SPORTS NEWS YOU CAN USE

Issue 25--Starting a Manufacturing Company

The next few issues of Sports News will deal with the sporting goods industry (manufacturing and retailing). The subject is so large that I won't touch upon every aspect at this time, but eventually I will return to cover some of the fine points in more detail.

It's an industry which offers job opportunities but receives relatively little media coverage (other than athletic shoe companies). There is very good and helpful information about manufacturing and retailing in trade publications, but many libraries don't carry them. However, more sports trade publications are starting to appear on the internet.

Particularly notable are the number of sporting goods companies started by men and women in their early twenties. (I will be mentioning some examples as I go along.)

I'm going to first look at manufacturing. This issue of Sports News and the next will focus on entrepreneurs. (A later issue will look at executives in large, established companies.)

Many, many sporting goods companies have been started by athletes who weren't able to find the equipment they needed. Or they felt they could improve upon what was currently available. Examples:

• Ellen Wessel co-founded Moving Comfort in 1977 to manufacture women's running clothes because she wasn't happy with the men's running shorts she was using.
  
  
• Todd Bibler started Bibler Tents in 1977 because there were no lightweight tents to take on mountain climbing expeditions.
  
  
• Georgena Terry started Terry Precision Bicycles in 1986 because her female cyclist friends were having trouble finding bikes that fit them.
  
  
• Matt Nipper started Aggression Snowboards in 1987 because the boards he was using kept breaking. According to co-owner Josh Racko, who joined the company the following year, "We didn't know anything. We went through a huge learning process, like learning to make the right glue." (1)
  
  
• Hank Kashiwa, former Olympic and professional skier, started Volant in 1989 when his brother, a ski designer at K2, couldn't interest anyone else in a stainless steel ski.
  
  
• David Chun started his business, Kialoa, because he wanted better outrigger canoe paddles. He taught himself woodworking and by 1995 he was making approximately 600 to 800 paddles a year for a sport with only 13,000 serious participants. "I'm making as much as I was as a social worker. ... I don't want to sound corny, but money is not the primary-factor. My wife's a paddler. We just like canoe paddling. It's a way of life. It's a compulsion now." (2)

Some sports entrepreneurs are surprisingly young:

• In 1995 Michael and Matthew Middlestetter started Westcoast Extreme Boardworks (a sport wax company) when Michael was a tenth grader and Matthew a seventh grader. They did all the work themselves, from creating special snowboard, surfboard, and skateboard waxes; printing labels; packaging the finished products; and developing a catalog to send to retailers.
  
  
• In 1989 Casey Golden, a pre-teen, invented a biodegradable golf tee. His father formed a company to make and distribute the tees to pro shops and discount chains.

Still, starting a sporting goods company is not easy. It's risky and takes hard work. There are some common threads that seem to come up when entrepreneurs talk about their companies. (Many of the following examples come from the snowboarding industry, which has been particularly open to start-up companies founded by young athletes.)

A Willingness to Experiment

• Twist, a snowboard clothing company, was started in 1991 by Troy Bush, Trent Bush, and Amani King, who were snowboarders and students at the University of Colorado. The oldest of the three was 22.

Troy and Trent had learned a little bit about the industry while working in a surf/skateboard shop before they entered college. "... the store's owner started making the clothing, so we saw how that happened," said Trent. (3)

Still, they didn't know everything. "We learned by trial and error," noted Troy. "We all dropped out of college and we were selling our shirts off our backs." (4)

• Mervin Manufacturing, which makes Lib Tech and Gnu Snowboards, was started in the mid 1980s in a horse barn. Said Mike Olson, one of the founders, "I didn't study plastics in college so I am willing to try things that an engineer would think is impossible. Sometimes it works. Other times it doesn't. It's all hands-on." (5)

Limited Cashflow

• Twist was getting orders and still lost thousands of dollars its first year. Its founders had to work outside jobs for income. Eventually they learned more about the business and made more money, but each was still putting in 75 to 80 hours a week.

Said Trent Bush in 1994 (a year when the company was projecting more than $4 million in annual sales), "We're always struggling. We're always asking, where are we going to get the money for this? We've gone to banks, but they've just shut us down because we're so young, and snowboarding hasn't become an established industry." (6)

• Kristin Crisman discussed how she and her husband Todd started Grease Monkey (a company that makes snowboarding gloves) in the early 1990s. "We started with nothing. It was rough. He was nineteen and we weren't married. He got a 5,000-dollar inheritance from his grandfather and borrowed a little money from his dad for our first ad in TransWorld SNOWboarding. It's a hard business to get into without money. There's materials and minimums with sewers, shows, and ads. Todd worked a second job to help out. It was a roller-coaster ride for three or four years." (8)
  
  
• Brothers Tim and Tracey Canaday started a snowboard company in the early 1980s. After three years with limited sales and no investors, they gave up and got regular jobs. But in 1990 they started Never Summer Industries. They had $100,000 to start and were able to raise another $300,000. Still, they felt undercapitalized. "But," said Tim, "in one sense it was good for us, because of our cash-flow worries, we had to be very disciplined about every dime we spent. We had to be resourceful, so we learned to build our own presses and other bits of equipment." (9)
  
  
• Kristy Roach started Kurvz Extremewear, a women's snowboard clothing company, as a college class project. "I had to develop a product that was needed, and I found there wasn't anybody doing snowboarding for women." (10)

She was encouraged to carry out her plan and started her company at the end of 1993. ''I was 19. I was afraid. I had no business background. I didn't have the money. I was worried about being 19. Starting a business is hard for anyone. Actually, being 19 helped me - I didn't have a family, a mortgage, some of those concerns.'' (11)

She spent two months working 90 hour weeks to set up her company, design 12 garments for a catalog, and sew two samples for a trade show.

The trade show went well so she sewed the other 10 samples and spent 35 days on the road to visit professional snowboarders and more than 150 shops. "I was a traveling saleswoman. It taught me the sales process. I still run into age barriers. It's a very male dominated industry." (12)

After the orders came in, she contracted with local firms to manufacture the clothing. Within four months, she started receiving international orders. First-year sales hit $175,000.

Said the professor whose class Roach took, "The best thing she did was talk to a lot of people who were knowledgeable. She was able to synthesize the knowledge. That was one of her great strengths. Those are what make good business people." (13)

However, in early 1997, even though the company had between $600,000 and $700,000 in annual sales, it filed for Chapter 11 bankruptcy. Creditors had begun to sue for debt payment. Said the president of one company that was owed money, "I don't think she failed because she didn't know what she was doing. She's pretty sharp." Rather he felt that as more companies began making women's snowboard clothing, Kurvz was facing stiffer competition, thus causing its cashflow problems. (14)

A Lack of Time

• Many athletes who start companies discover that they have virtually no time to participate in sports anymore. Said Dimitrije Milovich, "If you're doing it because you love snowboarding, go snowboarding. If you want to be a plastics engineer and a business person, then go do that. It's hard to make the two meet and have fun, because what happens is you end up working when you really want to be out using the toys." (15)

Management Turmoil

• In 1988 Bill Perkins, a sometime winter triathlete, invented a better snowshoe. Almost every snowshoe runner who saw one wanted it. Runners who wore them won races. The first year, Perkins and his partner, Alan Moye, made about 100 pair of Redfeather snowshoes and gave away about half of them to top athletes who wore them for racing. The next year they made about 300 pair and sold them in nordic shops and outdoor stores.

By 1990, Perkins and Moye had split. Perkins became sole owner of the company and was about $50,000 in debt. A salesman, Mark Opincarius, joined the company, and he and Perkins made the snowshoes themselves in Perkins's house. By 1991, they were making 600 pairs a year. The company was still in debt and Opincarius was owed between $4,000 to $5,000.

Barry Lefkowitz, co-owner of Aspen Ski Tours, liked the product and invested $100,000 and became co-owner. They converted an empty furniture store into a factory and hired full and part-time workers to increase production.

By 1992, the product was in over 100 stores and brochures were in 3.000 to 4,000 others. But Perkins and Lefkowitz did not get along. Perkins was bought out and continues to receive royalties on sales and payments for any new products he designs for Redfeather. Still, Perkins said, "The best days were when I didn't know what I was doing and we were doomed." (16)

 

1 Boulder Weekly, December 9, 1993.

2 Bulletin-Bend OR, June 4, 1995.

3 SNOWboarding Business, March 1996.

4 Boulder Weekly, December 9, 1993.

5 SNOWboarding Business, August 1996.

6 Boulder County Business Report, April, 1994.

7 SNOWboarding Business, March 1995.

8 SNOWboarding Business, March 1997.

9 SNOWboarding Business, March 1997.

10 The Kansas City Star, January 28, 1996.

11 Rocky Mountain News, December 17, 1995.

12 Sacramento Bee, March 20, 1995.

13 Sacramento Bee, March 20, 1995.

14 Business Journal-Sacramento, March 17, 1997.

15 SNOWboarding Business, March 1995.

16 The Denver Post, February 16, 1992.

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