How to buy a bike shop?
Click here to download a business sale agreement to purchase a bike shop.
Cycling is becoming increasingly popular in the UK. There are also better ranges of higher quality low-cost bikes available on the market to consumers. Further, cycling is not region-centric, nor is it only popular in the big cities. It is also popular in the urban areas as well as country residents.
Buying a bike shop, therefore, appears like a sound investment. But how do you go about finding the right bike shop and make most of the growing trend?
In this article, we will provide you with the information you need to buy a bike shop.
Choosing the right location
The foremost important consideration to prioritise in the hunt for the perfect bike shop is the location. You should find a location which gets a sufficient footfall with a proportion of it flowing towards the shop.
You should be thinking about your target audience. For instance, if you want to sell mountain bikes, it would make more sense to look for a shop in a countryside setting. On the other hand, if you want to sell children’s bikes, look for a bike shop in an area with many families nearby who can also afford to invest in bikes.
It will be significantly beneficial for you to research how many people live within a 5-mile radius of any bike shop you are interested in buying.
Also, consider the local demographic – are there a lot of cyclists in the area? Which towns, cities, or villages are included in that radius?
Check the competition
It is a must that you examine the other bike shops in the area you are considering. Do your research; find out what they are offering, their prices, and who their customers are.
You have to assess whether you can keep up with the competition. This will depend entirely on your business plan. To get you started, you should be thinking about the following:
- What will be your unique selling point?
- Who will be your target customer base?
- What will be your fixed and variable costs?
- What will be your estimated monthly profit margin?
- What will be your sales targets?
- What is your marketing plan?
Finding the perfect premises
Further, you must also ensure that the business you are interested in purchasing provides supplementary services. Bikes need regular maintenance and with the increasing number of users of bikes, offering such services provides a solid revenue stream to bike shop owners.
However, for this, you will need space big enough to work in. Additionally, you will also need an office area as well as a stock room to store goods.
Additionally, you want to make sure that you show off your stock through an attractive display. But you do not want to make it seem overwhelming, so check how much stock can fit in the shop.
An increasing number of bike shops now include cafe areas, or coffee machines, so that bikers can rest while waiting for a repair or on a Saturday evening bike ride. This is a great way to create additional revenue.
Licenses and permission
You need to make sure that the bike shop you are interested in buying meets all legal, health and safety requirements, particularly if you plan on providing bike maintenance services.
The process of due diligence is one that provides a thorough investigation into a proposed investment transaction. It means you check the investment worthiness, and assess the full claims made by the owner. This check is usually performed by a solicitor and accountant who act on behalf of the buyer. A large portion of due diligence will involve checking financial statements and accounts.
Click here to find more about due diligence.
If you buy wisely and do a thorough research of the background and potential of the business which attracts your interest, you will get immediate access to the existing base of customers and suppliers. This will ensure that you know what you are getting into.
To get you started, you will have to find out the following:
- existing insurance the business has
- existing business rates
- the fire escapes and fire alarms
- efficient rubbish disposal system
- reputation of the business
- what overheads and sales the management accounts show
- if the property is a leasehold, inspect the terms and length of the lease.
You need a solid contract
You, as the buyer, will have to produce the sale document. This agreement will have to cover the mechanics of the deal – what is being sold, where it is, how it is to be transferred, and so on. This is where warranties come in. Click here to download a business sale agreement if you are purchasing a bike shop.
Warranties which are legally binding promise as facts about the business, which provide information relating to the business. Click here to know about how warranties work and why they are important.
Other documents you need
Additionally, you may need assignment and novation agreements to transfer contracts the seller is a party to.
If company shares are being sold, then you will need directors service agreements, board minutes to document approvals to changes, and possibly, a new shareholders agreement and new articles of association.
We can help you find exactly what you need for your circumstances if you contact us and ask.
Please note that the information provided on this page:
- Does not provide a complete or authoritative statement of the law;
- Does not constitute legal advice by Net Lawman;
- Does not create a contractual relationship;
- Does not form part of any other advice, whether paid or free.
We would love to hear what you think about this article and how we could improve it. Please do let us know. However, we shan't be able to reply to your specific questions. If you have a question about a document, please contact us.
If you have noticed a bug or a mistake on this page, or just want to give us feedback, we'd love to know. Nothing is too small or too big. Send your message on this feedback page.