t have the time to test one after the next sequentially. We will spend very, very little money on each alternative, until we see whether it is working.
While we are willing to deliver bicycles anywhere on Cape Cod, we will give an extra emphasis to marketing to motels and campsites within a half hour drive of our bicycle storage facility. Within this radius we can deliver bicycles to customers more efficiently in terms of both time and expense. At motels and campsites I believe we will find a concentrated audience with a higher propensity to rent bicycles than the general summer population.
Unique Selling Proposition
Our unique selling proposition is: “Bike rentals, delivered free!”
The fine print indicates a minimum of two bikes being rented for two days each to qualify for free delivery. This means that we are grossing at least $100 on each free delivery, or $25 per bicycle per day.
We are the only bicycle service on Cape Cod offering delivery of bicycles. Offering delivery for free makes it that much more compelling.
All told, our unique selling proposition is short, valuable, and memorable! Great for use in marketing campaigns!
Sales Tactics
We will develop sales tactics to try to convert inbound inquiries into bicycle rental customers.
Inbound Telemarketing
Some of our inbound inquiries will be phone calls. We will use a six-part approach to closing phone inquiries.
Inbound Email Inquiries
Website Inquiries
Advertising
Selecting an advertising medium is trickier for us than for many new businesses for a several reasons. First, most of our competitors primarily attract customers on the basis of their highly visible commercial locations, including large displays of rental bicycles and signage. Our bicycles are stored in a garage in a residential-zoned district, so we really need to make our advertising work.
Second, we only have a 10-week summer season. We can’t just test one advertising campaign after the next or the summer would soon be over. We need to test several at once.
Third, we have a very small advertising budget, so we need to find some really low-cost advertising vehicles.
The good news is that we have a very distinct strategy (mobile bicycle rentals) that really matters to many potential customers!
The even better news is that we have been able to translate our powerful strategy into a compelling unique selling proposition: “Bike rentals, delivered free.”
So between our strong strategy and our memorable USP, we have a really good chance of getting a decent response, even from low-budget advertising.
Website
Our website is a core component of our advertising. We will prominently display the website address or have a link to it in all of our advertising. We will design the website primarily to “sell” a prospective customer on the idea of renting bicycles from us. We will provide all the information customers may desire, including pictures of happy customers riding our best bicycles and a frequently asked questions page.
We will also provide rates. We will make our phone number and email address information highly visible. The website will be just a few pages long, but it will be attractively designed and simple to navigate. We will also design the website to optimize search engine results placement.
Guerilla Advertising
We will go out to every campsite and motel and coffee shop within a 30-minute drive of our house and plaster every bulletin board with an advertising flyer. We will leave small handout flyers at motels. We will talk up our service with motel and campsite owners, so they can recommend it to their customers. Bob will ride his bicycle to visit them, to increase impact and recall.
Tourist Guide Advertising
We will test a very small ad in one of the small tourist booklets distributed all over Cape Cod. The advertising is one of the more expensive things we will do, but we will keep the first ad very, very small until we see that it is working.
Local Newspaper Advertising
We will test a small ad in the local weekly newspaper. We will aim this more for longer-term renters.
Search Engine Advertising
We will run several very short tests for keyword advertising. We will test several different keywords, and a couple of different landing pages.
Promotions/Incentives
Our unique selling proposition, “Bicycle rentals, delivered free,” is our everyday promotional offer.
Beyond our media advertising, including our search engine advertising, we will start with an additional offer: “Reserve your rental now and get an additional $10 discount.”
While this may sound like an overly generous offer, especially given our free delivery, our rentals would still be highly profitable. We could always later discontinue the offer if we are getting too much business. On the other hand, if a particular advertising media is not responding in our first test with this extra $10 discount, then we can feel more confident in immediately dropping it.
Additionally, if rentals are running below plan, we may discount prices further during the process of phone inquiries, especially for longer-term rentals.
Publicity
Our primary publicity vehicle will be social media. We will aggressively promote our visibility on social media; encourage friends, customers, potential customers, and key local businesspeople to follow us; and update our information regularly.
We will also send a start-of-season press release to all major websites and print vehicles everywhere on Cape Cod.
Bob will offer to do talk show interviews on local Cape Cod radio and cable TV stations on the joys of bicycling on Cape Cod, liberally referencing Bob’s Rent-A-Bike.
Instead of passing out a traditional business card that largely features his name, Bob will pass out to every single person he sees all summer long a Bob’s Rent-A-Bike business card–shaped advertising piece that offers a special “Friends and family $10 discount on your next bicycle rental.”
Trade Shows
Bob will attend the local chamber of commerce trade show held at the beginning of the season. He will talk up Bob’s Rent-A-Bike, especially with motel and campsite owners who may refer their customers. He will also give them promotional flyers.
OPERATIONS
Key Personnel
The key person is founder Bob Adams. Bob is nineteen years old and is completing his freshman year at Carleton College. He is a graduate of Phillips Exeter Academy. Bob’s previous summer jobs include working as a rodman for Savery Engineering, as a dishwasher for Howard Johnson restaurants, and as a busboy for Stage Coach Grill. Bob has ridden bicycles for years, is handy with tools, and is ready to work 24/7 to make Bob’s Rent-A-Bike a success.
Organizational Structure
Other than Bob, the only other person that will work for Bob’s Rent-A-Bike will be Bob’s twelve-year-old brother, Jim, who will just work a few hours as needed. Jim will answer the phone if Bob is not available and help clean and maintain the bicycles. Jim is willing to work for a very, very modest wage.
Human Resources Plan
To provide extra motivation for his younger brother Jim and to offset the very, very modest wage he will receive, Bob will let Jim use a different Bob’s Rent-A-Bike bicycle of his choice each week, provided it is not needed for rental purposes.
Service Delivery
Bob will deliver rental bicycles to customers using his mother’s station wagon. Bob has agreed to reimburse her for gas and try not to beat up the car too much. He also has a large bicycle rack to mount behind the car, and has been practicing carrying bicycles on the roof as well. Bob feels he can carry as many as 12 adult bicycles in one trip.
Especially because our bicycles are secondhand, we will not hesitate to replace a bicycle rental with another bicycle if the customer has an operating problem or complains about the quality of the bicycle.
We aim to have a rental fleet of 50 bicycles.
Customer Service/Support
We view our business as a high-touch personal service business and will endeavor to make every single interaction with our customers from initial inquiry to final bicycle pickup a positive one.
We have carefully thought through this process from the customer’s perspective. Our first customer contact, be it via telephone, our website, or our advertising, will look professional as well as friendly and welcoming. We will continue interacting with our customers in a “high touch” warm and friendly way throughout the entire process.
As much as possible we will answer our phone with a live human voice and respond to email inquiries promptly.
Because we expect our customers to have a very positive experience with us, we will also ask our customers for referrals and ask them to follow us on social media.
Facilities
In keeping with our low overhead, we will operate out of an old garage on our family property that was converted from an outhouse. It is a small, single-car garage and not all bicycles will fit parked in the garage at once. However, we intend to purchase bicycle hooks that we can screw into the old beams in the ceiling of the garage and hang bicycles from, saving huge amounts of space and allowing us to get all 50 bikes into the garage.
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