Business owners, prospective buyers, and industry investors rely on a diverse set of financial benchmarks to assess the value of a business. We have compiled data from current BizBuySell listings and sold businesses to provide insight into the business for sale market and important benchmarks for pricing and evaluating bike shop businesses relative to industry standards.
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Bike shops listed and sold on BizBuySell span a diverse range of business models, catering to both traditional and niche markets. These include well-established bicycle stores with strong community reputations, turnkey operations offering rentals and repairs, and newer concepts focused on electric bikes (e-bikes) and smart technology like GPS-enabled kids' bikes.
| Median Sale Price | Median Asking Price |
| $230,000 | $229,000 |
| Average Sale/Ask Ratio | Median Days on Market |
| 0.99 | 189 |
| Median Revenue | Median Owner Earnings |
| $625,000 | $120,000 |
| Average Revenue Multiple | Average Earnings Multiple |
| 0.43 | 2.47 |
Sale prices of bike shops sold on BizBuySell surged following the Covid-19 pandemic, fueled by a sales boom in the bicycle industry. Valuations rose greatly as business owners used the spike in revenue to sell at all-time highs in 2021. Prices have been volatile in the years following, driven up by demand, then tempered by increasing interest rates.
Valuation, or pricing, multiples are financial tools that allow for comparisons between businesses that have different levels of revenue and earnings. They represent the sales price of a business relative to its financial performance, and given enough individual business sales data, they represent what the market is willing to pay for a business given its revenue and earnings.
Business values and associated multiples fluctuate over time, influenced by a variety of macroeconomic factors such as interest rates, inflation, consumer spending, and overall economic growth.
Average earnings multiples for bike shops sold surged in 2022, driven largely by a sales boom in the trailing years. Bike shop business values surged on the back of a pandemic driven bicycle demand boom, before falling back in 2023 and 2024 with pressure from declining bicycle sales and rising interest rates.
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To determine how a business compares in terms of revenue and earnings relative to industry peers, it's necessary to have some insight into industry standards. "Benchmarking" describes the practice of comparing a business's financial performance to typical industry standards to determine where a business falls relative to other businesses in the same industry. These benchmarks can help guide owners and investors towards appropriate valuation multiples from the range above.
To that end, we have aggregated financial ranges useful for comparing an individual retail bicycle business to its peers in the market.
2021 saw a surge in revenue and owner discretionary earnings of bike shops sold, driven by a surge in bicycle sales during the height of the Covid-19 pandemic. This unusual sales boom lasted about 18 months before demand for bicycles fell sharply back to pre-pandemic levels with reported revenue and earnings holding steady through 2024.
| Year | Revenue | Discretionary Earnings | % of Revenue |
|---|---|---|---|
| 2020 | $592,780 | $115,069 | 19.4% |
| 2021 | $1,384,900 | $290,428 | 21.0% |
| 2022 | $575,000 | $75,000 | 13.0% |
| 2023 | $625,000 | $160,000 | 25.6% |
| 2024 | $500,000 | $77,957 | 15.6% |
| Five-Year Median | $625,000 | $120,000 | 19.2% |
| Median reported revenue and owner earnings of bike shop businesses sold on BizBuySell | |||
Discretionary earnings (used interchangeably with the terms "cash flow" and seller's discretionary earnings or SDE) is often the crux of business valuations, so it is important to benchmark it relative to other businesses traded on the market. Below you will find discretionary earnings ranges of bike shop businesses sold over the past five years as well as recent for sale listings.
| Bike Shop Business Discretionary Earnings | ||||
|---|---|---|---|---|
| Lower Quartile | Median | Average | Upper Quartile | |
| Recent Listings | $80,798 | $120,000 | $151,467 | $219,298 |
| Sold Businesses | $70,203 | $120,000 | $176,910 | $210,466 |
| Owner's discretionary earnings based on reported financials of bicycle retail businesses sold during five years between 2020 and 2024. | ||||
Sales volume plays a large role in business valuation, as it measures the size of the potential income opportunity for new ownership. It's not uncommon for buyers to select an earnings multiple range based on overall revenue. The table below includes revenue ranges of bike shops sold over the past five years as well as recent for sale listings.
| Bike Shop Business Revenue | ||||
|---|---|---|---|---|
| Lower Quartile | Median | Average | Upper Quartile | |
| Recent Listings | $373,650 | $699,000 | $859,006 | $1,098,815 |
| Sold Businesses | $445,322 | $625,000 | $935,757 | $1,212,465 |
| Revenue based on reported financials of bicycle retail businesses sold during five years between 2020 and 2024. | ||||
Clearly higher levels of earnings lead to higher valuations, even given the same multiple. However, valuation multiples also tend to rise with business sales volume. Businesses that generate higher sales (and maintain reasonable profit margins) tend to sell for earnings multiples on the higher end. So, a bicycle retailer consistently generating sales over $1.2MM annually may sell for an earnings multiple above 2.6, where a smaller bike shop with sales under $500k would likely sell for an earnings multiple closer to 1.4.
This tendency for higher sales volumes to fetch higher valuation multiples is largely driven by the economics of business acquisition financing. Higher volume businesses give buyers more cushion to cover debt service obligations and still have enough left over to pay the new owner a reasonable income.
For a more complete understanding of the market and valuation standards, consider comparisons within the broader retail sector when benchmarking bike shop businesses. The chart and table below include key metrics from sales of select retail businesses on BizBuySell between 2020 and 2024.
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