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Interview with a Successful Startup Founder

VO2 Sportswear: Making £250k/year but Running out of Cash

Matthew Tomkin
Matthew Tomkin
November 20, 2019
Category of startup
Country of startup
United Kingdom
Revenue of startups
Interview with a Failed Startup Founder

VO2 Sportswear: Making £250k/year but Running out of Cash

Matthew Tomkin
Matthew Tomkin
November 20, 2019
Category of startup
Country of startup
United Kingdom
Cause of failure of the startup
Lack of Funds

After realizing no triathlon clothing brand was properly catering to the market from a design point of view, Matthew decided to do it himself and started VO2 Sportwear. Through social media, sponsorships, and SEO, the business made £250k its third year, but then failed to manage their cash flow and had to shut down.



Hi Matt! What's your background, and what are you currently working on?

Hello everyone, I’m Matt Tomkin and I’m currently 35 years old from Bolton, UK. I’ve started a number of businesses over the past 15 years. Some with success and one with a significant failure.

I now run a Search Marketing agency in Bolton called Tao Digital Marketing and a start-up called quotonga which helps generate leads and opportunities for businesses. 

The significant failure was VO2 Sportswear; which provided custom performance sports clothing, such as Triathlon kit, Cycling kit and running kit, to clubs and teams mostly in the UK, but throughout the world. 

VO2 Logo

As well as being the founder of the brand, my role within the team was that of Managing Director and therefore covered the majority of areas. 

The main areas of focus for me were in the sales and marketing side of the business.

We would generate an inquiry through the website then design a completely bespoke kit range that was always very unique. The kit would then be manufactured to a very high standard in Lithuania (if you have never been, get there it’s a beautiful country). 

All of this would be done through our website and enabled us to grow into countries that we didn’t even realize had big Triathlon scenes. 

What motivated you to start VO2 Sportswear?

I’m big into my sports and helping out charities raising funds where I can. 

A local lads and girls club had a team that were rowing the Atlantic Ocean from Europe to Antigua and I ended up being part of the team. 

During the training for the event, we were entered into Ironman UK which is a 1.2-mile open water swim, 112-mile bike ride and then a 26.2-mile marathon run at the end. 

Whilst training it became abundantly clear there was no-one catering to the market properly from a design point of view. Every Triathlon suit seemed to be one color and most often they were just black. Pretty boring for a sport which took so much out of you. 

I knew of the process of sublimation printing into man-made fabrics so I went about trying to source this in the sports I was constantly training for. 

Before I started VO2 Sportswear I had started and grown a very successful business telecommunications company called Comms Consult. It was through the connections I made building this company that the opportunity to row came. 

I was always on the hunt for things that mixed my passion for sports, charity, and business together. 

The brand was started whilst I was still running the Telecoms company but things took their toll on my relationship with my co-founder and after a falling out we decided to go our separate ways. I then sold my half of that business to him and took on the challenge of growing VO2. 

I was only 26, I had a lovely apartment and a brand new 370Z on the drive. Living a pretty cool lifestyle for a young age. In hindsight, I had a lot too young probably as it made me very overconfident in my ability.

How did you build it?

So from initially deciding, I’d start the brand to actually finding a factory who could produce the kit I wanted to the standard I expected it took about 12 months. 

It’s not easy getting clothing samples organized from all over the world when the only bit of purchasing I’d ever really done was speaking to Telecom networks and manufacturers who were all over the sales process. 

In the early stages, there was just me looking for garments that fit the quality I wanted in the product. 

Then I partnered up with the design company behind our branding for Comms Consult. The lead designer was very much into the brand and how it could grow, ending up being a shareholder another year down the line. 

The beauty of having a graphic designer and not a traditional clothing designer was that he saw the garments as a blank canvas and wasn’t constrained by any previous mindsets of what could and couldn't be done on clothing. 

The only resources we used, in the beginning, were photoshop/illustrator and a very basic Wix website that Phil (graphic designer) knocked up. 

A close friend of mine who ran a small but rapidly growing digital marketing firm said he would help generate sales leads via Google ads before we got the organic traffic increased. 

This was great as it proved the concept to us. 

Later on, we used Shopify to power the store for a while before moving 100% to Wordpress and Woocommerce. Wordpress gave us the platform to really push the content growth forward. 

We ended up at the top of Google for pretty much any search terms surrounding custom triathlon clothing and near the top for custom cycling kit. Which proved to be the perfect place to find people looking for a new kit for their rapidly expanding clubs or even for wealthy individuals who had deeper pockets than most. 

Some of the initial hurdles we encountered were around sizing. One obvious area was the ladies’ kit. It became very clear, very quickly that a size 8 UK standard was completely different from the majority of places people bought their clothing from. So, I later found out that some brands would purposely downsize their women's clothing range so they would come back to that shop rather than be a size 10 in another shop. How bizarre! 

We had to look at how we could get people to try the kit on before they placed their order with us. As the clothing was manufactured to a bespoke design and printed into the fabric, there was no way to reuse/resell these if they didn’t fit.  

We ended up putting together a “sizing sample” pack which would be sold at a heavy discount. Phil also came up with the idea of marketing some of the other products on the design of the samples. Genius! It meant no-one would nick the kit from the clubs but also helped us to increase sales in other clothing as they were trying the kit on. 

Pricing; we kept this really straight forward. We had a price list from our supplier for all the kit we sold. We just doubled the price on the majority of kit so we would have a 100% mark-up. Some items of kit we would actually triple the price due to the competition charging a premium for that particular item. 

We were making good money on the kit, it was the other areas of the business we didn’t manage that great!

All of our sales, in the end, came through the website, we would get referrals from other clubs but no matter where you mapped the sales back to it would stem from initial engagement through the website. 

We did a massive amount of promotion for the brand, alongside the search marketing we would sponsor GB triathletes and also became the sponsor to a number of great organizations. 

We provided kit to the Help for Heroes Rehabilitation triathlon team called Team True Spirit. I still take part in events with these guys as they’re such a massive inspiration. 

VO2 Logo

As well as providing all the kit to the North West Triathlon junior performance group. This was great for the brand as we were helping youth GB triathletes and were very proud to see some of these go through and make the senior GB teams.  

We also sponsored Amy Kilpin; she was a GB Age group triathlete who was in marketing so would provide us with a great outlet. She would write for some of the biggest publications within the Triathlon world. Again great to be represented with Amy. 

VO2 Logo's Sponsorship

One area I was heavily involved with was the North West Textile association. They had government funding to try and help re-shore a lot of manufacturing that has moved overseas over the last number of decades. 

Via this, I was interviewed on BBC News and Channel 4 news around the time the Brexit vote had been announced. They were looking for my views on foreign workers and also how we might be able to bring manufacturing back to the UK. 

Which were your marketing strategies to grow your business?

Everything we did was online, we started using social media to spread the word. We got our first customer/team very quickly. I think some of it was luck and the rest just lots of cool information being shared around Twitter. 

At the time of starting VO2, Facebook was also a good platform for spreading the word. At that time the organic visibility of pages was still pretty good before they turned into a full-on pay to play platform. 

At first we used Google Ads to gain traffic and sales leads. This helped us build a good level of data on what people searched for and which keywords/phrases converted better. 

The main growth happened as soon as we started using Search Engine Marketing. When our SEO kicked in we ended up receiving between 2-5 sales leads per day on our good days, which became the lifeblood of the company. 

From my experience, SEO is the way to go when it comes to finding people who are in the market and have an intent to buy. 

It can take a good amount of time for organic traffic to start flowing but when it does start to come in as long as you keep investing time and resources then it just gets better and better. Hence why this is the main area of business for me now. 

Which were the causes of VO2 Sportswear failure?

I realized the company had issues when we turned over £40k one month then the following month we turned over £550 with big overheads. We were going into the quiet season (winter) too which meant we’d struggle as sales were few and far between. 

We took the decision to take the company into liquidation as we were only building more and more debts by this point. It was a really painful experience and one which 3 years down the line I still find very hard to talk about.

Looking back the main reasons for failing were:

Not diversifying enough

So, on our best days, we were receiving a good level of leads. The problem was this was only in the summer months. If we had moved into even one or two winter sports we would have been able to sustain better revenues through the winter months I believe.  

Hiring too soon

I was always in a rush to prove something with VO2. This lead to me making rash decisions on “building the team”! Instead of building a good level of cash in the bank before bringing members of staff into the company we employed who we thought would need to be part of the team instead of giving it some time to fall into place a little more. 

We started the company using an outsourced function to process smaller orders; we made the decision to bring a sales person into the company and this in the end turned out to be a poor choice. It didn’t work out very well at all and meant we’d quadrupled our overheads and didn’t end up getting the boost we expected. 

Looking back I wish we had kept the processes as they were (working) and not decided to bring them all in-house. 

Not understanding the effect of overtrading 

When someone tells you “you need to be careful of overtrading” you need to listen. It was mentioned to me over and over again when we first set the company up. We had an investment team working with us to prepare us for the “big pitch”. I just didn’t believe it was something that could happen. I mean surely if you were selling that much product someone would come in the help fund it right?! Wrong!

I spent a number of years not being part of the things I enjoyed after the company closed. Whilst running VO2 I was really lucky to get involved with Help 4 Heroes Team True Spirit; we used to manufacture the kit for the whole team but also I made some great friends. My pride stopped me from going and joining in with the team for a good year or so. To anyone that goes through this, just keep talking to people as they will not judge. If anyone does they’re not worth your time.

Which were your biggest mistakes and challenges you had to overcome?

We grew too fast; I’m not sure how you get over this one really. To this day I still feel we were let down by the UK financial sector. We were growing so fast and we just couldn’t get any more from the banks and the investment sector seemed adamant that if it wasn’t a tech business they weren't investing. 

One thing I do keep going back to is that we maybe should have pitched the business more as a tech business with clothing manufacturing behind it rather than a clothing brand using a website. It was very ahead of its time so maybe I got my pitch wrong. 

Also, we took on a salesperson way too soon. I wanted to grow before we should have and thought we’d catch up on the revenue and profits needed by bringing them on board. We’d worked with an outsourced company for a year before this to process smaller orders and bringing a salesperson in quadrupled the cost of processing sales. 

Which were your expenses? Did you achieve some revenue? In the end, how much money did you lose?

With regards to revenues; 

Year 1: £6,500

Year 2: £99k

Year 3: £250k

Then we ran out of cash flow. We managed to gain a small investment of £15k towards the end but in hindsight, this was just scratching the surface of what we needed to raise and I wish to this day I hadn’t taken it. 

Put us under massive pressure but the investor was a really nice guy and it ended up not being a very nice situation when he lost it all. 

Our overheads ended up at about £13k per month which for a small business was just way too much. The website needed constant investment, the team became a huge drain on money and not bringing enough back in.

But all in all, it was the lack of liquid cash that ended everything as we were growing too fast to sustain without serious backing. 

By the end of VO2, I had spent almost 4 years working pretty much full time. I even put more than full-time hours in really as I spent a lot of time with clubs and teams we were working with taking part in running events, triathlons and cycling to build vital relationships with potential new clients. 

We had managed to build up overheads of about £13k per month in the end; with this type of overhead and only averaging £21k per month in sales at a 50% average gross profit margin, the numbers didn’t stack up in our favor. 


If you had to start over, what would you do differently?

If I started over with VO2, firstly it would be a side project for a good few years while we built up enough traction to pay a full-time salary. 

I would outsource everything at first to make sure we had very little fixed overheads. 

With regard to online marketing, we’d go all-in on organic search and make sure we became the only place people would find.  

Looking back I would worry much less about what people think about you and just make sure you do it your way. I listened to a few too many people at the start who were suggesting things we shouldn’t have done. 

Which are your favorite entrepreneurial resources?

Here’re some websites:

  • Moz’s Blog: Great information all of the time from Moz. One of the first true SEO companies.
  • Distilled: This is such a great resource for learning about Search Engine Optimisation.
  • Startups UK: Somewhere I used to look for a list of inspiration. Whether it was how to do something in business or to get some insights into how others are being successful

Here’re my favourite books:

On the side, TED talks, anyone business related. I remember one that talked about the facebook like button and how it took millions of hours to design just the one button.

Where can we go to learn more?

My new company is Tao Digital Marketing and also Quotonga. I write a lot about a number of areas including search marketing (obviously) and business in general on my LinkedIn profile.

I’m an avid runner and have completed a number of Ironman Triathlons but my proudest and favorite was a run through the Wadi Rum Desert in Jordan in October 2018.

Matthew Tomkin Running


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