Contents
Motorcycle Shop Business Plan
Recycled Riding Dreams offers quality used motorcycles and parts to motorcycling enthusiasts. For beginners, it provides affordable first bikes. For experienced bikers, it reduces repair and modification costs by 50% to 75%.
In the past decade, biking has gained popularity among men aged 40 to 65, surpassing young men aged 18 to 25 in motorcycle sales. In Montclair, motorcycle sales in 2000 reached $6 million, with a predicted 15% growth this year.
Montclair, a city with 650,000 residents and an average income of $28,000, has seven motorcycle organizations and hosts an annual cycling event during spring.
Brian Jefferson, owner of Recycled Riding Dreams, is a highly respected and well-known motorcyclist in Montclair. As the president of the city’s largest motorcycle organization, he led the motorcycle parade during last year’s spring celebration.
With Brian’s connections in the motorcycling community and the increasing demand for quality used motorcycles and parts, Recycled Riding Dreams will become one of the most popular shops in the city.
1.1 Objectives
Recycled Riding Dreams aims to:
- Capture the majority of the used motorcycle business in Montclair.
- Offer customers superior service at a low price.
1.2 Mission
Recycled Riding Dreams’ mission is to become the primary resource for used motorcycle parts in Montclair.
1.3 Keys to Success
The keys to success for Recycled Riding Dreams include:
- Customer referrals.
- Exceeding customers’ expectations for quality, timeliness, and price.
Company Summary
Recycled Riding Dreams will offer quality used motorcycles and parts to a growing market of motorcycling hobbyists. The shop will purchase used and damaged bikes, as well as used motorcycle parts.
2.1 Company Ownership
Recycled Riding Dreams is owned by Brian Jefferson.
2.2 Start-up Summary
Brian Jefferson will invest $55,000 in Recycled Riding Dreams and secure a $20,000 loan. The initial inventory will cost $45,000, focusing on engine and electrical parts. These parts will be sourced from motorcycle hobbyists who sell them to upgrade their own motorcycles.
The following table and chart show projected initial start-up costs for Recycled Riding Dreams.
Start-up Requirements:
– Legal: $1,000
– Stationery etc.: $200
– Insurance: $500
– Rent: $1,300
– Display Equipment: $3,000
– Expensed Equipment: $5,000
– Total Start-up Expenses: $11,000
Start-up Assets:
– Cash Required: $4,000
– Start-up Inventory: $45,000
– Other Current Assets: $0
– Long-term Assets: $15,000
– Total Assets: $64,000
Total Requirements: $75,000
Start-up Funding:
– Start-up Expenses to Fund: $11,000
– Start-up Assets to Fund: $64,000
– Total Funding Required: $75,000
Assets:
– Non-cash Assets from Start-up: $60,000
– Cash Requirements from Start-up: $4,000
– Additional Cash Raised: $0
– Cash Balance on Starting Date: $4,000
– Total Assets: $64,000
Liabilities and Capital:
– Liabilities:
– Current Borrowing: $0
– Long-term Liabilities: $20,000
– Accounts Payable (Outstanding Bills): $0
– Other Current Liabilities (interest-free): $0
– Total Liabilities: $20,000
Capital:
– Planned Investment:
– Brian Jefferson: $55,000
– Other: $0
– Additional Investment Requirement: $0
– Total Planned Investment: $55,000
– Loss at Start-up (Start-up Expenses): ($11,000)
– Total Capital: $44,000
Total Capital and Liabilities: $64,000
Total Funding: $75,000
Products:
Recycled Riding Dreams offers:
– Used Motorcycles: These cycles have been inspected and occasionally reconditioned to offer customers the best value.
– Used Parts: These quality parts include engine parts, bodywork, gas tanks, electrical parts, frame, and chassis wheels and brakes.
Market Analysis Summary:
Over the past ten years, biking has developed a new customer base among baby boomer men, ages 40 to 65. Last year, motorcycle sales for this age group was twice that of young men, ages 18 to 25. These two groups represent 80% of motorcycle sales. In Montclair, motorcycle sales exceeded $6 million in 2000, and sales are predicted to grow by 10% this year. The city has ten motorcycle organizations and sponsors an annual cycling event as part of the city’s spring celebration.
The demographics suggest a large market for used motorcycles and motorcycle parts, especially among experienced bikers. This is important because the experienced customer will seek out a shop where the owner has a reputation for quality and service in the motorcycle community.
Market Segmentation:
Recycled Riding Dreams will focus on two customer groups:
– Male baby boomers, ages 40 – 65.
– Young men, ages 18 – 25.
Market Analysis:
| Market Analysis | |||||||
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |||
| Potential Customers | Growth | CAGR | |||||
| Male Baby Boomers | 6% | 85,000 | 90,100 | 95,506 | 101,236 | 107,310 | 6.00% |
| Young Men | 5% | 70,000 | 73,500 | 77,175 | 81,034 | 85,086 | 5.00% |
| Total | 5.55% | 155,000 | 163,600 | 172,681 | 182,270 | 192,396 | 5.55% |
Strategy and Implementation Summary:
Word of mouth among motorcycle hobbyists is the foundation of Recycled Riding Dreams. The motorcycle community in Montclair is close and used by its members to locate resources and services. Each satisfied customer of Recycled Riding Dreams will bring in more business.
5.1 Competitive Edge
Brian Jefferson, owner of Recycled Riding Dreams, is one of the most respected and well-known motorcyclists in Montclair. Brian is the president of the largest motorcycle organization in the city with over 800 members. He has been a motorcycle hobbyist for 15 years and has built a reputation for quality customizing of motorcycles. For the past five years, Brian has served as a resource in locating used motorcycles and motorcycle parts for hobbyists.
Recycled Riding Dreams’ competitive edge is Brian’s visibility in the motorcycling community.
To develop good business strategies, perform a SWOT analysis of your business. It’s easy with our free guide and template. Learn how to perform a SWOT analysis.
5.2 Sales Strategy
Recycled Riding Dreams will open with a Customization Show and Competition. During the first month of operation, Recycled Riding Dreams will offer a 15% discount on all purchases over $50. Brian will also offer a standard 10% discount to members of the city’s seven motorcycle organizations.
5.2.1 Sales Forecast
The table and charts below show Recycled Riding Dreams’ projected sales forecast for three years.
Review:
Sales Forecast
Year 1 Year 2 Year 3
Sales
Used Motorcycles $137,000 $142,000 $152,000
Used Motorcycle Parts $98,000 $110,000 $119,000
Total Sales $235,000 $252,000 $271,000
Direct Cost of Sales
Year 1 Year 2 Year 3
Used Motorcycles $62,500 $63,000 $69,000
Used Motorcycle Parts $45,000 $54,000 $58,000
Subtotal Direct Cost of Sales $107,500 $117,000 $127,000
Management Summary
Brian Jefferson will manage the daily operations of the shop.
6.1 Personnel Plan
Besides Brian Jefferson, Recycled Riding Dreams will have one additional employee.
Personnel Plan
Year 1 Year 2 Year 3
Brian Jefferson $36,000 $39,000 $42,000
Staff Person $33,600 $35,000 $37,000
Total People 2 2 2
Total Payroll $69,600 $74,000 $79,000
The following is the financial plan for Recycled Riding Dreams.
7.1 Break-even Analysis
The monthly break-even point is approximately $16,000.
Break-even Analysis:
Monthly Revenue Break-even: $16,638
Assumptions:
Average Percent Variable Cost: 46%
Estimated Monthly Fixed Cost: $9,027
7.2 Projected Profit and Loss:
The table and charts below display projected profit and loss for three years.
Pro Forma Profit and Loss
| Pro Forma Profit and Loss | |||
| Sales | $235,000 | $252,000 | $271,000 |
| Direct Cost of Sales | $107,500 | $117,000 | $127,000 |
| Other Production Expenses | $0 | $0 | $0 |
| Total Cost of Sales | $107,500 | $117,000 | $127,000 |
| Gross Margin | $127,500 | $135,000 | $144,000 |
| Gross Margin % | 54.26% | 53.57% | 53.14% |
| Expenses | |||
| Payroll | $69,600 | $74,000 | $79,000 |
| Sales and Marketing and Other Expenses | $6,000 | $6,000 | $6,000 |
| Depreciation | $4,284 | $4,284 | $4,284 |
| Leased Equipment | $0 | $0 | $0 |
| Utilities | $2,400 | $2,400 | $2,400 |
| Insurance | $0 | $0 | $0 |
| Rent | $15,600 | $15,600 | $15,600 |
| Payroll Taxes | $10,440 | $11,100 | $11,850 |
| Other | $0 | $0 | $0 |
| Total Operating Expenses | $108,324 | $113,384 | $119,134 |
| Profit Before Interest and Taxes | $19,176 | $21,616 | $24,866 |
| EBITDA | $23,460 | $25,900 | $29,150 |
| Interest Expense | $2,000 | $2,000 | $2,000 |
| Taxes Incurred | $5,153 | $5,885 | $6,860 |
| Net Profit | $12,023 | $13,731 | $16,006 |
| Net Profit/Sales | 5.12% | 5.45% | 5.91% |
7.3 Projected Cash Flow
The table and chart show the projected cash flow for three years.
Pro Forma Cash Flow
| Cash Flow | |||
| Year 1 | Year 2 | Year 3 | |
| Cash Received | |||
| Cash from Operations | |||
| Cash Sales | $94,000 | $100,800 | $108,400 |
| Cash from Receivables | $116,820 | $149,451 | $160,645 |
| Subtotal Cash from Operations | $210,820 | $250,251 | $269,045 |
| Additional Cash Received | |||
| Sales Tax, VAT, HST/GST Received | $0 | $0 | $0 |
| New Current Borrowing | $0 | $0 | $0 |
| New Other Liabilities (interest-free) | $0 | $0 | $0 |
| New Long-term Liabilities | $0 | $0 | $0 |
| Sales of Other Current Assets | $0 | $0 | $0 |
| Sales of Long-term Assets | $0 | $0 | $0 |
| New Investment Received | $0 | $0 | $0 |
| Subtotal Cash Received | $210,820 | $250,251 | $269,045 |
| Expenditures | |||
| Expenditures from Operations | |||
| Cash Spending | $69,600 | $74,000 | $79,000 |
| Bill Payments | $108,864 | $153,470 | $171,723 |
| Subtotal Spent on Operations | $178,464 | $227,470 | $250,723 |
| Additional Cash Spent | |||
| Sales Tax, VAT, HST/GST Paid Out | $0 | $0 | $0 |
| Principal Repayment of Current Borrowing | $0 | $0 | $0 |
| Other Liabilities Principal Repayment | $0 | $0 | $0 |
| Long-term Liabilities Principal Repayment | $0 | $0 | $0 |
| Purchase Other Current Assets | $0 | $0 | $0 |
| Purchase Long-term Assets | $0 | $0 | $0 |
| Dividends | $0 | $0 | $0 |
| Subtotal Cash Spent | $178,464 | $227,470 | $250,723 |
| Net Cash Flow | $32,356 | $22,780 | $18,322 |
| Cash Balance | $36,356 | $59,137 | $77,459 |
7.4 Projected Balance Sheet
The table shows the projected balance sheet for three years.
| Balance Sheet | |||
| Year 1 | Year 2 | Year 3 | |
| Assets | |||
| Current Assets | |||
| Cash | $36,356 | $59,137 | $77,459 |
| Accounts Receivable | $24,180 | $25,929 | $27,884 |
| Inventory | $10,550 | $11,482 | $12,464 |
| Other Current Assets | $0 | $0 | $0 |
| Total Current Assets | $71,086 | $96,548 | $117,806 |
| Long-term Assets | |||
| Long-term Assets | $15,000 | $15,000 | $15,000 |
| Accumulated Depreciation | $4,284 | $8,568 | $12,852 |
| Total Long-term Assets | $10,716 | $6,432 | $2,148 |
| Total Assets | $81,802 | $102,980 | $119,954 |
| Liabilities and Capital | Year 1 | Year 2 | Year 3 |
| Current Liabilities | |||
| Accounts Payable | $5,779 | $13,226 | $14,194 |
| Current Borrowing | $0 | $0 | $0 |
| Other Current Liabilities | $0 | $0 | $0 |
| Subtotal Current Liabilities | $5,779 | $13,226 | $14,194 |
| Long-term Liabilities | $20,000 | $20,000 | $20,000 |
| Total Liabilities | $25,779 | $33,226 | $34,194 |
| Paid-in Capital | $55,000 | $55,000 | $55,000 |
| Retained Earnings | ($11,000) | $1,023 | $14,754 |
| Earnings | $12,023 | $13,731 | $16,006 |
| Total Capital | $56,023 | $69,754 | $85,761 |
| Total Liabilities and Capital | $81,802 | $102,980 | $119,954 |
| Net Worth | $56,023 | $69,754 | $85,761 |
7.5 Business Ratios
Business ratios for the years of this plan are shown below. Industry profile ratios based on the Standard Industrial Classification (SIC) code 5015, Motor Vehicle Parts Used, are shown for comparison.
| Ratio Analysis | ||||
| Year 1 | Year 2 | Year 3 | Industry Profile | |
| Sales Growth | 0.00% | 7.23% | 7.54% | 12.20% |
| Percent of Total Assets | ||||
| Accounts Receivable | 29.56% | 25.18% | 23.25% | 28.00% |
| Inventory | 12.90% | 11.15% | 10.39% | 38.90% |
| Other Current Assets | 0.00% | 0.00% | 0.00% | 16.40% |
| Total Current Assets | 86.90% | 93.75% | 98.21% | 83.30% |
| Long-term Assets | 13.10% | 6.25% | 1.79% | 16.70% |
| Total Assets | 100.00% | 100.00% | 100.00% | 100.00% |
| Current Liabilities | ||||
| Accounts Payable | 5.79% | 13.23% | 14.19% | 38.90% |
| Long-term Liabilities | 24.45% | 19.42% | 16.67% | 12.30% |
Hello!
I’m Andrew Brooks, a seasoned finance consultant from the USA and the mind behind phonenumber247.com.
My career is built on a foundation of helping individuals and businesses thrive financially in an ever-changing economic landscape. At phonenumber247.com, my aim is to demystify the complex world of finance, providing clear, actionable advice that can help you navigate your financial journey with confidence. Whether it’s personal finance management, investment strategies, or understanding the nuances of market dynamics, I’m here to share insights and tools that can propel you towards your financial goals.
Welcome to my digital space, where every piece of advice is a step closer to financial clarity and success!