The subject lines of the most visited pages on SmallBusiness.com start with the three-word question, “How do I…?” If you have such a question, please e-mail it to Tips@SmallBusiness.com and we may answer it in an article like this one we received about starting a bicycle shop.

To help us answer this question, we reached out to the National Bicycle Dealers Association (NBDA), the association of independent bike dealers, to provide some business-oriented information regarding the breakdown of a bicycle retail store. (See bottom of the page for a list of resources the NBDA suggests.)

Some “start here” suggestions from NBDA

  • Spend time reviewing all the resources you can find about small business basics.
  • Research and build a sound business plan.”
  • Planning, organizational skills, and high energy are prerequisites for success in the bicycle business.

Financial management can be challenging in a low-margin, highly competitive industry, and studies show the most profitable shops today deliver excellence while also controlling costs.

Studies show the most profitable shops today deliver excellence while also controlling costs. An average break-even point of 37% in a world where bike margins are 36% or less, is a prescription for financial strain.

Average expenses for specialty, independent, bicycle retailers

The following is from the NBDA Cost of Doing Business Survey, expressed as a percentage of gross annual sales)

20.5% | Payroll Expenses
7.7% | Occupancy Expenses
3.% |  Advertising/Promotion
0.5% | Auto and Delivery
0.9% | Depreciation
0.8% | Insurance
0.5%  | Licenses/Other Taxes
0.5% | Professional Services
1.2% | Office Supplies/Postage
0.6% | Telephone
0.4% | Travel/Entertainment
1.3% | Other operating expenses
37.7% | Total Operating Expenses
36% | Gross Margin on Bicycle Sales
43% | Gross margin on clothing sales
48.1% | Gross margin on other equipment
4.2% | Net income before tax

Recommend additional resources

  • The NBDA Cost of Doing Business Survey, from the NBDA for $150 ($75 for NBDA members). Detailed financial study of bicycle retailing, complete with average costs, profit margins and more.
  • The Bicycle Retailer and Industry News Industry Directory, from Bicycle Retailer and Industry News, www.bicycleretailer.com, or phone 949-206-1677.
  • Interbike Trade Expo, held in September in Las Vegas, Nevada, Web site: www.interbike.com. This show is open to the trade only and for 2013 invited consumers.

Trade magazines

  • Bicycle Retailer and Industry News, 25431 Cabot Rd., Suite 204, Laguna Hills, CA 92653, 949-206-1677. Internet: www.bicycleretailer.com
  • Outspokin’, member newsletter from the NBDA.

Association

National Bicycle Dealers Association (NBDA)
806 S. Public Rd #201
Lafayette, CO  80026
Phone: 720-668-8862

E-Mail: info@nbda.com
Web site: www.nbda.com