Two-Wheeled Ventures: How to Start a Motorcycle Dealership

Here are the most important factors to consider when you want to start a motorcycle dealership:

1. Location — Choose a location that is easily accessible and has high visibility. Ideally, it should be near other automotive businesses or in a commercial area with high foot traffic. Ample space for displaying motorcycles and providing customer parking is essential.
2. Permits — Obtain the necessary permits and licenses to operate a motorcycle dealership legally. This may include a business license, zoning permits, sales tax permit, and a dealer license. Check with local authorities for specific requirements.
3. Insurance — Secure comprehensive insurance coverage for your dealership. This includes general liability insurance, property insurance, and inventory insurance to protect against theft, damage, and other risks. Additionally, consider offering insurance options for customers purchasing motorcycles.
4. Register your business — A limited liability company (LLC) is the best legal structure for new businesses because it is fast and simple. Form your business immediately using ZenBusiness LLC formation service or hire one of the best LLC services on the market.
5. Legal business aspects — Register for taxes, open a business bank account, and get an EIN.
6. Zoning — Ensure your location complies with local zoning laws and regulations for automotive dealerships. You may need to obtain special zoning approvals or variances.
7. Logistics — Set up a reliable logistics system for receiving, storing, and displaying motorcycles. This includes having a secure and organized inventory management system and a process for handling deliveries and shipments.
8. Specialization — Identify a niche market or specialize in certain types of motorcycles, such as sport bikes, cruisers, vintage motorcycles, or electric bikes. Specialization can help you target specific customer segments and differentiate your dealership from competitors.
9. Stock a variety of motorcycles — Ensure your dealership stocks a wide range of popular and high-quality motorcycles. This includes new models, pre-owned bikes, and a variety of brands and styles to cater to different customer preferences.

You May Also Wonder:

Is a motorcycle dealership profitable?

A motorcycle dealership can be profitable. Your best bet is to sell a mix of new and used motorcycles to have a higher average profit margin. You’ll also want a good location with high visibility.

What is the growth potential of a motorcycle dealership?

A motorcycle dealership can boost revenue by offering repair services and motorcycle-related products. It can also expand to multiple locations.

What type of business is a motorcycle dealership?

A motorcycle dealership has NAICS Code 441228, which is the motorcycle, ATV, and other motor vehicle dealers industry. It’s also a form of retail sales.

Can you start a motorcycle dealership on the side?

Having a full-blown dealership is a full-time job. But you could buy used motorcycles, restore them and resell them online to start building a reputation before opening your own shop.

Step 1: Decide if the Business Is Right for You

Pros and cons

Motorcycle dealership industry trends

Industry size and growth

• Industry size and past growth – The U.S. motorcycle dealership and repair industry is worth $34.8 billion in 2023 after growing 1.1% annually the last five years.((https://www.ibisworld.com/industry-statistics/market-size/motorcycle-dealership-repair-united-states/))
• Growth forecast – The U.S. motorcycle dealership and repair industry is projected to expand 1.1% in 2023. 
• Number of businesses – In 2023, 14,549 motorcycle dealership and repair businesses are operating in the U.S.((https://www.ibisworld.com/industry-statistics/number-of-businesses/motorcycle-dealership-repair-united-states/#:~:text=There%20are%2014%2C549%20Motorcycle%20Dealership,of%20%2D4%25%20from%202022.))
• Number of people employed – In 2023, the U.S. motorcycle dealership and repair industry employs 67,433 people.((https://www.ibisworld.com/industry-statistics/employment/motorcycle-dealership-repair-united-states/))

Trends and challenges

Trends

• Electric motorcycles could enable a dealership to offer an eco-friendly option
• Interest in retro motorcycles, such as old Indian models, is being replaced by demand for new, retro-inspired styles. 

Challenges

• The motorcycle industry is having difficulty attracting new customers, while existing customers are aging. 
• Motorcycle dealers have failed to attract women to the motorcycle market, which makes for a much smaller target market. This could also present an opportunity for a creative entrepreneur to develop marketing that appeals to this market. 

Demand hotspots

• Most popular states – The states with the highest rate of motorcycle ownership are South Dakota, New Hampshire, and Iowa.((https://www.fool.com/investing/general/2014/02/16/50-states-ranked-for-highest-motorcycle-ownership.aspx))
• Least popular states – The places with the lowest rate of motorcycle ownership are the District of Columbia, Mississippi, and Louisiana. 

How much does it cost to start a motorcycle dealership business?

Startup costs for a motorcycle dealership range from $50,000 to $100,000. Costs include renting a shop and lot space, inventory, and an operating budget. 

Theoretically, you could start a motorcycle dealership online, but you’d still have to purchase inventory and have a space to store the bikes, so you might not save much on startup costs. 

An alternative would be to develop a buy-sell motorcycle site, where users could sell and buy used motorcycles and you take a commission on each transaction. Your main cost would be building the site, which could cost several thousand dollars.  

In addition to motorcycles, you’ll need a handful of items to launch your dealership, including: 

• Motorcycle display equipment
• Repair tools and equipment
• POS system

Start-up Costs	Ballpark Range	Average
Setting up a business name and corporation	$100 - $500	$300
Business licenses and permits	$200 - $300	$250
Insurance	$100-$500	$300
Website	$200 - $1,000	$600
Initial Marketing Budget	$300 - $500	$400
Shop and lot rental deposit	$5,000 - $10,000	$7,500
Display equipment and other equiment	$10,000 - $20,000	$15,000
Initial inventory	$25,000 - $50,000	$37,500
Operating budget	$10,000 - $20,000	$15,000
Total	$50,900 - $102,800	$76,850

How much can you earn from a motorcycle dealership business?

What you charge for motorcycles will vary based on the type and model, and whether they are new or used. Motorcycles generally range from $4,000 to $20,000, with an average price of $10,000. 

If you’re selling new and used bikes, your profit margin should be about 20%. In your first year or two, you could sell 250 motorcycles a year, bringing in $250,000 in annual revenue. This would mean $50,000 in profit, assuming that 20% margin. 

As you gain traction, sales could climb to 600 motorcycles a year. With annual revenue of $600,000, you’d make a tidy profit of $120,000.

What barriers to entry are there?

There are a few barriers to entry for a motorcycle dealership. Your biggest challenges will be:

• Funding the startup costs
• Having extensive knowledge of various motorcycle brands

Step 2: Hone Your Idea

Now that you know what’s involved in starting a motorcycle dealership, it’s a good idea to hone your concept in preparation to enter a competitive market. 

Market research could give you the upper hand even if you’ve got the perfect product. Conducting robust market research is crucial, as it will help you better understand your customers, your competitors, and the broader business landscape.

Analyze your competitors 

Research motorcycle dealerships in your area to examine their products and services, price points, and customer reviews.

• Make a list of motorcycle dealerships that offer similar products and services. 
• Review your competitors’ motorcycles – their features, pricing, and quality. Also take a look at their marketing to determine their target market. The goal is to find an underserved target market in your area that could become your niche. 
• Check out their reviews and ratings on Google, Yelp, and Facebook to get an idea of what their customers like and dislike.
• Identify your competitors’ strengths and weaknesses and capitalize on the latter. For example, your competitor may not do motorcycle repairs, which you could offer to attract customers. 

This should identify areas where you can strengthen your business and gain a competitive edge to make better business decisions.

Why? Identify an opportunity

You’re looking for a market gap to fill. For instance, maybe the local market is missing a shop that specializes in new and used Indian motorcycles or that sells accessories like helmets and leather gear. 

This could jumpstart your word-of-mouth marketing and attract clients right away. 

What? Determine your products or services

You should sell a mix of new and used motorcycles. You could specialize in a certain brand or offer a variety. You can also add revenue by offering repairs, spare parts and accessories. 

How much should you charge for motorcycles?

Your prices should be based on market prices in your area, but also on your costs to acquire the motorcycles and your overhead. 

Once you know your costs, use this Step By Step profit margin calculator to determine your mark-up and final price points. Remember, the prices you use at launch should be subject to change if warranted by the market.

Who? Identify your target market

Your target market will depend on the motorcycles you offer. If you offer a wide variety, your market is likely to be very broad, so you should market on TikTok, Instagram, and Facebook. You could also advertise on motorcycle-related forums, blogs, and groups. 

Where? Choose a location for your motorcycle dealership

You’ll likely need to rent a shop with a lot. You can find commercial space to rent in your area on sites such as Craigslist, Crexi, and Instant Offices.

The location should be easily accessible to your target demographic, with good road connectivity and parking facilities. Visibility is crucial, so opt for spots with high footfall or vehicular traffic, such as near main roads or shopping areas. Ensure the rent or purchase price is within your budget, and take into account future expansion possibilities. Lastly, check local zoning laws and regulations to ensure you can legally operate a dealership in the chosen location.

Step 3: Brainstorm a Motorcycle Dealership Name

Here are some ideas for brainstorming your business name:

• Short, unique, and catchy names tend to stand out
• Names that are easy to say and spell tend to do better 
• Name should be relevant to your product or service offerings
• Ask around — family, friends, colleagues, social media — for suggestions
• Including keywords, such as “new and used motorcycles”, boosts SEO
• Name should allow for expansion, for ex: “MotoVerse Dealerships” or “TwoWheel Horizons” over “RetroRide Cycles” and “TrailBlaze Bikes”
• A location-based name can help establish a strong connection with your local community and help with the SEO but might hinder future expansion

Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these. 

Finally, make your choice among the names that pass this screening and go ahead and reserve your business name with your state, start the trademark registration process, and complete your domain registration and social media account creation. 

Your business name is one of the key differentiators that sets your business apart. Once you pick a name, reserve it and start with the branding, it’s hard to switch to a new name. So be sure to carefully consider your choice before moving forward. 

Step 4: Create a Motorcycle Dealership Business Plan

Here are the key components of a business plan:

• Executive Summary: Provide a concise summary of your motorcycle dealership business plan, outlining your dealership’s unique selling points, target customer base, and financial projections.
• Business Overview: Describe the nature of your motorcycle dealership, its location, the brands and types of motorcycles you plan to sell, and any additional services, such as maintenance or customization.
• Product and Services: Detail the range of motorcycles and related products you’ll offer, including new and used bikes, accessories, parts, and any special services like motorcycle repairs or customizations.
• Market Analysis: Analyze the motorcycle market in your area, considering factors like customer demographics, demand for specific types of motorcycles, and trends in the industry.
• Competitive Analysis: Identify other motorcycle dealerships and competitors in your region, highlighting your dealership’s unique features, pricing strategies, or exclusive partnerships.
• Sales and Marketing: Outline your sales and marketing strategies, including how you’ll attract customers through advertising, online presence, motorcycle events, and promotions.
• Management Team: Introduce yourself and any key team members involved in running the motorcycle dealership, emphasizing their expertise in the motorcycle industry.
• Operations Plan: Explain the day-to-day operations of your dealership, including staffing requirements, dealership layout, inventory management, and customer service protocols.
• Financial Plan: Present financial projections, including startup costs, sales forecasts based on market research, and profit margins for your motorcycle dealership.
• Appendix: Include any supporting documents, such as images of the dealership, dealership layout plans, financing details, and marketing materials, to strengthen your motorcycle dealership business plan.

If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist to create a top-notch business plan for you.

Step 5: Register Your Business

Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business! 

Choose where to register your company

Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you are planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to motorcycle dealerships. 

If you’re willing to move, you could really maximize your business! Keep in mind, it’s relatively easy to transfer your business to another state. 

Choose your business structure

Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your motorcycle dealership will shape your taxes, personal liability, and business registration requirements, so choose wisely. 

Here are the main options:

• Sole Proprietorship – The most common structure for small businesses makes no legal distinction between company and owner. All income goes to the owner, who’s also liable for any debts, losses, or liabilities incurred by the business. The owner pays taxes on business income on his or her personal tax return.
• General Partnership – Similar to a sole proprietorship, but for two or more people. Again, owners keep the profits and are liable for losses. The partners pay taxes on their share of business income on their personal tax returns.
• Limited Liability Company (LLC) – Combines the characteristics of corporations with those of sole proprietorships or partnerships. Again, the owners are not personally liable for debts. Here’s how to form an LLC.
• C Corp – Under this structure, the business is a distinct legal entity and the owner or owners are not personally liable for its debts. Owners take profits through shareholder dividends, rather than directly. The corporation pays taxes, and owners pay taxes on their dividends, which is sometimes referred to as double taxation. Read how to start a corporation here.
• S Corp – An S-Corporation refers to the tax classification of the business but is not a business entity. An S-Corp can be either a corporation or an LLC, which just need to elect to be an S-Corp for tax status. In an S-Corp, income is passed through directly to shareholders, who pay taxes on their share of business income on their personal tax returns.

We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using an online LLC formation service. They will check that your business name is available before filing, submit your articles of organization, and answer any questions you might have. 

Step 6: Register for Taxes

The final step before you’re able to pay taxes is getting an Employer Identification Number, or EIN. You can file for your EIN online or by mail or fax: visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN. 

Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.

It is important to consult an accountant or other professional to help you with your taxes to ensure you are completing them correctly.

Step 7: Fund your Business

Securing financing is your next step and there are plenty of ways to raise capital:

• Bank loans: This is the most common method but getting approved requires a rock-solid business plan and strong credit history.
• SBA-guaranteed loans: The Small Business Administration can act as guarantor, helping gain that elusive bank approval via an SBA-guaranteed loan.
• Government grants: A handful of financial assistance programs help fund entrepreneurs. Visit Grants.gov to learn which might work for you.
• Friends and Family: Reach out to friends and family to provide a business loan or investment in your concept. It’s a good idea to have legal advice when doing so because SEC regulations apply.
• Crowdfunding: Websites like Kickstarter and Indiegogo offer an increasingly popular low-risk option, in which donors fund your vision. Entrepreneurial crowdfunding sites like Fundable and WeFunder enable multiple investors to fund your business.
• Personal: Self-fund your business via your savings or the sale of property or other assets.

Bank and SBA loans are probably the best option, other than friends and family, for funding a motorcycle dealership. You could try crowdfunding if you have an innovative concept.  

Step 8: Apply for Motorcycle Dealership Licenses and Permits

Starting a motorcycle dealership requires obtaining a number of licenses and permits from local, state, and federal governments.

Federal regulations, licenses, and permits associated with starting your business include doing business as (DBA), health licenses and permits from the Occupational Safety and Health Administration (OSHA), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits. 

You’ll need a motorcycle dealer’s license in your state. Each state has different requirements. You’ll also need to follow guidelines set by the Federal Trade Commission. 

You may also need state-level and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more. 

You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package. They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.

If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.

Step 9: Open a Business Bank Account

Before you start making money, you’ll need a place to keep it, and that requires opening a bank account.

Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your motorcycle dealership business as a sole proprietorship. Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.

Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account. 

Step 10: Get Business Insurance

Business insurance is an area that often gets overlooked yet it can be vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.

Here are some types of insurance to consider:

• General liability: The most comprehensive type of insurance, acting as a catch-all for many business elements that require coverage. If you get just one kind of insurance, this is it. It even protects against bodily injury and property damage.
• Business Property: Provides coverage for your equipment and supplies.
• Equipment Breakdown Insurance: Covers the cost of replacing or repairing equipment that has broken due to mechanical issues.
• Worker’s compensation: Provides compensation to employees injured on the job.
• Property: Covers your physical space, whether it is a cart, storefront, or office.
• Commercial auto: Protection for your company-owned vehicle.
• Professional liability: Protects against claims from a client who says they suffered a loss due to an error or omission in your work.
• Business owner’s policy (BOP): This is an insurance plan that acts as an all-in-one insurance policy, a combination of the above insurance types.

Step 11: Prepare to Launch

As opening day nears, prepare for launch by reviewing and improving some key elements of your business. 

Essential software and tools

Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks.  

You may want to use industry-specific software, such as Frazer, CDK Global, and vAuto, to manage your inventory, purchases, sales, and workflows. 

Accounting

• Popular web-based accounting programs for smaller businesses include Quickbooks, Freshbooks, and Xero. 
• If you’re unfamiliar with basic accounting, you may want to hire a professional, especially as you begin. The consequences for filing incorrect tax documents can be harsh, so accuracy is crucial.

Create a website

Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism. You can create your own website using services like WordPress, Wix, or Squarespace. This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech-savvy, you can hire a web designer or developer to create a custom website for your business.

Your customers are unlikely to find your website, however, unless you follow Search Engine Optimization (SEO) practices. SEO will help your website appear closer to the top in relevant search results, a crucial element for increasing sales. 

Make sure that you optimize calls to action on your website. Experiment with text, color, size, and position of calls to action such as “Contact Now”.  This can sharply increase purchases. 

Marketing

Here are some powerful marketing strategies for your future business:

• Host Community Events: Organize local rides, bike shows, or safety workshops to engage with the community, showcase your inventory, and build lasting relationships with potential customers.
• Leverage Social Media Influencers: Collaborate with motorcycle enthusiasts and influencers on platforms like Instagram and YouTube to showcase your bikes, creating authentic content that resonates with your target audience.
• Offer Test Ride Events: Allow potential customers to experience the thrill of your motorcycles firsthand by organizing test ride events, converting interest into tangible experiences that drive sales.
• Create Loyalty Programs: Implement loyalty programs or exclusive membership perks for repeat customers, fostering brand loyalty and encouraging them to choose your dealership for their future motorcycle purchases.
• Partner with Local Businesses: Form partnerships with local cafes, restaurants, or other businesses to cross-promote each other, tapping into their customer base and expanding your dealership’s reach.
• Local SEO — Regularly update your Google My Business and Yelp profiles to strengthen your local search presence.
• Utilize SMS Marketing: Implement targeted SMS campaigns to reach potential customers with exclusive deals, event invitations, or new inventory updates, keeping your dealership top-of-mind.
• Create Engaging Content: Develop a content marketing strategy that includes blog posts, videos, or podcasts about motorcycle culture, maintenance tips, and riding experiences to establish your dealership as an authoritative and engaging resource in the industry.
• Sponsor Local Riding Groups: Support and sponsor local motorcycle riding groups, clubs, or events to align your dealership with the biking community, fostering positive associations with your brand.
• Implement Referral Programs: Encourage satisfied customers to refer friends and family by offering incentives such as discounts or exclusive promotions, leveraging word-of-mouth marketing to expand your customer base.

Focus on USPs

Unique selling propositions, or USPs, are the characteristics of a product or service that sets it apart from the competition. Customers today are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your motorcycle dealership meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire. 

Global pizza chain Domino’s is renowned for its USP: “Hot pizza in 30 minutes or less, guaranteed.” Signature USPs for your motorcycle dealership business could be:

• Best selection of new and used motorcycles in town
• Caught the biker bug? We can help
• Vintage motorcycles, fully restored
• Save the planet. Go electric. 

Networking

You may not like to network or use personal connections for business gain. But your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running a motorcycle dealership business, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in motorcycle dealerships for years and can offer invaluable insight and industry connections. 

The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in motorcycles. You’ll probably generate new customers or find companies with which you could establish a partnership. 

Step 12: Build Your Team

If you’re starting out small from a home office, you may not need any employees. But as your business grows, you will likely need workers to fill various roles. Potential positions for a motorcycle dealership business include:

• Salesperson – assist customers, make sales
• Repair Technician – repair motorcycles
• Marketing Lead – create and implement marketing strategies
• General Manager – accounting, scheduling, inventory management

At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need. 

Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed, Glassdoor, or ZipRecruiter. Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent. 

Step 13: Run a Motorcycle Dealership – Start Making Money!

Motorcycle lovers rarely lose their passion, so the industry is sure to stay strong. The motorcycle market is steady even in tough economic times and withstood the pandemic much better than other industries. With your own dealership, you’ll be feuling that market, doing what you love, and making a healthy living.

Now that you’ve cranked up your business knowledge, it’s time to roll up your sleeves and put your motorcycle dealership on the road to success!