Olympic Hot Tub Co. Bubbled
to Become Top Spa Seller
Enterprise, April 15, 2005
By Carol Tice,
Staff Writer
The growth of Seattle's Olympic Hot Tub Co. is proof that determined entrepreneurs can start with little but a dream and climb to the top of their industry - if they're willing to seek help.
Started back when hot tubs were a brand-new idea, Olympic Hot Tub has
grown up along with the home-spa industry to become a four-location, $8 million business. The company has been repeatedly named one of the most professionally-run spa retailers in the country by industry trade publication Aqua Magazine.
Olympic wasn't a huge success at first, though. Owned by married couple Blair Osborn and Alice Cunningham, Olympic stumbled through its early years barely surviving, but then made key changes in the business at several points with the help of consultants, Cunningham said.
Though the company was solidly profitable by the mid-1980s, Cunningham felt they could do better. In 1995, after hearing Michael E. Gerber, author of "The Entrepreneurial Myth," Cunningham signed up for two years of phone consultations from Gerber's company. She said Gerber's advice helped the company achieve success as a growing chain.
"He said most people work at their business, not on their business," she said. "I thought, 'That's me.' He got us into systemization. Before that, I didn't even think we needed job descriptions."
Cunningham's quest for business knowledge even leads her to lunch regularly with a manager from top competitor Aqua Quip where they exchange tidbits about the industry. Aqua magazine president Peter Brown said Olympic's culture of constant improvement has helped vault Olympic to the top of its industry.
"We look up to Olympic as probably one of the best dealers in the country as far as keeping up with trends in retailing," he said.
The company's current success is a far cry from where Olympic started in 1975. Then, the idea of hot tubs was so new that people who stumbled on the company's tucked-away store on Lake Union would see the wooden tub in the window and ask, "What's that?"
The couple got into hot tubs shortly after they met, wanting to find a business they could run together. Neither had any business-management experience - she worked for the U.S. Dept. of Labor, while he was a University of Washington engineering professor.
Both quit their jobs to get the business going. The transition to business owner was a bit of shock for two people who were used to being merely one cog in a large organization. Suddenly, there was no one else to handle a million details from changing a light bulb to designing marketing campaigns.
"I said, 'Let's have a business ... how hard can that be?'" Cunningham recalled ruefully. "We went from being very specialized to having to be a generalist, overnight. The learning curve was straight up."
It was hard to make a profit at first, as it took more than a week to assemble, plumb and install the early wooden hot tubs the couple stocked. An early banker indicated her lack of confidence in Olympic by asking if the couple liked beans, as the banker thought they'd be eating plenty of them.
"She thought the whole idea was so harebrained," Cunningham said.
The business took a leap forward in 1982, when Osborn and Cunningham were among the first to recognize a turning point in the spa industry -- the creation of plastic spas made with the necessary plumbing built in. Suddenly, Olympic could sell and install four or five spas a day instead of a half-dozen per month.
With its hands-on showroom stocked with bathrobes and bathing suits for customers who want to jump in and try models out, Olympic was positioned to capture the growing market for the new, easier-to-use tubs. The company maintains a five-person staff to manage repairs and service on tubs it sells, enhancing Olympic's customer-service reputation.
As demand for home spas grew, additional Olympic stores in Fife and Everett were added in 1987 and 1988. In 1995, the Seattle headquarters store finally arrived at its current high-visibility location on Dexter Avenue North, northeast of downtown, after decades in out-of-the-way spots. The location does help a bit - Cunningham's studies show 10 percent of customers find out about Olympic simply from driving past. But the vast majority of Olympic's customers are repeat purchasers and referrals.
The most recent Olympic store opened in Issaquah in 2002, aimed at capitalizing on residential expansion there. Cunningham said Issaquah now ties with Seattle for highest-volume store in the chain.
As the business grew, Cunningham and Osborn discovered that by chance, they had picked one of the best markets in the country in which to sell home spas. Figures from The Association of Pool & Spa Professionals show that last year, Washington ranked No. 4 nationally for hot-tub sales, behind California, Florida and Texas.
The association study showed nearly 200,000 tubs were sold here last year, to purchasers with an average income that tops $75,000 per year. A typical customer at Olympic, Cunningham said, spends $8,000.Despite its recent success, Olympic continues to bring in consultants, seeking new inspiration. In January, Cunningham brought in another set of advisers, a team from Minneapolis-based Charthouse Learning.
The authors of the popular series of "Fish!" books use Pike Place Fish Market's operations to teach companies how to be successful. The "Fish!" philosophy includes a vow to "be fully present for customers."
After seeing the "Fish!" presentation, Cunningham made some changes. She switched to doing her own voice-overs for Olympic's radio and television ads, to personalize the company for prospective customers.
The company is also now in the hunt for more locations, even though a recent market study Cunningham commissioned showed Olympic is already the top-grossing local chain. With more units, it's easier for Olympic to afford the advertising needed in a market with more than 30 local spa dealers.
"We're going after a much bigger market share," she said. "That's a powerful goal, once you voice it and write it down."
© 2005 American City Business Journals Inc.
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