Niall Holden: How Van Damme kicked us into profit

Amateur musician Niall Holden spotted his business opportunity when delivering cables to recording studios. Now this year's sales at his audio cable supply company are expected to top £8m.

When amateur musician Niall Holden got a job delivering cables to recording studios, he quickly spotted an opportunity. "Different artists, producers and studios wanted to get their hands on specific kit and were prepared to pay for it." In 1988 Holden, who had tried his hand at "lots of different jobs" since moving to London from Blackpool in 1980, decided to make his move.

He teamed up with fellow delivery driver, Marcus De Figueiredo, and set up an audio cable supply company VDC. They borrowed £5,000 from NatWest bank "it was easy to borrow money in the late 1980s, they'd lend to anyone".

The pair spent it on a two-week holiday to Rhodes and two new cars. "We convinced ourselves it was for the business, but when we saw we had £120 left in the account we had a reality check." Alarmed, they rang everyone they knew in the industry. "We had made friends at the studios and used them to get through to the right people."

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Sales started flowing, especially when renowned German cable company Klotz made VDC its exclusive British distributor. "The Klotz deal helped transform the company. We rented a small warehouse and hired technicians to customise the cables." The deal helped push annual sales to around £200,000.

Their good fortune did not last long, however. After 18 months customers began to tell Holden that his cables were too expensive. Klotz, meanwhile, had opened its own British branch and was undercutting VDC.

Holden split with Klotz and "for a while we were a cable company without a cable". After several months he found a new supplier, European manufacturer Van Damme. "They were specialists in telecoms, but when I saw the quality of their cable I realised it would be great for music." Van Damme was more expensive than Asian competitors, but the pair decided to target a niche market that "would pay for quality". They sold to music festivals, tour organisers, bands and studios. "Our customers cared more about the sound than the price."

The business grew, yet by 1994 De Figueiredo wanted out. "He wasn't enjoying it as much anymore." Holden agreed to buy him out for £253,000. Although the split "wasn't acrimonious", Holden figured De Figueiredo might use his industry knowledge to set up a rival. His novel solution was to pay £170,000 upfront in cash and the rest in 83 post-dated £1,000 cheques to be cashed in weekly as "an incentive not to compete".

Now Holden worked with Van Damme to tap new markets for luxury yachts, cars and flats. Eric Clapton was briefly a client his Ferrari was retro-fitted with Van Damme cables. Holden also bolstered the "in-house team of technicians" so that he could offer "bespoke solutions".

The strategy worked. By 2000 annual sales reached £3m and this year are expected to top £8m. Having bedded down the cables with audio specialists, Holden, 51, is now looking at the consumer market for his next big push. "We are very close to signing a deal with a major British retailer that should catapult sales."

James McKeigue

James graduated from Keele University with a BA (Hons) in English literature and history, and has a certificate in journalism from the NCTJ. James has worked as a freelance journalist in various Latin American countries.He also had a spell at ITV, as welll as wring for Television Business International and covering the European equity markets for the Forbes.com London bureau. James has travelled extensively in emerging markets, reporting for international energy magazines such as Oil and Gas Investor, and institutional publications such as the Commonwealth Business Environment Report. He is currently the managing editor of LatAm INVESTOR, the UK's only Latin American finance magazine.