Changing of the Guard

Photography by James Kullmann

For the inaugural issue of SpaRetailer in fall 2007, Alice Cunningham and Blair Osborn, the husband-and-wife team behind Olympic Hot Tub in Seattle, graced the cover. Cunningham shared how they started the business in 1977. The company grew to become one of the top sellers of Hot Spring Spas, winning the manufacturer’s top award three times. The couple was inducted into Hot Spring’s Ring of Honor in 2016 and was one of our Retail Stars in 2014. They were stalwarts of the industry, and in 2016 they sold Olympic Hot Tub to longtime employee Don Riling.

Riling had a long history in retail, with management stints at Nordstrom and Disney. He was between gigs when Cunningham snatched him up to help with some office work. That gave him the opportunity to learn the business, and he liked what he saw. When a job opened on the sales floor, he took it. His role evolved until he was managing the entire company.

SpaRetailer: How did you know that you wanted to buy the business and that it was something [Alice and Blair] were willing to talk about?

Don Riling: The irony of the whole history of my time at Olympic is that when Alice and Blair took me out to dinner for my five-year anniversary with the company, they asked me if I was interested in buying the business.

People who know Alice and Blair know they do things judiciously and slowly. That may have been the slowest thing they ever did in their lives.

It certainly took the patience of Job on my part to stay in the mix. When we had that conversation initially, I was still relatively young. It was a shiny ornament at that point. It was very attractive and a nice idea, but of course I had no concept of how to buy a business. We kept it on the backburner all this time. That was one of the reasons my career progression happened at Olympic the way it did: opportunity presented itself, and I wanted to learn more about the business. They, in turn, gave me that opportunity. For a couple years now, in essence, I have been running almost the entire business.

There weren’t a lot of responsibilities I was unfamiliar with — most of the company looked at me as second in command. It was a really good situation for me to be in. We talked about this for 16 years.

SR: Had you pictured yourself owning a business? Was that something you had ever wanted before they said, “Hey, are you interested in this?”

DR: Yes. I had thought about owning a number of types of businesses over the years. I thought about owning my own bookshop, a restaurant, or combining the two. One of my good friends, Sue Rogers [the owner of Oregon Hot Tubs], I’ve known for over 30 years and we’ve worked together in different careers. I had actually talked her into working for Olympic Hot Tub before she bought Oregon Hot Tub. Over the years, we both talked about buying and owning businesses.

Way back in the ’80s, we were talking about owning frozen yogurt shops. It’s fun that we’re both in the same industry now. We both own businesses that are, in essence, right next door to each other for the same manufacturer. At Olympic, it was refreshing that the people running the business actually approached me and said, “What do you think about being the owner?” I’d never had anybody do that.

SR: Financially, did the length of time between those initial conversations and you actually buying the business give you enough time to figure out how you were really going to do this?

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DR: I wish. It’s interesting because when we got to the point of working out the mechanics, I didn’t have tons of money lying around, and I definitely drained every penny out of my 401K. I didn’t want to owe people money at the end of the day, if I could manage it. If I was going to owe anybody money, it was going to Alice and Blair and a bank. That’s the track I took. It took time to work it out, and it was a little bit difficult. Would I say I had a plan? No. Was I ready? No. I don’t know if anybody really is ready when they finally decide to do it. I might be wrong. I think a lot of times, the opportunity presents itself sooner than the vehicle for you to actually pay for it does.

SR: When and how did ownership officially change hands?

DR: August 1, 2016. We had a big retirement party for them at the end of July, which was really fun and nice. It took us about a year and a half for the purchase to happen. There was a lot of blood, sweat and tears, setbacks and a lot of crazy things that happened. Working with banks and the SBA, I found to be a very odd experience. Nothing was predictable.

SR: Are there things you would recommend people think about or look at when they start this process, to help them make it a little smoother?

DR: Well, it’s funny because I thought we had a lot of stuff in line that would make things easier, and it just didn’t. You have to pick the right bank, No. 1. It’s difficult for some of the larger banks to understand the business model we have and believe you can make money at it. It doesn’t matter how much data you give them.

We provided 10 years of business financials to the bank. We showed them how we survived the economic downturn. Blair is brilliant — an analytical, numbers financial guy. I felt [the bank] didn’t understand our business very well. We had to go back and recraft an arrangement that would work out for all of us, and not rely on the bank or the SBA as much. The odd thing about it was getting to the point where you’re ready to sign papers and then having things change. That happened a couple of times.

I will say that Alice and Blair had a much bigger investment in the process and in the transaction than originally intended. To their credit, they made it palatable for all of us, and we all knew that the timing was right — so they were really dedicated in making it happen.

We had a business analyst involved in helping us strategize and craft the transaction. He kept us on a steady path and provided alternatives, and we worked it out.

SR: Can you imagine going through that process with anybody other than Alice and Blair?

DR: No. We knew each other so well, and we’d worked together for so many years. Ultimately, we both had so much respect for each other as friends and business associates. That’s what made all the difference in the world.

They were both so dedicated to making it work for me. I was dedicated for making it work so they got what they should for a business they’d owned for 39 years. They’ve been so successful, and I wanted them to enjoy the benefit of their labor for so many years.