Sweat and tears: what it took to get from debt to success with a $20m franchise

By Sarah Stowe | 24 Sep 2018 View comments

Former personal trainer Aaron Smith turned a $20,000 debt into a $20 million franchise business in eight years by fostering a culture of continuous improvement. Here are his three rules for success.

It was a lonely night in a Melbourne fitness studio that taught me one of my first lessons about business: marketing matters. I had returned home from a stint in London on top of the world. Some years before I had become a personal trainer but felt that the market had become saturated. In London, I discovered a dynamic form of Pilates that I was certain would revolutionise the fitness industry.

Looking back eight years on, it’s a great feeling knowing that I got it right, that the dynamic workout at KX Pilates was revolutionary – I just hadn’t really thought through how I was going to let people know about it.

And so I learned the hard way that a brand doesn’t just appear out of thin air and market itself just because you have a great product or service: you have to create it.

Rule 1: Recognise the value of marketing and branding

In the beginning I was so ambitious and excited about my product that I didn’t give much thought to the strategy behind how to build awareness and acquire customers. A business loan backed by my father helped me get started and I was determined to make him proud, so I spent all my time perfecting my first studio in Malvern, Victoria, but in the beginning when I opened the doors, few people came.

That was a big wake-up call and made me realise that knowing fitness and having an idea was one thing but actually understanding marketing and selling was another.

Do your homework. That includes research on your audience and location as well as how your product or service is a solution to a problem. If you’re looking to franchise your concept, you also need to think about scalability and consistently offering your franchises something new.

After a lukewarm start I ended up working closely with a brand expert who helped me truly define what the KX brand – short for ‘kaizen experience’, Japanese for ‘continuous improvement’ – stood for and how to translate that into an experience that tied in design and service.

In KX Pilates’ case, we took a risk by branding ourselves as premium and boutique, but it was a calculated risk. Boutique fitness offerings were an emerging trend catering to people who felt intimidated or uncomfortable training in big box gyms, or felt they lacked personalised support in large group fitness classes.

Our strategy positions us as a premium boutique fitness experience, essentially a combination of offering something different and creating a community environment for our clients.

The kaizen philosophy is central to the way we work with our studio owners. Kaizen is about making very small and ongoing improvements, which includes refreshing the brand and its offering. This supports franchisees as it gives them something new for their clientele.

We are currently rolling out studio upgrades and new, custom-made equipment to sharpen KX Pilates’ unique selling proposition across our network.

Rule 2: Culture is the lifeblood of your franchise

Culture is intrinsic to success and that goes for culture inside the team – making sure the people you hire fit the culture or align with it – and out, where you deliver a service that creates a culture that keeps your clients coming back.

One way we ensure a franchisee fits with our culture is by hiring from within: currently a lot of KX Pilates’ growth is organic with more than 75 per cent of franchisees sourced from our existing network of trainers and class participants. Many trainers who work in a studio make good franchisees because they are already brand ambassadors for the workout and have the KX Pilates culture ingrained in them. Teaching them business acumen then helps them to succeed.

Rule 3: Close the gaps in your team

It takes a great deal of self-awareness and humility to know your strengths and weaknesses, but identifying the gaps in your skills and experience is the first step to recognising that you can’t do everything. The best part? You can delegate.

Hire and surround yourself with people who are great at what they do so you can close the gaps in your team and strengthen your business. For me it is not just about seeking mentorship but also filling roles in the business where I recognise I am not the best person for it. I attribute much of our success to the fact that the people in my team and my franchisees are excellent at what they do and far better than I would be in their roles.

One of the most valuable things we do at KX Pilates is maintain a community outlook so we can share our collective knowledge for the benefit of the franchise at large. Initiatives include interviewing our top 10 owners on what they do to run successful businesses, getting them to provide real examples of how they treat their team, build culture in their studios, build loyalty in their clientele so that others can learn from their experience.

Do these rules work? Well, since 2010 we’ve hit $20 million in annual revenue as a franchise and opened 50 studios, with our first international one in Jakarta, Indonesia.

We have activated the pillars of brand, culture and talent fulfillment and leveraged kaizen, which means that our next goal of 150 Australian studios and a global footprint isn’t out of reach.

CEO and founder of KX Pilates, Aaron Smith, is an award-winning fitness innovator and entrepreneur.