I moved to the U.S. from Montenegro when I was 20. After working at McDonald’s for a few months, I became a helper on a moving truck. I went on to fill nearly every role in the industry, from mover to driver to crew lead to sales.
Most of the big players have been around for decades, some since the 1900s, and I felt the industry was ripe for innovation. In 2018, at age 24, I launched Piece of Cake Moving with the purchase of one truck for $20,000. It has since grown to 350-plus trucks, completing over 100,000 moves annually, with 800 employees—and surpassing $100 million in annual revenue in 2023.
We’ve never taken on outside investment, and I believe the decision to avoid VC funding was key to creating a high-demand service and brand, as well as achieving sustainable growth. The Kauffman Foundation analyzed the 5,000 fastest-growing companies in the U.S. and found that 67% secured funding through personal savings or bank loans, followed by 34% that secured funding through credit cards. Only 6% secured funding from venture capitalists.
Over the past five years we've received interest from both VC firms and investment firms, especially during the pandemic with increased demand for moving, and over the past year as we've expanded across the U.S. While interest remains, bootstrapping a business is often a more reliable, secure path to sustained startup success and ensuring the longevity of a business. Here are some things to keep in mind:
Maintain control of all decision-making
Bootstrapping allows you to have the highest degree of control when building a business by retaining full ownership and decision-making. When you don’t have outside investors, you have greater say over your time, money, priorities, and the direction you want to take the company in. You’re able to devote all of your time to creating a high-demand service or product that meets your customers’ needs, as well as build a business model that will generate revenue leading to sustainable growth. When a startup accepts VC money, it gives up some of its control and is sometimes forced to make decisions and set priorities that go against its vision or business plans.
Create the perfect service and product market fit
When Piece of Cake Moving launched, we put all of our resources into creating a high-quality service, as well as acquiring customers. We did not let perfection stop us from getting into the market and refining our operations based on the feedback of early customers. Such feedback is central to growing a business. Look for patterns in it, both good and bad. The most useful feedback is negative, because it creates an opportunity to fine-tune exactly what the customer is looking for and find the perfect product market fit. When you’re in control of your business, you can constantly evaluate what performs well and eliminate things that don’t, having the flexibility to pivot where needed without having to seek approval.
Generate high demand by investing in your customers
Your customers are your salespeople and have the potential to significantly contribute to the growth of your business. Some 72% of customers will tell six or more people if they have a satisfying experience, and 82% of people trust the voice of customers more than messages from the brand. What the brand says matters, but what the customers say will always matter more. Referrals are highly effective because of the implicit level of trust customers place in friends and family, and they lead to higher lifetime customer retention rates.
Build a culture of resourcefulness
When a business takes on VC funding, money often gets spent quickly, without generating revenue or producing sales. Up to 75% of VC-backed startups fail, and up to 40% of those liquidate assets, according to Harvard Business School lecturer Shikhar Ghosh. When it’s your money, you’re mindful of how you spend every dollar, and the only way to grow is to reinvest the profit you’ve made back into the company. This gives you a singular focus on which sales and marketing channels yield the best result at the lowest cost. It pushes you to think outside the box. When I launched Piece of Cake, almost all of the moving trucks in the industry were plain, so I made ours bright pink to stand out. It has since become our brand's iconic brand mark.
Focus on sustainable, paced growth
Building a profitable business can be a long road. You must understand your customer, develop a highly effective customer acquisition pipeline, and anticipate their future needs. Putting your customers’ happiness at the center of your growth strategy and decision-making leads to tremendous yields. According to Forrester, investing in a customer-first operation can yield up to a 700% ROI over 12 years. Bootstrapping your company empowers you to lean into data you’re getting from your customers and trends you’re seeing within your field, versus having to heed outside voices who don’t know the intricacies of your business.
Hire and retain the right employees
If there’s a secret sauce, it’s hiring and retaining the right employees. When you’re spending your own money, you’ll have a sharper eye on ensuring every role is essential and working toward a specific goal. It’s important to focus on putting the right hiring processes in place to attract talent that wants to grow with the company and to create a culture that people are proud to be part of. When you have high retention and provide growth opportunities for employees, you don’t have to spend time and resources constantly training new people. The cost to replace a highly-trained employee can exceed 200% of their annual salary, so it’s a worthwhile investment to prioritize your team.
Read more:
- How our ping pong startup hit a $50M valuation in 5 years by tapping into automation
- How we built our bootstrapped startup different and sold it for $40M. (Hint: We ignored some myths)
- I grew my business with no outside funding. Bootstrappers have an advantage over VC-backed startups—especially now
- I’ve led multiple tech businesses. This is the biggest mistake startup leaders make
The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of Fortune.
