What you’ll learn from this episode
Highlights from the interview
[02:29] – How Kelly started & sold multiple businesses
[11:23] – The different ways Kelly made money as a subscription model – creating multiple profit centers
[17:04] – Timing & marketing to effectively add a revenue stream through paid workshops
[23:03] – Why Kelly paid premium for a business that made only $900/month
[28:58] – Different Ways to Market with a small budget
[32:07] – How to get free PR to promote your business
About our Guest
Today, I’m talking to Kelly Howard. She’s a serial entrepreneur who has sold 4 different companies.
One of the companies she’s founded is Bayou City Outdoors, it’s one of the largest outdoor activity social clubs of its kind. Through that business she’s seen life transformations such people start to become active and people meeting and actually getting married.
She’s an online entrepreneur with her Fit Is Freedom Podcast, she talks about mindset and motivation, and through her courses and events she helps people create that life-change they’re seeking.
Edited transcription of Fitness Business Secrets Podcast, Episode 49
How Kelly started & sold multiple businesses
[02:29] Kristy: I’m with Kelly Howard. She’s a multiple-time entrepreneur who has sold multiple businesses. She is in the fitness industry. She’s a trainer and a coach, so it just shows that there’s multiple ways to make money as a coach.
How are you doing today, Kelly?
Kelly: I’m doing great. Thanks for having me here.
Kristy: Thanks for being on the show. I am just dying to know all about you and your journey. When did you get started as a fitness coach and what types of businesses did you find so much success in that you were able to actually sell it, which everyone’s trying to do?
Kelly: It is a fun one. Right? It’s funny because I’ve always worked for myself, since I was a little kid actually. I think one time I had a job in the corporate world and I lasted six months. I got fired because I kept trying to tell the owner how to run his business. He just finally got so tired of me that he tossed me.
I started out small. My first company was actually a yacht maintenance business. Millions of years ago, it was a small business. One of the cool things was I only hired women. Well, we had one token guy, but then I hired all women. Most of my clients were at yacht clubs and it grew to the point that one of the people in my largest yacht club started business just like mine to compete with me because he saw how well we were doing. I ended up selling that company and started another one.
The second one I started, I was in the membership business. This is so long ago, practically before the internet. Not quite that bad, but practically the sites that we created for the first two companies, we had to code the whole thing. It was $25,000 to $30,000 to build a website because it was all code.
Both of those companies were membership clubs and they were really geared more towards single people being social. I found that it was fun, but I’m not the kind of person who likes to go to a lot of socials. I would rather be out biking and hiking and doing all those things. I thought that it would be better for the people in my clubs to be doing those things too.
A friend of mine had this small company in Houston called Bayou City Outdoors, and I sent everybody his way because I thought it was such a cool thing and such a great way to meet people. He actually met his wife through one of my companies. So, he told me one day, “I’m going to close Bayou City down because I don’t have time to get married and start a family, and run a company and have a business on the side and all these other things.”
I was like, “No!”
It just came out of my mouth. I said, “I’ll buy it.”
He’s like, “You’ll buy it?”
I said, “I’ll buy it.”
So, I bought it and it was funny because it was very small at the time. I think he had around 70 paying members and he wasn’t doing anything with it. The calendar was small. He wasn’t emailing them. At that time, I was like the queen of email in Houston. I had an email list of probably 30,000, which was actually the largest email list in Houston. People would come to me and go, “Hey, would you promote this or that for me?”
Email’s the queen, right? So, I just sent an email out to all those 70 members and half of them quit because they’re like, “I keep meaning to stop this because I’m paying every month for this and I’m just not using it.”
It was kind of shocking actually, but it was okay because I figured that with 30 people, all I could do is go up and get better. I think probably the most members we had were about a little over a thousand. It was a little bit cyclical, but it grew. I grew it and it was so much fun. It was a great company.
Kristy: That’s really neat. I know you sold four companies. The first one was a yacht club, and then the two in the middle were just all websites.
Kelly: They were subscription-based businesses. One of them was a dinner club. If you’ve ever heard of a company called Eight Friends Out, it was similar to that. It was actually created before Eight Friends Out started. Eight Friends Out was my company. I think it’s called Dinner For Eight or something like that, and what we would do is we put people together at group dinners.
Then, the second company was called Houston Single Source. Once again, there were large parties and introductions face-to-face for people, and they could also meet on the web. Both of them had a large activity or social aspect and they’re web based also. When match.com first started, we had actually come out right before them. So, it was quite cool.
The neat thing about both those companies that makes it unique is that they were location specific. In the singles industry, one of the problems is geographically undesirable. You meet somebody you match with and you live in Houston, but they live in Dallas or New York or whatever.Since we were Houston based, everyone lived in the same city. Then, we did a few offshoots in some other cities, so everybody was meeting people who lived right there.
It was cool, but it came back to the whole thing that I just didn’t want to go to a bunch of parties. I would rather go out and do the things I love doing.
How she found her buyers
Kristy: So then, you sold them too. How did you find a buyer?
Kelly: The first one was a friend of a friend, the second one was another friend of a friend, and the third one I actually just put it out there with a broker. Then, the last one was a friend who was also a member of the company.
Figuring out the right price to sell it for
Kristy: I guess these are the last of your social clubs. What was the general revenue? Did you approach it where you could have sold it at a multiple of profit or revenue or is it kind of whatever they’re willing to pay?
Kelly: No, because you can’t do that. Right? You create something that is valuable, and you don’t want to just walk away. I did it with one of the companies. With one of them, I was just like, “I am so over working this hard and doing things I didn’t really love doing.”
Kristy: The singles club, was that the first one?
Kelly: That was the first one. The dinner club. I don’t want to go out to eat every night, quite frankly. It’s just not my gig. I’m very picky about what I eat. I’m vegetarian, so sending me to a steakhouse, which everybody else wanted to go to, was like, “Oh, shoot me.”
It really varies, and that’s what I’ve found across the board. I think that you have to be fair and realistic. To me, fair and realistic means that it is probably some variable of what you’re bringing in, some variable of what you’re netting, and some variable of what they’re going to be able to do. A lot of times when someone buys a company, there’s a point there where they’re not going to be able to be as successful as you right away, unless they have a big amount of money behind them.
A person that I was on his podcast recently, he invests in large sums of money and companies that want to be purchased. Doing that is a whole different animal than if you’re selling to an individual. Yeah. It’s also a different animal if you’re selling through a broker or not because a broker’s going to take a commission and they’re going to they’re going to jack the price up as high as they think they can, which is viable as long as the person buying it understands what they’re getting because you have to be fair.
It’s everybody’s dream to sell their company or not everybody, but a large portion of the people would like to sell their company. At the same time, you have to realize that that company wants to keep running, so you can’t load it with so much debt that it’s impossible for it to keep running.
The different ways Kelly made money as a subscription model – creating multiple profit centers
[11:23] Kristy: Definitely. I know that the numbers are a little bit different for service companies and smaller businesses. Let’s say for the singles club at its highest, how much would you say that made in revenue?
Kelly: I actually do not remember. I would just make something up. I cannot remember. It’s been a number of years and it’s just out of sight, out of mind. I have this ability to completely forget things. I know that it was doing well enough that I was doing well, but I couldn’t give you an exact number. I do know that in that company and actually in the last three companies, all of them have had the subscription based model, which I love. For the singles clubs, we made money off events too. Some people would say,”Well, that doesn’t seem right.”
Someone has to pay a subscription and an event, but it worked. They got the quality that they wanted. I liked that because I’m always looking for, “Where’s the extra profit in this?”
Because you’re going to have that amount of money that’s going to cover your base, but then where are your profit centers and how many profit centers can you have?
Kristy: That makes sense. I think a lot of fitness trainers would relate. You have a gym, then you have a baseline of membership, and then you upsell to personal training or other things, and there are additional costs, so it makes sense.
Kelly: There’s a lot you can do. If you think about it– and I’m just going to run off on a tangent for a second– but if someone’s running in the gym, a lot of times, my friends who have had gyms have just looked at it as a subscription based model in the story. Maybe some personal training, but there’s so much more you can do. Not just selling water bottles to them. There’s just so many add-ons and digital things you can do. It’s actually extraordinarily cool, especially right now.
Someone has a gym where I am, I’m not going to my gym. It’s just not going to happen. So, I’m having to find different ways to deal with that and learn. I belong to two gyms and one of them is being super smart and coming up with new things, and the other is just stuck in the eighties and they’re dying.
Examples of different upsells revenue sources for fitness studios
Kristy: It’s tough. It sounded like you know a lot of gym owners, did you see any examples of them doing something where they added additional revenue similar to your social club?
Kelly: Yeah. I had a friend who I worked with a little bit. I just helped her out and in helping her out, not from a fitness standpoint because she totally knew what she was doing, but from a marketing standpoint because I do love marketing. If you want to get me going and fall asleep with me talking, talk to me about marketing because I’ll talk for hours.
What we did with her was we first created some events. When everything went crazy here in Houston, we took her over to online immediately. The events were not like, “Let’s do a half hour of yoga together,” or something. We brought in speakers and examples of things that she could do such as how she worked with people, and show and tell, and all of that. People love that stuff. So, that actually became a second profit center for her.
The other thing we did was we actually created a digital course for her and in the digital course, it is similar to what I do. She was targeting her clients and using her spin on it, but she was able to upsell a large portion of her clients to a digital course so that they were getting more than just coming into a gym and maybe workout with a personal trainer once or twice a week, but then they go home and they keep the same habits and they’re eating junk or whatever it is. These courses help people create a better mindset and better habits.
We also created for her an accountability set up. I do an eight week accountability group a couple of times a year. So, we did the same thing for her group and it really made a difference. When people have that little yup, like we say down here which is that little extra special something, it made everybody so sticky even when all of this stuff was going on with the pandemic.
Kristy: That’s interesting. I’m going to ask some follow up questions because I think a lot of small gym owners are like, “What did they do?”
For the events and the membership, do you know if she maintained? I’m not sure how involved you are with her business, but did she maintain her gym membership, and then add on events or did she just do events?
Kelly: She kept her gym and added on. These are all add-ons. It’s kind of like a sampler platter. You’ve got your entree, and then add-on the appetizers, and you add-on the desserts. You throw it in a fancy cocktail. When people like you and when you help them, they just want to do more business with you.
Timing & marketing to effectively add a revenue stream through paid workshops
[17:04] Kristy: That sounds very interesting and I know we try to do events. We did osteoporosis workshops and stuff. For us, I found it worked, but sometimes it was also hard because it was a ton of time into one event. You only did it once and did a lot of set up. So, I felt like it was always a give and take if it worked.
What type of events would you put in? How much would she charge?
Kelly: Let me just see if I can think about this for a second. There were times when we were doing weekly, and then there were times when we were doing monthly.
Before the whole COVID thing started, probably two years before, I had gotten her into the idea of doing these weekly events. Part of the thing with events, if it’s marketing them, it’s naming them. You can have an osteoporosis event called, “How to prevent Osteoporosis,” or you can have one and I’m just going to make something up real quick like, “No more broken bones,” or, “Did you get the 3% bone loss from your whatever the bone density is called.”
You have got to hook them and once you hook them, then there’s a lot of ways to promote events. You have to be willing to go all in. When I say it that way, what I mean is that if I’m going to have two events a year, they either better be like, “Katy, bar the door. These are the most amazing things,” or else you do them weekly and get people knowing that this is coming and you’re marketing to them properly that way.
Kristy: Are they workshops or sort of like a 12 week program? How do you get people to come to this event?
Kelly: The events that she was doing, they were all one time events. One topic, one time. Sometimes a specialist would come in and sometimes it would just be her teaching something. I helped a couple of times with a couple of things. I think we did one workshop series, but the problem with a workshop series is that if you’re going to do a workshop series, you now are doing three or five or eight events.
The profit goes down because if you can charge $40 for an event, it’s one thing. But now, if you’re doing eight, you’re at $320, but people don’t want to pay $320 for a series. So now, they want to pay $120 or whatever it is. It’s easier to do it a la carte.
Kristy: I could see that. On average for your events, you guys were charging these bigger events at about $40.
Kelly: $25 to $58.
Kristy: Were these events one hour events or two hour events almost? How many people show up?
Kelly: It’s one to two hours. How many people? I’m going to have to make this one up to 5 to 20 people. We’re not talking about big events. Big events are a whole different animal and you can do them now on zoom, but you’re not going to be able to do them at all, depending upon where you’re living for a while. If people are thinking about doing events, they’re either looking at outdoor events, smaller events or online events.
Kristy: For the course that she did, did she just start that when COVID started?
Kelly: No. We did that a couple of years ago.
Kristy: So, she has a gym and she added on this course. Was it sort of like a personal training course, as if nutrition and health, and did she give personal training with it?
Kelly: It was more of a mindset, motivation and accountability, because that’s the stuff that I know. I add on some of the things that I use myself as a Guinea pig for, but in general, those are the things I know. Those were the things I could help her build her course around.
We did a little bonus because she was an excellent physical trainer or personal trainer, so we did a bonus with some personal training stuff that a lot of the people were already training with her. It was kind of an elite gym, so people wanted to work with her too.
Suggested price ranges for a premium digital courses
Kristy: I see. How much money did she make from each program since this was an elite gym?
Kelly: I don’t know.
Kristy: I’m wondering if it was $2,000 for the program or $300.
Kelly: You mean what she charged?
Kelly: I’m not sure. I’m just going to make something up. I would imagine that we probably put the price at somewhere between $600 and $1800, depending upon the time of year and what she was actually doing. It’s different if you have just a DIY course or if you have a group coaching course where she’s going to actually spend her time also coaching on a zoom call or whatever.
Kristy: Absolutely. Do you know if she did group coaching or one-on-one?
Kelly: She did one group coaching.
Kristy: I would imagine that’s why it would be okay to charge over a thousand for digital retail. That’s interesting. Those are all like great ideas for gym owners during this time.
Why Kelly paid premium for a business that made only $900/month
[23:03] Kristy: Back to your story, I think we left off as a cliffhanger. She had just bought Bayou City Outdoors, and all of a sudden, half of the people left. So, you’re at 30 people and I can totally relate because I think when I took over the gym, I think a bunch of people were like, “What?”
They’re like, ” Great. I can get out of my gym contracts.”
Kelly: Yes. When you buy something, you’re new. They’re used to something different and people are funny about change.
Kristy: How much were you charging at that time?
Kelly: They could do a monthly, semi or an annual, and they probably paid somewhere around $30 a month, $180 and whatever the other one was. They’ve got a break at an annual, probably $300 for annual.
Kristy: Let’s say 30 people, $30 a month. So, you’re making about $900 a month.
Kelly: So, you’re not making any money. You’re way more expensive than that.
Kristy: Did you actually pay a decent amount of money for this business?
Kelly: Yes. It was more than the company was making that year, but it was also a company that I knew was highly under-utilized. I spent a lot of time giving this person marketing help because his idea of marketing was to buy an ad in a magazine and be done with it.
Kristy: You saw so much value in it and I’m wondering.. What was it? Was it that he had certain relationships with places?
Kelly: The value was in the members meeting each other. That was the real value in the beginning. I bought the company probably 15 years ago. Once again, before you had meetup and had some of these other things out there, people didn’t know how to connect. They wanted to, but they really just didn’t have the way. Maybe little social groups out there, a little activity groups out there, but there was nothing that was like the gorilla.
I could see this as the guerrilla. The guerrilla is the thing that comes into town, takes one look around and says, “We need to own this. We need to own the hiking. We need biking trips. We need to own the kayaking stuff. We need to teach people how to do all these different things.”
What ended up coming out of it was millions of friendships. People just became the best friends in the world over this club. There were lots of weddings, which was cool. The big thing though was how many people got into things they didn’t think they could ever do. They just didn’t think they could physically do something. That was what really drove me.
I can remember a woman coming to one of my hikes and Houston’s a relatively flat city, but we have some areas that have some pretty good ups and downs. She showed up and she had a cane, which was a little strange. People show up with hiking poles, but not with a cane. She said, “I just wanted to show up. I’m not going to go on the hike with you. I just wanted to prove to myself that I would come.”
I was like, “No way. You’re coming with us on this hike.”
Of course, everyone took care of her. She finished. She did something she never thought she could do. She was so stoked and so excited that it changed her life. She goes hiking all over the world. Now she has friends that she takes with her. That’s when you can do something like that. How can you put a value on that?
How to turnaround a struggling events focused company
Kristy: You’re changing lives. You still want to make money. What were the first things you started to do so you could increase the membership?
Kelly: More events. In fact, it was kind of fun because at the time I had probably four or five people who worked for me from the other companies, and everybody worked at my It was a madhouse. Two bedrooms in the house. That was it. What we did was we printed out the calendar that was the current calendar, and I think maybe there were five events, which is pathetic. Our goal was to hit 20 events a month.
When I sold the company, we’re doing 100 to 120 events a month. When you can bring it up like that and volunteers running the event, it becomes very sustainable.
I’m not going to go down the whole road of why it’s better than meet ups and stuff like that because I think meetups are a very cool business. This is a very sticky business because people come in, they make friends, they get to do things and then they continue.
Kristy: When did you sell your business?
Kelly: Last year.
Different Ways to Market with a small budget
[28:58] Kristy: You mentioned you started it 15 years ago. So, after 15 years, you’ve brought it up from I think you said five to 120 events. What were the first few years like?
Because I’m sure it’s a great idea to add events, but you still need to make sure you’re getting people to these events. You also just need to market outside of your current list. How did you market it on I’m assuming a shoestring?
Kelly: Well, shoestring. A little bit of debt. Sometimes you just have to be willing to jump in, and that’s something that I’ve always been willing to do– is just jump in because I trust that I can do the things that I want to do. We were super Creative. That would probably be the westward.
One day, I’m walking around and I see Outside magazine and the local REI, and I’m like, “Why don’t they do something with us?”
So, I just pick up the phone. I find the person who does the outside magazine distribution. I’m like, “I’ve got this club. You should send me magazines.”
They shipped me 2000 magazines. So, my whole crowd sat around and literally took these Outside magazines, put invitations to the club, tied them up in tissue paper and our branding big ribbons on them. It was crazy.
Then, we went around to every place. We’ve got a very nice, massive park here in Houston, and we went and we put it on everybody’s car. We irritated some people, but a lot of people were like,”Wow.”
That’s such a hands on thing to do. A guerrilla marketing kind of thing. This was barely before Facebook. It just started coming out. So, the advertising on Facebook was pretty good, but we could get a lot of organic reach on Facebook because it was just getting going.
So, we did a lot of organic reach that way. I did a lot of organic reach by reaching out to organizations and companies in the city. “Hey. We’ve got this cool thing. Do you want to have us?” With church groups, I would go out and speak to them, which was like, “Oh my God. Not another speech.”
But, it worked. I can do the same thing now, but I do it on zoom, which is so much easier. I did a lot of PR. I was on every TV show and every magazine in the city because it was just easy and it was super effective. In my current business, I do a lot of Facebook advertising. I do a lot of email advertising. Back then, I did a lot of email advertising too for this company.
I liked those basics, but I also like looking outside of the box.
How to get free PR to promote your business
[32:07] Kristy: For the PR, I think that’s interesting for a lot of trainers or small gym owners thinking, “I’d love to get in front of some type of published article or something.”
How did you do that? Did you just reach out to them? Did you have to follow up a lot?
Kelly: PR was pretty easy for me. I was known. I’ve done a lot of TV in the city already. Actually, I used to have a TV show. So, it was easy for me just to pick up the phone and call. It’s not as easy to pick up the phone and contact a producer anymore, but you can get all the information you need for a producer. You do have to be willing to follow up. PR is a flip. So, the flip is that it’s free.
It carries power and the reason it carries power is that when you’re on TV or on the radio, whatever it is, people see you as more than you are. It has a star power that it doesn’t have when you’re just telling people how great you are, there’s a lot of value there.
These days, there’s less physical or currency value. I don’t see tons of sales or leads that come in from PR, but I do see that the star power and the credibility factor just goes up and through the roof. You do have to be willing to do a lot of follow up.
One thing that you need to think about on that is in my world, I think automations and systems are the best thing you can do. You figure out a system, you create it, and then you figure out a way to automate it as much as you can. Then, you find someone that can do it for you.
I still don’t do a lot of this stuff. I’ll do some followup. If there’s a big TV show that I’ve been going back and forth with right now, and you do that follow up. My assistant doesn’t handle it, but she takes and runs some of the smaller stuff.
The Surprising Tip to Get in front of a producer
Kristy: That’s nice. To get the producer information, I’m going to imagine that a lot of people don’t have an assistant and they’re just like, “I’m going to try to get the producer information. Just follow up myself.”
Kelly: It’s super easy. Google. That is what’s simpler than in the past. In the past, you would have to literally call the TV shows and be like, “Who’s your producer? Can I have their name? What’s their phone number?”
Now, you just get on the web and start looking. There’s so much information out there and you can find everybody.
Kristy: In the current environment, where there’s so many ways to contact producers now. They’re probably inundated. What’s the best kind of personal approach?
Kelly: They want short emails. They want follow up. They don’t want to be harassed. If someone’s on this call and they are interested, some friends of mine have this thing called Super Connector Media. You can find them, Chris and Jen, on Facebook and they actually have a class they run. It’s brilliant. They’re really good and they’re super cute. They just know their stuff like nobody’s business. I would definitely tell people to just contact them.