Sports Equipment Rental Business Plan
Velocipede/Snowpede Borrow Bank (VS) is a Eugene, OR-based rental company specializing in bicycles and snowshoes. VS will offer road, mountain, and tandem bicycles for rent, as well as various sizes of snowshoes. Bicycles will generate the majority of revenue from April to November. In the rainy season and when snow covers the Cascade Mountains, the focus will shift from bicycles to snowshoes. Velocipede/Snowpede will provide customers with detailed maps/trip logs to guide them along scenic hiking and biking trails. Eugene’s thriving cycling community and proximity to the Cascade Mt. range make it an ideal location for these activities.
While Eugene already has several bicycle and snowshoe rental stores, their primary business is retail, with rentals as a secondary offering. VS will differentiate itself through exceptional customer service, aiming to steadily gain market share. The company expects to become profitable by month nine and achieve $150,000 in revenue by year two.
Contents
1.1 Objectives
The objectives for the first three years include:
- To create a service-based company that exceeds customer expectations.
- To increase the number of clients served by 20% per year through superior performance.
- To develop a sustainable start-up business funded by its own cash flow.
1.2 Mission
Velocipede/Snowpede Borrow Bank’s mission is to provide customers with bicycle and snowshoe rentals, as well as suggested journeys. We exist to attract and maintain customers. When we adhere to this maxim, everything else will fall into place. Our services will exceed customer expectations.
Company Summary
Velocipede/Snowpede Borrow Bank is a bicycle rental company operating in Eugene, OR. VS rents road bikes, mountain bikes, and tandems (two-person bicycles), as well as snowshoes. In addition to providing rental equipment, VS offers detailed maps indicating suggested rides/hikes. While other companies offer rentals, none have as large a selection or as detailed a trail system.
2.1 Start-up Summary
Velocipede/Snowpede Borrow Bank will incur the following start-up costs:
- Three tandems, seven road bikes, 10 mountain bikes (five rigid bikes, five suspension bikes). GT will manufacture the road and mountain bicycles. KHS will manufacture the tandems.
- Two repair stands and the necessary tools, manufactured by Park.
- Twenty pairs of snowshoes of assorted sizes (different sizes have different weight and floatation capacities for varying depths of snow).
- Twenty pairs of trekking poles.
- A computer with a POS terminal and software.
- A back-end computer with CD-RW and printer.
- Fax machine and copier.
- Counters and shelving units.
- Office desk and chair.
Please note that the following items, considered long-term assets, will be depreciated using the G.A.A.P.-approved straight-line depreciation method.
Velocipede/Snowpede Borrow Bank is a privately held Oregon corporation owned by Dan Jalopee. They offer rental services for bicycles, snowshoes, and poles. Additionally, they provide detailed maps for suggested rides and hikes in the area. In Eugene, there are many challenging road rides for cyclists and plenty of off-road areas for mountain bikers. To discourage theft, a large deposit or a hold on funds with a credit card is required. Eugene also has great areas for snowshoeing near the roads that lead up into the Cascades.
Velocipede/Snowpede Borrow Bank has two main customer groups: local customers and tourists. While their advertising will target both groups, they will specifically focus on reaching tourists. They face competition from local retail outlets that also offer rentals but lack the customer service support provided by Velocipede/Snowpede Borrow Bank.
The market segmentation for Velocipede/Snowpede Borrow Bank includes tourists and locals. Tourists passing through Eugene who are cycling enthusiasts or want to try cycling are part of their target market. Locals in Eugene who are interested in cycling or snowshoeing and prefer renting equipment instead of owning it make up a larger percentage of customers for snowshoe rentals than bicycle rentals.
| Market Analysis | |||||||
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |||
| Potential Customers | Growth | CAGR | |||||
| Tourists | 9% | 35,645 | 38,853 | 42,350 | 46,162 | 50,317 | 9.00% |
| Locals | 9% | 39,854 | 43,441 | 47,351 | 51,613 | 56,258 | 9.00% |
| Other | 0% | 0 | 0 | 0 | 0 | 0 | 0.00% |
| Total | 9.00% | 75,499 | 82,294 | 89,701 | 97,775 | 106,575 | 9.00% |
4.2 Target Market Segment Strategy
Velocipede/Snowpede Borrow Bank will have different strategies for communicating with various target groups. Tourists will be targeted through advertisements in Chamber of Commerce publications specifically for visitors.
Locals will be targeted through advertisements in the local outdoor free-journal that tracks outdoor activities in Eugene. In addition to these ads, VS will have an ad in the Yellow Pages and provide information on the website.
4.2.1 Competition and Buying Patterns
Currently, there are three retail bicycle shops and four retailers that rent snowshoes.
Customers typically call different bicycle/outdoor shops to ask about equipment rentals. Convenience and availability are their main concerns.
Strategy and Implementation Summary
All employees will be trained in customer service to maintain a competitive edge.
5.1 Competitive Edge
VS’s competitive advantage is excellent customer service. This commitment to service begins with answering any questions during the initial phone inquiry. VS goes beyond other rental places by fully explaining the features of the equipment. Employees are trained to ensure that customers leave feeling well-informed and impressed.
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5.2 Sales Strategy
The sales strategy of VS is to convert information gatherers into customers through outstanding customer attention. The majority of customers who visit the shop will end up renting equipment due to the relatively low cost. Impressions are formed during phone inquiries, where employees use a basic level of tone and helpfulness. Additional perks like detailed maps of local rides/hikes are also communicated to customers.
All employees will be trained and monitored to ensure the proper level of service is provided to customers.
5.2.1 Sales Forecast
The initial month will be used for store setup and employee training. Sales will primarily come from snowshoe rentals during the second month, with incremental increases each month. Revenue will shift from snowshoes to bicycles in April and back in November.
Winter months will not be as busy as the summer months for bicycle rentals due to the popularity of bicycles and higher rental prices. Renting snowshoes helps balance the seasonal nature of the business and requires minimal maintenance.
| Sales Forecast | |||
| Year 1 | Year 2 | Year 3 | |
| Sales | |||
| Tourists | $65,044 | $96,547 | $102,458 |
| Locals | $35,800 | $54,545 | $59,014 |
| Total Sales | $100,844 | $151,092 | $161,472 |
| Direct Cost of Sales | Year 1 | Year 2 | Year 3 |
| Tourists | $3,252 | $4,827 | $5,123 |
| Locals | $1,790 | $2,727 | $2,951 |
| Subtotal Direct Cost of Sales | $5,042 | $7,555 | $8,074 |
5.3 Milestones
VS will have several milestones early on:
- Business plan completion. This will be done as a roadmap for the organization; It will be an indispensable tool for the ongoing performance and improvement of the company.
- Store set up.
- Training programs developed.
- Profitability.
| Milestones | |||||
| Milestone | Start Date | End Date | Budget | Manager | Department |
| Business plan completion | 1/1/2001 | 2/1/2001 | $0 | ABC | Marketing |
| Store set up | 1/1/2001 | 2/1/2001 | $0 | ABC | Department |
| Training programs developed | 1/1/2001 | 2/1/2001 | $0 | ABC | Department |
| Profitability | 1/1/2001 | 10/1/2001 | $0 | ABC | Department |
| Totals | $0 | ||||
Management Summary
Dan Jalopee received his Bachelor of Arts from Colorado College. This is also where he had his first experience in the bike industry, working as a mechanic in a local shop.
After graduation, Dan was unsure about his future. He planned to go to graduate school since his philosophy major was not very helpful in securing a job. However, he was offered a full-time position at the bicycle shop and accepted it. Within four months, he was promoted to manager and handled all aspects of the company. Working at the bike shop allowed Dan to take a few months off during the winter to travel. He discovered snowshoe racing and received sponsorship from Redfeather snowshoes. This sponsorship led to a good working relationship with Redfeather, which he would eventually leverage for Velocipede/Snowpede.
After managing the bicycle shop for three years, Dan decided to open his own business. He chose the rental business, focusing on bicycles with snowshoes in the winter, and selected Eugene due to its cycling reputation.
6.1 Personnel Plan
Dan will work full time for VS. In the second month, he will hire one full-time employee to help in the store. This employee will handle store-front operations and prepare bicycles for the upcoming season. In April, Dan will hire two additional seasonal employees, who will be released at the beginning of November.
| Personnel Plan | |||
| Year 1 | Year 2 | Year 3 | |
| Dan | $36,000 | $36,000 | $36,000 |
| Full-time employee | $16,500 | $18,000 | $18,000 |
| Full-time employee | $12,000 | $12,000 | $12,000 |
| Full-time employee | $12,000 | $12,000 | $12,000 |
| Total People | 2 | 4 | 4 |
| Total Payroll | $76,500 | $78,000 | $78,000 |
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