How to start a bike rental business: Getting started

by Eliisa L.

24 June 2020
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So, you’ve decided to open up a bike rental shop, or you’re at least thinking about it - great!
Starting any type of business requires a lot of preparation and set processes, and a rental shop is no exception.

In this blog series, we will help you through the different phases of running a rental shop: getting started, operating the shop, and scaling up. We are fortunate to have an experienced professional here to share the best practices and tips - Kuutti from Roll Outdoors

For the past three years, Roll Outdoors has offered guided mountain biking tours in the scenic arctic nature of Lapland. What started out as a small business owned by two friends, is nowadays run with the help of 8 employees in two locations, expanding their mostly tourist-based audience to a more local one.  

What you’ll need to get started: 

✔️ Customer base
✔️ Inventory 
✔️ Insurance
✔️ Shop space
✔️ Online Presence
✔️ Marketing

 

Finding your customer base 

Before setting shop and getting started, it’s important to make sure there is a potential audience and a demand for your service. This is called market research.

Kuutti pointed out, that if you like going to a certain spot and enjoy biking around a certain area, most likely there are other people who would enjoy it as well. With this being said, pay attention also to the location and how long the season is: you still want your business to be profitable. 

''Getting started with bike rentals is still quite easy since the sport is still in baby shoes in Finland compared to, let’s say, snowboarding and skiing. Since those sports already have a strong presence locally and huge resorts and chain shops running the industry, it’s significantly harder to make a breakthrough.''

Building your inventory

Kuutti pointed out that all of the staff members enjoy the sport, and when it comes to the equipment they offer, they don’t have anything that they themselves wouldn’t use. You wouldn’t offer something you don’t like to someone else - so why would rental bikes be any different?  

Where to get the bikes from?

For rental shops, bikes are usually bought in bigger batches straight from the manufacturer or the importer. Having deals with them usually means you get the bikes with a little discount, but it’s still not a cheap shopping trip. 

‘’It’s easy to get bad bikes for cheap, and since the purchase price is so high it emphasizes
the importance of proper maintenance of the bikes for the business to be in any way profitable.’’

It’s naive to think that it’s profitable business to buy an expensive bike, run it for a few seasons until it pays itself back, and then sell it for pennies. You have to take care of the bike in order for it to keep its value for reselling purposes. 

How to decide on what to buy? 

For the average Joe, the bike itself might last for years, maybe even a lifetime. In Roll Outdoors’ case, for example, a bike’s lifecycle is only one year. Currently Roll Outdoor has a fleet of a few dozen bikes, and it has pretty much steadily grown over the course of three years. In the next few years, however, they’re planning on exponentially growing their inventory. Because of the short lifespan of the bikes, the purchase decision criteria is also different, and there’s a lot to consider. 

One of the most important things Roll Outdoors takes into consideration while buying more equipment is maintenance, and spare parts to be exact: 

‘’While having a large number of different kinds of models, we try to make sure the bikes have a lot of the same parts. This makes getting spare parts and maintenance much easier and more cost-effective. ‘’ 

How to ensure that you get your money’s worth? 

A rental shop’s main source of revenue is the equipment, meaning if something happens to it, the shop loses money. While there is a possibility to insure the equipment in case of theft, for example, there’s really no other official ways to make sure your business doesn’t lose money in case something happens. This means the shop is taking the risk of losing money.

Nonetheless, Kuutti mentioned that usually people have good survival instincts when it comes to rental gear and the occurrence of customers not being willing to pay for the damage is quite rare. However, you can always play it safe by setting up deposits, especially with the more pro gear or having mandatory waivers that each customer has to sign.

‘’This [waivers] has usually led to the customers using the equipment in a more civil manner.
Also paying attention to safety and instructing on how to use the equipment correctly makes a huge difference. Paying a little bit of extra time in training pays off.’’ 

Finding your brick-and-mortar shop

Choosing the space for your rental shop is a tricky process and there’s a lot to consider. Here are some basics to start off with:

  • Location
    While choosing the area or location, keep in mind the accessibility of your shop. Is there enough parking, is it easy to get to, is it easy to find or even stumble across? Also, scout out areas that allow the customer to immediately partake in the sport without the need to move to other locations.
  • Competition
    Unless you’re 100% confident your offering is better than the neighbours’, you might want to stay away from super crowded areas with multiple shops. However, being located next to maybe one other shop isn’t necessarily a bad thing: you can save money in advertising and get better visibility from potential customers. Setting up shop next to an already active place confirms that there is a demand for your service, which you can play to your advantage.
  • Budget
    Seems like an obvious thing, but you need to have a clear understanding of how much you can afford to pay. This means taking into account utility bills, insurance for both the space and equipment, and some cushioning in case of some unexpected expenses. 
  • Space
    Needless to say, the rental shop space should be multi-functional: it should be inviting and easy to navigate around for both the customers and employees, should have enough space for all the equipment, and an area designated for equipment maintenance. 


The majority of the time entrepreneurs can’t afford to pay for unused space, but if your financial situation allows, invest in a bigger space straight from the bat: it’ll be much easier later while adding more equipment to your inventory. A bigger space is also nicer from the customer experience’s perspective.  

‘’When it comes to the space and shape of the shop, a classic one is a pipelined rental space: customers walk in through one door, deal with payments and registrations, receive their equipment, and exit through a different door.‘’

Online Presence 

''It's hard to imagine managing Roll Outdoors without any sort of online presence since 100% of our sales have always come from some form of an online platform, whether it would be via email or the booking system.

Especially after taking Rentle into use, there has been a significant increase in pre-bookings for this season, the majority of which have been paid in advance.''

Running any form of business without any sort of online presence seems impossible in the modern world. Having a website and even some social media channels is essential when it comes to reaching potential customers and turning them into recurring, buying customers. 

Check out our blog post on what makes a successful e-commerce website to get started. 

The ability to rent and pay in advance has been a new addition to Roll Outdoors, and they believe that online booking systems are the right way to go - especially since nowadays people are so used to the convenience of paying in advance using whatever device they want. 

Convenience is key when it comes to your target audience: the purchase experience should be as easy as possible, so the customer becomes a recurring face at your shop. Having an online platform is quintessential in making sure that happens.

In order to know what kind of systems or tools you need, you need to understand the differences between just an online booking system and rental software

Marketing

It’s important to establish a balanced marketing strategy straight from the beginning. It’s rare for people to find a business without any kind of marketing. However, your marketing should be in proportion to your ability to cater to your audience - you don’t want to over-promote yourself and end up not being able to meet the demand. 

‘’If you have a good product but no marketing, you won’t be able to make the sales you need to keep your business afloat. On the other hand, too much marketing is not necessarily good either, you still want to be able to keep up with the demand.’’ 

In order to find the right marketing strategy for your business, you need to know who your audience is and where to find them. In the next part of this series, we will go walk you through the processes, tools and ways to engage with your audience you need in order to successfully run your shop. 

Photos by Roll Outdoors



👉 Check out the second part of the series ''Running your operations''

👉 And third part of how to scale up and grow your business

Eliisa L.

The storyteller that spends her time in the studio, outdoors, or creating the best, most relevant content for rental shops.

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