Cycleklops is a bicycle dealership selling and servicing a wide array of bicycles. We will locate on the corner of Main Street and Saybrook Road in the center of Ivoryton. Our shop will be the only independent bicycle dealership in our market area.

Purpose of the Plan
We are seeking a loan of $71,000 [in addition to our $19,000 investment] to finance the building lease, make renovations, purchase inventory and equipment, and provide working capital. Our projected profits will be adequate to repay the loan. Inventory, equipment, and personal assets will provide collateral to secure the loan.

Description of the Business
We will sell high quality bicycles to retail customers. We will also service the bicycles that we sell, and we will carry a large selection of bicycle accessories.

The business will be open six days a week from 10:00 a.m. to 6:00 p.m. on weekdays and from 10:00 a.m. to 8:00 p.m. on Saturdays. Demand for bicycles is seasonal. We will need to adjust our schedule as demand fluctuates, possibly scaling down operations for a month or so during the winter months.

We have an ideal location for the business, a 2500 square foot building in Ivoryton. Ivoryton's demographic characteristics and location make it an ideal place to open a bicycle shop. The town has a large population of children and young adults - - heavy users of bicycles. With a large college three miles away, we expect to attract a large number of college customers.

The building will need some renovations to make it suitable for our needs. We will partition the building into four areas: (1) showroom (1000 square feet); (2) office area (300 square feet); (3) service area (300 square feet); and (4) other space for restrooms and storage (900 square feet).

Market Analysis
The bicycle industry has benefited greatly from the public's increased concern for health and physical fitness. Bicycling is an excellent cardiovascular exercise. People realize the benefits of bicycling and they are flocking to the sport. In 2002, 12.5 million bicycles were sold in the United States - - an increase of almost 3 million over 2000. Sales of bicycles and bicycle accessories have reached $3.5 billion per year. 55 million adults and 45 million children in the United States own bicycles.

The Official Guide to Household Spending estimates that the average person in the United States spends approximately $14.50 per year on bicycles and bicycle accessories. With a population of 30,000 in our marketing area, Ivoryton spends roughly $435,000 a year on bicycling. We also expect to make sales to tourists and students at the college. State Department of Tourism data suggests that we could see even higher sales by 25-35% during the tourist season. This would bring the total spent on bicycles and bicycle accessories in the Ivoryton market area, along with tourists and students, to $594,000.

If we were to capture just 30% of market share, we would expect retail sales of $190,000 per year not including service income. This is an achievable goal given the lack of any serious competition.

We will stay on top of industry trends and customer demands. We will carry three different types of bicycles. We will sell a large number of mountain bikes as they accounted for 65% of all bicycles sold in the United States last year. The prices of these bicycles range from $200-$1200.

We will also sell hybrid bikes - - a cross between a mountain bike and a road bike. In 1995, hybrid bicycles accounted for 12% of all the bicycles sold in the United States. These models are for people who want to ride their bicycle on different types of terrain from asphalt roads to dirt trails. The prices of these bicycles range from $150-$1200.

We will also carry a wide selection of children's bicycles. Children's bicycles are the second largest portion of the bicycle market. The prices of these bicycles range from $125-$400.

There are three businesses in the Ivoryton area that will be directly competing with Cycleklops. However, Cycleklops will fill a unique niche in Ivoryton.

(1) Alex's Department Store -- This is a nationwide discount retailer that sells a limited selection of bicycle and bicycle accessories. They sell bicycles to individuals seeking a relatively inexpensive product. Alex’s does not service the bicycles they sell, and they do not offer instruction on the safe and proper use of bicycles. Alex's is located approximately four miles south of Cycleklops’ location.

(2) Sports & Things -- This is a retail chain specializing in sporting goods. They have a store three miles west of the Cycleklops’ location. This store will not pose a significant threat to us with only seven or eight bicycles in stock at any time. This store also does not service the bicycles they sell.

(3) The Cycle Shop -- This is an independent bicycle dealership located ten miles east of Ivoryton. The Cycle Shop is a family owned business established in 1979. They have less than thirty bicycles in stock and offer a limited selection of bicycle accessories. The Cycle Shop was slow to adapt to developments in bicycling. The Cycle Shop will not be a threat to the success of Cycleklops.

Marketing Strategy
Our location will provide us with excellent exposure. We will install signage to advertise our presence. We will spend approximately $200 a month to advertise on local radio stations, in the local newspaper, in the local business directory, and in the university newspaper. We will conduct bike maintenance and safety clinics at the local elementary schools. Each clinic will include a safety trial ride and obstacle course. Participants will all receive a "Cycleklops" safety patch. Town officials are enthusiastic about our proposal to sponsor a bicycle race at the annual "Ivoryton Days" festival held every July. Other promotions will include sponsoring riders in area road races. We will pay their entry fees in exchange for wearing Cycleklops T-shirts and insignias. Our grand opening ceremony is scheduled for March 1st. We will advertise our grand opening in the local media. We will raffle off a new mountain bike to attract a large crowd.

Owners / Management
Cycleklops is a Sole Proprietorship owned by Michael and Laurie Joyce.

Michael: I earned a Bachelor's degree in 1980 in Accounting. Following college, I worked for two years at Sports City, a sporting goods retail outlet. I gained valuable experience in customer service, marketing, and management. I will be responsible for store management, accounting, and marketing.

Laurie: I earned an Associate's Degree in Physical Fitness in 1981. I have worked on a part-time basis for the past three years as a cashier at a local discount retailer. I am an avid cyclist and I have competed in numerous bicycle races. I am very familiar with bicycles and bicycle accessories, safety issues, and bicycle repair and maintenance. I will be in charge of sales and bicycle service.

We believe that, with our combined knowledge and skills, we will be able to make this business a success. Our resumes are included as attachments to this Plan.

We will hire part-time employees to assist in sales and bicycle repair. We will hire part-time help for twenty to thirty hours per week during the busy season. We will hire students at the nearby college with starting pays ranging from $6.00-$7.50 per hour depending on an individual's skills and experience.

We will have approximately 120 bicycles in stock ranging in price from $125-$1200. We will carry a large selection of bicycle accessories. We will order additional bicycles and accessories as we experience demand for a particular product.

We will need specialized tools and equipment to service the bicycles. Laurie has significant experience in bicycle repair and already possesses a number of tools.

The business will need additional equipment including a cash register and some assorted supplies.

Renovations include: partitioning the building into four areas, installation of flooring in the showroom and service areas, replacing the existing heating system, installation of a counter and cash register; and, remodeling the restroom.

There is a strong demand for an independent bicycle dealership in Ivoryton. There are few stores in the area where an individual can purchase a bicycle. The stores that do sell bicycles have a limited selection, and they do not service the products that they sell. Cycleklops will not only sell bicycles and bicycle accessories, but we will service them as well. We believe that our promotional efforts and business location will generate the exposure necessary for us to achieve our sales goals, and we believe that our revenue and expense projections are realistic.

This case study is purely fictional. Neither Cycleklops nor the people and businesses it refers to actually exist. The Case Study was adapted from several case studies developed by Small Business Development Centers across the country associated with the SBA.


Risk Management

Risk Management Improves the Performance of a Small Business

“Thus, risk management is important to small business because it improves performance -- and, ultimately, the bottom line. For example,

Through effective contingency planning, a business can continue to serve its customers even after an adverse event affecting the business, its suppliers, its customers, or the entire community.

A strong quality-control program can improve a business' goods or services, reducing the potential for lawsuits and improving the business' competitive position in the marketplace.

An accident-prevention program can help ensure that a business' resources are put to their best possible use, instead of being diverted to make up for accident-related losses.

By carefully monitoring the market, a business can prepare to respond rapidly and effectively to changing needs.

Advance agreements with lenders for access to financial resources can reduce the likelihood of a cash-flow crisis.

Advice from professionals, such as accountants and attorneys, can improve a business' financial position and its compliance with legal and regulatory requirements.

By working with neighboring businesses, civic associations, chambers of commerce, and local governments to address community needs, a business can help to improve the overall business environment. “

From Risk Management for Small Business, by Claire Lee Reiss, J.D., A.R.M., Public Entity Risk Institute, Fairfax, Virginia 2004. Reproduced with permission. For copies of the full monograph, contact PERI. 11350 Random Hills Road, Suite 210, Fairfax, VA 22030. Telephone: 703-352-1846 Website:

Key Topics