From nominations, Upsize selected five finalists: Avionte, Imagine IT, Renters Warehouse, TitleSmart and VirtualOffiCenters. Their CEOs presented their stories in a private session in November, after which judges named Kevin Ortner of Renters Warehouse the Upsize Business Builder of the Year.
Upsize is proud to present all five impressive entrepreneurs in these pages, in hopes that every business owner will draw wisdom and inspiration from their tales.
Renters Warehouse has been on a growth tear for the last few years, hitting $3 million in revenue in 2012, then $5.4 million in 2012 and $9.1 million in 2013. After scooping up a new software system last year, President Kevin Ortner is continuing to scale up.
Staffers at the Minnetonka-based company bill themselves as “professional landlords for hire,” and the company is on track to hit $14 million in 2014 and projects $20 million in 2015.
Renters Warehouse is the Upsize Business Builder of the Year, selected by judges after presentations by five finalists in November, at presenting sponsor Winthrop & Weinstine headquarters in downtown Minneapolis. The stories of all five are presented here.
The software is a listing syndication tool called RentFeeder that allows agents to list properties for rent on multiple websites in less than a half hour. “It takes hours to load all the listings on all the sites” without RentFeeder, Ortner says. With RentFeeder, “it takes 20 minutes.”
The acquisition is an example of Renters Warehouse moves to establish a national brand in a business that lacks one. “We didn’t invent anything new” when starting in 2007 to rent out and manage people’s homes. “What we found is it’s antiquated, with a bunch of mom and pops” acting as landlords on their own.
“We decided we’d find technology and use it in ways that we can scale,” Ortner adds. Renters Warehouse also spends heavily on advertising, with $2 million a year on radio locally, for example, this past year.
It has opened offices around the country, and began selling franchises last year, with 11 new franchise owners in training.
“If you’re not innovating you’re on your way out,” Ortner declares.
Armed with new capital, Avionte aims for higher ground
Avionte attracted a private equity investor last January, Serent Capital of San Francisco, which purchased 85 percent of the staffing software firm, bought out three of the four partners, and immediately opened doors for CEO John Long.
“Now on my board is the CTO of Intuit,” Long gives as an example. “These are serious people.” He’s intent on bringing the company to a new level, especially looking for new market segments to attack.
Long counts 1,600 staffing firms as potential customers for his Eagan-based firm’s software, which manages all aspects of employment for clients. “It’s a very specific niche. We’re adding other segments, which will take us up to 12,000 to 15,000 firms.” He acknowledges his role is changing, too.
“As you transition you have to go from generalist to specialist,” he says. “When you’re small you can be the hero. As you transition, you have to trust your teammates.”
Two challenges remain the same, however: retaining employees and serving customers. “I have positions open for 27 people between now and the end of next year,” he said at the end of 2014. “I pay $5,000 a month retainers just for recruiting.”
To address the former, Avionte provides three paid days off a year for employees to work on its not-for-profit foundation’s initiatives. They spend time at Wolves games, have beer Fridays, and even sponsored a “running of the bulls” event recently.
On the customer service side, “I take it to the nth degree,” he says. “We’re almost manic about it.” Avionte has a department called customer care, which employs eight people who are non-billable and provide “the voice of the customer.”
In other words, Avionte aims to reach higher ground while remaining grounded.
Imagine IT boss envisions bigger future for firm
Rich Anderson, CEO of Imagine IT, believes in the power of the team—so much so that he backs the often-uttered sentiment with tangible tactics.
Chief among them is a quarterly team incentive plan called TIP$, in which 10 percent of company profits are put into a pool for distribution, based on company goals, team goals and individual goals.
Another is a company-wide team meeting every week to report progress, voice concerns and brainstorm solutions.
A third is a one-page business plan, an aspect of which each person focuses on for a quarter.
And a fourth is a consensus style that requires every voice be heard before decisions are made. “Not every decision has to be unanimous, but everybody has to have a voice,” Anderson says. “That voice has been very impactful on our company.”
After merging with a competitor in 2012, Imagine IT has been growing: from $1.1 million in 2011 revenue, to $3.1 million in 2013 and a projected $4 million in 2014. The company has met goals nine out of the last 10 quarters, he adds.
“I attribute the bottom-to-top fully engaged workforce to our growth,” Anderson says. He’ll turn his attention now to making acquisitions of smaller managed services companies, to add talented staffers but also “to pick up some lieutenants.”
He wants to fill out the management team to be ready for greater growth over time—the 2017 revenue goal is $7 million—and he knows his management ranks are too thin.
“We don’t look at our current accountability chart,” which has 24 employees now, he says. “We look at our future accountability chart,” and that has 50 people. That means Anderson is imagining a bigger future for Imagine IT.
Two loans from parents turns into TitleSmart, now with eight locations
Cindy Koebele (rhymes with noble) had worked for other title companies as a loan closer, when in 2007 she “announced to my sister we’d open our own.”
“We borrowed $30,000 from our parents, got an underwriter to underwrite us,” and employed three closers—“myself, my sister and my best friend”—at two locations to launch TitleSmart.
One year and a real estate market crash later, and she ran out of money, so she again tapped Mom for $30,000 more. By 2008 the first-time home buyer’s tax credit was helping her business, so she spent money on marketing and beefed up her website. “We made a $30,000 profit that year and we have never not made a profit since,” Koebele says.
Today, TitleSmart has 19 closers and 43 staff members total in eight locations throughout the Twin Cities, with 2013 revenue topping $3.8 million. She tries to make the loan-closing chore into something pleasant.
“We wanted to offer this different experience. We make chocolate chip cookies, we have a fireplace in some locations. Our staff is upbeat,” she says. “People come in and they’re really cranky. They get treated well and they leave in a great mood.”
She runs her business counter to competitors by treating her closers as top talent rather than as expendable commodity. Closers are encouraged to build their own business and have no cap on their income.
Also, she keeps enough cash in reserve so she can employ people year around. “A lot of my competition, they lay off people after the busy time,” she says. “I don’t, so we’re ready when spring hits, and the others aren’t.”
And the loans from Mom and Dad? Koebele smiles. “We do not owe that $60,000 to my parents anymore,” she says, and leaves it at that.
Targeting workers based at home pays for VirtualOffiCenters
VirtualOffiCenters has been around for 33 years, but the last couple have been the most exciting for owner Lori Spiess.
That’s when she started targeting self-employed people to use her five centers around the Twin Cities, remodeling them to offer co-working and team spaces as well as meeting options for an “on-demand client base.”
Starting with 37 such clients in 2011, when she re-branded her firm to attract this market, she’s grown to 500 “virtual” clients and a total client base above 800. “I didn’t want to sell bricks and mortar,” Spiess says. “I wanted to sell a community.”
The changes were necessary as the need for office space changed, too. Back in the day: “I had one guy sitting in one office, and when he left I got another guy. I had a waiting list. I’d say in a smug little way, we’re recession proof.”
But then came the rise of the part-time office user, the type her firm once thought of as “those poor people who worked at home.” But then everything changed. “My goodness, the fax machine wasn’t bringing in $5,000 a month in revenue,” any more. “How was I going to re-tool my business? I didn’t have a clue what to try.”
So she started to talk to people, asking them what they liked about working at home, and what they didn’t like. Invariably the latter answer was “isolation,” and so her new business idea was born.
“We’re going through our biggest growth patch. People come out of their homes to come into our centers to work with other people,” she says.
“This has been my proudest year,” Spiess says, even though she won’t hit her overall number. In May she was diagnosed with head and neck cancer, and spent the summer in radiation and chemotherapy. Some of the marketing events she had planned had to be postponed, hence the company fell a bit short of projections.
Now she says she’s healthy and ready for more. “When it comes to big life events, some say work less. I say work more,” she says. “The bucket list can wait. I want to get back to work.”
[contact]
John Long, Avionte: 651.556.2121;
jlong@avionte.com; www.avionte.com
Rich Anderson, Imagine IT: 952.905.3700; rich@imagineiti.com; www.imagineiti.com
Kevin Ortner, Renters Warehouse: 952.224.9597;
kevin@renterswarehouse.com;
www.renterswarehouse.com
Cindy Koebele, TitleSmart: 651.779.3075; cindy@title-smart.com;
www.title-smart.com
Lori Spiess, VirtualOffiCenters: 952.876.4044;
lori.spiess@virtualofficenters.com;
www.virtualofficenters.com
