My biggest mistake: Aaron Smith, founder of KX Pilates

Aaron Smith, the founder of KX Pilates, is now one of Australia’s most successful fitness entrepreneurs, with almost 100 studios and counting.

However, three years into business, Smith let his enterprising spirit get the better of him — using an influx of franchisee cash to jump on some hot new trends.

Instead of focusing purely on pilates, he decided KX Fitness should be the umbrella brand, and set about establishing sub-brands including KX Pilates, KX Cycle, KX Barre and KX Yoga. 

Alas, it was an approach that would ultimately hold the business back — at least in the short term.

Smith, now 38, reveals why he considers this to be his biggest mistake in business — and the steps he took to right the ship.

The mistake

It was 2013 when Smith decided to go ahead and roll out his new offerings — despite his brand developer’s advice that it was “a terrible idea”.

Smith recalls the developer telling him Virgin were the only company who had successfully used the one brand for various businesses, such as Virgin Mobile, Virgin Active etc.

But like many gung-ho entrepreneurs, Smith pressed ahead anyway, opening four ballet barre studios, plus a hot yoga studio and a cycle venture.

“Barre was growing but as we started to go interstate, it started to become a bit confusing,” he said.

Customers were asking which studios were offering barre, or when it was coming to their location.

Smith says while each of the different offerings were successful in their own right, it soon became clear they were never going to be as popular as KX Pilates, which was beginning to really boom.

In the end, Smith made the call to wind back all of the new sub-brands and focus on KX Pilates.

The context

In 2013, KX Pilates already had six studios up and running — and then sold its first three franchises, in Melbourne. Suddenly there was money to play with.

“At the time I was travelling a lot with my wife. We were looking at what was happening over in the UK and over in Europe, and doing a lot of trips to the US,” said Smith.

“Innovation has always been really key in my brain in terms of how we can improve, adapt — and I was just loving some of the other fitness concepts that were coming out of the other countries.”

The idea was to sell a territory to a franchisee, which the company no longer does.

“They would put their KX Pilates studio in there, and then within the same territory have the rights for a KX ballet barre studio, a KX hot yoga studio,” he said.

“We even tried KX Cycle as well, off the back of SoulCycle, which was dominating America.”

Aside from the muted growth of the new sub-brands, Smith says it was another trip overseas — this time to an international franchise conference — that cemented his decision to return to the core of the business. 

At the conference, a founder of a major US hairdressing chain spoke about the power of innovating from within — by continuously improving systems and processes. It was a lightbulb moment for Smith.

“I basically went back from that and went right, this is taking up too much of my time,” he said.

“Let’s push them all off and rebrand them and get rid of them, and then just focus 100% on Pilates, which we have.”

The impact

While Smith spent plenty of time and money — up to $500,000 — on the offshoot businesses, he says the ramifications for the business weren’t huge. 

The biggest impact was the opportunity cost of failing to pour all his energies into what inspired him to start the company in the first place.

“Looking back, if that money went into the development of KX Pilates at the time, where would be now? That’s a question I’ve always thought about,” said Smith.

“But at the same time, unless I did all of that and made those mistakes, we wouldn’t be where we are today.” 

The fix

In 2016, Smith made the call to wind back the sub-brands.

He began by closing the barre studios attached to company-owned sites; while franchisees at separate sites were given the chance to rebrand their barre studios.

The yoga studio was also rebranded and sold off.

“It was pretty easy for me because I had a business partner in the yoga space,” said Smith.

“I basically gave them back my share and told them to rebrand, because at the time I had signed across licences to use the KX brand. I wanted that licence back because KX was my baby, and I didn’t want to pay to get that back — I just wanted to take it back.”

As for the cycle studio, he paid about $30,000 for its rebranding, so he could recover the name.

The lesson

Smith says the experience taught him plenty.

“It’s that expensive lesson kind of talk, where I paid a lot of money to make mistakes that I then learnt from.”

For instance, he says he’s learned that, despite the exciting nature of start-ups, it’s usually better to concentrate on one business for 10 years, rather than five over the same period.

“I think nine times out of 10, unless you get a unicorn, you’re going to be more successful in that one business,” he says.

Smith says the company is constantly innovating and improving its processes and systems, such as its booking system and intranet. It’s also spent years developing its own exclusive reformer machine.

These days, Smith, who handed over the CEO reins in 2018, is happy using his entrepreneurial talents to continue innovating from within the core business — including growing KX Pilates’ international footprint.

“At the end of the day we still sell an experience teaching dynamic pilates and that hasn’t changed in 12 years,” he says.

“You just have to kind of get used to the idea that business is a lot of repetition; it’s consistency leads to success, that classic quote.”