Bikers make hobby their business

By Gill South

Three keen mountain bikers saw a gap in the clothing market and went for it, creating a niche product.

Ground Effect mountain bike clothing founders Steve van Dorsser (extreme left) and Guy Wynn-Williams (second from right). Photo / Caleb Smith
Ground Effect mountain bike clothing founders Steve van Dorsser (extreme left) and Guy Wynn-Williams (second from right). Photo / Caleb Smith

For many entrepreneurs, business inspiration can come from a hobby they enjoy. They might also have a strong drive to be their own boss.

"We had all worked for about 10 years, long enough to have done well but to have seen the limitations of working for other people," says Fraser McLachlan, one of the three founders of mountain bike clothing company Ground Effect. "It was a lifestyle choice for us as well," he says.

Former Macpac designer McLachlan, Telecom executive Steve van Dorsser and Macpac consultant Guy Wynn-Williams were all keen Christchurch cyclists. They watched the rise of mountain biking in the 1980s and saw an opportunity for a clothing business.

Road cyclists wore logo-covered, tight-fitting clothing whereas mountain bikers needed practical, hard-wearing fabrics that were wind and waterproof yet breathable.

As the founders say on their website: "It's not rocket science. We conjure up functional designs based on our own experiences and interactions with fellow cyclists.

We source high-specification fabrics that work better and last longer than the industry norm and don't cut corners when stitching it all together."

Ground Effect released its first catalogue in October 1994. The brand sells purely online or via catalogue in a number of countries. The main markets are New Zealand, Australia, and Britain and the US is growing.

South Korea, Singapore and Hong Kong have potential too.

More than 18 years later, the business, based in Ferrymead, near Sumner, turns over less than $5 million and it has had several approaches from potential buyers.

But growth over the past couple of years has been hit by the strong Kiwi dollar. "We had 16 years where we grew, the last couple we went back a few per cent."

The financial crisis and Canterbury earthquakes haven't helped either. "We lost a month of sales because the factory was inside the red zone. We lost three weeks of access." Things are now back on an even keel, says McLachlan.

Ground Effect has nine staff, with the three founders holding equal ownership. Staff, who all cycle to work, can earn bonuses and, on rotation, have every fifth Friday off, giving them a long weekend.

The clothing range is made by a Christchurch manufacturer. "It's what we call a hand-in-glove arrangement," says McLachlan. Around 90 per cent of the manufacturer's production is for Ground Effect.

Local manufacture allows the company to make regular small orders so there is never stock sitting on the shelf that needs to be shifted by discounting.

"If we manufacture locally, we make the most of that flexibility," says McLachlan.

All three founders have roles in the business. "I do product development, Steve forecasting and operations and Guy does database and software development. We are slightly overskilled for the size of the business. We have lots of computer servers and have the strength to be a $20 million business."

In their early 50s, McLachlan, van Dorsser and Wynn-Williams have talked about exit strategies.

When the time comes they may sell the business to staff or a flotation is not out of the question.

"We do have plans in place to make sure that we are not indispensable. Then the business is more viable to sell," says McLachlan.

Top tip
Brand-building takes time - it takes a while for word-of-mouth referrals to spread for a business that sells direct to customers.

Our best business achievement
Clearly identifying our personal and business goals, working to achieve them and remaining friends after 18 years.

- NZ Herald

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