Little as $500, These Entrepreneurs Created Multimillion-Dollar Businesses
Successfully launching two tech businesses with almost no startup money made it easy for Mike Michalowicz to attract venture capital for his next enterprise, an angel investing company called Obsidian Launch. But in a clear case of "be careful what you wish for," Michalowicz took the money, then saw his new startup flop, victimized by what he says in hindsight was poor decision-making brought on by a lack of urgency.
"I've started a business with nothing, and I've started one with a lot of money, and I have to say I'd rather start with nothing," says Michalowicz, author of The Toilet Paper Entrepreneur, whose latest venture is New Jersey
profit and growth accelerator Provendus Group. "Nothing forces you to make better and faster decisions, because you feel the pain of every mistake acutely. You're more apt to respond quickly to what works and what doesn't when you don't have a lot of money. When I failed with Obsidian Launch, I didn't feel the pain. I just threw more money and more time at it, which made things worse."
The takeaway is that lack of cash won't keep a good business idea--at least one that's executed well--from succeeding. And it's not just Michalowicz who has proved it. Take a cue from our cross section of successful businesses whose founders used their resourcefulness and hard work to create multimillion-dollar enterprises. It's time to start thinking big.
16 years to $26 million
Organic Growth
Even as he was disassembling cardboard boxes in a garage that served as the warehouse for his just-launched organic produce home-delivery venture, David Gersenson's gut told him Door to Door Organics was destined for big things.
"I was breaking down the numbers as I was breaking down the boxes, and I knew this thing was going to take off," he recalls of that moment in 1997 when he foresaw the future of his company. Started for about $700 in Upper Bucks County, Pa., the business was based on an idea he hatched in his early 20s after eating organic produce on a trip to India.
While Gersenson's vision proved prophetic, he could hardly have predicted the outcome of the strategic decisions he made along the way to turn Door to Door Organics into the bustling multistate company it is today. The online grocer of natural and organic products employs more than 200 people in five metro markets around the country, posted $26 million in revenue in 2013 and is projected to grow to more than $40 million this year.
From the start Gersenson focused on residential deliveries and eschewed commercial customers, whom he says could have easily become competitors. Relying almost exclusively on word-of-mouth to cultivate a customer base, he operated the business frugally, waiting years (until the venture had a couple hundred customers) before hiring staff. During that time Gersenson handled customer service, did all his own billing and even made some of the deliveries himself (enlisting UPS for others).
That workmanlike approach helped Door to Door become profitable within two years. But in 2004, when growth plateaued in eastern Pennsylvania, Gersenson decided to move to Boulder, Colo. It was a personally motivated lifestyle decision that also proved great for business, as it established the company in a regional epicenter of the organic-foods and locavore movementsOnce in Colorado, Gersenson forged supply relationships directly with local farmers and regional trucking and distribution companies to bring groceries to his customers. Then, drawing from the capital reserves his cost-conscious ways had helped build, Gersenson assembled an in-house delivery fleet so he'd no longer need to rely on UPS. He says these moves significantly improved quality, strengthened the supply chain and cut costs.
Finally, with annual revenue hovering just above $3 million in 2009, Gersenson sought out a consultant's guidance for growing the business. That consultant, Chad Arnold, became Door to Door's CEO in 2010. "David was at the point of asking 'What do I do now?'" Arnold recounts. "He was trying to figure out how to scale the business, and I knew how to do it."
As for Gersenson, who retains a seat on Door to Door's board of directors along with a significant minority stake in the company, one of his only regrets is holding the reins as long as he did. Hiring Arnold, he says, "was the greatest decision I ever made. My goal was always to step away to let someone else take over. I had no ego attached to that."
12 Years to $5 million-plus
Adapt and thrive
Reinvention is a panic move for some ventures. For Peach New Media, it's part of the normal course of business. The software reseller Dave Will launched in 2001 out of his basement for $2,600 emerged from its subterranean beginnings--and multiple strategic pivots--as a solidly entrenched SaaS provider in the learning content management space.
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