2001 was a one-two punch--a recession that hit entrepreneurs hard, a terrorist attack that hit our nation even harder. But Americans--and entrepreneurs--are up to a challenge. The entrepreneurs on this year's Hot 100 list prove it's possible to not just survive, but thrive.
Our 8th annual listing of America's fastest-growing new entrepreneurial companies is compiled with assistance from D&B, the leading provider of global business information and technology solutions. How does this year's list reflect the tenor of the times?
Last year, despite the dotcom crash, 36 companies in our Hot 100 were high-tech businesses. This year, technology companies account for just 13 of the businesses on our list. And just as home sales remained a bright spot in the economy during the recession, home-related businesses--from construction to home improvement products and services--were the single largest group of companies on our list, with 27 of the Hot 100 in this category, followed by business services, with 25.
The numbers reflect tough times: This year's companies reported total sales of $673.7 million for 2001, compared to last year's $935.4 million for 2000. And while the average 2001 Hot 100 company's start-up capital was $871,000, this year's crowd launched with an average of just $546,000.
But, as our Hot 100 companies prove, smart entrepreneurs can do more with less. Learn their secrets in the stories that follow.
Topping the Charts: COKeM International
Chuck Bond is at the top of his game. The 46-year-old founder and owner of COKeM International has seen his company's sales figures more than triple from nearly $17 million in 2000 as a start-up to $77 million in 2001. If this were pinball, his initials would be first on the high-scorers board. As it is, COKeM tops our list of the fastest-growing new entrepreneurial businesses in America.
COKeM is a home entertainment value-added marketer in Plymouth, Minnesota, that specializes in buying up overstock and publishing or re-publishing low-cost video games and computer software. The company counts Sam's Club, Costco, Office Depot, Best Buy and Target among its customers. There's a bit of family tradition here. Bond's father worked in the scrap metal business, and Bond likens his company to being in the scrap metal business for video games and PCs. Bond's own background is in accounting and finance, a career that eventually landed him in the software industry. He soon gave up number-crunching though to move into marketing, and then gave up that for entrepreneurship. He credits fast turnover, varied product offerings and smart marketing techniques with keeping COKeM's inventory moving.
Go online and look up COKeM in any search engine, and you won't find much information. The company stays very private. "That's the way my dad was," says Bond. "Just do what you do and work hard, and there's no reason to brag." His accounting background shows through in the down-to-earth attitudes and financial philosophies of COKeM. Calculated risks and financial discipline are recurring themes.
But don't think for a minute this business is stodgy. "Fun" is another recurring theme. His proudest achievement in all of this? "My kids get to play a lot of video games. I'm able to provide for myself and my friends and family a lot of fun time."
That outlook flows over to COKeM's 60 employees. Flexibility and responsibility are emphasized. "I'm only as good as my team behind me. They understand my madness and understand and appreciate my style of rewarding those that go above and beyond the call of duty," says Bond. "We have minimal structure [in most of the business]." There's at least one sure sign that this approach is working: COKeM expects to rack up $120 million in sales in 2002.
Bond's secrets to success aren't very secret. At the top of the list are honesty, fairness and following through on commitments. "Service is definitely the key to our success," he says. "If you service at a higher-than-expected level, you usually outperform the competition." COKeM watches customers' inventory and is always ready with new promotions, packaging ideas and product mixes tailored to each retailer's consumers.
While Bond doesn't actually play video games (he'd rather spend his time on real grass at the golf course), he knows that entering that market has helped push his young enterprise to its incredible growth. You won't see them plastered all over the business news, but his company is definitely going for the win. And it adds up to a simple future outlook for COKeM: Says Bond, "More growth, more fun." -Amanda C. Kooser
Full Stream Ahead: Anystream
Geoff Allen doesn't hop on the bandwagon--he builds the bandwagon. He started writing software when he was 8. Now, at age 31, the co-founder, president and CEO of streaming media automation company Anystream has already spent most of his business life on the cutting and bleeding edge of technology. On the strength of the Agility software line, Anystream's revenue has grown every quarter it's been in existence, even through the black days when techs were tanking left and right.
The origins of Anystream are easy to trace. Just look at the previous two technology businesses Allen started: Source Digital, a systems integration and interactive media company, and Axicom, a cable TV advertising insertion company that shut down in 1998. Put the two together, mix in the World Wide Web and some forward thinking, and out popped Anystream in 2000. Allen co-founded the company with vice president of research and development Steve Geyer, 45; developer Rod McElrath, 35; and developer Alan Gardner, 56--all from Axicom.
When you ask entrepreneurs about their biggest business challenges, you often hear answers like "raising capital," "hiring good employees" or "expanding market reach." When you ask Allen, he points to the radical tech fallout of 2001. "We went through a period of time when nobody cared what you were actually worth," he says. "It was so inverted that it didn't matter if you had customers, a growing market or revenue. The emotional toll on everybody in our company was something that many had never been through before."
Allen doesn't claim to have the magic pill for an emotional rescue, but he does have a good treatment. "We are significantly more open and honest in this company than the vast majority of companies and certainly more than I've ever been in my past companies. [It's] out of necessity. We're trying to allow people to make their own decisions." One way the Anystream team practices this is by regularly sharing the company's financial position with employees. The result is a business that has weathered the storm in fine form.
Allen doesn't like to offer advice about how to achieve success; he prefers to let his experiences do the talking. "Good ideas aren't enough. Hard work is not enough. The only thing that really matters is results," he says. Building up an untapped market, sticking close to the business plan, raising three rounds of funding, and snagging customers like CNN, ESPN and Weather.com all easily translate into Anystream joining the ranks of the fastest-growing businesses at No. 57 on our listing. If there are any secrets to his company's success, they are flexibility, openness and identifying what the customers want.
Besides the $7.8 million in projected sales for 2002 (up from $3.4 million in 2001), here's another sure sign of Anystream's success: The majority of the rich media audio and video you see on the Web from top news providers like Reuters and CNN.com comes from Anystream's software. And that's exactly what Allen likes to see: results. -A.C.K.
Making the Cut
This is how it all begins: Culling from its massive database, D&B provides Entrepreneur with an initial list of fast-growing companies. Entrepreneur mails each company a form, which the entrepreneurs must complete and submit along with current financial statements. We then measure the company's sales growth from the date of inception, listing the businesses in growth order.
In order for a business to be considered for the list, it must meet the following criteria:
- The founder is actively involved in daily operations and owns a controlling interest in the business.
- The business was founded no earlier than 1999.
- Annual sales for 2001 exceeded $1 million.
- The company meets the SBA's definition of a small business, based on the company's number of employees and sales figures. These numbers vary according to the particular industry.
To be considered for our Hot 100 list next year, your company must be registered with D&B with current information on file.
D&B research is conducted by the D&B Analytical Services Group; Entrepreneur research is conducted by Maggie Iskander and Zoy Parkinson Smith.
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