Bicycles are popular in South Africa which creates a need for bikes and related products and services. While we certainly don’t have a shortage of bike shops in SA, the key to this business is the right location.
People use bicycles for various purposes for recreation, transport. A bicycle like any vehicle needs to be serviced, parts need to be replaced and eventually if the rider requires it to be upgraded to a newer model.
To start this business you need a location to work from. People work from their garages, shipping containers, flea markets all the way to large retail outlets. While it is pretty obvious the bigger you go the more capital you require, this business can be extremely capital intensive if you are going with a large retail outlet.
There are three business models often employed in this industry: small, medium and large.
You work from home (garage), container, flea market doing repairs, services and selling spares and accessories. You do not sell bikes at all. This business will often not get high-end clients.
You work from a small shop doing repairs, services, and selling spares and accessories. You keep a few cheaper bikes on display for sale but offer catalogues that your clients can order more expensive bikes from. If a client wants a bike they can order it, by paying a deposit and paying the balance on collection. This will allow you to charge less markup on a bike as you are not holding stock, but has the drawback people not test driving or seeing the bike before they buy it, which might put some people off. You can focus on specialising in services using this model and even target high end clients, if you have a good reputation. These businesses are often found in or around main roads.
This is the typical mall bike shop, offers a few services and various spares and accessories but its main business is the retailing of new bikes. This is a capital intensive operation as bikes are not cheap and you will need to have various different kinds and models on your floor. While bikes here are often the most expensive there is good reason for this, floor space in malls are not cheap and you have outlaid the capital to purchase the bike. If you have taken a loan for your shop, that loan must be repaid with interest as well, so that has to be factored in as well.
Products & Services
Regardless of size products and services will be identical with a few exceptions here and there.
Products usually consist of accessories and spares:
Tubes, tyres, spanners, patch & solution kits, pumps, brake pads, locks, helmets, tube sealant / slime, co2 canisters, water bottles and cages, cycling tops, energy bars, sunglasses etc.
Repairs, installation of slime, servicing, straightening of wheels
Puncture repair service
While the smaller township based bike shops often offer this service, medium and large bike businesses rarely ever mess around with offering a puncture repair service – it is a waste of time. Either sell the person a patch and solution kit or sell them a new tube.
Where you are based will determine your target market, if you operate a small shop in a relatively poor area your primary clients will be people using their bikes for transport often to and from work. so you will offer them services and products that will match their needs. While on the other end operating a retail operation in a mall you will often get high-end clients, leisure riders, maybe doing a few races a year, here you will need higher components like groupsets and related equipment.
If you small and people in your area know about you, most of your clients will come via word of mouth. Of if you at a flea market people will see you when they pass you.
For a medium bike shop specialising more on labour than retail (because it’s expensive to hold stock), one of the best ways is to offer a comparative service cheaper than the big shops and use that to get clients. Your clientele can get a bike from a large shop, but the service they offer will be the same as yours but you can charge half the price. One way to get into the service business is to work with bike clubs either through a discount sponsorship or a free coupon, then they recommend their members to your shop.
For large businesses, the reason malls are so expensive is that you are guaranteed foot traffic, even people not going to a mall for a bicycle have to pass your shop, and they may want to use cycling as a way to lose weight or buy a child a bike for their birthday or Christmas.
Whichever business model you go with, this business is not going to make you rich quick. Competition is plenty, but starting a small business can help you put food on the table, medium sized you can live relatively comfortable by keeping your costs low and focus on selling your time (labour), maybe even grow it to selling more and more bikes and purchasing a property to call your own or build something you can sell to eventually set you up for retirement. On the large business side, you have to really know what you are doing, some of the large retail bike shops are so heavily geared with debt for bikes that is standing months on the floor and of top of that the crazy rentals that malls charge it gets quite stressful.
In general I would say opening a bike shop is like opening a golf shop, you must like the sport, be knowledgeable and really enjoy what you are doing. If not here is over 200 other business ideas for you to look at.
|Business Model||Service, Retail|