Some say mixing business with friendship is tricky, but Dennis Kellner and his two partners have been making it work for more than two decades.
Kellner grew up in Grande Prairie, Alta., with Darcy Amendt and Brent Macklin. In their early 20s, the long-time friends got jobs as retail hot-tub salesmen in Edmonton and Calgary. They discovered a natural passion for the industry, and when a Calgary hot-tub manufacturer asked them if they wanted to take over his company, the trio jumped at the opportunity.
“In December, 1996, we started on the path to buy the business from the existing owner, do our thing with it and grow the business,” Kellner says.
Arctic Spas now manufactures and sells about 7,500 hot tubs a year in 25 countries. About 65 per cent of sales take place in Canada, 25 per cent in the United States, and the remainder in European countries such as France, Norway, Sweden, Finland, Russia and Britain.
The trio won the EY Entrepreneur Of The Year 2019 Prairies award on Oct. 10, recognized for creating “some of the most innovative and technologically advanced hot tubs in the world,” Kellner says, while maintaining a business where every employee is treated like family.
Each of the co-owners has a specific role in the organization. Kellner is president of Blue Falls Manufacturing and Blue Falls USA (the manufacturing side of the business), while Macklin heads up the retail side and Amendt is CEO of the entire organization.
Kellner says the fact the three remain friends is a boon to the business.
“It's a really cool experience because we know each other so well, and we get to go to work every day and see our buddies,” he says.
While the trio learned early on that it was a good idea to split up responsibilities, Kellner says they keep lines of communication open. “We’re always communicating with each other, whether it's here or on the phone, saying, ‘This is the plan, what do you guys think? What should we do next?’”
To differentiate themselves from the competition, Kellner says Arctic Spas invests heavily in research and development. The goal is to craft the best hot tub on the market for use in colder climates.
“Being up North and selling regionally, we learned very quickly that water and cold don't necessarily mix unless you build [hot tubs] properly, so we really had to be innovative in what we were doing to make sure our end customers were happy,” he says.
One of their latest innovations is Spa Boy, the company’s automated spa monitoring and maintenance system. The system uses medical-grade sensors to analyze water cleanliness and sanitizer and pH levels, allowing customers to monitor them remotely with their computer or phone.
Constant innovation keeps Arctic Spas at the top of its industry, but Kellner says that like any business, the company has had its fair share of challenges over the years. Economic downturns, like the 2008 housing crisis, can hit luxury businesses harder as consumers stop buying leisure items.
“In 2004 or 2005, we were manufacturing and selling 10,000 hot tubs a year,” he says. “Our industry itself was significantly larger than it is today and it still hasn't fully rebounded in the U.S.”
He said those tough post-recession days taught his team a couple of valuable lessons: Don’t be too reliant on one geographical region, and remain as lean as you can.
“You’ve got to make sure that you're working as efficiently as possible,” Kellner says. “If you don't take care of that, then you will find yourself quickly going in the wrong direction as opposed to growing.”
Talent has also been key to the company’s success, Kellner says. Being based in Thorsby, Alta., about 70 kilometres from Edmonton, he admits the business is at a bit of a disadvantage when it comes to attracting new hires. But the owners have worked hard to entice top-notch talent to take the leap out of the city, he says, adding that when it comes to retention, strong company culture is key.
“It’s all about the package that you put together. We have bonus programs, we pay quite well. It's a great environment for people because everybody's respected, everybody's opinion is worth something.”
For other entrepreneurs considering going into business with friends, Kellner has this advice: “If you're going to have a partnership, first make sure you trust each other completely. You’ve got to know that they have your back at all times.”
And don’t forget the “r” word, he adds. Respect.
“If you always treat anybody that you’re dealing with – whether it’s staff, suppliers, customers – with the utmost respect, you will have success. It’s just a matter of hard work, dedication and achieving the goals that you set for yourself.”
Advertising feature produced by Globe Content Studio. The Globe’s editorial department was not involved.