How cycle-to-work became wheel of fortune for two entrepreneurs
Published 11/03/2010 | 05:00
THE most brutal Budget in decades is an unlikely springboard for new business ventures, but the founders of Build a Bike prove even Budget 2009 had its beneficiaries.
Before Brian Lenihan stepped up to the podium on that fateful day in December 2008 Darren Walsh was "tapping away" with his bike shop in Maynooth, turning over about €100,000 a year and Terry Doherty was working as a shop designer.
Less than two years on the pair are on the cusp of opening a new 6,000sq ft bike shop in Dublin's city centre, complete with pay per use showers, indoor bike stands and lockers to cater for the city's burgeoning cyclist troupes.
The new venture, coupled with a booming trade in cycle-to-work contracts, put Build a Bike on course for a turnover of more than €2.5m this year -- and the duo expect to have 14 to 18 employees on the books by the end of 2010.
"When the lovey Mr Lenihan announced the cycle-to-work scheme that immediately changed things for me," says Walsh. "I could see there was a lot of potential in this."
The Ecology Foundation, who Walsh had previously worked with on small-scale company cycle schemes, soon came knocking. Corporates had been flocking to the foundation with queries on how best to implement the cycle to work scheme, so they turned to Walsh for answers.
"We sat down over about six weeks and bashed out our core business, a way that Build a Bike and the Ecology Foundation could deliver the entire cycle-to-work scheme under an exclusive agreement with companies," says Walsh.
Under the deal, Walsh and new business partner Doherty are contracted to supply all the bikes bought for staff.
The duo, together with their five-man team, also go all out to encourage more staff to take up the deal.
"We go and put displays in all the company's offices. We'll have someone manning those displays twice a week so people can go and ask questions," says Walsh. "We even have a cycle show -- like a fashion show for bikes -- that goes on tour."
Build a Bike also provides companies with bike stands and offers bike safety and bike maintenance courses, and there's even a weekly Sunday fun cycle for those who see bikes as more than just commuting tools.
"The average take up in most companies is three to 4pc. In our companies we've got a take up of about 12pc, and that's just from the first round," says Walsh.
"We're starting into the second round now, people who didn't do it last time round and see their friends doing it may give it a go this year."
With big name contracts such as Eircom, KPMG and IKEA, Build a Bike racked up more than €780,000 worth of cycle-to-work sales between last May (when they registered as a limited company) and the end of 2009. The duo say there's plenty of scope for another €1.5m to €2m worth of business there this year, but they're also expanding their horizons.
When Walsh decided the cycle-to-work scheme was the way to go, he gave up his shop in Maynooth and Build a Bike began life from a home office.
A few months in the pair decided a more central operating base was in order. A friend had a lease on a building on Middle Abbey Street, a lease that became worthless in the recession.
"We initially said we'd take it for a month or two, we came in and we immediately saw the site's potential," recalls Walsh. "We had a really good conversation with the landlord and we found out he also owned the building next door.
"We ended up taking both buildings on a very long-term lease."
The first building, the older of the two, has been ear-marked for the "facilities" arm of Build a Bike's operations.
As well as the usual repair area, an indoor bicycle park is being developed to alleviate people's fears that their bikes will be "wrecked or robbed".
There'll also be shower and locker facilities so people can cycle into town, smarten themselves up and go about their shopping or work.
Build a Bike is planning to rent the spaces for a euro a day on a walk-in basis, or bundle them as deals to their corporate cycle-to-work clients who don't have space for ancillary cycling services themselves.
"The market research has been incredibly good, but we're not 100pc sure on whether that'll transfer into people actually using them," says Walsh.
"If it's not popular we can reduce it, if it takes off we can add more spaces."
The newer Abbey Street building will be developed into a "super-duper bike shop".
"Most bicycle shops feel like caves," says Walsh. "We want to really get away from that, to make our shop feel much more like the usual retail experience."
A small selection of bikes and accessories will be displayed in branded concessions, against a minimalist backdrop with flat screen TVs.
"If people want to see other bikes they can have a coffee while we can make them up next door," says Walsh, who's aiming for a "car showroom" feel.
The shiny new shop will also be the outlet for the duo's own Cyclebike brand of bicycles and Cyc brand of biking clothing. Designed with Doherty's design input and Walsh's technical expertise, the pair say their range will deliver the quality of big brands at lower prices.
The first Cyc shipment is due in over the next fortnight, and a full-scale launch is pencilled in for the summer.
"If we got a €1m turnover on the retail side we'd be very happy," says Walsh.
That €1m would bring total sales to between €2.5m and €3m, with average margins expected to come in above 10pc. "If we clear €250,000 that'll all go right back into staff, marketing, transport," says Doherty.
"The purpose of business is of course to make a profit, but the main purpose is to grow the business."