Two is Better than One is a new tandem bicycle store opening in Santa Barbara, California. The owner, Samuel Burton, is requesting a $100,000 loan from The Bank of Santa Barbara to help stock the store with tandem and specialty bicycles to be purchased from a manufacturer. Burton has experience in business and cycling and believes there is a market for tandem bicycles in Santa Barbara among couples aged 18-35. The attached business plan provides details on Burton's goals, products and services, marketing strategy, and financial projections, which estimate the loan can be paid back within three years.
1. Burton1
Samuel Burton
3340 Marina Drive
Santa Barbara,CA 93101
November 24, 2013
Christopher Waterhedge
Loan Officer
The Bank of Santa Barbara
12 East Figueroa Street
Santa Barbara,CA 93101
Dear Mr. Waterhedge:
I am Samuel Burton owner and manager of “Two is Better than One” a new tandem bicycle store
opening in Santa Barbara. I come from Zionsville, Indiana and have just moved here with my family with
the goal to open up a tandem bicycle shop. I am an avid business student and a member of the DECA
business club. Cycling is a sport I have always been fascinated in and I believe it’s the sport of the future.
I work at McDonalds as a part time job right now and have been putting money into a savings account
for years. And with some help of some family members I will be able to put $10,000 toward the opening
of the tandem store. I would be requesting a loan of $100,000 to help me stock and supply my tandem
store to help it get on its feet. This is what I plan to request from The Bank of Santa Barbra, I am willing
to pay the loan back in 3 years plus 6% interest with my car as collateral.
Attached to this letter is a copy of my business plan so you can get a better sense of the store and what
your money and time will be turned into. I plan to be in contact back with you and the bank in a week and
halves time to discuss your thoughts and idea on the business plan and answer any questions you may
have about it. Then a week after I plan on contacting you about your overall decision on whether to
supply me with the loan I am seeking. If you have any questions before then please feel free to email me
at Twoisbetterthanone@bluebottle.com or call me on my cell at (317) 733-6391.
Thank you for your time and consideration in reading this letter and plan, and I’d love to hear from you
and the bank soon.
Sincerely,
Samuel Burton
Owner
Two is Better Than One
2. Burton2
Table of Contents
Executive Summery Page 3
Company History and Background Page 4
Goals And Objectives Page 5
Missionand Vision Statements Page 6
Products and Services Page 7-14
Form of Ownership Page 15-17
Marketing Page 18
Advertising Page 19
Promotions Page 20
Competition Chart Page 21
5 P’s of Marketing Page 22
Risk Statements Page 24
Startup costs Page 25
Projected Expenses Page 26
Projected Revenues Page 27
3. Burton3
A statement from the executive:
Two is better than one is going to be a tandem bicycle store in Santa Barbara, California.
The product we are focusing on is tandem bikes as well as bikes of exotic nature featuring
designs and aspects you may have never seen on a bike before. They will be bought through a
manufacturer or made in house out or recycled and donated bike parts. They will sell in the
$5000-$11000 price range which is a good price for the quality of tandems we will be offering.
We have many goals and objectives for our new business venture as many new business
owners would have of course. We want to have a website up selling products and promoting our
business within three months of this business plan being published and finalized. After we have
bought and found our space we plan to have our store front open and operational. I would like to
of hosted a couple if not more tandem races and events after being open for 2 years. This will be
ideal for promoting the business to people from out of town. Our goals for the future be to have
multiple store throughout California. And eventually I would like to branch out into the
neighboring states and across the west coast.
The market we are going into is one that is rapidly expanding but contains quite a bit of
risk. The bicycle industry is a seven billion dollar industry but with tandem sales only owning
2% of that money. With that being the case we look to target the 18-35 population of males and
females who are dating. We feel like that will be the best way to bring in more revenue to the
business because they are the ones that will enjoy riding together throughout Santa Barbara.
We’re filling the needs of Americans looking to get the new economically and financially
viable method of transportation. Those couples that are looking for a bike to be able to ride with
their significant other, and get that new fun way of exercise will be ideal to come to our store and
reap the benefits. We project low startup costs because there are few things we will only need to
buy once. Our monthly expenses will be high but due to the cost of the bikes the revenue should
bring a steady and healthy profit. We will be looking for about a $100,000 loan but as our
financial statements will show we should be able to pay this back in about a three year period.
4. Burton4
Company Description/ History + Background
The company is a tandem bicycle store named “Two is better than One”. The store will sell
tandem and exotic bicycles as well as providing an opportunity for die hard bike fanatics to meet
their other for half. We will also have people in store on hand to help people learn to ride their
new tandem providing lessons and tours around the area. I came up with the idea while riding my
bike around town and noticing that tandem and exotic bikes are not present in current bike riding
settings. I felt like because of Americans new desire to get healthy and provide a better and
healthier life for themselves as well as their families. I felt like a bike shop that sold tandem and
exotic would get people more interested in the idea of bike riding and make people see a whole
different side to the art of cycling. I personally have always been a favorite activity and way to
explore new places and gain a sense of independence. I’ve been working at McDonald’s since
May of 2013 and have shown myself as a good and hard worker. I can apply these skills to my
business in customer’s relations and management of people. I also can apply some fast thinking
and entrepreneurial skills I’ve learnt through DECA and classes like Business Foundations,
International Business, and Entrepreneurship. Two is Better than One is unique because were a
bike shop that refuses to sell your regular mountain or road bikes, we only want to sell tandem
and specialty bikes. You’re not going to find a store like mine anywhere else in the world I’ll
guarantee it. We don’t just want to sell you a bike we want to make a lasting relationship with
you not just as a customer but as a friend and part of our tandem family.
5. Burton5
Goals and objectives
Short Term
o Have a store front rented or bought within 8 months through research and careful
planning to find the perfect place
o Have a website up operational and selling items by 3 months acquiring the dot
com should be and easy and painless process
o Sell 20 tandem bikes within a year through promotional deals, opening sales, and
improved client relationships
Medium Term
o Have a fully stocked bike inventory within 1 and a half years should be easy to
obtain with an improved relationship with our manufacturer
o Sponsored my own tandem bike race in town within 2 Years just by gaining
support of the community and getting the OK from the city council this is pretty
easy.
o Turned $1,000 or more profit after 3 years of operation I really feel like with just
selling a few tandems a month this goal is really easy to meet for us we just need
to stick to our marketing strategy and stay on top of bill paying
Long Term
o Own a second tandem bike shop in California within 5 years with profit margins
growing and customer loyalty and word of mouth improved we should be able to
open a second store
o Own an out of state tandem shop within 10 years with two California stores and
the dot com aspect profit should be enough to fund an out of state store
6. Burton6
o Invent the 4 seat tandem bike within 11 years of being a tandem store this is just
an easy concept that should be attainable through careful planning and process
Mission Statement
The “Two is Better than One” official mission statement. We here at “Two is better than one”
believe that your tandem experience should be majestic and unaltered. We strive to give you the
purest most enjoyable tandem experience in the United States. We also want to provide the
proper training an expertise to get you riding tandem like the pros. We also offer singles nights
and tandem matchmaking to get you a new tandem partner that rides the same way you do. The
point of “Two is Better than One” is to expand people’s perception of the cycling game into a
new and more energetic 21st century view on cycling
Vision Statement
Our vision statement is that once we establish ourselves as a tandem bike store in California we
can then expand throughout the United States. But not only do we want to expand the store we
want to expand the art of tandem cycling. We plan to join up with other companies and host
tandem bike riding competitions. Through this people will become more aware of what tandem
cycling it will promote and gain attraction and customers to our store.
7. Burton7
Products/Services
We at Two is better than one offer a wide range of products and services in store and online. We
specialize in the Tandem bicycle industry but we do also like to offer up specialty and unique
bikes that the usual bikes shop would not offer their customers. All bikes are either shipped in or
made in house at our shop. The bikes made in house will be based off of plans bought by the
shop and the bikes we be used out of recycled and new bike parts .
8. Burton8
Our Bike Selection
Tandem Bicycles
o Primera
A benchmark for performance, value and durability. The Primera is
designed to take on any task from club rides to self-contained touring.
Mocha
o A top-performing tandem, the Mocha is built on 26” wheels for rugged versatility
and great fitting range for smaller riders.
Speedster
o Introduced in 1991, the Speedster has seen a lot of changes, but always kept its
popularity. Take an extended tour, enter your favorite century ride or just head for
the hills.
Equator
o The perfect answer for those who would rather not touch a chain or derailleur and
want the incredible reliability of Rohloff’s amazing Speedhub. Well equipped to
travel the globe.
Java
o Find out what’s out there beyond the asphalt grid when you take a Java into the
wilder parts of the globe. This great-fitting tandem with big tires can also perform
a more civilized role with a more conventionally-sized 700x32mm or larger tire.
Robusta
o The Robusta is fast and lightweight, yet ready for anything. Take it on a club ride
or an light tour with someone you’d like to take on your next adventure.
9. Burton9
Supremo
o Incredible lightness and speed for exhilarating road riding or racing in a superbly
hand built package.
Macchiato
o Jaw-dropping light weight and heart-pounding performance define the Macchiato.
New dual disc brake configuration and tapered headtube + exclusive new Co-
Motion tapered carbon tandem disc fork… it’s irresistible.
Periscope Scout
o Getting your little scout out bike riding with you has never been more fun. Family
friendly adjustability gets kids started young, yet adjusts for mom or dad to ride
with the little ones easily.
Periscope Torpedo
o This tandem is ideal for getting your young child started cycling early, yet can
stick with your family as your child grows and take you places you never
imagined.
Periscope Hammerhead
o You’re a racer, all your bikes are made to go fast, and you want to get your kid
into the action today.
PeriScope Trident
o The PeriScope Trident makes it easy to start your kids riding early, family style!
Super-friendly adjustability makes fitting everyone a snap
PeriScope Trident Convertible
10. Burton10
o For your growing family, there’s really nothing like the PeriScope Trident
Convertible. Get your kids started early, and invest in quality time together. Set it
up for the three of you, or convert it back to a tandem.
Multi-rider Triplets, Quads, Quints
o When you want your whole family or all of your friends on one big bike, we're
the people to build it for you
Carrera
o Outfitted with everything the modern tandem-riding pair dreams of, the Carrera is
fast and fun, yet ready to take on tour or pack into travel cases with the Co-Pilot
option.
Specialty Bikes:
The Transporter Cargo Bike
o 2A traditional large wheeled bike with a new twist the bike will have a truck bed
on the back used to help cyclists transport the things they need to and from where
they need to go.
The Warrior Recumbent Tadpole Racing
o It’s low, it’s lean, and it was designed for speed. The Warrior recumbent trike can
blast around corners and reach maximum highs speeds with its rear 26 inch wheel.
This high performance trike handles like a dream, with agile and responsive
steering placed in a comfortable position under the seat.
Overkill Phat chopper
11. Burton11
o The OverKill chopper has such radical proportions that you might think it was
originally a street chopper with the engine removed! The unique jackshaft
transmission system makes it easy to pedal this monster chopper like a regular
bicycle, and once you get rolling, the bike rides as smooth as any bike. Steering is
stable, and with such a phat rear tire, you won’t even need a kickstand.
The Auora Delta Racing trike
o Typically, high performance trikes have been of the tadpole type (two wheels in
the front), but the Aurora shatters this stereotype with its ultra low seating
position and amazing corning abilities. With our easy-to-ride delta trikes, you can
cycle your own racing delta trike using typical cycling techniques, and you can do
so at a fraction of the cost of an equivalent factory produced trike.
The Viking Recumbent Tandem
o The Viking tandem tadpole trike is designed for comfort, durability, and smooth
handling, so you can hit the trails or commute in traffic with your riding partner.
Having 36 or more speeds and a 20 inch rear wheel means that you can work
together to achieve a decent top speed or easily conquer that steep hill. Dual front
disc brakes and a rear caliper brake give the Viking tandem trike great stopping
power for a safe city ride.
The KyotoCruiser Sociable Delta Trike
o It’s nice to be able to tour a country road and have a conversation with your
partner or commute thought city traffic on a vehicle that takes its proper place on
the road. Working as a team, fairly high speeds are possible, and the KyotoCruiser
is highly stable and agile at any speed. The wide steering range allows this
12. Burton12
tandem trike to easily turn around on any city street or maneuver around traffic on
a crowded city street.
Other Experiences
o Tandem Tours
Night time and daytime tours of Santa Barbara
o Races
o Local sponsored and held tandem races
Our specialty bikes are made in house using new and recycled bike parts made by our plans
using specific specifications in house. Our tandems are bought through our official tandem
partner Co-Motion Cycles. All tandems made at Co-Motion are made to our specifications with
the parts that we want to be put on our bikes. All bikes sold at our shop are handmade to higher
specifications then other bikes which makes the experience for the rider to be that much more
smooth and enjoyable.
We want to sell you a tandem you and your family can use for life the good thing about all our
bikes is that they are built with interchangeable parts. So if you or your partner/family outgrow
the original tandem you bought you can bring it back to the shop and we will replace the parts
and change it into a more advanced bike for a discounted price. We also are the only bike
business around that will sell you these exotic and specialty bikes. Buying a bike through us
doesn’t only secure you a bike it’s your personal invitation into our tandem family which will
allow you to race and expand your reach throughout the tandem community and connect with
tandem fanatics around the town.
13. Burton13
We have some competition around the state of California but one powerhouse in the Californian
tandem business is Crank 2. The shop is located Pleasanton, California which is just outside San
Francisco. Lots of indirect competition in our area most of those shops they make the main
amount of their revenue off of individual bike sales and just sell a few tandems a year. We’re
looking to fill the need for a bike shop that’s more of a community then a bike shop we’re a shop
that’s trying to connect the cycling community together. As well as expand the tandem cycling
community throughout California.
The cycling industry is constantly expanding business because there is growing trend in
Americans in there attempts to try and get healthier. And with the soaring gas prices and growing
awareness with global warming people now more than ever want the new environmentally and
economically friendly way to travel. With this growing trend throughout the United States there
is a growing trend a lot of small mom and pop and big time bike stores have opened up
throughout the United States. Lots of indirect and direct competition either around the area or on
the internet, our direct competition is almost all online with multiple with multiple tandem
bicycle stores. With so many gaps in the market and areas for stores to reach the growth in the
tandem industry is huge. Once we have a hold on the market and some profit expanding will be
inevitable. We have the idea and potential to expand throughout the west coast. The trails and
people are there and ready for this product. Bicycle sales has averaged a steady and healthy 6.1
billion dollar industry from 2003 to 2012. And the NBDA (The National Bicycle Dealers
Administration) projects an expansion in sales to $7.3 billion in 2013. An estimated 39.3 million
Americans age 7 and older have said they ride a bike more than 6 times a week. This number is
14. Burton14
flat compared to the 1990’s when numbers were in the higher 50 million. Out of the 6.1 Billion
businesses tandem cycles only own 2% of the sales in the market. Which means the sale of
tandem bikes is a $122,000,000 industry and growing. As far as the technology trends in the bike
industry being able to adapt and change when new lightweight frames come into the market will
be key for us to stay successful as a business. Technology doesn’t really change that much in the
bike world but everyone wants to have the fastest bike so our goal needs to be to keep on top of
all the changes and make sure we are only selling the lightest and up to date frames. Experts
predict a growth in the coming years of the cycling industry including a projected $1 billion
growth from 2012 to 2013. With the obesity scare and other factors playing into Americans
growing demand for bikes not only as a recreational tool but also as a mean for transportation
makes the bicycle business a viable one in the future plans of America.
The location of any business is crucial in their overall success. We needed to find a location that
would give us an advantage to push our products to the public in the best and most convenient
way. So I chose to place the business in Santa Barbara this location is great for a bike business.
Santa Barbara is one of the northern most cities in the region known as southern California. It
offers a strategic location as being on the beach and being known as a town where cycling is
already big. Also being on the historic California 1 means lots of traffic will flow through the
city bringing in business.
15. Burton15
Form of Ownership
Two is better than one will operate as a sole proprietorship with me the owner putting
forth most of the funds and trying to secure loans. Advantages of me doing this are that I will be
able to control the business my way and the way I see fit. Also it’s a very simple type of legal
ownership to set up not a lot of paperwork or legal matters need to be met. I also only get taxed
once instead of a corporation who will get taxed twice. The drawbacks are that I will be putting
all this money up myself and will not have a person that could support me to fall back on. I also
have full liability meaning if the business fails they can come after my possessions and money
Management and staffing
I am not going to need that many people or staff to fill out my business.
The following positions will need to be filled:
Manger/Owner
o I will take this position in the business and I will run day to day operations of my
business and hire my employees
o I will eventually promote an employee I feel deserving of the position to assistant
manager so I don’t need to be in the shop every day
Mechanics
o I would like to have 3-4 mechanics on payroll with one or two being in the shop
during working hours
o Their duties will be as follows
Fix bikes
Create new bikes
16. Burton16
Provide kind and helpful tips to customers
o These people will need to of had a college education in some sort of engineering
or mechanical degree
Or have achieved an equal certificate from a trade or technical school
Sales Reps
o I’d like to have 4 reps on call with 2 in store
o Duties:
Sell bikes
Promote customer happiness
Be knowledgeable about the product
Help customers with any questions
Graduated high school and college (not required)
Have a love of bicycles
Cashier/Janitor/General Help
o I can keep as many as 6 of these people on my payroll with 1-2 working in shop
during hours
o Duties:
Checking customers out with their purchases
Cleaning up the shop and promoting a safe work environment
Making sure shelves are stocked and people are always greeted when they
walk in
These people can be anybody 17 years and up who can handle money and
promote the sport of cycling
17. Burton17
I’m going to hire from the local Santa Barbara population talk to people in local bike clubs to
work for me, which will help because these people know the biking community and know the
routes around town. I’m also not afraid or against hiring high school students because I know a
job during high school is the best way to promote a brighter future for a teen.
HR Policies
Policies are very simple as far as HR is concerned. Request 4 days off a month these
days will be without pay, sick days are allowed they will be unpaid and a call is required 24
hours in advance. A no call no show will be an automatic termination. Salaries for the mechanics
and managers will be set at a rough $25/hour plus added bonuses for good work. The sales rep
will be paid on commission but not only commission I don’t want there to be pressure during
sales I want our reps to build relationship with the customer, so therefor there will also be an
hourly wage of $12/hour for the reps plus 10% commission on every bike sold. Our times of
operation will be 9am-10pm every day except certain holidays.
18. Burton18
Marketing
Two is better than one ideal customer profile is:
18-35 Year old
Males and females
Couples
Outdoors people
Income of $65,000-200,000
Cycling fans
Easy going people
We’re focusing on the southern California market around the Santa Barbara/Oxnard area but not
limited to there. We plan to reach out up the California 1 to about as high as Santa Cruz as a
south as Los Angeles. I believe this reach is attainable for us because of our centralized and
pristine location on the California 1.
I’m going to enter the business at limited capacity. I want to trial run the business
in California and possibly online but this is not my final plan. I want to start expanding
throughout the west coast by the end of year 10. I feel like California was a great place to start
with all the trails and such, but there is so many untapped tourist and bike riding resources in the
west coast. And I don’t plan to sit back and just let those opportunities pass me.
19. Burton19
Advertising
Advertising is a key to any business. We plan on investing quite a bit of money into our
advertising fund. Investing into forms of advertising like billboards on the California 1 because
that is close and relevant to the location of the business, only drawback is that people are driving
by fast and don’t have all the attention to the sign. Also after a couple years I would like to
produce a television commercial that way I can get the advantage of sound and sight, only
drawback is it will cost a lot of money to buy the spot and put the commercial together. Also
would like to get some magazine and newspaper ads out, hopefully the local newspapers and Los
Angeles paper this way the locals will know about my business In the are only drawback of the
paper is that it has low circulation life due to the fact a new one comes out every day. The
magazine if I could get a spot in a cycling magazine that way I could get a long circulation and
the support of bike fans. Its just tough to get in sports and bike magazines without having
established a reputation but I plan within a year to a year and a half we should be able to secure a
spot in a magazine.
20. Burton20
Promotions
I would also like to capitalize on the idea of promotions and publicity. I plan to hold tandem
only races throughout the year where local business can get involved and promote their product
at the start and finish lines. The plan would not only benefit my business but will also gain
support of the local businesses which having a support group in a new city is something I would
love to capitalize. Within a few years I would like to host the first annual “Tandem Tour de Cali
Uno” which would be a bike race up the California 1 with multiple tandem and bicycle vendors
getting involved with that. Do to the fact that to keep costs down we make bikes with old bikes
I’m offering the “Onesie to Two Piece” trade up promotion where if you bring me your old one
seat bicycle you will get a 35% discount on a tandem and will get an early chance to buy the
exotic bike your old bike went to build at a discounted price. I also offer the “Singles Mingles”
nights where you come single and we will match you up with another single of the opposite (or
same) sex and let you go on one of our extravagant nighttime town tours. If we were successful
and hooked you up with that significant other you can come back to the store with her and get a
discounted tandem. These are just ways we plan to be more than just a bike shop we want to be
a part of the community that people respect and like to come to.
21. Burton21
Competition Chart
Competitor Price Location Strength Weakness Strategy Indirect
vs.
Direct
Crank 2 $$$ Pleaston, CA Low Price Poor
Location
Get a more
accessible
location
Direct
Santana Cycles $$$$ Online Online/quality
bikes
High price Lower price Direct
Bennys Bike
Shop
$ Rosemead,
CA
Low price
good location
Too cheap
no chance
for profit
Higher prices
become more
competitive
Direct
REI Store $$$ Santa
Barbara, CA
Good location
publicly
known
Poor
selection of
bikes
Need more
bikes
Indirect
Bicycle Bobs $$ Santa
Barbara, CA
Average
prices
friendly staff
Bad
location
New target
market/ location
Indirect
22. Burton22
The 5 P’s of Marketing
Price
o I want to price my products at a high mark due to the fact the bikes
are expensive and I need to pay commission to my employees I’m
looking to imply a 40% markup setting the average price of my
average tandem to about $6,000 this way I plan to maximize my
profit and market share.
Product
o The tandems themselves all show off multiple features ranging
from lightweight, speed, easy handseling, convertible, sit down,
and brake handling making sure the customer is able to recognize
these features as they walk in the stores will be key to securing the
sale because every tandem is different and the customers need to
know the differences between tandems
Place
o The tandems will have their frames hung around the store as well
as having some featured on the store floor this way we avoid
damage to the frames and bikes themselves but is also always a
pretty neat sight to see bikes hanging around the store it gives the
customer something to look at and turn their attention to while
visiting. Most of the exotic bikes will be displayed on the floor and
outside we do this because some people seeing these designs of the
bikes on the road will be intrigued and possibly bring in business.
23. Burton23
Also due to the size of the exotics they need to be displayed on the
floor and can’t be put on the wall.
Promotion
o We are using promotions a lot in all aspects of our business. We
center a lot of aspects of our business around our promotion
factors. I believe promotions in the community should be great for
us and we need to utilize them as much as we can. And we’re not
going to wait to impose are promotions were going to get them
going from the get go first day opening were going to be having an
opening sale. I want to get the public support and get them behind
my business so promotion plays key to that
24. Burton24
Financial Statements
Risk
Despite projected growth in the tandem industry it’s still an unstable and risky
business to go into. Especially when the bulk of your sales are coming from tandem bikes it’s
hard to predict how well you will do. I believe with the friendliest and the townie feel were
trying to bring to the business it should help us promote tandem. But if we do suffer and not do
as well as projected we are prepared to open the business up to selling bicycles. Obviously we do
not plan to do this but we are prepared to adapt to change if we have to.
Loan Security
I’m looking for a $100,000 loan from the bank, this money will help me put some money
down on the location I’m looking for and get me a nice supply of tandems up and ready to sell.
Also it will be enough to help me supply my store for opening. I will pay the bank their loan
back plus 6% interest in about 3 years making a monthly payment of $3,000 dollars. I will also
be putting forward $10,000 of my own money into the business and be putting my car up for
collateral. That way I have a skin in the game and how confident I am that my business will be a
successful and profitable one.
26. Burton26
Operating Costs (Per Month)
Item Cost
Payroll $12,600
Supplies (Bikes, Bike Parts, Water, Mechanic supplies) $25,000
Taxes (Income, Local Vendor Taxes, Bike Shop Taxes, Payroll) $2500
Advertisement Budget $1000
Insurance $300
Rent $5500
Bank Loan $3100
Total Per Month $50,000
27. Burton27
Revenues Per Month
Item Quantity Sold Price
Recreational Tandems X4 $7000
Racing Tandems X2 $9800
Family Tandems X3 $6300
Convertibles X1 $6000
Exotic Singles X6 $600
Exotic Recumbent X3 $1000
Exotic Tandem X1 $5000
Exotic Tandem Recumbent X1 $6900
Tandem Tours X50 $25
Night Time Tandem Dates X35 $30
Total $87,300