How To Open A Bike Shop: A Comprehensive Guide
Owning a bike shop is a dream for many keen cyclists. Giving them the chance to be surrounded by high quality bikes every day and spend their time interacting with like-minded bikers, it’s no wonder this is a popular endeavour. And with the most recent statistics showing that the UK cycling industry generated £2.31 billion in sales in 2020, it can be a highly profitable one too.
But if you’re considering this career path yourself, how exactly do you set up a bike shop? What are the keys to success, and are there any pitfalls to be aware of? Allow us to take you through the key steps to opening a bike shop in the UK to give you the best chance of making your venture a winning one.
- Perform market research
- Think about financing
- Sort out registration and legalities
- Get the right insurance
- Market your business
1. Perform market research
Like with any new business, the first step to setting up a bike shop is to conduct extensive research into your target market. This will help you work out things like exactly what kind of cycle shop to set up (for instance, a bike repair shop vs. a bike retailer), where to base it and how you can outdo competitors. All of this will massively increase your chances of surviving and thriving.
We recommend gathering data in the following two areas: the bike shop sector as a whole and your direct competitors. You can do this in so many ways, from conducting surveys to reading industry reports. Some of the main questions you want answering include:
- What are the industry’s main trends? For example, rising concerns around the environment has led to a surge in demand for eBikes in the UK.
- Why are people in your region buying bikes? Do they need them for work, their kids or sport?
- What products or services are most in demand?
- How much do customers spend in bike shops, and how often do they visit?
- How many cycle shops are there in your area?
- What products and services do they offer?
- What are their prices?
- Who are they targeting, and what marketing methods are they using?
2. Think about financing
The next step is to consider how much setting up and running a bike shop will cost, and how you’re going to finance this.
Bike shop costs
The major costs involved with running a bike shop include:
Rent for commercial premises
How much this will cost you will depend on the size of your space and where you’re based. For instance, the average annual cost of retail space in London’s West End is almost ten times the average cost in the city as a whole.
The cost of your stock is again hugely variable. For instance, those selling bikes will likely spend a lot more on stock than those repairing them, as will those with more upmarket cycle shops.
According to WordStream, new companies should spend around 12-20% of their gross revenue on marketing. The methods you use will impact how much you spend, however — for instance, traditional marketing methods like TV adverts are a lot more expensive than online methods.
Other costs to bear in mind include general equipment, shop signage and insurance — more on the last point later.
How to finance your business
Some of the main ways to finance your venture include:
Traditional bank loans are a popular way for businesses to fund themselves, with a number of banks offering low interest rates. However, the process of securing funds this way can be arduous.
Business angels offer business funding in exchange for a share in your bike shop. Of course, it goes without saying that this isn’t suitable for those who want to retain 100% control over their business.
Incubators and accelerators
These are programmes designed specifically for startups, and offer funding in return for equity in the business. Again, this might not be the ideal move for those who want full equity.
Alternative ways to fund your business include crowdfunding, asking family or friends, and short term loans.
3. Sort out registration and legalities
Once your finances are sorted, it’s time to register your business and ensure you’re meeting any relevant laws.
Your business structure
How you register your bike shop will depend on whether you set up as a sole trader, limited company or partnership. Each of these business structures entail different reporting, management and accounting responsibilities
Being a sole trader involves complete responsibility over your company. Although you’ll get to legally keep all of the profits you make after tax, you’ll be personally liable for its finances, including repaying any debts.
Forming a limited company lets you trade like you’re self-employed, while not being personally liable for any debts incurred. However, it does involve greater set up costs.
A general partnership is where two or more parties share responsibility for the business. Profits are usually shared equally, with each partner in charge of their tax own liabilities but jointly liable for any debts.
A limited partnership is similar to a general partnership, but it only requires one partner to be personally liable. The ‘limited’ partner’s input is entirely financial, and they’ll only be liable for what they’ve invested.
As well as registering your business structure, you will also need to register for VAT if your VAT taxable turnover is expected to be more than £85,000.
While you don’t require any specific licences to operate a bike shop, you’ll need to meet certain laws, including:
Cycle safety regulations
If you’re selling bikes, they must adhere to laws like the Pedal Bicycles (Safety) Regulations that outline safety standards for new bicycles.
There are a range of regulations retailers must abide by, such as clearly displaying the price of goods and ensuring these are of high quality.
If you’re aiming to employ people, you’ll need to comply with a whole host of employment laws. These cover everything from sickness and employment contracts, to holidays and discrimination.
Other legal considerations include meeting health and safety laws, obtaining a licence to play music, and having the right insurance.
4. Get the right insurance
Owning a shop comes with unique risks that might not necessarily be covered by a standard insurance package, which is why having a shop insurance policy is vital. This covers you for everything from the cost of replacing lost, damaged or stolen shop stock and contents, to any legal fees you’re subject to due to being sued.
With Brisco Business Insurance, you can quickly compare shop insurance packages from the UK’s leading providers in order to find the right policy for your needs. Some of the main covers these packages tend to include are:
Public liability insurance
Public liability insurance protects businesses that cause injury or property damage to a third party, whether it’s a customer or member of the public. This is an essential cover to have, or you could be left in the mire financially should somebody sue you for the reasons just mentioned. It also shows you’re trustworthy, helping your cycle shop to attract clients.
Employer’s liability insurance
As touched upon in the last section, having insurance can be a legal requirement, and this always applies to businesses that employ people. Those which do must have employer’s liability insurance under UK law, which protects businesses should a member of staff hurt themselves, such as by covering medical expenses or legal costs if you’re sued by the employee in question.
Professional indemnity insurance
Professional indemnity insurance covers your business if you’re sued for any losses caused by bad advice. This is a particularly useful cover for bike shop owners like yourself considering a huge part of your business involves advising customers on their bikes.
The value of your bike shop’s contents can add up to thousands — if not tens of thousands — of pounds, which is why having contents insurance is so vital. This covers you if these contents are lost, damaged or stolen.
Products liability insurance
While we’re sure you’ll do everything possible to make sure your products are completely safe, sometimes accidents happen. This can also lead to you being sued, making products liability insurance a crucial cover for your cycle shop.
Other useful covers include business equipment insurance, goods in transit insurance and business interruption insurance. If you’re looking at shop insurance for your bike store yourself, then be sure to get a quote from us today.
5. Market your business
In order to make a name for yourself and attract customers, it’s imperative that you market your business. The main steps to doing so include:
Set up a website
In today’s increasingly digitised world, your online strategy is key to your success. This begins with your website, which gives you a hub where prospective customers can find you. Here they can learn about what your business does, and even buy products or book services.
Employ SEO strategies
SEO stands for Search Engine Optimisation, which is the process of optimising your website to improve its visibility in search engine results pages. A successful SEO strategy encompasses numerous elements, including a user-friendly website, keyword optimisation and great onsite content.
Harness the power of social media
With over half of the world’s population using social media, harnessing this to your advantage can be invaluable for your marketing efforts. You can do this in many ways, from high-quality content to directly interacting with your audience.
Utilise offline methods
Despite the focus on online marketing methods so far, there’s still lots of value in offline practices too. Everything from business cards and events, to press releases and community engagement initiatives can help bring customers to your bike shop.
So that’s that: all you need to know about how to open a cycle shop in the UK. Best of luck with your venture! Whether you need general liability coverage or specialised professional indemnity insurance, Brisco Business has the right business insurance solution for you.
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