With the popularity of ebikes on the rise, many people want to know how to start an electric bike business.
As one of the leading professionals in the ebike industry, and someone who started his own ebike business while holding down a full-time professional job, I wanted to create this Complete Guide to Starting an Ebike Business, to help you get started with this fun and lucrative business model.
In this Guide we discuss some key business decisions to think about before moving ahead with your own ebike business. There are many things to consider:
- Do I want to rent ebikes or sell ebikes? Which is more profitable?
- How much does it cost to start an ebike business?
- Are licensing programs with Pedego or Rad worth the cost?
- Which brands and models should I start my fleet with?
- What kind of business structure should I set up?
- What licenses and permits do I need to get before opening?
- Do I need a website with a booking engine?
- What kind of marketing will I need to do?
All of these questions and more will be answered in this Guide. If you want to get started right away, with no upfront investment, check out the RGE 50/50 Brand Ambassador Program. Basically, as an Ambassador, you send people to my site Really Good Ebikes. When they make a purchase, you and I split the profit 50/50.
Elkin E-Bikes & Stuff, an electric bike rental business in Elkin, NC purchased their fleet from Really Good Ebikes, and they get paid every time one of their customers buys a bike from us.
Really Good Ebikes offers this Guide free of charge, and we will do everything we can to help you open your own ebike business.
I often get calls from people who are semi-retired but still active in life, who want to learn about starting their own electric bike rental business. Some have prior business experience, but for many this is a completely new endeavor.
I'm here to help. If you choose to buy your rolling stock from me while getting your ebike business up and running, that would be great. And if you want to work together to make future retail sales through our ecommerce website, even better.
I have well established relationships with each of the brands I carry, and can provide you and your customers with the highest level of support and satisfaction.
My company Really Good Ebikes does not offer franchising or licensing. We offer free business coaching to Ambassadors, who earn 50% profits on all leads they generate that result in a sale.
Should I Rent Or Sell Electric Bikes? Which is More Profitable?
This is a key question, and it's an important one to ask early in your business planning process.
This will be your own business, for you to build and run as you like. You can choose to rent ebikes, and even give electric bike tours if you live in an area with nice bike trails. Depending on your location, you can expect to charge about $50 per rental hour.
Another approach is to offer free demo rides, using a try-before-you-buy business model. In the same amount of time you earned $50 from a rental, you could have earned $500 from a few sales.
But just like any business, it will rely on a couple of key factors, which you have to get right to succeed.
First, you should love interacting with people, sharing with them the joys of ebike riding. Remember the first time you rode an ebike, and how magical it felt? Now you can share that experience with others.
Second, you should have an entrepreneurial mindset, believing that anyone who works hard on a good idea can succeed in business. If you need help breaking through a mindset block, give me a call. This is perhaps the most important skill, and will have a big impact on the potential success of your business.
Starting an electric bike business can be a great entrepreneurial endeavor, as either a part-time side hustle or a full-time venture.
Electric bike demos, rentals and sales are not mutually exclusive, and you can run the business and offer the services you like.
If you look for them, you will see ebikes around crowded beach towns, in mountain resort communities, and in many other locations where other tourist attractions and operators are present. Look for places with great foot traffic. Start thinking about how much space you will need, and who your target customer is.
There are a number of things to consider before starting your business, including the proper business structure, permits, and the profit potential. It is important to understand what your upfront costs will be, and also to have a good idea as to how long it may take to turn a profit based on a number of bookings your business can handle, or sales you can generate.
Pro Tip: If you wait until the end of this Guide, we will reveal the hidden money-making secret that many ebike rental companies completely fail to tap into.
How Much Does It Cost To Start An Electric Bike Business?
Sample Cost Analysis
There will be some up-front costs to your business that we will go over in detail, but to understand your profit potential long-term, here are some numbers to consider.
Your revenue potential will essentially be a function of how many ebikes you have in your inventory, how often you demo them or rent them out, and conversion rate. What I mean by conversion rate is the number of customer engagements that result in a sale.
For instance, let's say that you have 4 ebikes in your fleet to start. You rent them out at $50/hour, and estimate each bike will get rented 2 times per day. That's $100 per bike/per day, or $400 for your fleet of 4. Assuming you run your business 5 days per week, your gross revenue would be about $8,000/month.
Let's also assume that during this same sample month, you offered demo rides and talked with rental customers about their interest in buying an ebike. It's a natural conversation to have at an electric bike rental shop, since many people want to try before they buy. That's why free demo rides is such a no-brainer. You help people decide which ebike would be best for them, or you give me a call and I can do helping. With this in mind, expect to sell at least one ebike per day, with a net profit of $150 (varies by model). That would be about $3,000/month.
So, using these very conservative figures, you could expect to gross about $11,000 per month with a 4-bike ebike fleet.
For a commercial setting, you should get ebikes for your fleet that are heavy duty, easy to operate, fun to ride, and desirable to your customer base. Your upfront cost for ebikes like this could be $2,000/bike, assuming you buy a spare battery for each unit. So your starter fleet of 4 bikes will cost about $8,000, and you will need to spend about $1,000 more on a decent bike maintenance shop setup, with tools, a work bench and bicycle stands.
Are Licensing Programs with Pedego or Rad Power Bikes Worth The Cost?
When starting an electric bike business, you should give serious consideration to the large affiliate programs out there, and see if one might be a good fit for you.
Pedego Electric Bikes
The Pedego Electric Bikes Own A Store Program says that "Pedego is built on two basic principles. First, delight our customers; and second, support our stores. Without Pedego stores, there would be no Pedego. Your success comes first!"
"Pedego’s world-class support takes all the guesswork out of owning a store, saves you a tremendous amount of time and money, and really sets you up for success. All with no royalties or fees!"
So how much does it cost to open a Pedego store? Pedego stated in 2016 that the average cost to open a store was about $75,000. It has certainly increased since then.
“Ninety percent of our store owners are Boomers who were displaced by Corporate America or retired from other careers such as teaching and the military. Today, as owners of their own electric stores, they are experiencing second careers as entrepreneurs and finding success selling to other Boomers,” said Don DiCostanzo, Co-founder and CEO of Pedego Electric Bikes.
Targeting Boomers as store owners is a proven recipe for success, according to DiCostanzo. “Boomers grew up riding bikes as kids and want to experience that joy again and share it with others. Electric bikes make it possible. That’s why our slogan is ‘Hello, Fun!’”
According to DiCostanzo, the average cost to start a store is $75,000, which is significantly lower than most franchise opportunities, and there are no franchise fees because Pedego is not a franchise. In fact, according to DiCostanzo, the new store owner’s entire investment goes into the store.
Benefits of Pedego store ownership include:
- "Affordable" entry point as compared to franchises, starting at $75,000, depending on location
- No franchise fees; the entire investment goes into the store and product
- Support in finding a store location and negotiating the lease and signage
- Store set-up support, which includes build-out, point-of-sale equipment and inventory
- Negotiated discounts for bike accessories and other items to sell in your store
- Technical training on Pedego bikes, including assembly and repairs
- Sales and marketing training to help attract customers and sell bikes
- Marketing support, which includes website creation and social media platform set-up
- Online dealer support site with photos, graphics, inventory information and more
- Annual dealer meeting with the Pedego leadership team and other store owners
- Candidates are considered based on unique criteria including personality, general business experience and enthusiasm. Prior retail or bicycle industry experience is not needed. If you own or have rented a Pedego bike, your application goes to the top of the pile.
Rad Power Bikes is the largest ebike company in the US. They have an awesome lineup of models at good prices. Unfortunately for me, they do not work with online-only stores like Really Good Ebikes. But they do work with commercial partners. As they describe it:
Rental Fleets An exciting revenue generator and great new add-on to your existing or new business! Your customers will enjoy the unique experience of riding a stable and exciting electric bike and the added power of the motor means that everyone in the group will be able to travel together no matter their fitness level.
Urban Delivery Deliver more, sweat less. Earn more, spend less. Ebikes are eco-friendly with zero carbon footprint and the capacity to haul whatever you’re in the business of delivering - papers, pizza, people, you name it!
Warehouse Logistics The world of logistics is changing fast, and the needs of the industry are changing more rapidly than ever. These changes present opportunities, but only to those nimble and adventurous enough to respond with new solutions.
So, what can you make if you join the Rad Power Bikes program? You can read the entire Rental Fleet and Sales Referral Program Agreement, and decide for yourself. Under their program:
A minimum purchase of ten (10) bikes is required to establish a preferred rental fleet (“Rental Fleet”), with additional discounts and extended payment terms at 15+ and 25+ unit benchmarks, as set forth below.
- 10-14 units: 10% off MSRP
- 15-24 units: 15% off MSRP
- 25+ units: 20% off MSRP
Sales Referral Program Features
Many customers will rent a Rad Power Bike in order to test the bike prior to buying one. Others will love their rental experience so much, they’ll go home and buy a Rad Power Bike of their own. In either case, we provide our Preferred Rental Partners an opportunity to earn a commission on the resulting purchase!
1. Each Rental Fleet operator is supplied with a unique Rental Fee Reimbursement Code. Your rental patrons can use this code when purchasing an ebike from Rad Power Bikes at radpowerbikes.com and receive a discount on their purchase in the amount of $50 USD.
2. When this code is used to purchase a Rad Power Bike, the Preferred Rental Partner will receive a commission in the amount of $100 USD for each bike order placed using its unique Rental Fee Reimbursement Code
3. Rad Power Bikes’ retail sales model is exclusively consumer direct. As such, Rad Power Bikes does not engage in third party supplier or drop ship relationships; all orders, even those qualifying for the Sales Referral Program, must be placed and fulfilled through our website.
Really Good Ebikes 50/50 Ambassador Program Ambassador
Unlike Rad and Pedego, we do not have expensive startup fees or low commission reimbursement agreements with extensive restrictions. Whether you want to buy a fleet of 10 ebikes and open a retail/rental store, or you just want to start with 1 bike, our 50/50 Ambassador Program is unique.
If you want to start your own ebike business, Really Good Ebikes can provide services in 3 specific areas.
1. If you buy a fleet of 6 or more units, we will give you a 10% discount, on top of free shipping and no state sales tax.
2. If you generate a lead that results in a sale at RGE, we will share the profit from that sale with you 50/50. This amount varies by model, but on average is about 12.5% of the retail price.
3. We offer free business coaching to our Ambassadors. Not sure where to start, or how to grow once you are up and running? Give me a call. I got a late start in entrepreneurship in 2015 when I was in my early 50s, and have been learned a ton about how to start and nurture small businesses.
Here are a few other examples of the upfront costs to buy your initial inventory, which were developed for an actual customer of RGE.
|10% Fleet Discount
|Nakto Santa Monica
|Revi Cheetah + Accessories
Here's another recent quote we worked up for an actual Partner (January 2022):
|Revi 750W Cheetah 48V/13Ah
|Greenbike EM26 750W Fat Tire
|GreenBike City Path 750W Low-Step Fat Folder
|Catalina 500W Step-Thru Cruiser
|Laguna 500W Classic Beach Cruiser
|Malibu 350W Step-Thru Beach Cruiser
|Newport 350W Classic Cruiser
The beauty about ebike rental businesses is that they are easy to run, and easily scalable. If you start off slowly with just two, four or six ebikes [pro tip: ebikes are rented and sold in pairs], your investment will be minimal, and the scale potential will be great.
When things start to work and you can see what your customers really want, then you can expand and grow - the only limit with be where to store all your ebikes. There are major ebike rental companies that have over 40 units in their inventory, which you can imagine builds up the profit potential.
Getting the Right Equipment for Your Electric Bike Rental Business
Which Brands and Models Should I Start With?
In order to make sure you can provide the best service to your customers, you need to make sure you have the best equipment, and the right tools to keep your fleet running smoothly. Here are a couple of important concepts to understand.
Some owner-operators might be tempted to buy ebikes on Amazon or Aliexpress, because they are less expensive. Or maybe they get ebikes that appeal to their personal riding preferences, without considering the needs of their customers and other commercial aspects of the business (ease and frequency of regular maintenance; high-quality components; resale potential).
There are hundreds of ebike brands in the US today, so picking the right brands, and the right ebike models for your rental startup business will be important.
Typically our most popular models sell for $1,000 - $2,000, while higher-performance models start at around $1,500 and top out around $6,000.
If you are serious about your business you should not take any chances buying products that are not suited for your use. It will likely cost you more money in the long run than you saved initially.
Some of the best performing electric bikes in rental and retail spaces include the Eunorau Fat-HD, Eunorau E-Fat-Step, Swell Summit LR2 Step-Thru Cruiser, and the Revi Cheetah Fat Tire Electric Bike.
Miscellaneous Up-Front Costs
Aside from purchasing your first fleet of ebike, starting your business will require some upfront costs that you should consider. These costs can vary significantly depending on how you set up your business and daily operations. For example, if you will meet your customers at a designated location, you may not even need a storefront to begin. That saves a ton in tenant improvements, rent and insurance.
Here is a list of things you should consider researching further:
Business Set Up: When setting up your business, you want to separate it from yourself as a person. This means creating a company that owns the business, registering that company with a secretary of state, and obtaining any local business permits that might be applicable. You will also need to open a business checking account. Regardless of what state you live in, I would highly recommend registering your LLC in the State of Wyoming. They have no state tax, and everything can be done online and with a registered agent. Make sure the bank you choose supports the payment processing you want for your business (credit cards, PayPal, cryptocurrency).
Insurance: Once you know the kind of business you will be running, consult the operators of similar businesses outside of your area. Find out what kind of insurance coverage they have, and if they like their provider. Next, contact a few insurance companies and get quotes for your business. The types of insurance you should consider include:
General Liability Insurance (GLI). General liability insurance helps protect your business from claims that it caused: bodily injury to someone else; property damage to another person’s belongings; or personal injury, like libel or slander.
Commercial Property Insurance. Commercial property insurance helps protect your owned or rented building and equipment that you use to run your business. Be aware that this insurance doesn’t cover damage from earthquakes or floods.
Commercial Auto Insurance. Commercial auto insurance helps protect you and your employees on the road if you drive company-owned vehicles for business. It can help cover property damage and bodily injury claims from an accident your business causes. This is important because a personal car insurance policy won’t help cover third-party claims in an accident you cause with a business-owned vehicle.
Website: You may think you need your own website right away, but many businesses get by simply using social media platforms to establish their online presence. You can easily create a FaceBook business page, and use Google My Business to let people know you exist. Some businesses get exposure on TikTok or Instagram. The main thing to consider is where are your customers, and how are they going to find you? Foot traffic is the best, but even then, people are using Google Maps to discover and navigate to local businesses. As you grow your fleet, another resource for your business is Bike Rental Manager software, which helps you run your entire electric bike business.
Marketing & Advertising: You will want to set aside a budget to advertise locally in order to get your first customers. This could be as little as a few hundred dollars, or much more, depending on how much money you are willing to invest to get your business up and running. Of course, if you simply add your website address and phone number to a plate that you put on each eBike, the will find an incredible (and free) source of advertising.
Legal Material: In order to protect yourself and your business from any kind of litigation, it makes sense to have a standard contract and liability waiver that you will have customers sign before renting or even trying an ebike. Forms for this are readily available online for free.
Researching The Market
Starting an ebike rental business could be an incredible opportunity if your local market is underserved. Conversely, it might be a tall order to wiggle your way into an already crowded market. There are a few ways to approach this.
Your first order of business is to find out how many businesses are actually offering ebike tours and rentals in the geographic area that you want to service. Luckily, that is quite easy to find out these days by doing a local search on Google or Yelp. Some key things that you want to take notice of:
- How many businesses are offering bicycle or ebike rentals?
- What prices are they charging? Find out what the going rate is, and what additional services they might be providing. For example, are they offering guided tours? Are they offering snacks or meals as part of longer tours? This will give you an idea of your profit potential, as well as how competitive the market may be.
- How well is the competition presenting itself? Are their websites professional looking, or do they look very out of date and confusing? That may be an opportunity to differentiate yourself.
Once you have taken stock of what the market looks like then you can start determining whether a real opportunity exists. Pro tip: Even in a what appears to be a crowded tour rental market, you can open a business and be very successful by having a “unique selling proposition.” Think about it - how many restaurants are in your town? How many hotels? Competition is a good thing - it’s a strong indication of market demand.
Marketing Your Ebike Business
In order to get your first customers, you need to let them you know you exist! Local marketing has completely changed, largely because of the Internet. It used to make sense to take out a few ads in the Yellow pages and other local magazines, but that simply isn't the case anymore.
If you aren't connecting with your customers online then you are missing the boat. Your first order of business will be to get your online affairs in order. Here are a few key places to get you going.
Local Advertising Can Be Extremely Effective
Online advertising technology has gotten extremely advanced, and local businesses can pinpoint their potential audience with greater accuracy than ever before. When you are first starting out in your ebike business it will make sense to set aside a budget for advertising in the beginning. Your goal is to book new business, impress your clients, and have them spread the word online and in their local community.
Right now the best bang for your buck will likely be Google and Facebook. They are the two most-used websites out there, and they offer the best advertising products for local businesses.
You can read up about Google's Adwords local program here. The key reason why Google is so effective is because you are capturing a potential customer at the moment of intent. If you are able to serve up a relevant advertisement to a family who are looking to find a local ebike rental business for their visiting family, you can make sure that you show up.
The only downside is that pay-per-click advertising has gotten very competitive, and you could be competing against other ebike rental businesses for those spots. The best thing to do is to set aside a test budget and track very closely how much you are paying for new leads.
Facebook offers a different local advertising product, which you can read more about here. They allow you to target various demographics and geographic locations with impressive precision. You can offer deals, drive people to your site, and various other methods. Facebook is constantly making their technology more effective, which is why it has become a preferred choice for local marketers.
Additionally, you could experiment with local deal sites like Groupon in order to book your first set of clients.
Get Involved in the Community
Another effective tool in promoting your business is good old-fashioned networking. Get a bunch of professional-looking business cards printed from a service like Vistaprint, and get prepared to pound the pavement!
There are plenty of ways to get creative with this approach. One way is to make sure you are connected with local companies that are associated with your eBike rental business. For example, there could be local tour companies that don't offer eBike rentals, and you could make sure they know you are available to supply them if the need arises.
Additionally, you could get involved with local organizations like The Rotary Club. Anything you can do to make yourself visible to members of your community will help keep your ebike business in their minds if they eventually will need your services, or a friend of theirs asks.
Wrapping it Up - Will You Take the Dive into starting a eBike Rental Business?
We've covered a lot! By now you have a general overview of steps you should consider before starting your ebike business. Here is a brief recap:
Size up the opportunity - evaluate your competition and the going rate for eBike rentals in your area. This will determine your profit potential.
Get the right equipment - Commercial eBikes are a must for your venture. You can see our selection of appropriate inventory here.
Don't forget about miscellaneous costs - There could be a few things to consider outside of just purchasing your fleet of eBikes.
Have a local marketing plan - people in the local market need to know your ebike business exists so they can hire you!
If you are planning on taking the plunge we wish you the best of luck. Keep us in mind for your ebike rental business needs!
As promised, we wanted to save the best for last. When you run an ebike rental company, for most of your customers this will be their first experience riding an ebike. And if you know anything about ebikes, you know that the first ride is simply awesome and amazing. More than 50% of first time ebike rental customers ask about buying an ebike. And you are the company who they have come to know, like and trust - so they will want to buy their new ebike from you.
After their rental, you will make it incredibly easy for them to buy their new ebike online, so in 5-7 days, they will have a brand new ebike delivered to their home, and you will reap the benefits. If you’re worried about the cost and complexity of setting up a sales channel, don’t give it another thought. That’s where Really Good Ebikes comes in.
We have spent the last 3+ years developing relationships with over 50 ebike brands, and we have an ecommerce site that’s built to sell. All you have to do it open a browser, show your customers what their options are, and close the sale. We will take care of all the fulfillment, so you can focus rentals and tours. For each bike you sell, you’ll get 50% of the profits- which is amazing, since the ebikes really sell themselves. All you have to do is open the browser, and point your customers to the BUY NOW button.