It sounded like the ultimate success story of young entrepreneurs fulfilling the American dream: Two brothers have an idea and go into business; in just one year their product gains an international reputation, sales soar and orders far exceed expectations.
But, when the above scenario happened to Scott and Mark Galbraith, founders of R.L. Sportswear outdoor clothing, success caught them off guard and forced them to bail out and sell their enterprise this month to a larger and better financed competitor."It's kind of disappointing to see it leave. We put in a lot of hours, bloodied our noses and made a contribution," said 30-year-old Scott, now liq-uidating boxes of excess inventory at a small shop on Highland Drive.
"But on the whole, it was a very positive experience that I can use in the future."
Recalling the past, Scott said he was an MBA graduate working for Mobil Oil when his brother, an outdoor enthusiast, had some ideas on recreational clothing designs and the pair decided to parlay it into a small business. Their plan was to manufacture clothing for specific outdoor activities that were gaining popularity, particularly mountain biking, cross-country skiing and mountaineering.
Scott quit Mobil and the two brothers acquired a plant and equipment from Sunset Sports, when that company sold out to Herman's in 1987. To accumulate some working capital for their venture, they started doing contract work for private label sportswear such as Browning, Patagonia and Eddie Bauer. With the extra money, the Galbraiths were able to manufacture their own specialized, functional outdoor clothing.
Their Sunridge Sportswear label products caught on immediately. Although the coats, pants, jerseys and fanny packs were made to accommodate specific outdoor activities - for example the nordic ski clothing had fleeced lining in places where a skier gets cold - the bright colors attracted the fashion conscious, too.
Within a year, distribution not only covered the United States, but Sunridge clothing could be found in shops across Europe. Special orders were made for cross-country ski teams, and the Galbraiths outfitted three Mount Everest expeditions.
"Sales at the end of 1988 were $1.5 million and our orders for the next year were twice what we had estimated," Scott said.
But the phenomenal success proved to be Sunridge's downfall.
Still a young company, suppliers weren't willing to extend a line of credit to facilitate Sunridge's unanticipated orders. Instead, materials had to be purchased with cash, up front, before delivery, leaving Scott about $800,000 short of filling incoming requests.
He said local lenders weren't particularly eager to finance a young apparel manufacturer, and those that did show some interest couldn't process the transaction in time to meet the company's deadlines.
"It all happened so fast," Scott recalls. "We needed funding faster than we could order the raw materials to fill our orders on time."
Under pressure of a capital crunch, the brothers received a call from Lowe Alpine Systems in Boulder, Colo., a manufacturer of backpacks and climbing gear. "It just came out of the blue and they made us an offer we couldn't refuse."
Although it appeared the brothers sold a gold mine, Scott said Lowe treated them well in the deal. Terms have been kept confidential, but the pair received an undisclosed amount of cash and royalties for the next few years. Mark, being the designer and brains behind Sunridge's product, was part of the package and is now a designer with Lowe in Colorado.
Lowe did not buy Sunridge's manufacturing operation in Midvale, which employs 110 workers. But Scott was able to sell that to Moonstone Mountaineering, a northern California outerwear manufacturer that plans on keeping the plant and jobs in Utah, he said.
Lowe offered a job to Scott, but he declined, preferring to "pursue other interests." Without disclosing any details, Scott said he will probably become involved in starting another small business.
Meantime, as he sells off the remaining Sunridge stock, Scott Galbraith ponders his initiation into the rough and tumble world of owning and operating a small business and the price tag of success.
"Anyone out there can succeed if they work at it. But remember that it will cost you to grow," he said.