Starting an apartment referral business can be an excellent business to start.
(article continues below)
We get some perspective on starting such a company from successful entrepreneur Mike Levy.
So, Mike, tell me about your current business. What market need is your business addressing and what were your goals in starting the company?
We found a need in our community (Northern Colorado) for a way to allow people to advertise their rental properties that was far less expensive and more effective than using the local classified ads in the newspaper.
That was the genesis of NorthernColoradoRentals.com, which we started in October 2003.
Our three goals were simple:
(1) Provide an EXTREMELY EASY / SIMPLE TO USE website that is 1/10th the cost versus other advertising alternatives and up to 5 times more effective.
(2) Provide the best customer service and have the highest customer satisfaction versus any other web-based rental listing service.
(3) Guarantee 100% customer satisfaction or give their money back.
What were you doing before this, and is this your first business?
Previous to this, I spent 25+ years working for Hewlett-Packard (HP) in various roles including R&D Software management/development, Marketing, I.T., etc.
In the last five years, I've started three companies and helped someone else start one company.
I'm currently working on starting my fourth company that will be focused on providing local ads for websites and advertisers in Northern Colorado.
Where did you get the startup money?
My business partner and I self-funded the startup.
Who are your main competitors? How do you compete against them?
Main competitors are some of the national rental websites as well as craigslist.org.
Our competitive advantage is the superior customer service we provide (essentially for FREE).
The real proof of our success is the fact that we have hundreds of EXTREMELY SATISFIED customers. Go to our website and you can see all our unsolicited customer testimonials.
How has your experience in running the business been different from what you expected?
I never realized how "superior customer service" could be a sustainable key differentiator and competitive advantage – and how really easy it is to provide great customer service.
Is there anything you wish you had done differently?
I would have done more research and investigation before choosing a web development company and internet hosting company to work with.
What have you done that has been very effective in helping to grow the business?
Again, superior customer service has led to a great deal of "word of mouth" referrals.
What advice would you give to somebody else who wanted to start a similar business?
Do a really good business plan and stay focused on key business metrics. Execution is key, and making sure you understand your financials is essential (specifically when will you be cash flow positive, and when will you breakeven on your initial investment).
By focusing on excellent execution, we were able to be cash flow positive from day #1 of our operation and we recouped our initial investment within 6 months (versus our goal of 12 months). We have a nice monthly annuity stream, and the back-office operations take a mere 30-60 minutes per day!
Sounds like things are going well. Thanks so much for sharing your entrepreneurial experience with us, and good luck in growing your business.