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Author: Michael Ramzi Jreidini Director of Operations, Campus Cycles mrjreidini@gmail.com

Business Plan

Campus Cycles 1 Lovebikes Street State College, PA 16801

April 20, 2010

Jeanette Novakovich Ms. Novakovich:

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Transmittal Document

Campus Cycles Business Plan

The Pennsylvania State University University Park, PA 16802

report illustrates our plan to achieve our ultimate goal: offer college campuses a bicycle offerings, competitors, and overall strategic approach in order to accomplish our target Jreidini at mrjreidini@gmail.com

sharing program, in order to provide students with quick and safe transportation around aspiration. If any comments or questions arise, please do not hesitate to contact Michael

university grounds. This plan will evaluate and explain Campus Cycle’s business, product

Campus Cycles would like to submit the Business Plan Report you requested. This

Sincerely,

Michael Jreidini Director of Operations, Campus Cycles

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Transmittal Document…………………………………………………………………………………………………… 1 Executive Summary……………………………………………………………………………………………………….. 3 Financials………………………………………………………………………………………………………... 7-9 Marketing Approach……………………………………………………………………………………… 9-10 Strategy and Implementation Summary…………………………………………………………………………. 7 Conclusion………………………………………………………………………………………………………………….. 11

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Table of Contents

Campus Cycles Business Plan

Market and Competitor Analysis…………………………………………………………………………………….. 6

Service Development…………………………………………………………………………………………………… 4-6

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provide students with a fast, easy, and safe mode of transportation around campus. With bike racks located near many buildings on school grounds as well as neighboring areas, students can forget about driving around campus and go green! A simple swipe of the student ID sends students cycling around university grounds! We cannot envision a better time to bring this unique bicycle sharing program to

_________________________________________________________________________________________________________ Campus Cycles is a self-service bicycle sharing program for students. Our goal is to

Executive Summary

Campus Cycles Business Plan

colleges and universities. Everyone on the Campus Cycles’ team, being graduates of large student parking tends to be far from classes). No sprinting to class in order to avoid offer students the opportunity to not “run late” and arrive to class on-time, avoid tardiness, only to sit uncomfortably after an unexpected midday workout (basically, we

“college-town” universities, understands the advantages of riding a bike as transportation. No waiting for buses. No stress over finding a parking spot (and double-stress reliever as unnecessary absences, missed classed notes, and especially that awkward walking-into-

the bike, as shown in the chart below, 85% of cyclists ride for a max of 30 minutes (for New environmentally-friendly express ride to class. rental bike at any rack location, Campus Cycles are the Campus Cycles is dedicated to spreading green

merely placing our bikes back on the specially created bike-racks (until a “click” is heard)

successfully secures the bike for the next user. Our users do not even require much use of

class-late and disrupting the class moment). Not even a worry about locking up a bike, as

York City bikers). With the ability to return the short-term across all college campuses! We truly believe this unique service will not only provide students with a worry-free,

safe, and rapid mode of transportation, but without any harmful emissions, playing a part in the world's green initiative will be as easy as riding a bike!

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university. In order to become a member of the bicycle sharing program at a particular university, an individual must comply with these rules and regulations: • • • • valid school identification card. operating a Campus Cycles’ bicycle. by the third party. Wear, and correctly tighten, a bike helmet (on the head) at all times when Return the bike in the condition in which the individual rented it.

_________________________________________________________________________________________________________ Campus Cycles offer a bicycle sharing service to students and faculty at a college or Active student (full-time or part-time) or faculty member at the school with a

Service Development

Campus Cycles Business Plan

system. The goal of our company is to link our membership fee with the school’s tuition. In this situation, our company receives revenues in lump-sum amounts from a reliable rent a bike (as others would not have a valid student ID). institution (rather than each individual student). Another advantage to connecting our membership fee to tuition is that only paying students of the university have the ability to By using the individual’s student (or faculty) ID, we believe theft and damages to

Assuming these policies are followed, an individual may become a member of our

This includes obeying traffic signs, not being under the influence of any drug or alcohol, and learning all bicycle hand-signals.

Follow all laws (differ by state) for riding bicycles or non-motorized vehicles.

Never reveal their unique pin number (created by the member) to a third party.

If revealed, the individual accepts any and all responsibility for the actions done

bikes will be minimized, as our database would have any and all pertinent information on recognized as a member at the bike rack. With the extra security provided by the pin
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the individual to return a damaged bike (or not return it at all). In order to assure the person renting the bike is, in fact, the student on the swiped identification card, an

individual will also need a four digit pin number, which will be keyed-in after the card is

number, we believe identifying the last user of a damaged (or stolen) bike will extremely easy. Campus Cycles. In order to prevent lawsuits, our company has required riders to wear a the influence of any drug or alcohol. Campus Cycles believes that if these rules are respected, our bikes are 100% safe. With little damage and theft, the major problem with this service is liability of

Campus Cycles Business Plan

helmet (properly), follow all state laws and regulations, and never ride a bike when under it is time to move onto development of the service. In order to thrive, Campus Cycles bike racks must be located at a variety of locations on campus, as well as in surrounding areas and neighborhoods. This will allow for students to rent a bike just outside their housing, installment of a multitude of bike-racks around the university grounds. This said, more congested areas will boast more (or bigger) racks to appease the high demand for bikes Campus Cycles will flourish as students will ride our bikes wherever they need to go. and spots to return them. Our team is ready to survey students, research campuses, and truly understand all Campus Cycles locations in order to allow for the most effective and arises as our next issue. Although a small, on-location shop is necessary, our team has simple repairs and servicing at a small shop on-location (this also serves as a representation of Campus Cycles, available for all campus-specific problems for all Now that we have discussed the rules and requirements of this bike sharing system,

ride it as close to class as possible, and return it at a rack at that location. This involves the

efficient placement of bike racks. We trust that when our bike racks are placed properly,

come to the realization that servicing and repairing bikes cannot happen at every school, as this would become extremely costly. We have decided that it makes most sense to perform

After placement of our bike racks has been completed, servicing and repairing bikes

customers), while major repairs will take place at regional locations. These regional

and transport any severely damaged bikes back to the regional warehouse for repair.
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warehouses will aid on-location shops with extra bikes and a full inventory of spare-parts (just complete an order form, and all spare-parts or extra bikes will arrive within the

week). These drivers will not only deliver all spare-parts and extra bikes, but also receive

thrive at all higher-education schools. Although competition may arise, we know our

superior development plan will allow us to easily surpass any new entrant to our market.

Campus Cycles has faith that with the proper implementation of our service, we can

Campus Cycles Business Plan

fact, we are creating the market! Although many cities have bicycle sharing systems,

_________________________________________________________________________________________________________ Campus Cycles offers a unique opportunity to be the first entrant into a market. In

Market & Competitor Analysis

including cities such as Paris, Barcelona, and Washington D.C., none of these programs are This guaranteed customer-base and stable revenue source allows our company to be oneof-a-kind in a market that does not even exist yet! And with the plethora of colleges and universities that are compatible for a system such as Campus Cycles, our growth opportunities are virtually endless! This is an exciting time for our company, as our every move expands the market,

directed at students and none operate on university grounds through a reliable institution.

as Campus Cycles, but a company with knowledge and technology of an industry will certainly enter the niche of that industry.

and with minimal competition from others, we look to dominate the market share. Even

though no competitors have arrived yet, it is hard to believe one will not arise. The systems that take place in the other cities listed above may not be as in-depth and customer-specific In order to cement ourselves as the best student bike-sharing system available,

prove very valuable in this market. Officials at these schools will accept the offer of a wellbacked, respected, and experienced company over any other competitor. By proving we are the best at efficiently implementing a well-thought-out bike sharing system (each for success”), Campus Cycles will control the market.

Campus Cycles will have to gain a positive reputation fast. First-class feedback from our customers (which remember word-of-mouth will help our company significantly, as our

customers are the universities we offer our system to and students who use the bikes), will university must have its own system, as all campuses are different, there is no “one formula

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and universities with a worry-free mode of transportation for its occupants. Although we locations (number one reason profitable firms fail is because they expand too fast). The first perfecting our methods. Once our company has successfully applied our system to these campuses, we plan to expand and dominate the market. Financials simple fact is this, we need to implement a few test campuses (3-4 in the same region) in

relish the opportunity to expand, Campus Cycles plans to evaluate any and all prospective

while all major dilemmas will be handled immediately by an executive representative. It is

efficiently implementing bike sharing systems on university grounds, but also provide

_________________________________________________________________________________________________________ Campus Cycles strategic approach is to not only become the best at effectively and

Strategy and Implementation Summary

Campus Cycles Business Plan

our goal to provide users with safe and easy-to-use bikes that encounter minimal problems,

excellent customer service and keep the users of the bikes and universities happy. We

believe our on-location shops will allow us to quickly fix any minor problems that occur,

order to smooth out our plans and work out any kinks. We cannot become the best without As mentioned above, Campus Cycles plans to open and operate 3-4 “test campuses”

with the intention of truly understanding the service, market, and any problems that arise. With endless growth potential, we believe establishing ourselves at our test campuses as soon as possible is key to controlling the market. However, in order to launch our test

requirements. By using the New York City Bike-Sharing System Plan, we were able to number of bikes (and bike racks) at each location.1
Program City Paris, France Velib’ Barcelona, Spain Bicing

campaign, Campus Cycles would like to calculate and discuss our start-up costs and capital that total costs vary on the number of bikes and bike-stations used at each campus. The
Wasington, DC Smartbike Montreal, Canada Bixi Velo

table below shows similar bike sharing programs in cities across the world, and the exact
Toulouse, France

break down our costs into installation fees and operating costs. First, one must understand

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Start Date City Size City Population Bicycles Bike Racks

44 sq miles 2.2 million 20,600 1,451

July 2007

March 2007 39 sq miles 1.6 million 6,000 400

August 2007 68 sq miles 588,000 120 * 10

141 sq miles 1.8 million Unknown 5,000

Spring 2009

Campus Cycles Business Plan Nov. 2007 45 sq miles 435,000 1,400 135

*Note – Program in D.C. is solely for the use of tourists and is only located around main attractions.

make some basic assumptions. Campus Cycles plans to use relatively large universities as our test grounds, as more students and more campus grounds will allow for maximum exposure. We plan to start-up our company at 3 test campuses, all of which need to be

To determine the number of bikes necessary for each of our campuses, we need to

must make an estimate as to how many bikes (and racks) are necessary at each location. and racks. In order for this region to run properly, we believe a total of 1,500 bikes and 150 bike stations are necessary (500 bikes/50 bike racks per school). Again, we use historical figures (from the programs above) to calculate our total start-up costs1: Bicycle Costs: $600 per bike. Total Bicycle Costs = $900,000 Capital Costs: $4,000 per bike. Total Capital Costs = $6,000,000

and 34, 883 4 respectively. Add a total faculty of about 10,000 per school, and our total number of members in this region comes to nearly 150,000! Seeing as 150,000 does not coincide with any of the programs shown above, we

located in the same region of the country. Say we begin Campus Cycles in the south, at the University of Florida, the Florida State University, and University of Georgia. According to valid sources, the total number of students at these universities are 52,271 3 ; 30, 803 2 ;

To make it simple, we will assume all three universities require the same number of bikes

Operating Costs: $1,500 per bike. Total Operating Costs = $2,250,000

and installation of bike-stations, purchase of service and distribution vehicles, development of a website, and purchase and installation of necessary hardware and software.” 1 “Operating costs include salaries for maintenance and administrative staff, insurance, replacement costs for broken or stolen equipment, debt-service, gasoline and

“Capital costs for a bike-share program include provision of bicycles, manufacture

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upkeep costs for redistribution vehicles, website hosting and maintenance, electricity charges for the bike-stations, membership cards and warehouse/storage fees.” 1 Total Start-up Costs: $9,150,000

Campus Cycles Business Plan

annual membership fee of $60 per customer (150,000 student/faculty members) to get an year one revenue stream of $9,000,000. This first year cash flow is solely from growth market in itself (advertise on a bike and get constant moving exposure around a not include them in our analysis. After one year of operation, our net income is negative, but our capital costs and

membership fees, and yet it still nearly covers our total start-up costs. Also, we could factor in advertising placed on the bikes (and bike stations), which has the potential to be a highcollege campus). However, these revenues are speculated and not guaranteed, thus we will cost of $1,500 per bike make up our costs for years to come. Yet, just to be totally secure, we believe including some unexpected fees is necessary (inflation is one factor but also one. This makes our total cost of operation (per year) amount to only $3,000,000. a year two net income of $6,000,000!

Although the capital necessary seems like a lofty investment, take into account an

costs per bike are one-time investments that we milk over years. This means our operating nothing goes 100% to plan), so let’s estimate operating costs at $2,000 per bike after year Despite requiring a high initial capital cost, Campus Cycles proposes significant Marketing Approach

Remember, our revenue from membership fees alone is $9,000,000 , giving Campus Cycles of our business, which cannot occur without a well-prepared marketing scheme.

profits in future periods, as most costs are up-front. However, we are assuming popularity have to “sell” our idea not only to the schools but also to the students. Our method to reach universities is to research and study the campuses; this includes student surveys, our system to the university. To help convince the leaders of the school, we must
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researching top schools within the college in order to find more congested areas, and even understanding the most popular means of transportation currently at that campus. After thoroughly examining the specific campus, our team will compile the results and present

The marketing approach of our company is more complex than many others, as we

assuming we are granted the rights to govern a bicycle sharing system on the property

communicate a specific implementation plan for that university and explain how the system will function (and why that school will benefit). Following our presentation to the school (and likely local area officials), and

Campus Cycles Business Plan

(and surrounding areas), we now have to go get our customers! This is the easier part of In order to do this properly, we must reach students and inform them! Signs, flyers, commercials, internet telling these students that they could rent a bike is not

our marketing approach, as research shows that young-people are more inclined to ride a bike around town (the pie-chart shows the popularity by age of cycling in New York City). advertisements, emails, and campus representatives are a enough; we must enlighten them on why! To do this, we few ways to notify our potential customers. However, just

is not practical and why biking is better than walking. Defeating driving is not difficult, as pedestrian traffic?), and also, biking is healthier for the environment! Although driving is easy to conquer, convincing students that biking is better than

most campuses struggle with parking spaces (especially for students, who usually park far walking will be tricky. We believe the best approach to persuading students to pick up a bike over riding is the time factor. Running late and do not want to run to or miss class?

away from central campus), mass crowds of pedestrians (who wants to drive in stop and go

must use our research of the campus to identify why driving

Grab a Campus Cycle! Want that extra ten minutes of sleep before class? Sleep and get to class faster on a bike. We all know riding a bike is significantly faster than walking, thus usage, school officials will cancel the program, so we must please our students and convince them bikes are better! our marketing must emphasize this so our customers learn to rent a bike whenever they need to make up lost time. In the end, we must market to students well. With no student

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and domination of the market will be as easy as riding a bike!

opportunity! With the correct implementation and marketing approach, our team truly believes Campus Cycles will become profitable within two years. We need your help to

make it a reality, with such lucrative and successful operations, expansion to other regions

_________________________________________________________________________________________________________ Campus Cycles has enormous potential in an emerging market, do not miss this

Conclusion

Campus Cycles Business Plan

2. Florida State University. The Princeton Review, 2008. Web. 4 Apr. 2010. <http://www.princetonreview.com/FloridaStateUniversity.aspx>.

1. Share Opportunities in New York City. Rep. no. PTCP08D00.G05. NYC Department of City Planning, Spring 2009. Web. 1 Apr. 2010. <http://www.nyc.gov/html/dcp/pdf/transportation/bike_share_part1.pdf>.

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Works Cited

3. Stats and Facts for Prospective Students. The University of Florida, 2010. Web. 4 Apr. 2010. <http://www.admissions.ufl.edu/ufprofile.html>.

4. The University of Georgia: Quick Facts. The University of Georgia, 25 Feb. 2010. Web. 4 Apr. 2010. <http://www.uga.edu/profile/facts.html>.

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