In With The New

Yes, it's important to treat your existing customers well-but experts say the key to fast growth is seeking out new faces.

From the beginning of 1996 to the end of 1997, Jana Taylor's company grew from seven employees to 35, while sales increased from $5 million to $8.6 million. To many entrepreneurs, that kind of growth would suggest trouble in the offing.

But for Taylor, 44, who started Jana's Classics Inc., a Tualatin, Oregon, cookie bakery, at her kitchen table in 1984, an emphasis on growth is part of the equation for success and longevity. As her company blossomed from a single employee and $7,000 in sales its first year to 100-plus employees and $13 million in sales in 1999, Taylor has embraced the attitude that growth is good and the faster the better. "Our target this year," she says, "is $18 million."

To reach that goal, Taylor juggles at least 40 new-product development projects at any given time and introduces 40 to 60 new products per year, adding to a portfolio of more than 400 varieties of cookies, dough and related products. Meanwhile, she's expanded the company from selling frozen dough in the Pacific Northwest to providing baked cookies and dough to ice cream makers, candy companies, restaurants, frozen dessert manufacturers and in-store grocers nationwide.

Taylor's rapid-growth strategy is a smart one, according to a recent study of high-growth firms by the Kauffman Center for Entrepreneurial Leadership, a Kansas City, Missouri, entrepreneurial education and research organization. A recent study of 672 Ernst & Young Entrepreneur of the Year winners indicated companies that maximized sales growth with strategies similar to Taylor's, emphasizing new products and new markets, had 25 percent higher profitability and increased company net worth three times faster than firms that focused specifically on profit growth, cash flow or increasing net worth.

The results ran counter to prevailing wisdom that maximizing sales is a strategy with a poor risk-to-reward ratio, says Larry W. Cox, research manager for the 1998 study, which was released last year. "There's a feeling that if you grow fast, it's going to hurt profitability and wealth creation," says Cox. "We found that's not necessarily so. Fast growth can be a good thing."

Mark Henricks is an Austin, Texas, writer who specializes in business topics and has written for Entrepreneur for 10 years.

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This article was originally published in the October 2000 print edition of Entrepreneur with the headline: In With The New.

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