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The Financial Times - Liberating the entrepreneurial mind

>>23 May 2006

Gap years are common among students, less so among private entrepreneurs.

However, David Hinde, Managing Director of UK Gear, says "the best use of time I ever made" was spending year 2000 messing about on his boat on the Mediterranean, as he plotted a move in the highly competitive sports shoe market.
The small company, which employs just seven staff, is set to make a profit this year on turnover of £2.5m, thanks to healthy demand for a training shoe bearing the crossed swords emblem of the British Army.

Switching business
UK Gear, which is based in Nuneaton, Warwickshire had specialised in producing playing strips for sports teams. Its factory employed 40 and its sales were about £1.5m. But Mr. Hinde says "I struggled for seven years and still had not seen a commercial return on the brand. I had become a manufacturer rather than an entrepreneur. "I woke up one morning with the determination that I would not bother with any product I could subcontract the manufacturing of"
He wound down the factory and embarked on his extended holiday, leaving skeleton staff to research new openings for the company.

Mr. Hinde, 43 says "Your brain capacity is limited and the day-to-day demands of running a business mean you can easily become a busy fool. I needed a half time in my career to reflect". UK Gear has now reached another crossroads. Demand for the army-branded shoe, the PT-03, is good in the UK & US.

To establish the UK Gear brand Mr. Hinde needs to create new lines, such as a lady's shoe. He could do that slowly, meeting development costs out of cash flow. Or he could step up the pace by raising capital. He is willing to sell part of his 87% stake but like most private entrepremeurs, he is reluctant to relinquish majority control.

From salesman to sportswear
Mr. Hinde is refreshingly proud of an earlier career as a salesman, a job description that some organisations nervously conceal with such titles as "relationship manager". He sold advertising space on wall planners, then graduated to selling corporate hospitallity packages for sporting events.

Mr. Hinde set up UK Gear in 1993 "with a few thousand" of his own money. His aim was to develop "an international sportswear brand". This was a pretty tall order, given his limited budget and the competitiveness of a market dominated by huge brands such as Adidas and Nike.

The solution was to offer a service, rather than sell off-the-peg garments through retailers. Mr. Hinde made tailored team strips for "sporting organisations that had credibility but were too small to get serious sponsorship". He started with Nuneaton Rugby Club and wound up supplying the West Indies cricket team. But ultimately it was a frustrating business. UK Gear had to make garments in varying sizes to fit different team members, some of whom would not even make the final squad.

The original agreement between the Army and UK Gear was that Physical Training Corps instructors would help develop a training shoe, by giving advice and testing prototypes. The chance to use the insignia was a spin-off from the relationship. The Army needed to establish a trading record for the crossed swords symbol to improve legal defenses against possible pirates. The claim of the RAF to its red, white and blue roundel was shot down because the emblem had been widely used on clothing since the MOD movement of the 1960's.

The silver, grey and white shoes were launched in 2004, an event that received national media coverage thanks to the Army connection. A pair of PT-03's retail for £79, a price that ironically means the shoes are not standard Army issue to new recruits.

'True fitness enthusiast'
Mr. Hinde dismisses the idea that customers are would-be hard men, of the kind who read Andy McNab novels but never battle anything more ferocious than the slugs ravaging their petunias. He describes the PT-03 as "a no-nonsense durable road-running shoe that will not let you down" which appeals to serious keep-fit enthusiasts.

UK Gear is strikingly international. The shoes are manufactured by a Vietnamese sub-contractor, which required considerable convincing to take on the little known brand. The growing proportion of sales are made through 60 US stores, including the Dicks Sporting Goods chain. Mr. Hinde is cagey about volumes, which suggests they are not high. However, growth is healthy, he says, driven by positive reviews in specialist sports and keep-fit magazines.

Future developments
UK Gear now plans to broaden its range with ladies footwear and "multi-sports" shoe. Mr. Hinde would also like to expand into off-the-peg clothing. "It would be a shame to lose impetus by not putting enough into product development" he says. But he is uncomfortable with the idea of "touting myself round the City for months" and sees angel investment as one possible solution.