Students present financial projections to USU
Correction: It was stated that business and marketing graduate students presented a business plan for CSUN’s Bicycle Co-op to the USU Board of Directors. In fact, graduate and undergraduate business and marketing, and engineering students presented an independent academic project about a feasibility study for a bike shop.
Business and marketing masters students presented future projections for CSUN’s fledgling Bicycle Co-Op before the USU board of directors. They focused more on the club’s student service mission rather than its ability to be lucrative which, researchers said, would be difficult.
Maz Khosravi, engineering and management masters student, was one the two students that presented the financial package as part of a class project.
“A very optimistic outlook (for profitability) would be about three years,” he said. “A more reasonable projection would be about five years.”
The initial start-up costs for the co-op program would be about $140,000, according to the students’ research. This figure includes labor, utilities, start-up fees and inventory, the latter comprising the majority of the budget.
Students estimated the recurring annual fee of the club, which would be located in the USU Plaza del Sol, to be approximately $52,000. Khosravi said the co-op would need to earn upwards of $4,000 per month to turn a profit.
Bicycle Co-Op Organizer Carlos Hernandez, 24, said the group has submitted an application to the university to be included in the campus quality fee. If approved, a portion of that student-wide fee would be directed to the club.
CSUN has housed a bicycle shop in the past but it was not well received, closing after the 1994 Northridge earthquake.
“Business was marginal, to say the least,” said Debra Hammond, USU executive director.
While it was unclear what the initial bicycle shop focused their efforts on, the proposed co-op would base a significant portion of its services on bike rentals.
By analyzing a similar bicycle program at UCLA, the student researchers proposed a business outline. Students wishing to rent a bicycle for a semester would pay $60, weekly rentals cost $27 and daily rentals cost $8.
The group would buy 50 bicycles at $280 per unit, using 40 of those bikes for semester-long rentals and the remaining 10 for weekly and daily rentals.
Khosravi and his teammate, Gala Lawrence, compared CSUN to surrounding universities. They concluded that the campus trailed behind CSU Long Beach, CSU Fullerton and San Diego State University in bike-friendliness.
The masters students surveyed 240 students and concluded the top reasons students choose two wheels over four were economic and environmental, followed closely by health consciousness.
While Hammond said bicycle business was limited, Lawrence noted that of those students surveyed, half lived within five miles of campus.
“Those students could potentially be converted,” she said.
Khosravi and Lawrence analyzed the managerial functions of other campus’ bicycle programs. They rejected UC Berkley’s volunteer-run structure, noting that it was unsuccessful and there was no accountability in the organization.
The student researchers also cited UC Irvine’s program. The 1,500-acre campus spend about $40,000 a year to rent 50 bicycles for three-hour intervals.
If approved, CSUN’s Bicycle Co-Op would employ a faculty director, student manager and two part-time student employees to run the shop during the proposed business hours of Monday through Friday, 10 a.m. to 4 p.m.
Lawrence said the club would make repairs available during those hours, including inspections, tune-ups and tire repairs, similar to UCI and UCLA programs. They would also host workshops, such as Beginner Bike Repair, Theft Prevention and Traffic 101.
Khosravi and Lawrence recognized local competition. They specifically mentioned Atomic Cycles in Van Nuys, two miles away from campus, whose main business is refurbishing bicycles. Some of their business is generated from abandoned CSUN bikes handed over to the business by University Police.
More professional operations, such as Cycle World and Bicycle Johns, cater to markets with expert customers. The students suggested creating partnerships with these shops, perhaps incorporating discounts with student IDs or referrals.
“We have a built in target market,” Khosravi said, referencing the thousands of freshman and international students, the audience that would be catered to by the Co-op.
Lawrence said she chose this project for her small business consulting class because it seemed realistic and the beginning of something great.
“It was a real campus project, something we may be able to see implemented,” she said.