Business-Plan of the Bike Rental Chain

Dream Wheels

Executive Summary

Dream Wheels Ltd. is seeking for an investment loan of 243.618,00 PLN (65.842,70 EUR) in order to start a bike rental outlet chain. The private equity of the associates is 110.000,00 PLN , 55.000,00 PLN from each partner. The total assets of Dream Wheels is to be 353.618,00 PLN (85.734,59 EUR).

Dream Wheels will generate revenues of 352.260,00 PLN (95.205,41 EUR) in the first year. with a final profit result of 31.758,13 PLN (8.583,27 EUR). Wages of the partners are included as expenditure so the profit will build up a better equity basis for expansion.

This Business-Plan shows our strategy, market analysis and financial forecast and analysis.

The Company

The Company is to be situated in one of the most attractive tourism regions of Poland at the Hel Cost at the Baltic Sea. Dream Wheels Ltd. is to be a bike rental outlet chain operating at 16 sales points located at 15 campsites and 1 city rental outlet. Liisa Huotari and Steven Ryckebosch are the associates of Dream wheels and fix staff at the same time. Both of the partners will make sure that the bikes are in a good condition by checking the sales points regularly. Repairing work will be done by the partners as well as advertisment and administration duties. Dream Wheels will hire 5 persons as season staff in the period from middle of april till middle of september. This period is the operating period of Dream wheels.

The Product

Dream Wheels basic service is the offer of bike rental for tourists spending their holiday on campsites. There will be the opportunity to rent bikes for the whole day or only for a few hours a day. Furthermore we will offer guided tours by bike taxi in the wonderful historical city of Gdansk at the Baltic Sea. Beside these two core services we will also organize bike camps for children as well as team building adventure mountain bike tours.

Corporate Strategy

Sales and Profit Forecast shows that our strategy is well chosen. The diversification of the rental placements is excellent to reach our customers directly. Furthermore we will expand into the southern mountain area and the eastern Poland Masuren area which, with its beautiful landscapes, is ideal for bike tourism.

Financial Projections

Net profit is projected at 31.758,13 PLN (8.583,27 EUR). Dividend of partners is already included in wages expenditure so a better equity basis will be built up for expansion. Cash-Flow situation will be positive in the first year with 81.656,89 PLN. Also the following years will show a positive Cash-Flow. ROI will be 16% in the first year rising up to 23% in y. 5.

CONTENTS:

1 Current information 4

1.1 Basic corporate information 4

1.2 Vision, mission, values 4

1.3 Business organization 4

1.4 Products and services 5

1.5 Core competence 6

2 External environment 6

2.1 The economy 6

2.2 Market analysis 6

2.3 Competitor analysis / Competitive advantage 7

3 Strategy and plans 7

3.1 Objectives 7

3.2 Business strategy/ Product strategy 9

4 Financial analysis 9

4.1 Sales Forecast 9

4.2 Capital spending 9

4.3 Operating Costs 10

4.4 Profit and Lost Forecast and Profitability 10

4.5 Balance sheet 10

4.6 Cash flow and funding requirements 10

4.7 Expansion 10

5 Risk analysis 10

5.1 Swot 11

5.2 Limiting factors 11

5.3 Critical success factor 11

5.4 Specific risks and their solutions 11

1 Current information

We are starting our Business in Poland at the Hel-coast at the Baltic Sea. There we will rent bicycles. In the city of Gdansk we will offer our customers guided city-tours in bike taxis. Our vision is to expand our business in southern Poland.

1.1 Basic corporate information

Basic corporate information

Company name: Dream Wheels

Status: Limited company

Equity Capital: 110.000 PLN

Head Office: Skandynawska street

84-120 Wladyslawowo

1.2 Vision, mission, values

Vision

Dream Wheels is determined to become a major player on the Polish two wheel vehicle rental services market. We want to achieve this by being present in the most important tourist locations. Also we want people to almost instinctively come to us when they want to visit a city by bicycle or do mountain-biking. We want to be top of mind in bicycling tourism.

Mission

Dream Wheels mission is to provide unique biking experiences to our customers.

By five years we want to be present at the Hel coast region as well as in the southern/mountain region and the Masuren National Parks in eastern Poland. In the above mentioned locations we want to obtain a dominant market position within four years. We aim for a market share of 10%.

During the first year our goal is to obtain 21.720 rents. By the fifth year this number should increase by 36 % to 29.463 because of the expansion.

Values

We will operate within strict legal, environmental and ethical guidelines. We will nurture our employees and put everything to work to create a pleasant working area for them.

1.3 Business organization

Our management team consists out of two professionals with appropriate qualifications, solid experience and complementary skills. They have previously worked together on an intensive program in Emmen (Holland) where they have shown their ability to work together and cope with problems.

In the first years we will be the fix staff responsible for administration and repairing. In the season and holiday time we will employ 5 students as tourist guides for the bike taxis.

Seasonal organization

During the winter period we repair and/or replace damaged bikes. We also look for new biking routes. If desired groups can still contact us if they wish to organize some teambuilding event or a bicycle trip.

During the season we offer a variety of (rental) services, which are stated in the section Products and Services.

1.4 Products and services

• City & Mountain Bike rental at the Hel Coast

We offer a bicycle rental service in the Hel coast region at 15 service points, which are situated at camping sites and hotels.

• Mountain Bike rental in mountain region

We will offer a mountain bike rental service in the southern/mountain region in Poland starting in 2009. We will have 5 smaller service points and 1 bigger service point there, which will be situated at camping sites and hotels.

• City & Mountain Bike rental in eastern Poland

We will offer a bicycle and mountain bike rental service in the Masuren National Parks in eastern Poland proximately starting in 2012. These 5 service points will be situated at camping sites and hotels.

• Guided City Tours at Gdansk

Next to the standard rental service, we also offer a tour by bike taxi. This service is to be situated in the city of Gdansk at the Baltic Sea. Routes will be customized to the wishes of our customers.

• Bicycle Routes/Tours

We offer the possibility to explore the region by routes weve drawn out or go on a long bicycle trip, spread over several days. People can go from one location/city to another by the routes weve drawn out. Lunch, dinner and sleeping arrangements are included in this package.

• Corporate Teambuilding activities

To answer the increasing demand of team building events, we offer a special intense mountain bike journey with instructors as an adventure for participating employees or students/groups.

Children adventure camp

We will offer a special vacation program for children with bike riding tours and teaching how to drive bike in the traffic in order to make bicycling safe for the youngsters.

1.5 Core competence

We are one of the first enterprises in this growing market. During the last years the tourist market in Poland is steadily growing, as well as the interest in nature thus presenting a great opportunity for our company. We can react flexible, because we are a rather small company. We all can work in different ranges of our company because of our knowledge. It is possible for us to organize every bicycle event.

A unique factor is that we do not organize standard programs for the tourists. We want to realize their dreams and wishes, so we customize a program especially for one customer group.

2 External environment

During the last years Poland is a growing market and very attractive for companies and tourists. The prices are cheaper than in most other European countries, because of this situation many companies are interest in starting a business there.

2.1 The economy

Poland today stands out as one of the most successful and open transition economies. The privatization of small and medium state-owned companies and a liberal law on establishing new firms marked the rapid development of a private sector now responsible for 70% of economic activity.

GDP: purchasing power parity$489.3 billion (2005 est.)

GDP growth: 3.3% (2005 est.)

GDPper capita: $12,700 (2005 est.)

Source: Official Polish Statistics Office

2.2 Market analysis

During the year 2005 there were

• 64.6 million arrivals (4.3% more than in 2004)

• about 15.2 million tourist arrivals (6.4% more)
• In 2004 61.9 million foreigners entered Polish borders by 18.8% more than in 2003.

The beginning of arrivals rising up is on March and it is rising all the time till the holidays period where the peak is reached. That is why our business will be open from the middle of April till the middle of September. At that time there are the most tourists and thus the biggest demand for recreation.

National tourist movement for 8 month in y. 2005 in regions (in millions )

Like we can see, region Pomorze where we are situated, is on the second position in national tourist movement with 2,75 mill. movements. A lot of tourists choose this place as their holiday destination because of the sea, beaches, lakes, rivers, and forests provide all the different kinds of tourism. Bicycling is possible everywhere because of the flat landscape. . Accommodation is easy to find in the countless holiday homes, self-catering accommodation, guest houses, campsites and agrotouristic farms. People who enjoy nightlife and going-out will find any number of discos, clubs and pubs. Those looking for something else can go to see National Parks: Sowiski National Park, Wolin National Park, Tuchola Forest.

2.3 Competitor analysis / Competitive advantage

In our region there are 10 competitors. Their prices are quite similar but usually are bit higher than ours. Below some competitor prices:

Usually our advantage is the price but also some extra services like school for small children, we are organizing trips and have some bike-taxi.

3 Strategy and plans

3.1 Objectives

Segmentation

Our target group is middle class tourists and young customers who are interested in sport and adventure. This means families with children or students who want to explore a wonderful nature and culture by spending their vacation on a campsite being active in sports through bicycling.

Positioning

The positioning of Dream Wheels will be the quality of the service and the quality of the bicycles. We want to transmit a different experience, a different way to make tourism.

We want to reach all tourists looking for strong emotions and adventure. We position ourselves in the mid range of the market.

Product

Dream Wheels product is separated in two main parts of services. The major part is renting touring- and mountain bikes for 1 or more days or even for as little as time of a few hours. Secondly we offer guided city-tours by bike taxi. In total we will have three different bicycle models (not including the special taxi-bikes): Mountain bikes, city bikes, and bikes for children.

Price

Our prices are in the same range as those of the competitors. Prices vary depending on how long a bike is rented. The table below shows the different prices we have:

Guided city-tours by bike taxi

Kids school

Place

Our office is situated in the city of Wladyslawowo. In the first year we want to focus on bike rental in the Hel coastal region at 15 service points. Every of those places will be located on a camping site itself. This is the easiest way to be reached by our customers directly. In the future we will expand to southern and eastern Poland with the same placement-strategy.

Promotion

The communication-mix of Dream Wheels will be bellow the line communication, the principal objective is make a flyer that makes the consumers know we exist and what kind of services we offer.

To get a good communication we have made agreements with hotels and camping sites. Our flyers will be mainly spread in hotels and camping sites, as well will there be an advertising poster on site so visitors come in contact with our name. Hotel and camping staff will also refer to us if customers of them ask about the possibilities of renting a bike.

The points of sales are very well decorated, not in an aggressive way, so the consumer feels at ease when seeing our name.

3.2 Business strategy/ Product strategy

Through flexibility within our company we can react on each wish from the customers and offer a perfect service. We can offer this, because each employee has a special knowledge in for example history, music and art.

In the first years we will only offer our products at the Hel coastal region, during this time we can collect knowledge and experience. From 2009 we will expand our company, but making sure to finance the expansion by our profits.

First we want to focus on one market and penetrate it, making it less interesting for possible competitors. Our rents are cheaper and so the number of bike rents will be large.

The strategies for sales and marketing is that we want to attack our competitors on their weaknesses. Our personnel (students as season staff) has a great knowledge on the cities and special knowledge on museums, art and history.

4 Financial analysis

Both of our partners are investing 55.000,00 PLN the companys equity. The money is their savings. The rest of the money needed for the investment is to be borrowed from the bank. This is a long term loan of 233.618,00 PLN and a short term loan of 10.000,00 PLN.

4.1 Sales Forecast

The company is renting bikes only at summer so the business time is quite short. Proximately six months. Our high season is from June till August. That is the holiday season in Poland, when most of our customers are spending their summer holiday. We have also taken into account that not all the bikes are rented all the time. So the revenue calculation is very careful. It was estimated that the bikes are rented in 100 of 150 opened days because of the mentioned weather problem. Furthermore there is a diversification of the rents per day. That means for each of the 15 rental places that 5 bikes are rented for a whole day. 4 children bikes for the whole day. 2 bikes are rented for one hour and 3 bikes are rented for 2 hours. In the first year a revenue of 352.260,00 PLN should be reached. (see attachment profit and loss account)

4.2 Capital spending

The companys biggest investment is the bikes. Dream Wheels is buying 110 normal bikes and 55 mountain bikes. The total cost for the bikes is 105.468,00 PLN. For the children we have 45 bikes which cost 18.000,00 PLN. For the helmets, we invest 8.750,00 PLN. For the bike taxi (wagon) we need 30.000,00 PLN.

Instead of renting a building, weve decided to buy it. These building will be used to store the bikes during the winter region. Calculations showed that buying it now equals the rent of three years. The cost for the main building is 138.000,00 PLN.

We also need a means of transportation for the company so we bought a used Ford Transit for the price of 17.000,00 PLN. The total startup-investments is 317.218,00 PLN/ 83.478,00 EUR. (See attachment Investment for startup)

4.3 Operating Costs

Rental expenditure is for the rental area at the campsite service points. We only use the areas for 5 months in a year. The total rent for all the 15 places is 9.000,00 PLN per month. Repairing costs are proximately 1.000,00 PLN per month. Wages are the biggest cost in our company. The owners work in the company around the year. We hire five persons for the summers and the cost for these helpers is 2.000,00 PLN per person/mth. total cost is 10.000,00 PLN per month. The two partners who are working around the year, get 3.000,00 PLN per person each month, total 72.000,00 PLN per year. (See attachment cost overview)

4.4 Profit and Lost Forecast and Profitability

Dream wheels is making profit already on the first year. The reason for that is probably that most of the costs are fixed. Profitability is on a rather high level.

For details see attachment profit and lost account and financial analysis

4.5 Balance sheet

See attachment balance sheet (depreciation is calculated at the profit and loss account page, Loan payment is calculated on the attachment cost overview)

4.6 Cash flow and funding requirements

There is barely any cash flow at winter. All the money has to be earned at summer. Thats how the company will remain its liquidity around the year.

(See attachment cash flow)

4.7 Expansion

In year 2009 The Dream Wheels is expanding to the southern mountain region whit five new rental places. We are investing into bikes and helmets 43.540,00 PLN, car 17.000,00 PLN, building 46.000,00 PLN and office equipment 10.000,00 PLN. For the more we hire one fixed guy to work around the year. For his wages we spend 3.000,00 PLN per month. 2011 we do start our guided mountain bike tours, there for we hire five more season staff for guided tours in the mountains. For their wages we spend 10.000,00 PLN per month.

5 Risk analysis

For new companies it is difficult to get on a new market, there are factors which let the company growing and which let a company going bankrupt. Before you start with your company you must weigh risks and chances.

5.1 Swot

We thought also the strengths and weaknesses even the company is new in the business. But it is important to imagine the future, what could possible happen and how should we cope then. (see attachment swot)

5.2 Limiting factors

Competitors

season , weather

convince the bank to become money

convince the tourist from the great idea , sporty tourist

Risks:

Market: the market is growing/changing, but it is not sure how long it is growing and in which direction it will change

Product: our target group doesnt want to use our bikes renting bikes is a weak attractively and we have a weak competitive position

Sales: the sales depend on weather, and interest of the tourists

Capacity: our capacity is not the whole time full used only in the summer

5.3 Critical success factor

• The rent price of the bicycles
• The points of sale/renting bicycles
• The quality of the service and the quality of the bicycles

5.4 Specific risks and their solutions

The large number of competitions is a big limiting factor for our company. We concentrate on the dreams and wishes of our customers and do realize them. Because of the weather our company is limited to work in the spring, summer and early autumn. But many tourists come to make a city tour in early spring, autumn and from time to time in the winter period. We can develop taxi-bikes which can be closed by a transparent foil and every customer gets a covers; that they become warm. During the city tour they will become warm drinks like coffee, hot chocolate, glow wine.

The number of tourists in Poland is growing. But we dont know if they are really interested in bike tours. We convince them, that it is great to see everything by bike. Because you can drive to the object of interest and take there a break. You can drive into the nature, the city, the beach. We offer a special service to the customers. They get special maps from us (it exist maps for special kinds of customers, which are interested in art, history, music, etc.). When they want, we go with them in the museum and explain everything, thats possible because every guide has the knowledge.