Looking to join the electric bike industry? Consider tours and rentals
Tuesday, November 11, 2014
With the ongoing growth of the electric bike industry in the U.S., more individuals are looking for ways to get involved in this space. For many, they see potential and opportunity for electric bikes to take off within their community, city or region.
I regularly get inquiries from folks who are looking to start a business by bringing and promoting electric bikes in their area. For those individuals, it represents an opportunity to capitalize on the growing industry, while being involved with a product they feel passionate about.
The challenge, however, lies with how exactly to get involved. One of the first routes that many explore is opening up an electric bike shop. Unfortunately, the high cost of opening up a retail space and time commitment required to manage it on a daily basis ends up being a dealbreaker for most. After all, developing a brick-and-mortar shop from scratch can easily run north of $100,000.
As such, if a traditional electric bike store requires more funds and resources than you are prepared to commit, another good option to consider is starting an electric bike tour-and-rental business.
This offers an opportunity to benefit from the growing industry while promoting and sharing electric bikes within your community or city. Most importantly, it is significantly easier to get up and running and requires a much smaller investment.
A tour-and-rental business may not require a full brick-and-mortar location to get started. There are many opportunities to partner up with other businesses (e.g. hotels) or simply provide delivery of bikes to the customers' location. While the latter is harder to scale in the long run, it's a great way to test the waters while keeping the investment low.
Tours and rentals are also an effective way to the cash flow going right away. Since your customers are dealing with smaller amounts of $40-120 per rental or a tour vs. $2,000-$3,000 for a bike purchase, you'll find that those customers are easier to attract and turnover.
Your largest upfront investment is composed of the initial inventory of bikes used for the service. While that does require a cash outlay upfront, most such companies tend to sell this inventory at the end of the season thus recuperating most of the initial cost.
Many electric bike brands also specialize in helping new companies get off the ground by providing additional essential services, such as:
- Online marketing support: With carefully designed ads on Google and other search engines, as well as a well-planned promotion on Groupon, LivingSocial and similar websites, it makes it easier to get customers in right away.
- Sale commissions: Although the core of your business may be tours or rentals, you can still benefit from any sales of bikes that are generated. If your electric bike supplier can dropship the bikes to the clients you bring through the door, it creates an important additional revenue stream without increasing your investment upfront.
If you are considering starting a new electric bike tour-and-rental business, there are a few things to consider first:
- Think about your market. Is there an adequate tourism infrastructure to provide a regular flow of prospects looking to explore your city or area?
- Tours vs. rentals, or both? Tours can provide a higher profit margin and can be more fun to operate, as they provide ample opportunity to connect with other folks in a relaxed, nonrushed environment. Rentals are typically lower priced, but can scale better as they require a more hands-off approach.
- Your supplier. Who will you work with to supply your inventory? Are their electric bikes suitable for rentals and tours? Can they help you get up and running?
If you are looking to get involved in the e-bike industry, an electric bike tour-and-rental concept can be an exciting lifestyle business that can allow you to get started quickly while minimizing your risk and investment.
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