STEP 1: Plan your business
A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:
- What are the startup and ongoing costs?
- Who is your target market?
- How much can you charge customers?
- What will you name your business?
What are the ongoing expenses for a bike rental business?
Fleet costs will likely be your major ongoing expense. This includes the need to replace bikes and make major and minor repairs. Employee costs can add up too, so make sure that you schedule a large enough staff to meet needs, but not so many that you are over-staffed.
Who is the target market?
Your customers are likely to be vacationers who appreciate an active lifestyle. They’re likely unfamiliar with the region, eager to be involved with your establishment and very receptive to your advice on sights to see or avoid. You should also be receptive to their after-ride reviews, as these often offer helpful feedback, including what attractions you may want to add to your list of recommended sites.
How does a bike rental business make money?
You’ll rent bikes on an hourly or flat fee basis, or a combination of both. Some bike rental establishments also sell merchandise related to biking or area tourism (mugs, water bottles, t-shirts, etc.) You might also consider selling your fleet bikes when they’ve been replaced by newer models.
How much can you charge customers?
Rental rates will vary depending on location and seasonality, but can typically start at $8 or $9 an hour. Since it’s in your economic interest for each bike to be on rental as much as possible, consider rate discounting for daypart or all-day (or even all weekend) rentals.
Consult this website to see what competitors are charging (and even to see whether it’s in your economic interest to start such a business in a given location).
How much profit can a bike rental business make?
Your profitability is related to many factors, from the length of your season (if your climate is mild, your operation might run year-round, while elsewhere it might be a three-month season at most), to other services provided. In other words, if your rental operation is part of a bicycle sales and service operation, you’ll likely have a longer season than if it’s a standalone rental site.
How can you make your business more profitable?
If your area is particularly interesting to sightseers, consider offering guided bike tours for a flat fee.
You might also provide bike sales and repair services from your same shop. After all, if you have the skills or personnel to service your own repairs, it would be very little additional effort to provide the same services for bike owners.
Also, take advantage of the fact that your customers have an interest in the area surrounding your business. Consider displaying in your shop souvenirs that celebrate your neighborhood or region, such as postcards, t-shirts, mugs, bumper stickers, keychains and related paraphernalia.
And finally, you might be able to make additional use of your fleet, such as for restaurant takeout deliveries.
