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Kustom Bikes - Business Plan

Welcome back to my blog! This post is for the second Action Project of the STEAM class, Social Entrepreneurship. In this second unit, Develop, we have been learning about what makes a business, especially social ones. A social enterprise is a business aimed at addressing a social cause where investors make investments with a vision of contributing to social welfare and not profit entirely. We focused heavily on analyzing the bits and pieces of businesses, such as their mission/vision statements, legal structures, marketing strategies, and more. For Field Experiences, we spoke with Eric Davis, the founder of Global Citizenship Experience Lab School (GCE). Having the chance to meet Eric was incredible because he was the founder of the school I have attended for 3 years, going on 4. It was interesting to hear his vision for the school and the importance creating GCE has had on his life. Leading up to the Action Project, we were asked to create as many business ideas as possible and eventually settle on a few that could become our AP. The business I came up with is Kustom Bikes, a small bike shop that makes and sells completely customized bicycles for people of all ages. This AP tasks us to create a business plan and a short pitch for our company of choice. I hope you enjoy reading and listening about Kustom Bikes!





Kustom Bikes

Business Plan

GHS


Kustom Bikes Shop, GHS, 2023


Pitch:



Executive Summary

Kustom Bikes is a small, local bike shop in Logan Square of Chicago. We take unwanted or unused bikes, restore them to masterpieces, and create unique custom bikes for our customers. We want riders to have a connection with their bicycle. Customers can choose from our selection of preassembled bikes or build one of their own from our stock of parts, from assorted makes and models, with the expertise of our staff of visionary mechanics and sales associates. Kustom Bikes also offers repair services and tune-ups to keep riders on the move and a respray service to finish it off. On top of our regular services, Kustom Bikes holds learning/training days to teach the cycling community about riding safely in the city, repairing bicycles, and the benefits biking has on our environment and health. The education programs are funded and supported by the shop's sales and at no extra cost to the customer. Our small shop makes the business agile to provide for each customer in a flexible manner that is more adaptable to the customer's requirements. Kustom Bikes looks to find the right bicycle for every rider or to-be rider that walks through our doors.

Social Good

Kustom Bikes looks to support sustainable transportation and bicycle safety through learning/training days. Our programs will teach aspiring bicyclists to ride bikes safely in urban environments, how to repair their bicycles, and the physical and environmental benefits of cycling. Kustom Bikes hopes to contribute to the United Nations Sustainable Development Goal 11: Sustainable Cities and Communities by promoting the use of and access to bicycles for safe and sustainable transportation for all.

Riding a bike in the city can be frightening, and the car-centric Chicago can seem just as uncomfortable, so knowing how to ride safely is essential. Like driving, every state has a different set of cyclist laws, so it's worth brushing up on the basics. We want to ensure that cyclists of all ages know how to navigate the city safely and lawfully to limit the number of accidents and keep biking enjoyable.

Knowing how to repair and maintain a bike is just as important. Whether a rider is on the road, trail, or at home, bicycles can take unexpected damages that will affect the cyclist's and bicycle's safety. The repair shop at Kustom Bikes will be able to offer any repair service but will also provide demonstrations and training for tire repair and basic tune-ups to keep every rider pedaling.

Biking can improve a rider's physical and mental health. Exercise is always good for an individual to add to the workday. Riding a bike in the city means avoiding traffic and getting to destinations quicker than cars. Traveling to places on a bike can reduce the number of car trips and create carbon emissions.

Mission/Vision

Mission Statement
We build and sell bicycles that riders feel a personal connection to. We exist to inform the community of safe biking practices and environmental health.

Vision Statement
We imagine a world where lifelong bikers in our communities are mindful of their environmental impact and promote social change.

Products/Services

Bike Parts to be Sold - Kustom Bikes has a large selection of used parts for any type of bicycle. Our sales associates will help each customer build their bike by speaking with them about what bike they visualize riding. Then, when an idea is set, we'll find the best parts to make the customer's dream bike a reality.

Below are the different part categories with a price range for parts in those categories:
  • Brakes: $10-$50
  • Drivetrain: $10-$100
  • Stems: $20-$100
  • Handlebars: $20-$100
  • Components: $10-$200
  • Wheels: $10-$200

Restored Fully Assembled Bikes - Kustom Bikes offers a selection of preassembled bicycles for customers of all ages that qualify for a purchase discount program. Young riders can come in to get a bike to learn on, and as they grow, their bike will grow with them. This helps us develop lifelong customer relationships in our community.

For all preassembled bikes, there is an up to 50% off trade-in deal.
  • Base prices for bikes:
    • Beginner kids: $40
    • Medium kids: $70-$100
    • Teens: $100-$150
    • Adults: $200-$300

With the trade-in, any customer (new or returning) who provides proof of purchase can bring in their old bike and, depending on the condition, receive up to 50% off the purchase price.
  • Lifelong customer scenario
    • The customer purchases the $40 beginner kids' bike.
    • When the customer returns to get a larger bike ($70), they can get up to $20 back when trading in the $40 bike, making the purchase a $50 bike if spent on the new bike.
    • When the customer returns to get a larger bike ($100) after buying the second bike for $50, they can get up to $25 back when trading it in, making the purchase a $75 bike if spent on the new bike.

Repair Service - Kustom Bikes can offer affordable repairs or tune-ups. We can complete most quick fixes same-day with a walk-in service. Replacing parts that are or aren't in stock may affect the cost and speed of the repair. 

The basic services a customer may require are:
  • Flat tire fix: $10
  • Brake Adjustment: $10/brake
  • Hub Adjustment: $10
  • Headset Adjustment: $10
  • Shifter/Derailleur Adjustment: $10 single, $20 both
  • Fender Installation: $15
  • Wheel Truing $10/wheel

Respray Service - Kustom Bikes does not offer an in-shop respray service but encourages it for riders interested in customizing their bikes even more. Thanks to a partnership with a local auto shop, Automotive Andres offers resprays for cars and Kustom Bikes bicycles, where we can offer exclusive pricing.

Legal Structures

Kustom Bikes is registered as an LLC (Limited Liability Company) to protect the owners from personal liability and avoid double taxation since all profits are passed directly to those owners to be taxed as personal income.

Target Audience

The target audience for Kustom Bikes is people of all ages and tax brackets, specifically cyclists who wish to build and ride a personalized bicycle or be involved in the biking community. We also look out for younger riders to ensure they can enjoy biking and ride safely and smartly.

In 2021, the number of bicycle commuters was 18,872. A 2017 statistic showed the percentage of bike sale shares by category (what percentage of riders use each type of bicycle). The results:
  • Mountain Bike: 24%
  • Hybrid/Cross: 21%
  • Road: 20%
  • Comfort: 15%
  • Youth: 13%
  • Cruiser: 6%
  • Recumbent/Tandem: 1%

With these numbers in mind, Kustom Bikes looks to provide for and meet the needs of as many riders as possible. We want to ensure we have the stock available to build all types of bikes, but we will also focus on the preassembled road, comfort, and cruiser bikes used more often in cities such as Chicago.

Marketing Plan

Kustom Bikes will market itself by participating in and hosting city bike drives and donation events and providing learning/training days for people of all ages to learn how to ride bikes and understand the importance of sustainable transportation.

Kustom bikes will communicate with potential and existing customers by:
  • Providing an email newsletter with company news, general information, and schedules.
  • Utilizing social media such as Instagram and Twitter to post about upcoming/past events, community members, and products.
  • Providing contact information for all services on the company website.

Management & Organizational Structure

Owner: Responsible for the long-term health and growth of the business.
  • Hiring/Firing of other positions
  • Contacting outside contractors and potential partners
  • Teach bicycle safety and sustainability classes
  • Keeps shop in good condition
  • Creation of business policies and practices

Manager: Responsible for daily operations in the shop.
  • Oversees the shop and work of Mechanics and Sales Associates
  • Handles pricing for retail and parts
  • Responsible for the implementation of business policies
  • Assists in teaching classes and sales

Mechanic: Responsible for the operation of repair services.
  • Repair customer's bikes
  • Assemble bikes to be sold
  • Restore bike parts
  • Determine estimates and best part replacement prices
  • Teach bike repair classes

Sales Associate: Responsible for assisting customers.
  • Help customers around the store
  • Find parts
  • Give part or bicycle recommendations
  • Organize shop products
  • Finalize sales and orders

Accounting & Investment

Expenses:
Startup Expenses - $65,900
  • LLC Fee - $150
  • Business Occupancy Loan - $250
  • Equipment - $3,500
  • Inventory - $50,000
  • Display - $9,000
  • Signage- $3,000

Yearly Expenses - $337,375
  • Fees - $75
  • Loan Repayment - $10,800 (for 10 years)
  • Payroll - $139,000
    • 1 Owner: $10,000 salary (for startup)
    • 1 Manager: $40,000 ($20/hr)
    • 2 Full-Time Mechanics: $40,000 ($20/hr)
    • 1 Full-Time Sales Associate: $34,000 ($17/hr)
    • 1 Part-Time Sales Associate: $15,000 ($15/hr)
  • Rent - $11.00/SF/YR or $154,000/YR
  • Utilities - $22,500
  • Miscellaneous - $21,000

Income Projection

Income Projection, GHS, 2023



I hope you enjoyed hearing about Kustom Bikes. Biking is a passion of mine, so creating a business that could attempt to engage a different audience in the biking community was fun to mess around with. This project was fun to work on, and I enjoyed creating all the details necessary to include in the business plan. I think a bike shop like Kustom Bikes could exist and be popular. Some Chicago shops also try to restore and repair bikes, but their models are centered around something other than exchanging parts from one bike to another to create something unique. With more time, I would have liked to ask the biking community if there was any interest in a shop like Kustom Bikes and also see what it would take to work with other bike shops in the city to build the community even more. Thank you for reading, and I hope to see you in the next post. 

Sources:

“2537 n Pulaski Rd, Chicago, IL 60639 - Industrial for Lease.” LoopNet, LoopNet, 27 Feb. 2023, https://www.loopnet.com/Listing/2537-N-Pulaski-Rd-Chicago-IL/25311867/.

“Bicycle Repairers.” U.S. Bureau of Labor Statistics, U.S. Bureau of Labor Statistics, 31 Mar. 2022, https://www.bls.gov/oes/current/oes493091.htm#st.

Bouhl, Greg. “How to Start a Bike Shop.” StartingYourBusiness.com, 22 Nov. 2022, https://startingyourbusiness.com/how-to-start-a-bike-shop/.

“Building and Zoning Business Occupancy.” Building and Zoning Business Occupancy, https://www.cookcountyil.gov/service/building-and-zoning-business-occupancy.

“Cycling for Sustainable Transport: Tips & Resources.” Bicycle Network, https://bicyclenetwork.com.au/tips-resources/inspiration/sustainable-transport/.

“European Auto Service, Repair: Logan Square, IL.” European Auto Service, Repair: Logan Square, IL, 15 Feb. 2023, https://andresautoservice.com/european-auto-service-logan-square/.

Fernando, Jason. “What Is an LLC? Limited Liability Company Structure and Benefits Defined.” Investopedia, Investopedia, 10 Feb. 2023, https://www.investopedia.com/terms/l/llc.asp.

Gaille, Brandon. “51 Bicycle Industry Statistics and Trends.” BrandonGaille.com, 30 May 2017, https://brandongaille.com/49-bicycle-industry-statistics-and-trends/.

“Giving Old Bikes New Life.” Workingbikes.org, 26 Jan. 2023, https://workingbikes.org/.

“Goal 11 | Department of Economic and Social Affairs.” United Nations, United Nations, https://sdgs.un.org/goals/goal11.

“It's Your World, Ride It!” Bicycle Warehouse, https://bicyclewarehouse.com/.

Klosowski, Thorin. “The Practical Guide to Biking in the City.” Lifehacker, 17 Dec. 2015, https://lifehacker.com/the-practical-guide-to-biking-in-the-city-1748424313.

“Limited Liability Company (LLC).” Internal Revenue Service, https://www.irs.gov/businesses/small-businesses-self-employed/limited-liability-company-llc.

“Retail Bicycle Shop Business Plan - Financial Plan.” Bplans, 10 June 2020, https://www.bplans.com/retail-bicycle-shop-business-plan/financial-plan/.

Salary.com, Site built by: “Bike Shop Manager Salary in Chicago, Illinois.” Salary.com, https://www.salary.com/research/salary/recruiting/bike-shop-manager-salary/chicago-il.

Shaddy, Wade. “Cyclist Demographics - Just Who Is Riding.” I Love Bicycling, 2 Apr. 2016, https://ilovebicycling.com/cyclist-demographics-just-who-is-riding/.

The State of Queensland Transport and Main Roads; “Benefits of Riding.” Queensland Government, CorporateName=The State of Queensland; Jurisdiction=Queensland, 26 Jan. 2020, https://www.qld.gov.au/transport/public/bicycle-riding/benefits-of-riding.

Worldwide Cyclery. “All Things Mountain Bikes. Shop / Watch / Read.” Worldwide Cyclery, https://www.worldwidecyclery.com/.

“Write Your Business Plan.” Write Your Business Plan, U.S Small Business Administration, https://www.sba.gov/business-guide/plan-your-business/write-your-business-plan. 

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