La Jolla Shores eBikes - LJSeB
Opportunity Overview
La Jolla Shores eBikes (LJSeB) @ Location A is the brainchild of Peter Burns, who created the market for moped rentals over 40 years ago.
Electric bikes, or eBikes are today’s healthier and green alternative to mopeds; the acceptance of electric bikes has passed the early adopter phase and has entered the rapid growth phase.
There are currently 2 electric bike rental shops in La Jolla, but neither of them is in La Jolla Shores, and neither of them are convenient enough to La Jolla Shores that people would naturally travel to them. While geographically separated by only a couple of miles, the Village of La Jolla and La Jolla Shores are distinctly different as far as the flow and demographic of the vacationing populace. La Jolla Shores far surpasses the Village of La Jolla with those vacationers seeking recreational pursuits, as opposed to shopping and dining out which the Village is known for.
Considering that the bike shop that is in the Village of La Jolla seems to be doing quite well (see http://sdnews.com/bookmark/27386627), the much higher recreational tourist flow in La Jolla Shores, including the hundreds each day that come for kayak rentals and tours, merits an even bigger success.
Everyday California (EC) has been in La Jolla Shores since 2008 and offers kayak, snorkel, stand up paddleboard and surfboard rentals as well as group tours. That single location does ~ $2M a year in rentals and tours, which works out to be between 20,000 ($100/renter) and 40,000 ($50/renter) kayak renters coming through their doors every year. In addition, EC’s apparel business generates an additional $500K in annual merchandise sales (offline and online). EC has a 20 year lease on this property, which has zoned bicycle racks in front of their storefront.
EC’s customers mirror the demographic of LJSeB renters, so the “pairing” with this high volume, non-competitive rental business site is ideal for LJSeB.
There are two other rental shops that are a similar size to EC in La Jolla Shores, and a handful of smaller operators. All of these shops are busy with customers in mid-April 2017, as this is being written. Memorial Day to Columbus Day is the height of La Jolla's season, and if the current business observed is any indication of what is to come, these rental and tour shops will all be overrun with customers in a few short weeks.
LJSeB has forged a relationship with the owners of Everyday California. The building EC occupies has unused space at the moment, and based on conversations between LJSeB and the EC owners, they would be happy to have LJSeB sub-leasing from them, and have offered LJSeB a reasonable monthly leasing price. For future reference let’s call this Location EC.
LJSeB has also forged a relationship with an eBike consultant with 20 years of industry experience who has validated the company’s intuition that this has the potential to be a great business. The company envisions leveraging this consultant’s support when it comes to selecting suppliers, insurance, spare parts, and when it comes to training and other industry specific issues.
Within a year, Location EC is conservatively projected to generate over $150,000 in profit with just 25 electric bikes, and that is before adding many additional “add-on” profit centers. Also, considering that by August of 2018 LJSeB will already have a 15 month history and will already own bikes, the highest startup cost item accounted for in the Financials will have already been acquired.
A one year Pro-Forma for LJSeB operating at Location EC is illustrated on the page titled Location EC of the attached financials.
Assuming a move to Location A in August 2018, a one year Pro-Forma for LJSeB operating at Location A is illustrated on the page titled Location A of the attached financials
There are other profit centers that have not been accounted for in these financials:
1. Selling new and used electric bikes
In-store
Online - huge opportunity to market to everyone in the US who is in market to buy an eBike right now. See www.InMarketLeadServices.com for more on how that will be accomplished.
2. Adding in a higher end category of eBikes where we can charge a premium for like you will see here: http://sandiegoflyrides.com/bike-rentals/
Note: This is not budgeted in year 1 because these bikes would have a higher fixed cost.
3. Self-Insurance service for other electric bike shops
4. Create a buying group for mom and pop electric bike shops
5. Renting higher end electric mountain bikes
6. Renting recumbent bikes
7. Renting roller blades
8. Renting Golf Carts
9. Scaling accessory and/or apparel sales. Clever sourcing of accessories can minimize costs. See this example, which is owned by a business associate of LJSeB: https://perfectlifesports.com/collections/bicycle-helmets/products/aidy-ultralight-professional-bicycle-cycling-helmet
10. Scale to other desirable locations
Company owned vs Franchise
US and International
Exactly 40 years ago (next month), I opened up the first moped rental operation in the United States on Nantucket Island. Starting with 15 mopeds costing $5,000, I scaled that operation to 40 mopeds, earning $55,000 in 10 weeks.
That first shop started my "empire" of 100 recreational rental shops (mopeds, bicycles, jet skis, roller blades, etc.), earning millions of dollars over the next twenty years. A collage showing a bit of social proof can be found here: https://drive.google.com/file/d/0B4CTAhZvfj0UOHdJTEp5a3RNWEFIeHNKbkNNWEx2ZklTZUln/view?usp=sharing).
I moved to La Jolla Shores a scant few weeks ago and I observed the uncanny similarities between my new home and the many resort locations of my former rental locations over the years. Even though my ownership and operation of the moped rental businesses ended over two decades ago, I've always been aware of opportunities that present themselves. For the past twenty years, I've observed the stops and starts of the electric bike. From Lee Iaccoca's venture in the field, to the modern day versions of sleeker and more powerful eBikes...the product and its acceptability by the bicycle riding public is finally ready to reach the mainstream.
Each day, while having my latte on the main street of La Jolla Shores, I observe the thriving industry of kayak rentals and tours… monopolized by three main vendors and a handful of smaller operators. The numbers of kayak customers, outfitted in swimwear and safety vests that walk by me each day heading to the ocean, numbers in the scores and likely hundreds. Like my former moped rental summer season on Nantucket from Memorial Day to Columbus Day, the height of La Jolla's season is the same...so if the current business observed is any indication of what is to come...the kayak rentals and tours businesses will be overrun with customers in a few short weeks.
Quite by chance, I read I read a story in the local La Jolla newspaper that shared the success of an eBike retail and rental operation in the Village of La Jolla. (the La Jolla Cove area). Even though, geographically separated by only a couple of miles, the Village and La Jolla Shores are distinctly different when it comes to the flow and demographic of the vacationing populace. La Jolla Shores far surpasses the Village of La Jolla with those vacationers seeking recreational pursuits, versus shopping and dining out which are more akin to the Village. In my mind, if a Village of La Jolla based eBike rental operation is deemed very successful by the press, than the much higher fitness oriented tourist count of La Jolla Shores should facilitate an even bigger success.
(http://sdnews.com/bookmark/27386627)
With my many years of experience in scouting sites for my former rental businesses, it just made the most sense to locate our proposed La Jolla Shores eBike rental shop in one of the high profile kayak rental and tour business. In so doing, we can share the premium space while cross-marketing to each other's client base. I negotiated a deal with one of the largest such kayak operators, which is positioned at a key location on La Jolla Shores’ main street and generates over $2 million in rental revenue from an estimated 40,000 customers per year. Those customers mirror the demographic projected for eBike renters, so the match up in this high volume, non-competitive rental business site seems perfect for our new venture.
(See proposed location at https://www.everydaycalifornia.com/)
I have been in touch with the best manufactures of eBikes, who will provide industry information (especially in the rental of eBikes) and a ready source of spare parts and suggested retail inventories etc. I've been in touch with a 20 year veteran of the eBike industry who now runs an eBike consulting firm about the bigger picture that I envision will act as a resource to secure the best eBikes for our purposes at the best prices; as well as assist us in securing the proper insurance et al.
Finally, my colleague "ran the projections" of this proto-type rental shop to open by mid-May here in La Jolla Shores. These projections are included on the Location EC page of the attached financials.
In a nutshell, for a $75,000 start-up budget, I plan to fast track the start up of an eBike rental operation, conservatively earning a projected $150K profit in the first year, based upon my "best conservative guesstimate" of revenue and costs...all calculated from a 20 history in the recreational rental field.
I have a working manager lined up and it will be no problem acquiring a couple of additional workers and a mechanic to take care of the initial 25 eBike fleet. Additional revenue generators like eBike tours can be added as can additional rental equipment like traditional bicycles, as needed.
When this 1st prototype shops proves successful, it is my intention to replicate the eBike rental business like I did with mopeds...forty years ago. The opportunity to move our first, prototype store to Location A would put us in an ideal spot to attract all La Jolla Shores visitors. Conservative financials show that in Location A we can more than double our profits relative to Location EC in our first year there, as seen on the attached financials.
Peter J. Burns, III
Entrepreneur and Founder