How Backyard Leisure turned a catastrophe into a catalyst for change
Father and son Earl and Josh Michels stood in the parking lot of their hot tub business and watched it burn in June 2018. Before the fire trucks and smoke had cleared, Josh had his marketing guy there shooting video. They would have a literal fire sale.
The news and drama gave their business, Backyard Leisure in Terre Haute, Indiana, quite a bit of free publicity. They went home that Saturday night, rested Sunday and were delivering hot tubs out of their off-site warehouse Monday morning.
“If people think there’s a disaster and they can get a deal, they will come,” Earl Michels says.
In 1995, Earl and his wife, Joyce, wanted to add a gazebo to their property in Marshall, Illinois, which is about 16 miles from Terre Haute. But they were outside of any dealer’s territory, so Earl signed up to become a dealer — which meant he had to order two. He set one gazebo up in the backyard for his family and one in the front to sell. It was a successful enough venture that he kept doing it, eventually adding other products and getting a small retail location in Terre Haute. In 2003 the insurance salesman added hot tubs to the mix and in 2004 Earl resigned from his insurance gig. In 2006, he leased a 2,000-square-foot building, eventually buying it.
And eventually watching it burn.
Before the fire, Backyard Leisure had been growing steadily. Earl and Josh had just expanded by adding a store about two-and-a-half hours away in Springfield, Illinois. And while their original store in Terre Haute had suited their needs at the time of purchase, the older structure had become a hinderance. Though it wasn’t totally destroyed in the fire, they ended up demolishing what remained. For the first several months post-fire, they operated out of a tent.
“We spent a lot of money on advertising; we drove a lot of people into that tent,” Josh says. “It was like having a big off-site sale every day.”
They battled heat and flooding, but eventually the cold (and the astronomical cost to rent a heated tent) forced them to move to a new location. And while the ordeal was difficult, the end results were favorable.
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“It had a huge positive impact on our company as a whole and certainly on our year,” Josh says. “Up through June, our numbers weren’t where we wanted them to be, and by the end of the year we’d set ourselves a new record. Everybody responds to things differently; for us it was a challenge and opportunity. You take what you’re dealt and do the best you can with it.”
The fire also accelerated Earl’s longtime vision for the business: to become the Bass Pro Shop of hot tubs. He was inspired by a YouTube video about Bass Pro Shops’ winter wonderland. A customer who drove 200 miles to take her children to enjoy the festivities commented, “I just love Bass Pro — they do all of this, and they expect nothing in return.”
Earl could see the video was fantastic marketing. “If you can get people to walk through your door and they don’t even realize that you’re doing it for the purpose of [the customer] buying something, that’s a stroke of brilliance,” he says. “I want to be that kind of retailer.”
As they developed their new location, that vision was paramount. They found an old 33,000-square-foot H. H. Gregg appliance store and have been working to turn it into a Disney-like experience with a world-class wet-test room.
In addition to hot tubs, the company sells grills, patio furniture and swing sets, but Josh says they are most passionate about hot tubs. Earl believes the hot tub industry chronically underestimates itself and the value it brings to society.
“If we truly believe hot tubbing provides the wellness benefits we say we do, it is our responsibility to do everything we can to make sure as many people as possible can experience that hot-water immersion and massage therapy,” Earl says. “I am determined to be a driving force in bringing the hot tub experience to every patio within our marketing area.”
Another expansion into Champaign, Illinois, started pre-pandemic and was too far along to stop when COVID turned the world upside down. The pandemic hampered their original plans for that location — the 12,000-square-foot showroom has never been full since it opened — but fortunately it didn’t hurt sales.
“The only real upside [to opening during the pandemic] was that demand was high,” Josh says, adding that they had immediate sales out of that location instead ramping up over time with the increased advertising in the market, which is what typically happens when you move into a new area.
Bass Pro Shop–type stores in smaller markets (populations 60,000 in Terre Haute; 85,000 in Champaign; and 115,000 in Springfield) may seem out of reach, but the Michelses don’t see it that way.
“We’ve had people tell us the primary determining factor with regards to how many hot tubs are sold in the market is the operator,” Josh says. “[It has] much less to do with the size of the town or the demographics. You could just keep going indefinitely even in a town of this size, because there are so many patios that don’t have hot tubs on them yet. We want to be an experience that people are willing to drive for, but we also feel like we can serve our people right here better with a larger, more experiential retail setup.”
Josh and Earl have found a way to balance family and business. Josh is the heir apparent, and his sister Angela also works at Backyard Leisure, doing bill pay and accounts receivable.
“We would not be where we are today had it not been for Josh, and we would not be where we’re going to be in the future had he not been here,” Earl says, adding that he wants to leave a legacy and that means continued growth.
“[Earl] is one of the more energetic people I know,” Josh says of his father. “He’s also pretty progressive from a business standpoint. He’s still an idea man. He comes up with crazy things and says, ‘Figure out how to do it.’ ”
The duo drives each other, but their determination also comes from their higher calling.
“It comes from a passion for what we do,” Josh says. “We truly believe we make people’s lives better with hot tubbing, and the more people we can do that for, the better.”