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.

Motorcycle Shop Business Plan Example

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.

Motorcycle Shop Business Plan Example

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.

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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.

Motorcycle Shop Business Plan Example

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.

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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.

Motorcycle Shop Business Plan Example

Motorcycle Shop Business Plan Example

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

Financial Plan

The following is the financial plan for Recycled Riding Dreams.

7.1 Break-even Analysis

The monthly break-even point is approximately $16,000.

Motorcycle Shop Business Plan Example

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.

Motorcycle Shop Business Plan Example

Motorcycle Shop Business Plan Example

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%
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7.3 Projected Cash Flow

The table and chart show the projected cash flow for three years.

Motorcycle Shop Business Plan Example

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.

General Assumptions

Plan Month 1 2 3 4 5 6 7 8 9 10 11 12

Current Interest Rate 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%

Long-term Interest Rate 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%

Tax Rate 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00%

Other 0 0 0 0 0 0 0 0 0 0 0 0 0

Pro Forma Profit and Loss

Month 1 2 3 4 5 6 7 8 9 10 11 12

Sales $13,000 $16,000 $19,000 $20,000 $21,000 $22,000 $20,000 $20,000 $22,000 $21,000 $21,000 $20,000

Direct Cost of Sales $7,000 $7,500 $9,500 $10,000 $10,500 $11,000 $10,000 $9,500 $11,000 $10,000 $10,500 $1,000

Other Production Expenses $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Cost of Sales $7,000 $7,500 $9,500 $10,000 $10,500 $11,000 $10,000 $9,500 $11,000 $10,000 $10,500 $1,000

Gross Margin $6,000 $8,500 $9,500 $10,000 $10,500 $11,000 $10,000 $10,500 $11,000 $11,000 $10,500 $19,000

Gross Margin % 46.15% 53.13% 50.00% 50.00% 50.00% 50.00% 50.00% 52.50% 50.00% 52.38% 50.00% 95.00%

Expenses

Payroll $5,800 $5,800 $5,800 $5,800 $5,800 $5,800 $5,800 $5,800 $5,800 $5,800 $5,800 $5,800 $5,800

Sales and Marketing and Other Expenses $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500

Depreciation $357 $357 $357 $357 $357 $357 $357 $357 $357 $357 $357 $357 $357

Leased Equipment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Utilities $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200

Insurance $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Rent $1,300 $1,300 $1,300 $1,300 $1,300 $1,300 $1,300 $1,300 $1,300 $1,300 $1,300 $1,300 $1,300

Payroll Taxes 15% $870 $870 $870 $870 $870 $870 $870 $870 $870 $870 $870 $870 $870

Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $

Pro Forma Cash Flow Table:

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

Cash Received

Cash Sales $5,200 $6,400 $7,600 $8,000 $8,400 $8,800 $8,000 $8,000 $8,800 $8,400 $8,400 $8,000

Cash from Receivables $0 $260 $7,860 $9,660 $11,420 $12,020 $12,620 $13,160 $12,000 $12,040 $13,180 $12,600

Subtotal Cash from Operations $5,200 $6,660 $15,460 $17,660 $19,820 $20,820 $20,620 $21,160 $20,800 $20,440 $21,580 $20,600

Additional Cash Received

Sales Tax, VAT, HST/GST Received 0.00% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

New Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

New Other Liabilities (interest-free) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

New Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Sales of Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Sales of Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

New Investment Received $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Subtotal Cash Received $5,200 $6,660 $15,460 $17,660 $19,820 $20,820 $20,620 $21,160 $20,800 $20,440 $21,580 $20,600

Expenditures

Expenditures from Operations

Cash Spending $5,800 $5,800 $5,800 $5,800 $5,800 $5,800 $5,800 $5,800 $5,800 $5,800 $5,800 $5,800 $5,800

Bill Payments $69 $2,104 $2,839 $3,134 $3,652 $14,500 $15,030 $12,185 $12,507 $16,104 $12,545 $14,195

Subtotal Spent on Operations $5,869 $7,904 $8,639 $8,934 $9,452 $20,300 $20,830 $17,985 $18,307 $21,904 $18,345 $19,995

Additional Cash Spent

Sales Tax, VAT, HST/GST Paid Out $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Principal Repayment of Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Other Liabilities Principal Repayment $0 $0 $0

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%

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