Customers, who are typically (though not always) tourists, are loaned bicycles by bike rental firms for a limited period of time. Often, people rent bikes for a few hours so they may casually tour an area they are visiting. the clientele could include those needing bikes for more practical purposes such as in the case of all university students living on campus or locals who don’t want to utilize vehicles. Your company may be a stand-alone store, a division of a bike sales and servicing operation, or a subsidiary of a hotel or other accommodation businesses.
If you are interested in entering the world of bike rentals and have a great idea for your company, we have put together a plan that will help you get it off the ground. Unfortunately, there is more to starting a business than just registering it with the state, but we have done the research and compiled it here to make your experience of starting a bike rental company easier, more streamlined, and more effective.
HOW TO START A BIKE RENTAL BUSINESS
Step 1: Putting Together A Business Plan
To follow any path in business or in life, one needs a roadmap to work from. Every successful entrepreneur starts their business venture with some important considerations that will help them lay out the specifics and identify unknowns as it relates to their business. This roadmap is known as a business plan and it covers essential topics like startup costs, operating expenditures, target market, business naming, and how much customers can be charged for the products the business offers.
Startup Costs Of A Bike Rental Business
The average startup cost of a bike rental business is thought to be about $175,000, but that also means that this business type can be started for less. To assess these costs let’s consider a bike shop with a fleet of 20 bikes for rent. Here are a few factors for cost consideration:
- Cost of bikes and gear: If you purchase each bike in the fleet for $250 (the low end of bike costs), the stocking expenditure will be $5,000. However, you will not want to purchase the cheapest bikes available because they need to be durable, since they will endure heavy wear as they are used by renters. Another $1,000 to $2,000 will also need to be spent on bike peripheries such as bike locks and helmets.
- Repair costs: After use, bikes will need to be maintained, sometimes repaired, and in some instances, replaced. That means you will need access to a professional repair person (if that isn’t you), bike parts, and tools for any potential repair jobs. These can amount to about $5,000 annually. You will also need quick access to bike parts, so it is vital to secure a relationship with a bike product distributor that can get you these parts expediently. Keep in mind, that the longer your bikes are out of commission, the more potential money it will cost your business due to the inability to rent them.
- Staffing: If your business does not employ any staff, then your staffing expenses are relegated to what you believe is fair. However, if you have a few to a large team of employees, you will need to expect to pay at least $18 and withholdings per hour per mechanic who can take care of bike repairs and maintenance (if that isn’t you).
- Peripheral merchandise: You will want to stock up on some merchandise that is not bike or gear to entice your clients to purchase them as an upsell strategy.
- Rental costs: Whether you get the space to operate free of charge (such as if you are working in a hotel bike rental service wing) or you are leasing an area, keep in mind that you will need space equipped for storing bikes, displaying them, along with other related merchandise, and of course space, for customers to be serviced in.
- Liability insurance: You need to be aware that your clients may have an accident on the bike, and sometimes, it will be due to a bike malfunction. While you will want to have clients sign waivers to exempt you from responsibility in such cases, that alone will not be effective enough at keeping you from being liable in most situations.
- Professional assistance: You will need an accountant to crunch the startup costs, a lawyer to help put the customer waiver together, and if possible a web developer to put together an effective website for your business. Hiring the services of a graphic designer from Fiverr for your business’s brand logo and signage. Combined, these will likely amount to another $1,000 at a minimum.
What Are A Bike Rental Business’s Operating Expenses?
Your largest operating expense will be the repair (minor and major), as well as the replacement of bikes in your fleet. Make sure that you are staffing accordingly. You should have enough staff on hand to be available for all facets of your shop, but not too many because you will be spending money needlessly and suffer from overstaffing.
Who Is The Target Market For A Bike Rental Business?
Your most likely customers at a bike rental shop will be active vacationers. They might not be familiar with the region and are eager to explore. As you will be supplying their vehicles, they will likely ask for your advice on where to go, what to see, and what to avoid. They will also likely leave reviews after using your equipment, so make sure that you are receptive to feedback, even if it’s negative, using it as a way to improve. You may want to use them as an opportunity to add some attractions to the products or services you offer.
Making Money With A Bike Rental Business
You will bring in revenue through bike rentals, whether they are on an hourly basis or through a flat fee, and sometimes the combination of the two. Since your business will cater to a lot of tourists, you can also sell bike-related merchandise, or tourist favorites like water bottles, apparel, mugs, etc. for the local area. When your bikes are replaced, consider selling your older ones as well.
How Much Can Bike Renters Be Charged
There is a multitude of factors that influence the rates, and they can vary based on yet more factors. Where you are located will dictate how much you charge per hour of bike rental, though you may want to lower the rental costs in off-seasons, and raise them slightly in peak seasons. You can also charge a per-day rate, and the price should be slightly discounted from what the customer would pay if they were renting the bike for the full day’s hours.
Discounts can also be applied to rentals on either weekends or weekdays. Partial day rates are also a good option to have on the docket.
To stay competitive, it is a good idea to check out other bike rental services in the area and determine what is best in your business’s economic interest to charge at a particular location. Generally, bike rental charges per hour start at about $8 or $9.
How Profitable Can A Bike Rental Business Be?
Your profitability depends upon an array of different factors, including the timeframe of your seasons (year-round operation in milder climates, while elsewhere it may be a season of no more than three months), as well as other offered services. In other words, you’ll probably have a longer season if your rental business is part of a company that sells and maintains bikes than if it functions as a sole rental location.
Increasing A Bike Rental Business’s Profitability
There are a number of ways that you can bolster your bike rental business’s profits. For instance, if you are operating in an area with notable sightseeing locations, you can consider charging a flat fee for a guided bike tour. If you rent bikes, you can also sell them and offer repairs, all in the same location if you have the bandwidth, capability, and knowledge. This should require very little additional effort if you have the staff and skills for these services.
Don’t be ashamed to market your area through merchandise as well. You can place souvenirs that exhibit your state, town, region, or neighborhood. These can be in the form of mugs, keychains, bumper stickers, postcards, t-shirts, and various other paraphernalia. You can also consider leasing your bikes for bike delivery services for restaurants.
Naming Your Bike Rental Business
It is not only very important to lock down a business’s name, you need to assure that when you go to register it with the state, but you have also carefully checked business records and trademarks (on both a state and federal level), to assure that the name is not already in use. You can get even more research potential out of checking out social media.
If you do not have a name yet for your business or are struggling to come up with one, there is a variety of business naming generators, even those specifically for bike rental businesses. Once you have found a good name and cleared all the checks, you should verify that the domain is not being used by someone else. If it is available, register it before someone else does.
If you are operating as a sole proprietor, you may want to avoid naming the business after yourself.
Step 2: Forming A Legal Entity
Setting up a business structure is integral to the start and forward progress of your business as it allows for the proper legal setting to be put in place. While there are a number of business structures to select from, most businesses choose to register as LLCs or corporations. Being set up as such entities protects business owners from personal liability in the case of their business being sued. Setting up LLCs isn’t expensive, and for a slightly higher fee, the process can even be completed by an LLC service that will take care of all the work for you.
Step 3: Tax Registration
Before your business can open its doors, you will need to be registered for all the necessary federal and state taxes. For this to be possible, your business will need an EIN or a number that uniquely identifies it for the government’s taxation records. Securing your EIN can be done through the main IRS website. If you already have one, you can find it through EIN lookup guides.
The business type you select will carry some options for taxation purposes. LLCs, for example, benefit from S corporation taxation rates. Aside from federal requirements, franchise taxes, as well as any specifically imposed by your state of operation will also apply.
Step 4: Business Banking And Business Credit Cards
When running a business, you always need to protect your personal assets. If your personal finances are mixed with your business ones, then if your business is sued, things like your home, vehicle, and other essential valuables are put at risk. When you use dedicated bank and credit accounts, you “pierce the corporate veil,” a term for safeguarding your personal assets in the case of a business loss.
When your business has separate accounts and credit lines, you qualify for more favorable interest rates, and higher credit lines, and have an easier time with accounting, particularly at tax time. When you start your business, it has little business credit. Therefore, it needs to be built out.
One of the most popular approaches is to get a net-30 account, a term referring to the type of credit arrangement where businesses who may not have the cash on hand to stock their inventory can use the money and then pay it off to the vendors 30 days later. Net-30 accounts also report to the major credit bureaus, so by using them, young businesses build credit through a track record in their business history.
Business credit cards are similarly effective in protecting your personal lines of credit, but they also separate your business expenses into a centralized location. These are also vehicles for building credit history, which will turn out to be a great thing if or when you need to raise money in the future.
Step 5: Business Accounting
Keeping detailed track of your sources of income and your business’s expenses is essential to monitoring your business’s financial performance. It also helps keep things in order when it is tax time.
Step 6: Permits And Licences
To lawfully operate a business, all necessary permits and licenses must be secured. This is critical since not doing so will result in substantial at best, and the termination of your business operations at worst.
Every state may differ in the types of permits they require for someone operating a bike rental shop. You can get assistance in figuring out all of that information from the US Small Business Associations directory for local businesses, as well as through the clerk’s office in your city, town, or county.
You should research information pertaining to liability waivers that will serve as consent agreements that bike renters will be obligated to sign if they want to rent from you. This promotes transparency and gives you more legal cover in case of liability claims.
Additionally, your bike shop, as a business operating from a physical storefront, will need to obtain a CO (or Certificate of Occupancy), to confirm that the location is adhering to all government regulations, building codes, and zoning laws. If you are purchasing a location, the responsibility for obtaining a CO is on you, so you will need to familiarize yourself with all building and zoning codes, ensuring that your bike rental business is in compliance before having it inspected for CO qualification.
If your location is being leased, you should make your landlord aware that he/she is responsible for the acquisition of a CO, and make certain that the rental agreement states that you will not owe rental fees until such time as a CO is obtained. This includes a “refreshed” CO in the case of any sort of major renovation.
Step 7: Business Insurance
To operate lawfully and safely, your business needs permits and licenses, but that is not all. It also needs to have the security of Business Insurance which will protect the financial well-being of your business in the event of a loss. Business insurance policies vary based on the type of business you are operating and the risks associated with it. If you are not certain which insurance type to acquire, General Liability insurance is a good start, especially for most entrepreneurial ventures.
Additionally, your state will most likely mandate that you have Worker’s Compensation insurance if your business employs staff besides yourself. If you are running a rental bike shop, you might be a solo operation, but that is very likely too much for one person, so employees need to be covered for worker’s compensation if they experience loss on your site.
Step 8: Branding
Your brand is your company’s corporate persona. What your business stands for, how it is viewed by others, and how it distinguishes itself from competitors are all aspects communicated by a brand, generally through an icon or a logo (you can use Fiverr or Canva). Some business owners are nervous about crafting a brand logo, but with some good beginner design tips, anyone can put together a good, effective visual brand representation.
Marketing & Promotion
Many of your tourist customers will be younger people, eager for adventure and very well-versed with exploring places they want to visit on the internet. That means your business needs to have a website, along with regularly updated social media (Facebook page, Twitter feed, Instagram account, etc). You should even consider a blog that will talk provide historical details about your local area, as well as various attractions and food establishments.
While this digital media is highly valuable, don’t neglect traditional marketing methods like flyers posted in various coffee houses, hotels, restaurants, and any other place where visiting prospective customers may frequent.
Customer Retention
Your best friends in this line of work are review centers like Trip Advisor and Yelp. They are also places that have the potential to inflict damage on your business. In order to avoid the latter and leverage the former, you and your team must provide exceptional customer service. That means your operation should be more than just handing out bikes and taking customers’ money.
You should be able to be a friendly and engaging host, being able to suggest popular and interesting destinations for your clientele to visit while on their ride. The better you do, the more your input will be valued and appreciated. And that results in good reviews.
To that point, you will want to consider that many of your employees are likely part-timers earning minimum wage, so they won’t be as enthusiastic about engaging in customer relations. That means that as the owner, you need to stay involved in the process. A good start is to employ, nice, personable people, then train them in great customer interaction, then oversee their performance. The more memorable of an experience your staff provides, the better your business will be reputed.
Step 9: Business Websites Are Pivotal
It was already mentioned that your business should have a website and a social media presence, but once you have a brand and logo in place, setting up a website should be your next step. Social media is great for business, but it is not a proper substitute for a business website. These days it is hard for customers to feel that a business is legitimate without one. While social media like LinkedIn profiles and Facebooks pages are a great supplemented marketing vehicle, they are not substitutes.
Some owners are far from technologically savvy, so they may shy away from website creation, and they may not want to hire a website developer as a cost-saving measure. The important part to consider here though is that web design tools like WIX, GoDaddy, Squarespace, WordPress, Shopify, and Weebly make building a website straightforward. Even a novice can put together an effective one in under 3 hours. Just find a good website-building guide and follow along to secure a great digital marketing vehicle.
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Step 10: Business Phone
We talked earlier about walling off your personal assets from your business ones, but this idea is not isolated to merely the financial portion, but also to your life overall. Setting up a business phone system doesn’t just keep your private life separate from your business life, it helps your business be more automated, legitimizes it, and makes it easier to find prospective customers.
The best part is, you don’t even need to have the know-how of setting up a phone system for your business. Some companies specialize in this and would come out and take care of everything for you at a charge of a modest fee.
Is The Bike Rental Business For You?
As passengers may be harsh on bikes, bike rental company owners should be mechanically capable. Also, as bikes are frequently hired to explore the neighborhood, you should be quite familiar with your base of operations and ready to recommend interesting places for interested tourists. You should be determined to provide great customer service and possess an engaging personality.
Also, your location ought to be one where clients will want to borrow bikes. This often implies a tourist attraction and a biker-friendly environment that is not very rugged or crowded. For the safety and enjoyment of your patrons, the topography should be bike-friendly, with spacious streets, cycle paths, or trails.
What Is A Typical Day For A Bike Business Like?
Most days at a bike rental business involve customer interaction, where the employees or the owner rent bikes and received returned bikes from clients. The breakdown of a typical day is something like this:
- Renting bikes to customers or groups of clients. Before doing so, bikes are evaluated to make sure they are in good working order. When customers rent, assuring that they sign liability waivers, leaving credit card information and deposits to assure safe returns of the bikes.
- Answering questions about various destinations and attractions, as well as trying to upsell various displayed merchandise including t-shirts, water bottles, maps, and power bars.
- Tune up bikes to get them ready for rent.
- Arranging staffing schedules, assuring that at least one mechanic is on-site every day of operation.
- Evaluate returned bikes to verify if damage fines should be charged to the customers
- Regular updates to social media with news about the shop, the area, and pictures of potential destinations for bike tours.
What Are Some Useful Skills To Have In A Bike Rental Business?
Considering that bikes are generally expensive and they will endure a lot of wear and tear as they are used by clients, it is very important to either be mechanically inclined yourself or have someone on staff that is. If you need to outsource bike repairs, it will cost you potentially more than you are bringing in. Even one bike in a fleet that is out of service doesn’t earn money, and if you do not have sufficient rides available in stock, customers will go elsewhere.
You should also be creative enough to promote your business uniquely and cost-effectively. Additionally, you will need to have good people skills and keen instincts for good customer relationships. After all, it is their reviews of the business that will be what makes it or breaks it.
Bike Rental Business Growth Potential
A modest fleet of bikes, seasonal workers earning at or close to minimum wage, and a station to store and service bikes are the fundamental necessities of a bike rental business. You may employ a single technician to maintain bikes across several sites, or if you’re feeling ambitious, take on the duty yourself. Consequently, once you’ve found out how to properly manage one site, expanding is rather simple.
Taking The Next Step
The most important part of starting a business is soliciting expert guidance, such as can be provided by a business mentor. A free resource for business help when you need advice is invaluable, and a network of support during tough times can be critical to your business’s survival.
Women trying to get into business often requires a set of resources that are available to them in aiding their professional and personal success. Women in Business is a great series from Startup Savant that offers guides, support, and help with events and funding for female entrepreneurs.
One of the biggest factors in a success of a bike rental business is the ability to set up mutually beneficial relationships with various hospitality businesses such as hotels. These facilities need to be able to offer their guests various options for entertainment, making a bike rental business very valuable. You can use the relationship to put up flyers to guests with the hotel providing you a space to promote your business on their property free of charge.
Before opening your doors, you need to ensure that your business team is equipped. You will need a part-time mechanic on your staff. Beyond that, your staff can be as small or later as you need it to be, potentially varying based on seasonal demand.
Frequently asked questions:
how to start an e bike rental business?
Starting an e-bike rental business can be a lucrative venture with the growing popularity of electric bikes. To begin, you’ll need to research local regulations and obtain necessary permits, purchase a fleet of e-bikes, and create a user-friendly online booking system. You can then market your services through social media, partnerships with local hotels or tour companies, and targeted advertising.
how much is bike rental on mackinac island?
The cost of bike rental on Mackinac Island varies depending on the rental shop and the duration of the rental. However, the average cost is around $8-$10 per hour for a single-speed bike and $25-$30 per hour for a tandem bike. Full-day rentals can cost around $30-$40 for a single-speed bike and $60-$70 for a tandem bike.
how to start a bike rental business?
To start a bike rental business, you need to research your market, secure a location, and purchase or lease a fleet of bikes. You will also need to obtain any necessary licenses and insurance, create pricing and rental policies, and hire staff. A strong online presence and marketing plan can help attract customers and grow your business.