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Best way to estimate revenue of a bike shop

Anonymous A asked on Oct 25, 2018 - 5 answers

What are the different approaches (with great details) to estimate a bike shop revenue in London?

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Elias
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replied on Oct 25, 2018
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How about you provide some ideas and ask for feedback instead of asking others to do your work for you, ("with great details", no less)?

A person running a bike shop in London would say: "Bugger off"...

Guennael
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replied on Oct 26, 2018
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Agree too - this is why I never respond to those questions of people asking us to do their job. Pet peeve of mine :)

Vlad
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replied on Oct 26, 2018
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Hi,

Can only agree with Elias here:)

Best!

Vlad
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replied on Oct 26, 2018
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Jacob,

You approach seems good, but it's unclear how will you calculate the actual number of units sold in an actual shop. I see 2 ways:

1) From the demand side: every time you come to this store you see x ppl. You can assume how much time on average they spend at the store and calculate daily traffic. Then multiply it by the conversion rate (use an assumption based on personal experience)

2) You can also do it from the supply side:

Assume the size of the shop + warehouse room-> avg inventory (How many bikes it can fit) -> avg turnover (assume the inventory changing every season) -> sales

Best!

Jacob updated his answer on Oct 26, 2018

This would be my way of approaching this....

Revenue: (1) + (2)

  • Rev. from sales (1) = (1a) * (1b) + (1c)
    • # of bikes sold (1a)
      • # Electric bikes
      • # Used bikes
      • # City bikes
    • avg price (1b)
      • $ Electric bikes
      • $ Used bikes
      • $ City bikes
    • Accesoirces sold (1c)
      • units
      • $ per unit
  • Rev. from repair (2)
    • ​# of bikes repaired (2a)
      • Hours needed per repair (2a-I)
        • [4 segments from 2b ]
      • Hours of mechanic time (2a-II)
        • # of mechanics
        • Opening hours / working hours
    • $ per repair (2b)​
      • $ of flat tire = 25% of repair jobs
      • $ of new tire = 25% of repair jobs
      • $ of big maintenance = 25% of repair jobs
      • $ of other maintenance = 25% of repair jobs

Good luck putting some numbers to it....and it was a good practice case for me, thanks!

@Elias/Guennael/Vlad: if you have some feedback on my structure, I am happy to hear it.

(edited)

Hi Jacob, I take it you are not the thread opener. The structure is very solid to come up with a revenue estimate. Only thing I would add or specify more clearly is the "mechanic utilization rate". Maybe you meant this with "working hours" but just be aware that mechanics do not have a 100% utilization rate. — Elias on Oct 26, 2018

Another comment: Just assuming out of the blue the number of units being sold is an obvious invitation for a market sizing exercise. So how do you arrive at that particular number? — Elias on Oct 26, 2018

And, last but not least: London has GBP, so if you're assuming things in $, make sure to convert it at the end :-D — Elias on Oct 26, 2018

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