Adam Arnold, chief executive of SmarterHousing, is also beginning to achieve success by breaking the mould. Graduating in 2005, he spotted that university students in Warwick and Coventry were poorly served with housing rental. Rather than take up a graduate traineeship at KPMG he set up internet-based SmarterHousing. Most of SmarterHousing’s rental agreements are signed at least eight months in advance, so its percentage-based revenue is accurately predictable. Outgoings, at about £2,500 a month, are less than one tenth of local high street estate agents, and the company has only two employees in addition to Arnold.
Some local estate agents have branched into rentals and gone online, but this is an additional overhead for them, says Arnold. Now he’s planning to steal more of their market by diversifying into house sales. “The downturn in housing is an opportunity for us because we can mop up houses that others can’t sell.”
SmarterHousing is a low cost operation with no debt. But for those less fortunate, it’s crucial to keep in touch with your creditors. Sometimes businesses make the mistake of thinking that because they are owed more than their overdraft, there isn’t a problem, says Berrow, who was a commercial bank manager with Barclays for 25 years. “Typically the overdraft is growing while the money they are owed is diminishing.”
Business Survives on the Bottom Line is written by former Dragon Doug Richard and forms part of a series named “Survival in an Economic Downturn”. You can read the whole series on Venture Navigator, including:
* Cash is king: collect with passion
* Don’t slash and burn in the drive for cost savings
* Business Survives on the Bottom Line