Bootstrapping isn’t what you think of when you hear that a company is 18 years in existence. But that is what you have with PA & Associates, in Baltimore, Maryland. They work with companies of all sizes to achieve world-class carrier agreements with DHL Express, FedEx, UPS and highly-discounted truckload and LTL rates. They are a logistics leader and a small growing company that has hit a rapid growth curve in the current, challenging economy where everyone is trying to make budgets go further.
Recently, we were able to catch up with Richard Palarea, CEO, about PA & Associates‘ growth plans using a bootstrapping approach:
Q: When did you decide that you were not going to take VC funding?
A: We never entertained the idea until an Angel approached us with “the million dollar” question (what would you do if you had $1M). It got us thinking about how we might boost the growth quickly. The decision was made after careful re-forecasting of our revenue and expenses. Our (outsourced) CFO reported that everything we want to accomplish could be done through bootstrapping.
Q: How did you have to adjust your business plan by going the bootstrapping approach?
A: We decided to future-proof our business with a long-term vision. In reviewing our historical successes and accolades, most investors or shareholders might think that we’re looking past easy growth and revenue opportunities in leveraging our existing, proven model. Because what we do relies heavily on the cooperation and involvement of UPS and FedEx, we have decided to take a look 3-5 years out and create a business that will last another 20 years. This has allowed us to maintain decision making control, but also has us possibly forgoing some profit distributions in order to fund the new vision.
Q: How often have you had to turn down VC overtures?
A: Just once…so far.
Q: What is the biggest sacrifice you have had to make having gone the bootstrapping route?
A: I don’t feel we’ve had to sacrifice anything (yet). If anything, the opportunity has produced a keen vision of where we want to go, an awareness of other revenue opportunities/partnerships/alliances we were overlooking and a discipline to convert opportunities to clients and convert projects to billings.
Q: Do you ever see yourself taking a round of funding? If so, what would be the driver to do that?
A: It’s a possibility. I think if we found the right group that offered more than cash and if we had a need that required immediate, strategic spending to either create barriers to competition or gave us a significant advantage where there was a sensitivity to the timing. We would look for a venture group that could provide strategy, guidance and other advisory services and advocacy.
Q: What is the biggest thing you are missing as you bootstrap without the assistance of a VC?
A: At present, I don’t feel we are missing anything. As the landscape emerges, we might find that immediate access to strategic capital may be attractive. That, however, would be for an opportunity that we do not yet know about.
