BUSI 435 Week 3 Feasibility Analysis Example

Feasibility Analysis: Wrench on Wheels Mobile Bicycle Repair

Introduction and Business Concept

Wrench on Wheels would be a mobile bicycle repair service operating from a fitted cargo van in a composite college town of about 60,000 residents, including 18,000 university students. Instead of riders bringing bikes to a shop, a mechanic would come to their home, dormitory or workplace by appointment, perform tune-ups and repairs on site and handle electric bicycle maintenance. The founders are two graduating students, one a certified bicycle mechanic who has worked four years in a local shop, the other a business student who would manage scheduling, marketing and finances.

Scarborough (2016) describes a feasibility analysis as the process of determining whether a business idea is a viable foundation for a successful company before the entrepreneur invests heavily in it. This analysis examines industry, market, product, organizational and financial feasibility and ends with a recommendation. Research suggests the effort is worthwhile. Delmar and Shane (2003) found that new ventures that planned before launching other organizing activities were less likely to disband, and Brinckmann et al. (2010) found an overall positive relationship between planning and small firm performance.

Industry Analysis

Bicycle use for transportation and recreation has grown in many cities, supported by investments in bike lanes and by public interest in health and sustainability. Pucher and Buehler (2017) describe cycling as an increasingly important part of urban transportation in North America and Europe, encouraged by infrastructure improvements and policy support. Fishman (2016), reviewing research on cycling as transport, notes its health and environmental benefits and the importance of safe infrastructure in encouraging riders.

Electric bicycles are a growing part of the market and an important opportunity for a repair business. McQueen et al. (2020) estimated that e-bikes could substantially reduce transportation emissions in a metropolitan region because they let riders replace longer car trips. E-bikes are heavier and more complex than conventional bikes, with motors, batteries and electronics that require specialized maintenance, and many general shops have limited experience with them. A mechanic trained in e-bike service would serve a segment that is growing and underserved.

The repair industry itself is fragmented, made up mostly of independent bike shops that earn much of their revenue from selling bicycles and treat repair as a secondary service. Repair demand is highly seasonal, peaking in spring when riders take bikes out of storage, which leads to long waits at shops. That seasonal bottleneck is the opportunity the concept targets.

Market Analysis

To test demand, the founders surveyed 162 students, university staff and residents at campus events, a farmers market and two apartment complexes. The results, presented here as illustrative figures for this sample, were encouraging.

Heinen et al. (2010), reviewing research on bicycle commuting, found that convenience factors such as distance, facilities and effort strongly influence whether people ride. A bike that needs repair and cannot easily be taken to a shop is a convenience barrier, which helps explain why many respondents delayed repairs.

The survey suggests three target segments. University staff and faculty who commute by bike value their time and would pay for workplace service while they are at work. Students living in dormitories and apartments often lack cars to transport bikes and have flexible schedules. E-bike owners, a smaller but higher-value group, need specialized service that the town's shops provide only slowly. Applying the survey's likelihood figure conservatively, and assuming that only a third of likely users would actually book in the first year, the town's bike owners could produce several thousand service visits a year, well above the business's capacity.

Customer Interviews

To understand the numbers behind the survey, the founders interviewed twelve potential customers in depth: four faculty and staff commuters, five students and three e-bike owners. The commuters described the same frustration: their bikes are their transportation, so leaving one at a shop for a week means finding another way to work. Several said they would happily pay more to have a bike serviced while it sat in the department's bike room. The students cared more about price and speed than about scheduling, and most did not know where the campus cooperative was. The e-bike owners were the most motivated; two had waited more than two weeks for warranty work and one had driven forty miles to a specialty shop. These interviews suggest that the strongest early demand will come from commuters and e-bike owners, with students forming a large but more price-sensitive segment.

Market Size Estimate

A rough estimate helps judge whether demand can support the business. If the town's adult population and students include about 30,000 bike owners, the survey's figure of 64 percent needing service each year implies about 19,000 service needs annually. Even if only 6 percent of those needs come to Wrench on Wheels in the first year, the business would see more than 1,100 jobs, the projection used in the financial section. The estimate is rough, and it depends on the survey's representativeness, but it suggests the business does not need to capture a large share of the market to succeed.

Competitive Analysis

The town has two competitors. A full-service shop downtown sells bikes and offers repairs, with waits of seven to ten days during the spring rush, according to staff interviews and the founders' own work experience. A student-run cooperative on campus offers tools and advice for do-it-yourself repairs three afternoons a week but does not perform repairs for customers. Neither offers mobile service, workplace service or specialized e-bike maintenance.

Wrench on Wheels would compete on convenience and speed rather than price. Its risk is that the downtown shop could respond by adding pickup and delivery. The founders' plan to build relationships with university departments and apartment managers, and to specialize in e-bikes, would make that response less threatening. The founders also considered a third, indirect competitor: big-box stores that sell inexpensive bicycles and offer limited assembly services. Those stores do not repair bikes after the sale, but their low prices encourage riders to replace a broken bike rather than fix it. Wrench on Wheels would answer that substitute by keeping basic repairs affordable and by educating customers, through short social media videos and service notes, about how inexpensive maintenance extends a bike's life. Finally, the founders checked whether a mobile repair business already operated in nearby towns; one serves a city fifty miles away, which suggests the model works elsewhere but leaves this town open.

Service and Pricing Feasibility

The service menu would include a basic tune-up at $85, a full overhaul at $180, flat repairs at $30 plus parts, and e-bike diagnostics and service starting at $120. Prices are slightly above the downtown shop's, reflecting the convenience of on-site service. Hinterhuber (2008) argues that pricing based on the value customers receive usually outperforms cost-plus pricing, though many firms resist it because value is harder to measure. For Wrench on Wheels, the value includes the customer's saved time and avoided trip, which the survey suggests many riders would pay for. The founders would test prices during a spring pilot and adjust if bookings fall short.

To test the concept itself, the founders ran a three-weekend pilot using the mechanic's own tools and a borrowed pickup truck, completing 38 jobs with an average ticket of $92 and receiving requests for 20 more appointments than they could fill. Kerr et al. (2014) describe entrepreneurship as experimentation, and the pilot was a low-cost experiment that produced real evidence of demand.

Pricing Sensitivity

The survey also asked how likely respondents would be to book at different tune-up prices. Interest held steady between $75 and $85 and dropped noticeably above $95, which suggests the planned $85 tune-up sits near the top of the comfortable range. During the pilot, no customer declined service because of price, and several added extra work, such as new brake pads or tires, once the mechanic was already on site, raising the average ticket. Those add-on sales are a hidden advantage of mobile service: when the mechanic is standing beside the bike, recommending a worn chain replacement is easier than asking a customer to bring the bike back to a shop.

Organizational Feasibility

The founders have the core skills: four years of shop experience and a bicycle mechanic certification on one side, and coursework in marketing and accounting on the other. They would form a limited liability company, obtain a city business license and a vendor permit for campus work, and buy general liability and commercial auto insurance. The university's facilities office has indicated that registered vendors may work in designated bike parking areas. One gap is capacity: a single mechanic can complete about seven jobs a day, so growth would require hiring a second mechanic in the second year.

Legal and Regulatory Requirements

The business would need a city business license, registration as a limited liability company with the state, a campus vendor registration and sales tax registration for parts sales. Because the van would park on public streets and university lots during service, the founders confirmed with the city that a mobile service vehicle may operate in residential areas without a special permit, provided it does not block traffic. Disposal of used tires, tubes and batteries, including e-bike lithium batteries, must follow local recycling rules; the founders identified a recycling center that accepts batteries from businesses for a small fee.

Financial Feasibility

The estimated startup costs are summarized below.

The founders would contribute $15,000 and seek a $30,000 microloan, with annual payments of about $7,300 over five years. Research on startup financing supports this mix. Cassar (2004) found that startups with more tangible assets, such as a vehicle and equipment, are more able to use debt, and Robb and Robinson (2014) found that new firms rely more heavily on external debt, including bank loans, than was commonly assumed.

The first-year projection assumes 1,100 jobs, about 23 a week over 48 working weeks, at an average ticket of $95, for revenue of $104,500. Parts are estimated at 25 percent of revenue, leaving a contribution of about $71 per job. Annual fixed costs, including van operation, insurance, software, marketing and loan payments, total about $21,900, and the founders need about $40,000 in combined pay. The break-even point is therefore about 869 jobs a year, or roughly 18 a week across 48 working weeks, comfortably below projected volume. At 1,100 jobs, the business would earn about $16,500 after paying the founders.

Sensitivity Analysis

Because the projection depends on demand assumptions, the founders tested what happens if they are wrong. If the business completed only 900 jobs in the first year, about 18 percent fewer than projected, it would still exceed the break-even point of 869 jobs, though the founders' profit beyond their pay would nearly disappear. If the average ticket fell to $85, the contribution per job would drop to about $64 and break-even would rise to roughly 970 jobs, still below the projected 1,100. Only a combination of lower volume and lower prices would push the business below break-even. This analysis suggests the concept has a reasonable cushion, but it also shows why the spring pilot and the workplace partnerships matter: they are the best protection against a shortfall in volume.

Risks

The main risk is seasonality. Demand peaks in spring and drops in winter, when cold weather keeps many riders off their bikes. The plan addresses this with winter storage-and-service packages, partnerships with apartment complexes for move-in season, and e-bike work, which is less seasonal. A second risk is capacity: if demand exceeds one mechanic's limit, customers may wait as long as they do at the shop. A third is weather and safety for outdoor work. The founders would carry a canopy and portable lighting so that most work can continue in light rain and early darkness, and they would schedule outdoor jobs around forecasts during the coldest months. Headd (2003) found that many business closures reflect owners' choices rather than failure, and the founders should set clear measures, such as weekly bookings in the first spring, that would tell them whether to expand, adjust or stop.

Conclusion and Recommendation

The evidence supports moving forward. The industry is growing, especially in e-bikes; the survey and pilot show demand that existing shops do not meet; the founders have the needed skills; and the financial projection exceeds break-even with a reasonable margin. The concept is feasible if the founders can smooth the spring peak, because convenience is valuable only when customers can actually get an appointment. The recommendation is to proceed to a full business plan, with three conditions: a second spring pilot to confirm pricing, signed service agreements with at least two university departments or apartment managers, and a winter offering that keeps revenue flowing in the slow months.

References

Brinckmann, J., Grichnik, D., & Kapsa, D. (2010). Should entrepreneurs plan or just storm the castle? A meta-analysis on contextual factors impacting the business planning-performance relationship in small firms. Journal of Business Venturing, 25(1), 24-40. https://doi.org/10.1016/j.jbusvent.2008.10.007

Cassar, G. (2004). The financing of business start-ups. Journal of Business Venturing, 19(2), 261-283. https://doi.org/10.1016/S0883-9026(03)00029-6

Delmar, F., & Shane, S. (2003). Does business planning facilitate the development of new ventures? Strategic Management Journal, 24(12), 1165-1185. https://doi.org/10.1002/smj.349

Fishman, E. (2016). Cycling as transport. Transport Reviews, 36(1), 1-8. https://doi.org/10.1080/01441647.2015.1114271

Headd, B. (2003). Redefining business success: Distinguishing between closure and failure. Small Business Economics, 21(1), 51-61. https://doi.org/10.1023/A:1024433630958

Heinen, E., van Wee, B., & Maat, K. (2010). Commuting by bicycle: An overview of the literature. Transport Reviews, 30(1), 59-96. https://doi.org/10.1080/01441640903187001

Hinterhuber, A. (2008). Customer value-based pricing strategies: Why companies resist. Journal of Business Strategy, 29(4), 41-50. https://doi.org/10.1108/02756660810887079

Kerr, W. R., Nanda, R., & Rhodes-Kropf, M. (2014). Entrepreneurship as experimentation. Journal of Economic Perspectives, 28(3), 25-48. https://doi.org/10.1257/jep.28.3.25

McQueen, M., MacArthur, J., & Cherry, C. (2020). The e-bike potential: Estimating regional e-bike impacts on greenhouse gas emissions. Transportation Research Part D: Transport and Environment, 87, Article 102482. https://doi.org/10.1016/j.trd.2020.102482

Pucher, J., & Buehler, R. (2017). Cycling towards a more sustainable transport future. Transport Reviews, 37(6), 689-694. https://doi.org/10.1080/01441647.2017.1340234

Robb, A. M., & Robinson, D. T. (2014). The capital structure decisions of new firms. The Review of Financial Studies, 27(1), 153-179. https://doi.org/10.1093/rfs/hhs072

Scarborough, N. M. (2016). Essentials of entrepreneurship and small business management (8th ed.). Pearson.