Oliver Partridge (50%) | Anton Courtney-May (50%)

200 ON YOUR BIKE | BUSINESS

9 PLAN
Contents
1. Summary...................................................................................................................3
2. Business overview.......................................................................................................4
Introduction..............................................................................................................4
Current position........................................................................................................ 4
Competitive advantage..............................................................................................4
Growth plan............................................................................................................. 5
3. Business strategy........................................................................................................6
Tactics..................................................................................................................... 6
Strategic issues........................................................................................................ 6
Core values..............................................................................................................7
The importance of core values....................................................................................7
Corporate and Social Responsibility (CSR).....................................................................7
4. Marketing...................................................................................................................8
SWOT and critical success factors................................................................................8
Market research........................................................................................................8
Distribution channels.................................................................................................9
Strategic alliances.....................................................................................................9
Tactical promotion plan..............................................................................................9
Marketing budget....................................................................................................10
Credibility and risk reduction.....................................................................................10
On Your Bikes 5 Ps:..............................................................................................10
PESTEL analysis of On Your Bike:..............................................................................10
5. Team and management structure.................................................................................11
6. Financial budgets and forecasts...................................................................................12
6. Financial budgets and forecasts...................................................................................12
In our realistic (modest) projection of what that On Your Bike will make in terms of profit:. 12
Break even point per day (measured over a month as an average):................................12
Our optimistic (What IF) projection (this is if we rented all units all days):.........................12
Equipment & Supplies..............................................................................................13
Running Costs.........................................................................................................13
Loan......................................................................................................................14
Tax........................................................................................................................14

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1. Summary

On Your Bike is a new bicycle hire business, capitalizing on a new opportunity in

Sheffield.

With First Group cutting its bus services for students in Sheffield, their only alternative
is using normally priced services at 4 per day!

Using existing technology and innovative business management On your Bike will
make a pre-tax profit of 9,000 in its first year of operation.

On your Bike will provide a competitively priced, safe and carbon neutral means of
transport for the university student of Sheffield.

Our product consists of: 1 bike, 1 helmet, 1 combination lock & 1 set of lights, all for
just 3.60 per day and yes we do make a profit.

With over 45,000 students in Sheffield and a break even point of 11 bikes per day, we
are more than confident that On Your Bike will go from strength to strength as a
transport provider within Sheffield.

At On your Bike we believe in not just driving for success but RIDEing for it!

So, if you want to know how we do it, read on and well tell you

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2. Business overview

Introduction
First Group Bus Company has taken the decision to terminate the free bus services to
and from Sheffield Universities. This has left the students of Sheffield with two options,
either walking to university or paying an increased bus fare. Some student
accommodation is located on the outskirts of the city centre, so walking is not an
option.

The purpose behind the business is to give students an easy and affordable
alternative. Offering a rental facility for bicycles will allow students to get to/from
university quickly, easily and with very little cost. Students would be able to rent
bicycles and cycling equipment from us for travelling to and from their homes and the
universities.

Our bikes will be kept centrally at our warehouse in the city centre. At the universities
and student halls of residence there are facilities to keep bicycles. We feel that it is
important to have a number of locations for the bikes to be easily stored, as this will
increase the attractiveness of our service to our customers.

Our idea is to buy a number of mountain bikes (with safety equipment) that are to a
standard specification. We shall make them available to hire, to students for travel to
and from university. This will provide the students of Sheffield an easy and affordable
means of transport around Sheffield.

Current position
Our business is currently in the introductory phase, and after our market research we
believe there is definitely a position for our new business in the market place. We have
ascertained quotes for the products and services we will require. Weve put together
some projections for our business and it will be profitable. See: (On Your Bike Finance,
2009)

Our cycle hire company comes into the leisure and transport industry. Although this
industry has been around for some time, with first group cutting its routes and fares
going up, this has created a gap in the market, which will allow our company to grow
within the leisure & transport industry.

As a new start up business, we are setting up as a partnership. As we have a low

turnover and relatively low liabilities we believe this is a safe bet to begin with.

Competitive advantage
Our competition recently created a gap in the market, by cutting out essential bus
services First Group Plc provided to the local community. The number of students in
Sheffield is very high due to Sheffield hosting two major universities. With over
45,0001 university students studying in Sheffield this effects a lot of people.

The student communities are concentrated within certain areas, so not only is there an
extensive client base, logistically this is an ideal opportunity to get our business up
and running within the student community. Unlike our competitors we will have fewer
outgoings on items such as; maintenance, fuel, staff, administration and insurance
costs etc. This will be advantageous as a start up business to ensure that our company
is profitable within a short period of time. Also, due to our position within the
community (being students ourseelves) we know how to provide an excellent and
reliable service to our customers.

11 Sheffield has a big student population, being home to more than 45,000 students studying
at the two universities (Sheffield Hallam University, 2009)

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Our competitors, First Group Plc currently charge 4.002 a day for unlimited travel
around Sheffield. In year one we are charging 3.60 a day for unlimited travel around
Sheffield and unlike buses our customers can go wherever they want, whenever they
please.

We believe that our business could grow and expand rapidly not only due to shear
number of students concentrated in Sheffield centrally, but beyond the student
community by also offering services to the general public.

From our market research we have discovered that when consulting with the general
public the main contributing factors in support of our services are; Negative economic
factors; which have put increasing pressure on consumer finances. Our low cost option
would sit well financially within the general consumers transport mix. Also, in an
increasingly more socially responsible & environmentally aware market place our
transport solution which provides a carbon neutral option would be greatly welcomed.

Within the leisure industry the recession has affected the number of people using gym
services. With the expense of gym membership people are deciding that gym
membership isnt a necessary cost. These people not choosing to renew their gym3
memberships could be easily persuaded by our fitness & leisure services; by being
able to save money on fitness & leisure costs, and combining their fitness & leisure
costs with their transport costs we can save the customer time and money.

Growth plan
Our main target for growth within the short term is to build our client base and
company profile, but essentially, to hire out as many of our bikes as possible. We will
be starting with 25 units. Each unit consist of a; bike, helmet, bicycle lock and a set of
lights. In order to keep these units in service we require; 5 foot pumps, 30 per month
in maintenance costs (estimated).

Also, to enhance our business growth we wont be taking any profits from the
business until year two. Assuming that the business remains true to our projections we
will re-invest the remaining profits back into the business. If a high level of demand
remains in year two we will increase our fleet of bikes, associated equipment & staff.

In year two we plan on doubling our fleet to 50 units and taking a wage of 1000 per
month (500 each). By year three we plan on having 75 bikes and taking a wage of
2000 per month (1000 each). The associated running costs for these units as
regards labour and equipment we have kept in proportion with year one. Obviously
these are forecasts so we will re-asses our position after years one and two
respectively.

In future we plan on having drop off/pick up points manned at both the universities
and student halls of residence (this would involve either; more members of staff or a
partnership with the halls of residences and universities, where they would receive
some kind of commission or fee). To our advantage, student halls of residence
accommodate many students densely packed into large accommodation blocks. This
provides a large customer base around each potential drop off/pick up point so is
definitely worth looking into.

22 FirstDay Sheffield - 4.00 (First Group Plc, 2009)

33 In support of this theory I provide an extract from the guardian. In this article
it summarised the Office of National Statistics 62nd consumer spending review It
predicts a continued rise in online shopping but a drop in spending on nightclubs
and gym membership as younger people bear the brunt of recession. (The
Guardian, 2009)

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3. Business strategy

Our business strategy is to rent out as many bikes as is reasonably practicable.

Initially we will be targeting students. In May we will start marketing to the general
public, mainly focused towards the fitness, leisure & tourism industry.

Year one our fleet will consist of 25 hireable units. Year two, 50 units and 75 units in
year three. We feel that this is a steady growth forecast.

For the short to medium term we plan on being the number 1 bike hire service in
Sheffield. Our target is to have a fleet of over 150 units by the 4th year of our business.
This can be attained by:
Successive re-investment of profits into the company.
Expansion of services around the Sheffield area.
Working closely with the local communities; Sheffield universities, Sheffield
city council and Sheffield tourist board.
Competitive pricing.
Increasing our marketing mix.

For the medium to long term we plan to replicate our business model in other cities. To
start we would like to launch our services in Manchester. This is because Manchester
hosts three major universities and a high number of students that are concentrated
within the city centre like Sheffield.

Tactics
At the moment being a new business we have a long way to go. Firstly we need to
recruit our staff, and then implement our marketing strategy. Focussing on building
our customer base is paramount.

There is a potential risk that demand may outstrip supply. In this case we would need
to purchase more equipment. We believe that as long as we can prove that our
business is successful, profitable and that weve paid off our debts, the bank would be
happy to do business with us in future. Failing this we would look into other sources of
investment such as approaching venture capitalists or selling shares in our business as
a private limited company.

Strategic issues
Our potential threats are:
If the bus company decides to put a low cost bus back on, and/or compete on
price.
If another company started to hire bikes out in Sheffield.
If our bicycles were stolen. (Increased Insurance Premium)

As regards our bicycles being stolen we have set up a deposit scheme where each
member of our service has to pay 20 deposit, of which is returned to the customer if
they decide to end their membership.

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As part of the membership process we shall be taking full contact details, along with
student identification numbers and bank account details including a signed request
(cheque or card details) for 100 that can be taken from the members account if the
bicycle isnt returned & a signed request for 55 if the associated equipment isnt
returned. This is to ensure that the customer pays due care and attention whilst using
our service.

Our potential opportunities are:

If the bus company cuts more bus routes, or continues to raise fares.
If the cost of oil continues to increase further.
If the universities and or local government decide to go into partnership with
us.
If our business does better than we expected.

In the event of these opportunities arising we plan to be in as best a financial position

as possible in order for us to be able to capitalise upon them.

Core values
Our core values are:
RIDE to success
Inspire progress
Deliver excellence
Environmental champions

Our core values are integral to our business strategy. We believe that if we are to
succeed/Ride to success we need to inspire progress throughout our; business, staff
and customers. Without progress our business will not succeed.

In order for us to be able to inspire progress then we need to deliver excellence. On

Your Bike is committed to delivering excellence in all elements of the business. This is
delivering excellent service to all our stakeholders all of the time.

Championing environmental issues is key to our business model. Reducing carbon

emissions is very important to us that is why we dont stop at bicycles (which are a
great way of helping to save the planet); we are committed to ensuring that wherever
possible we source our supplies from ethical and sustainable sources.

Our values come as a package, and like a business they rely upon each other in order
to succeed. If we fail to deliver excellent service to our customers, if we dont drive
environmental issues, then we wont inspire progress within our business, or our
customers and ultimately we wont succeed.

Within our staff and our customers we put our core values at the heart of everything
that we do so together we will make On Your Bike RIDE to success!

The importance of core values

Having core values is highly important in todays corporate world of public relations. It
sets out positive work ethics and business practices for within the business, and
projects a positive image to those outside of the company.

Corporate and Social Responsibility (CSR)

Corporate and social responsibility is an important part of a business in order to stop

and think of a world outside of just making a profit. Obviously making a profit is the
cornerstone of good business. However, it doesnt have to be at the expence of
everything else. Thats why at On Your Bike we are dedicated to helping the

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environment. This doesnt just help us to sleep at night, but being Green is a popular
cash cow that is in full flow of being milked, and On Your Bike is in a prime position to
milk it.

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4. Marketing

SWOT and critical success factors

Helpful Harmful
To achieving the objective To achieving the objective

Bikes are an enviromentally friendly way to
travel with no associated fuel costs.
Bikes are cheap to buy and cheap to run.
We have the opportunity to expand, it is not
a restricted market.
We can set up alliances with the council,
unversities and tourist board to support the
business.
Theft or damage to the bikes could
jepordise our business. Taking deposts from
customers may reduce this risk of this
happening.
Students attend university on a term basis,
so the summer months will be less busy. We
will combat this by offering services to the
general public.

Following the start up of the business there The weather can affect our business. Snow
is the opportunity to expand. & rain may reduce the amount of students
Expansion into normal consumer markets, wanting to use bikes, therefore harming our
with the general public being able to hire profit.
bikes. Competition. If the bus company decides to
Depended upon success in Sheffield, would restart services again, people may use our
could expand to other cities. service less.
There is opportunity to use different
locations. For example the train station
would be a good place to rent bikes.
We have undercut bus prices, for any routes
that might be covered elsewhere.
The bus company that was running in the
area, recently closed the student routes, so
there is an open market.

Market research
To help understand our market we decided to create a questionnaire4 initially visited
both universities and a few student bars to gather interest. Then a separate
questionnaire was put to non-students around Sheffield. The questionnaire was
designed to help get an understanding of how many people would be interested in the
services our business offers.

To achieve the best results for the questionnaire we visited a number of popular
student locations. These included the Hubs for Sheffield Hallam, Sheffield Union for
Sheffield University, a number of popular Student bars, at both Universities and finally
at three student halls. We also distributed non-student surveys in the high street in the
city centre, museums, libraries and train stations. These opportunities allowed us to
get a wide range of feedback to the company, and look how different people looked at
the prospect of city cycle hire.

44 For copies of the questionairs and results please see: (O.Y.B. Questionairs & Results, 2009)

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Keeping our focus on Students initially allowed us to understand them more, along
with what their needs and requirements are. From our survey we found that a lot of
students left Sheffield over the summer. It was important to take this into
consideration, as it could certainly harm our profits in the summer as no students
would be around to hire our bicycles.

Distribution channels
Initially we have limited marketing to the student community. As mentioned in the
Business overview, First Group who used to run the bus service in this area has
discontinued the service, leaving students without alternative travel options.

One of our distribution channels for advertising is through leaflets that will be handed
out locally at popular student locations such as;

The Student Unions.

Student Bars.
Outside the Universities.
At bus stops where the cancelled bus service ran.

Our second main distribution channel is e-commerce. We are looking into setting up a
web-site (which being IT students doesnt cost a penny). Also, we will be using
Facebook as a form of advertising. We will not be advertising directly on Facebook.
However, we will be setting up groups and discussions on Facebook to raise our
companys profile.

A price has already been quoted for the cost of the leaflets of 125 per 2,500. We are
ordering 7,500 in total over the year. We plan to have a first batch of 2,500, followed
by a further 2,500 in May and a further 2,500 for September.

The reasoning behind the second and third batches is that the second batch is aimed
towards the fitness, leisure & tourism industry within Sheffield and the third batch is
aimed at the new intake of students at the Sheffield universities.

As our business expands over the next 3-5 years we will increase our advertising
budget and marketing mix. Possibly billboard advertising, sponsoring local events,
giving free gifts at fresher fairs, newspaper adverts, etc.

Strategic alliances
We plan to gain alliances with the two universities in Sheffield and their respective
student unions and halls of residence. We have been in discussion with the two
Sheffield universities and they have been very positive about the services our
business can offer. We have looked at other locations, such as the train stations
throughout Sheffield, where (when conducting our market research) we found a lot of
people who would be interested in renting our bikes.

Tactical promotion plan

Our main target for the short term is to get as many students interested in our service
as possible. Then begin marketing our service to non-students. This will begin late
May/early June. This is to ensure that we have a viable business during the summer
months whilst the vast majority of our main demographic are not at university in
Sheffield. This is where we will be aiming our marketing more towards the
environmental, leisure & tourism markets within Sheffield. We will be liaising with the
Sheffield tourist board in the coming months to co-ordinate our efforts.

Phase one, we will be raising our profile at student events such as Fresher Fairs.
Distributing leaflets around the universities and bus stops. Advertising on our own
web-site, and setting up Facebook groups/discussions.

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For phase two we shall be attending Green/CO2 reduction/ environmental awareness
& Sheffield tourism fairs, meetings and events. Distribute leaflets around tourist hot
spots such as; train stations, museums and main shopping high streets. Raise our
profile on the internet by blogging and commenting on Green forums.

Marketing budget
375 has initially been set aside for the production of leaflets. As for the distribution of
the leaflets, this has no associated cost (at present) as we shall be distributing them
ourselves. If necessary we may employ our staff to do a few extra hours.

Credibility and risk reduction

To increase the credibility of our business we will be looking to gain endorsements
from the universitys student unions.

To reduce the risk for our customer in doing business with us, we will be transparent in
our operations. We will hold our customer deposits separate from our business running
costs. Ensure that our business is in profit within the first few months. Provide a high
level of customer service and maintain our equipment to the highest possible
standard.

On Your Bikes 5 Ps:

Product Our bikes are cheap to hire, cheap to maintain, easy to store and
emit 0g CO2.
Price Our 3.60 per day is cheaper than our competitors at 4 per day.
Place Our bikes are already located at the heart of our customers local
community.
Promotion We are using the best methods of communication for students;
leaflets and the internet.
People Our people are trained to the highest standards and embrace our
RIDE to success mentallity.

PESTEL analysis of On Your Bike:

Political The main political factor that would be associated with our business
is probably the governments intrest in education and the environment. If
successful we may be able to receive some kind of support from the
universities or local government.
Economic In the current economic climate (recession), the fact that our
prices are competitive will help our business. Also, as oil prices inevitably go
up, (as the planet is running low on this resource) in the gap between the new
non-oil based transport and current modes of (oil based) transport, our service
will become cheaper (and therefore more attractive) in comparison with other
(current) modes of transport.
Social As people like to keep fit and as most students are young, this
method of transport of which has been associated with students for many
years, would not be out of place within the customers transport mix.
Technological Bikes are technically mavelous. Yes, theyve been around for
years, but theyre extreemly efficient, easily transportable, cheap, durable and
they work! Theres no point re-inventing the wheel, so were not. Were using
proven technology to provide a reliable service.
Environmental In the threat of global warming, El Nio and freak weather
systems, the world is in fear of CO2 our transport solution emits 0g of CO2.
Legal Obviously like all companies we have to adhear to health and satefy
regulations, tax laws, discrimination laws etc. there arent any laws in
particular that pose a major hiderance to our companys success.

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5. Team and management structure

Our management team consists of two entrepreneurs (ourselves) of which have a

variety of previous experience in business, customer service, marketing, IT, sales and
engineering. This puts us at an advantage in that we have the skills in order to do the
job; both managerially and technically. Having the technical knowledge already saves
potentially dangerous mistakes as regards our fleet of bikes this makes it easier and
cheaper when training our staff.

We will be employing four members of staff. We are targeting our recruitment

campaign towards engineering students as they are more likely to have had
experience in this area.

We estimate that for a fleet of 25 bikes we require 4.5 hours of labour per day, 7 days
a week. As our fleet increases we have forecast that we shall employ proportionally
more staff. However, we will re-assess staffing levels on a monthly basis.

We will have weely, monthly and annual meeting in order to discuss and monitor our
business progress. We will be using a series of financial monitoring tools5 to see how
our business is doing. This is key for any business to be able to easily check the health
of the company.

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6. Financial budgets and forecasts

In year 1 we need to hire out (on average over the month) 11 units per day. With over
45,000 university students in Sheffield and up to 25 units at our disposal per day we
feel more than confident that well be able to make a profit5.

In our realistic (modest) projection of what that On Your Bike will make in terms of
profit:
Year 1 9,356. That is with us (the management) not taking anything out of
the business.
Year 2 15,332. In year two we will be taking a wage of 1000 per month
(between the two of us). We will have a fleet of 50 units.
Year 3 22,538. In year three we will be taking a wage of 2000 per month
(between the two of us) and we will have a fleet of 75 units.

Break even point per day (measured over a month as an average):

Year 1 16 out of 25 units (64%) - Thats 0.035% of Sheffields student
population.
Year 2 34 out of 50 units (68%) - Thats 0.076% of Sheffields student
population.
Year 3 52 out of 75 units (70%) - Thats 0.116% of Sheffields student
population.

The rise in the percentage of bikes needing to be sold per day in order to break even is
a reflection of the increased wage bill and the lowering of our rates from
3.60/unit/day to 3.20/unit/day. The associated costs for equipment, staff etc. have
remained proportional the number of units in service.

55 All figures are quoted exclusive of tax.

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Our optimistic (What IF) projection (this is if we rented all units all days):
Year 1 11,996
Year 2 20,372
Year 3 38,928

Equipment & Supplies

In our first year we have purchased:

25 Mountain bikes @ 99.95 Each

25 Safety helmets @ 19.95 Each
25 Combination bicycle locks @ 11.95 Each
25 Sets of lights @ 6.90 Each
5 Bicycle pumps @ 15.95 Each
1 Computer @ 258.11
1 Printer @ 34.80
1 Desk @ 38.17
1 Chair @ 6.35
1 Pack of paper @ 4.85 (Consumable supply, not asset)

We shall be renting out; 1 bike, 1 helmet, 1 combination lock & 1 set of lights, as one
unit. We provide combination locks in order to secure our assets. Also, the use of
combination locks prevents the costs and inconveinence associated with customers
losing their keys. We believe that the inclusion of helmets and bicycle lights is
necessary not for our customers safety but in order to comply with the Highway Code.

59 Clothing You should wear

a cycle helmet which conforms to current regulations, is the correct size and securely
fastened (Her Majesty's Government, 2009)

60 At night your cycle MUST have white front and red rear lights lit. It MUST also
be fitted with a red rear reflector (and amber pedal reflectors, if manufactured after
1/10/85). (Her Majesty's Government, 2009)

We have not provided reflective clothing as part of our service. However, we will
advise our customers that when riding at night the use of reflective clothing is
advisable.

We believe that these assets are more than capable of lasting three years of good use.
After three years we will write these assets off and purchase more equipment. In the
event of loss or damage to our assets then we will discus (on a case by case basis) the
cost of replacing the item(s). In the event of non-compliance we will be able to recoup
our costs by means of the customers contract (terms stated above).

Running Costs

The running costs are:

Staff @ 7 per hour

Maintenance @ 30 per month (estimated)
Advertising @ 375 per annum
Insurance @ 1000 per annum
Wearhouse @ 200 per month

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These costs are essential to the operation of our business. Insurance and wearhouse
costs are fixed. Advertising costs are unlikely to change throughout year one.
Maintenance & Staffing costs are variable and will be reviewed on a more regular
basis.

Loan

The business loan we have been quoted for is for 2000 capital, of which we are taking out at
13%6 interest over three years. The total cost of this loan is 2426. We will be making monthly
repayments of 67.39 which wont greatly effect the running of our business.

Tax

For our final calculations for our net profit we deducted corporation tax at 20%.

Bibliography
First Group Plc. (2009, 04 01). First Group - UK Bus South Yorkshire. Retrieved 04 01, 2009,
from www.firstgroup.com:
http://www.firstgroup.com/ukbus/yorkhumber/southyorkshire/fares/firstday.php
Her Majesty's Government. (2009, 04 01). 59-82: Rules for cyclists. Retrieved 04 01, 2009,
from Directgov: http://www.direct.gov.uk/en/TravelAndTransport/Highwaycode/DG_069837
O.Y.B. Questionairs & Results. (2009). On Your Bike Questionairs & Results. Sheffield: On Your
Bike.
On Your Bike - Finance. (2009). Finance Overview. Sheffield: On Your Bike.
On Your Bike Finance. (2009, 04 01). Financial Forecast.
Sheffield Hallam University. (2009, 04 01). Life in Sheffield. Retrieved 04 01, 2009, from
www.shu.ac.uk: http://www.shu.ac.uk/international/sheffield.html
The Guardian. (2009, March 24). Recession brings out changes in shopping habits. Retrieved
March 2009, 30, from guardian.co.uk:
http://www.guardian.co.uk/business/2009/mar/24/consumer-spending-inflation-basket-ons

6 For loan rates please see apendix

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