Bike Shop Case Study

Topics: Bicycle, Bank, Commercial bank Pages: 2 (392 words) Published: September 22, 2012

Mr. Ricky Sanchez is an active member of BOMBA or Bikers Of Malolos Bulacan Association. He’s been a fan of bikes since 2009. Currently he is working in a commercial bank as Service Specialist for 10 years. He’s taking into consideration the idea of quiting his job and putting up his own bike shop.


Mr. Sanchez receives a monthly salary of Php23,000.00. Aside from that he also receives annual bonuses such as 13th month pay, Christmas Bonus, and Mid-year bonus which are all equal to his monthly salary. He has a fixed annual increase of Php1,000.00. One of the employee benefits of thebank he is currently working in is employees can avail for a loan as much as three times of his salary with a term of either 1, 2, or 3 years without interest. This loan will be deducted to the employee’s salary every payday (10th and 25th of the month). In case of resignation, employee’s outstanding balance of his salary loan will be converted to regular personal loan and should be paid monthly with 2% interest. According to Mr. Sanchez’ research, initial capital required to put up a bike shop is Php150,000.00 that consists of the following:

Initial advertising:Php8,000.00
Bicycles (20 pcsx5,000 each):100,000.00
Parts and accessories:20,000.00
Tools and equipment:10,000.00
Rent:12,000.00 / month
Since Mr. Sanchez is a bike-lover, he’s planning to be a hands-on owner but based on his research, he’ll be needing a worker that will help him do the bike set-up, repairs, and other services. Mr. Sanchez thinks that a fixed monthly rate of Php6,000.00 will be enough. Usual markup for bicyles is 30% and 100% for parts and accessories. Service fee is usually Php300.00 for set-up, tune-up, and other services. According to a friend of Mr. Sanchez who is also a bike shop owner, usual total service charges is Php26,000.00. Guide Questions:

1. Will Mr. Sanchez receive higher income as a bike shop owner than a bank employee?...
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