Owner Kevin Ishaug shifted the company into a higher gear, expanding to gain market share.
Kevin Ishaug, owner of Freewheel Bike, has transformed the struggling co-op, opening new stores and a mobile repair van since purchasing the company in 2000. He also meets with businesses and government officials to advocate for bike commuting and winter biking.
Peddling more than just bicycles, Freewheel Bike owner Kevin Ishaug is working to build Twin Cities ridership while expanding his bike shops' retail reach.
An avid cyclist and entrepreneur, Ishaug also has become a widely traveled cycling advocate. He's lobbied businesses, elected officials and bureaucrats from City Hall to Washington, D.C., and even individual riders to drum up support for more resources and to promote bicycling, especially bike commuting and winter biking.
"Freewheel's pretty much always been focused on the mission of commuting and getting more people to ride more bikes more often," Ishaug said.
Ishaug, 40, should know, given his history with the company. Before buying Freewheel in 2000, he was a customer and then an employee during college in the 1980s at the shop's original location on the University of Minnesota's West Bank.
Ishaug returned to Freewheel as a consultant in the late 1990s, after leaving his position in accounting at a publicly traded company that he had joined as a small start-up.
"I realized what I really wanted to do when I grew up was something I love," Ishaug said. "I've always loved bicycling, the activity and the social aspect of it. I love Freewheel, the way the culture mentored me through college and gave me a foundation."
Sharpening his focus on commuting bicyclists, Ishaug has sought to take advantage of the recession by making several moves to gain market share. Those include opening Freewheel's third store, in February in Eden Prairie, creating pop-up retail shops at some Life Time Fitness locations, starting a mobile repair service and placing vending machines on popular bike trails.
All that is in addition to the summer 2008 opening of the Freewheel Midtown Bike Center on the Midtown Greenway bike trail. A joint effort of Allina Health Systems and the city of Minneapolis operated by Freewheel, the Midtown location offers commuting bicycle riders indoor bike storage, showers, repairs and breakfast. It also hosts repair classes and has a public shop with tools where riders can make their own repairs.
Gearing up for a busy summer, Freewheel has 85 full- and part-time employees. The company pays wages above industry standard and offers health care and matching retirement account contributions.
Ishaug, reluctant to discuss revenue, said sales had increased roughly fivefold since he bought Freewheel in 2000, when the lone shop had 25 full-time employees and part-timers and $1.4 million in revenue. That would put this year's projected revenue at close to $6.8 million.
Over the years Freewheel, founded as a cooperative, had developed a strong reputation, especially for customer service. By the late 1990s, however, challenges were mounting for the company behind the scenes.
When he returned as a consultant, Ishaug saw three options, only one of which likely would save jobs: liquidate, sell to a competitor or find a friendly buyer. The board chose to find a buyer. Ishaug stepped aside as a consultant until he ended up buying Freewheel in 2000.
As he has opened new stores, Ishaug has installed key long-term employees from the West Bank location to help instill the Freewheel culture among newer staff members.
Eyeing transit hubs
He chose the new Eden Prairie location with an eye to the future. It's close to the Southwest Transit hub, just across Hwy. 212, and is only two blocks from the proposed route for the Southwest light-rail transit line. The city has 90 miles of bike paths, and nearby Fortune 500 and other companies that support employees commuting by bike.
"Those are the opportunities I see as that low-hanging fruit," Ishaug said. "There's all the infrastructure out here already. It's not a matter of putting it all together so it becomes a lot more connected. There's just such a willing audience that is ready for it."
Freewheel Bike customer Tom Lais, a year-round bike commuter, has observed Ishaug in action.
"Kevin is a phenomenal businessperson," said Lais, an accountant with Allina Health Systems and frequent Midtown Bike Center patron. "He's learned to partner business-to-business, with governmental organizations and his vendors and customers. He has embraced without a doubt the idea that bicycling is for the masses and not just for the Spandex group.''
Dan MacLaughlin, executive director of the Downtown Minneapolis Transportation Management Organization, a public-private partnership that advocates and promotes sustainable transit and transportation options, said Freewheel Bike is a strong supporter of the organization's outreach efforts.
"He's devoted to the concept that you can get around by human power," MacLaughlin said. "The idea is that hopefully by having employers step up and promote bicycling as a way to get to work, we can have a healthier worksite. It helps to have people like Kevin out here promoting it."
The expert says: Prof. Lorman Lundsten, chairman of the marketing department at the University of St. Thomas' Opus College of Business, said Ishaug appears to be violating conventional marketing wisdom when he says Freewheel will thrive by bringing new people into bicycling.
"The saying in advertising is 'target the likely prospect, the people that use your product, not the people who don't,'" Lundsten said.
In practice, however, Ishaug is "doing the right stuff," by providing a high level of service and amenities such as the showers available at the Midtown Bike Center aimed at devoted bikers.
"He says he's going after the people who are hard to get, but he's actually going after the people who bike now, helping them have a better time at it, which would be what we would recommend," Lundsten said.