People are seeking environmentally friendly transportation solutions as they become increasingly worried about climate change. Bikeshare is thriving in cities worldwide, with the global bike and scooter rental market expected to treble by 2027.
Starting a bike rental business, whether through a regular bike store or a bike-sharing app, might be an excellent way to give people with a fun, healthy, and environmentally friendly way to get about while riding the growing wave to success.
However, before you jump on board, you must first understand how to establish, advertise, and develop a business. You’ll also need to put in some effort and have a strong desire to succeed, but this step-by-step tutorial will teach you all you need to know to launch a successful bike rental company.
Step 1: Find Out if this is the Right Business for You?
Positives Vs Negatives
| Market Expansion – The industry is expanding at a breakneck pace. Earn roughly $50 per bike every day. Flexibility – If you pick bikeshare, you may run the business from home. | Market saturation – Established businesses such as Lime and Mobike dominate. Costly Maintenance – Bikes become damaged and need to be serviced on a regular basis. |
Industry Trends
- Market size and prior growth – The worldwide bike and scooter rental market was valued at $2.5 billion in 2019, following five years of rapid expansion.
- Forecasted growth – The worldwide bike and scooter rental business is expected to increase more than 400% to $10.1 billion by 2027.
Cost of Starting Bike Rental Business in 2023
A regular shop’s startup expenses range from $9,500 to $85,000 or more for a bikeshare business. The creation of the app is the most expensive part of the bikeshare system.
Investment Items:
- Bikes
- Helmets
- Bike locks and chains
Is Bike Rental Business in 2023 Profitable?
Bike rental costs around $60 per day. For a standard bike rental business, your profit margin should be around 60%.
In your first year or two, you may hire five bikes per day, 280 days per year, earning $84,000. Assuming a 60% margin, this equates to $50,000 in profit. As your business grows and recommendations come in, you may hire 15 bikes every day, 280 days per year. You would add employees at this point, cutting your profit margin to roughly 40%. You’d generate a terrific profit of more than $100,000 with an annual revenue of $252,000.
Entry Barriers
- The high start-up expenses of bikeshare
- Competing against huge bike rental businesses
Step 2: Create a Strategy
Identify a Gap
Examine the items, pricing, and customer reviews of local bike rental companies. You’re aiming to fill a market void. For example, perhaps the local market lacks a dependable bikeshare program or a business that rents traditional bikes, e-bikes, and scooters by the hour. This might kickstart your word-of-mouth marketing and immediately attract clients.
Solutions
- You must pick whether to hire bikes from a real place or through an app. You might provide standard bicycles, e-bikes, scooters, and other types of vehicles, as well as supplementary services like as excursions.
Pricing
Bike rentals cost an average of $60 per day. After rent and costs, your profit margin for a standard bike rental firm should be roughly 60%.
Once you’ve determined your expenses, you can use this profit margin calculator to figure out your mark-up and final pricing points. Keep in mind that the pricing you use at launch should be subject to modify if the market warrants it.
Target Market
Your target demographic for bikeshare will likely be younger. The market for a typical bike rental business will be vast. You should diversify your marketing efforts to include TikTok, Instagram, and Facebook.
Location
Choosing the best location for your bike rental company is critical to attracting consumers and maintaining its success. Look for a location with a large volume of foot traffic and a strong demand for outdoor activities, such as near parks, beaches, or tourist attractions.
Think about accessibility and convenience, and make sure the location is easily accessible by public transit or has enough of parking.
You may develop a lucrative and popular bike rental business that appeals to a diverse spectrum of clients by deliberately selecting the correct location. Commercial space for rent in your region may be found on sites like Craigslist, Crexi, and Instant Offices.
When selecting a business facility, you should consider the following guidelines:
- A central position that is easily accessible by public transportation
- Natural light and ventilation
- Lease that is flexible and may be extended as your business grows
- Ready-to-use area that requires no substantial upgrades or repairs.
Step 3: Write a Business Plan
Every company need a strategy. This will serve as a manual to help your business through the launch process while keeping you focused on your primary objectives. A business plan also helps potential partners and investors understand your company’s mission and vision:
- Executive Summary: A brief summary of the full business plan that should be produced when the plan is completed.
- Business Overview: A description of the organization, including its vision, mission, ownership, and corporate goals.
- Product and Services: Provide detailed descriptions of your offers.
- Market Analysis: Conduct a SWOT analysis to evaluate market trends such as variances in demand and development potential.
- Analyze your top rivals’ strengths and shortcomings, then produce a list of the benefits of your services.
- Sales and marketing: Investigate your company’s unique selling propositions (USPs) and create sales, marketing, and promotional plans.
- Management Team: A summary of the management team’s functions and professional backgrounds, as well as a corporate hierarchy.
- Procurement, office location, critical assets and equipment, and other logistical aspects are all part of your company’s operating strategy.
- Financial Plan: A three-year financial plan that includes initial expenses, a break-even analysis, profit and loss predictions, cash flow, and a balance sheet.
- Include any extra financial or business-related papers as an appendix.
Step 3: Create a Marketing Plan
Some of your customers will be passing by or online, but you should still engage in digital marketing! It is extremely vital for new businesses to spread the word since it increases consumer and brand recognition.
After you’ve launched your website, connect it to your social media profiles and vice versa. Because you can generate compelling posts that sell your items on social media, it is an excellent tool for promoting your business:
- Facebook: A fantastic paid advertising network that allows you to target certain demographics, such as males under the age of 50 in the Cleveland region.
- Instagram has the same advantages as Facebook, but with a different target demographic.
- Website: SEO will help your website rank higher in relevant search results, which is critical for driving sales. Make certain that your website’s calls to action are optimized. Experiment with the content, color, size, and position of calls to action, such as “Rent Now,” to see if you can increase purchases significantly.
- Google and Yelp: Getting listed on Yelp and Google My Business can be critical to creating awareness and consumers for businesses that rely on local clients.
Kickstart Marketing
Increase awareness of your services and promote your brand by utilizing your website, social media presence, and in-person events. Here are some ideas:
- Install eye-catching signage at your store and on your website.
- Make a film about your bike rentals. Use humour, and it may go viral
- Start a blog and post regularly. Change up your content and distribute it across numerous platforms.
- Paid social media advertisements – Select sites that will reach your target audience and run targeted ads.
- Pay-per-click marketing entails using Google AdWords to improve search engine performance. First, conduct keyword research.
- Pay people with significant social media followings to advertise your bike rentals via influencer marketing. Micro-influencers with lesser followings and cheaper prices are available.
- Create a podcast to interact with your consumers on a more personal level.
- Testimonials – Display consumer feedback on how your bike rentals aided them.