When you start a business, it's natural to hope for phenomenal growth. For a select few, this hope doesn't dwindle into a mere echo of ambition but swells into something greater: reality. For those rising stars chosen in Entrepreneur's third annual ranking of the nation's 100 fastest-growing small businesses, the American dream is anything but an illusion.
This year's ranking has been our most challenging, not only because there are more new businesses to choose from, but also because the quality of today's business start-ups is so high. "Small-business entrepreneurs are a lot more professional and educated than they were years ago," says Larry Winters of Dun & Bradstreet, the world's leading provider of commercial credit, business marketing information, and receivable management services. "These people aren't starting businesses out of economic need because they can't get a job somewhere else-they're starting businesses because they want to be [business owners]."
To assist us in our difficult task, Dun & Bradstreet combed its staggering database of business information. We narrowed the list using the following criteria:
The founder must be actively involved in daily operations and must control at least 51 percent of the business.
- The business must have been founded no earlier than 1994.
- Annual sales must exceed $1 million.
- Companies must meet the Small Business Administration's definition of a small business, based on number of employees and sales figures (which vary by industry).
From the large initial pool of companies, we calculated the annualized growth rate of each. The top 100 are listed in order of annualized sales growth. Companies that tied in ranking are listed alphabetically. Each listing contains the founders' names, a description of their businesses, year founded, number of employees (initially and currently), start-up investment, first-year sales and 1996 sales.
But numbers, while fascinating, aren't the whole story. We've included five profiles to give you a behind-the-scenes look at the personalities who drive the company names. These entrepreneurs discuss their diverse strategies and experiences, as well as the challenges and rewards of plunging into entrepreneurial success so quickly.
Many of these and the other companies that made the cut have carved a niche in some of the hottest industries for small business. According to Winters, up-and-coming businesses can be found in fields ranging from medical, environmental, personal, and financial services to specialty gift stores. Even small manufacturers share the unlikely label of "hot." "A lot of people think [man-ufacturing's] a sleepy industry," says Winters, "but we're seeing a resurgence in light, small manufacturing of specialty products."
Of course, no list of hot industries would be complete without a mention of technology. "There are so many different gradations of technology," says Winters. "Manufacturers of peripherals and chips, value-added resellers, consultants, software developers, Web site developers-it goes on and on."
And so does our search for fast-growing new businesses. We've provided insights to the businesses, the mind-sets and the industries that rose to the challenge this year. The next challenge is yours: Do you have what it takes to make the cut in 1998? As this year's honorees will tell you, it's natural to hope.-Janean Chun
RCS corp. hasn't gotten where it is-namely No. 1 in our ranking of the 100 hottest new small businesses without the help of others. An engineering and environmental services company in Aiken, South Carolina, a small town of 35,000 on the western side of the state, RCS Corp. gives a lot of credit to local and national government, nearby environmental organizations and the area's business-friendly climate.
"There's really no single success factor here," says Carlos F. Garcia, RCS' president and CEO. "It's been all about teamwork. We all work together here."
Of course, a cooperative atmos-phere isn't the whole story. Far from it. In fact, there has been plenty of strife for Garcia, 41, particularly in the business's early years. After leaving his job as a regulatory compliance manager at a nearby engineering and construction company because he felt he could provide the same services at a lower cost, Garcia started RCS out of his living room in April 1994. To finance it, he initially took out a home equity loan and then lived without a salary for one year, all while the company was pulling in just a few small contracts. All together, Garcia raised $205,000 in start-up capital to get the business on solid ground.
"It was extremely difficult," Garcia says. "I had to mortgage all the property I owned, and, at some point, I even mortgaged my in-laws' [house] as collateral. I had to take out enough loans to keep us growing."
And grow it did. Garcia's original business concept called for helping clients comply with emerging federal and state regulations. Yet RCS quickly moved into systems engineering; health and safety areas, including accident investigation and emergency preparedness; and facility operations roles. The 71-employee company now pulls in multimillion-dollar contracts from government agencies, including the De-partment of Energy, and several commercial clients. All told, RCS grew by 114 percent last year with annual sales projected at $8.8 million this year.
Garcia believes a crucial chapter in his business' success story has been maintaining low overhead. For example, in May 1996, RCS moved into what some might see as a rather unlikely location: an inexpensive, 3,000-square-foot house built in the 1890s. Because many of RCS' employees work at job sites, there's simply no need for a larger facility, Garcia says. In fact, the RCS staff is quite lean, with only seven office employees to handle finance, payroll, human resources, marketing duties and more. "We wear many different hats," admits Garcia.
Keeping a sharp eye on quality also ensures a steady stream of future revenue. "Basically, if you do a good job on your existing work, you're going to get a lot more work behind it," Garcia says. Last year, for example, RCS won a $3 million project that grew to $8 million after subsequent contracts.
To be sure, timing has also had a little to do with it. Historically, the majority of environmental services work has been dominated by larger companies. But with substantial government downsizing in the past five years, government projects are being outsourced to smaller companies that can do the job at the lowest price, Garcia says. Government agencies have also been particularly aggressive about giving more work to small businesses.
As Garcia further expands his earth-friendly business into new Southeastern markets, his company, like all things in nature, has come full circle. As in the past, future success, he says, depends on everyone's ability to work together. "The key is to hire great people," Garcia says, "and we make an effort to invest in personnel and work as a team. They're our real asset." -Heather Page
Her company, Quality Staffing Specialists, may be No. 15 in our ranking and command respect in an industry populated by conglomerates, yet a little more than 10 years ago, Phyllis Eller-Moffett's life was as far removed from the business world as you could imagine.
"I stayed home with the kids, baked cookies, and did all the things my generation was told to do," says Eller-Moffett, 49. But a divorce rocked her lifestyle. "I had never worked an 8-to-5 job and didn't have any skills or a college degree. The thought of supporting myself and my children was very scary," she says. "It's depressing to face the job world without knowing what you're able to do."
Eller-Moffett was as surprised as anybody by how much she was able to do. After researching growth industries at the library, she decided to pursue a job in temporary staffing and answered an ad for a receptionist at a Washington, DC, temp service. The woman who owned the business hired her despite her inexperience. "She said, 'I feel you can do this work and I'll give you whatever you need to get ahead,' " Eller-Moffett recalls. "She took a chance on me."
With her mentor's encouragement to learn more about the industry, Eller-Moffett was quickly promoted through the ranks to corporate director of sales. When the company was sold to a national chain, she once again found herself starting over. But this time she was undaunted. She moved to Cary, North Carolina, at the suggestion of her son and used her savings and credit cards to start Quality Staffing Specialists in May 1995.
By positioning herself in niches that weren't being addressed-the medical clerical and library services fields in particular-Eller-Moffett says her company was "catapulted" into success. "For many companies that never used a temp service before, it was the answer they'd been looking for," she says.
Like her mentor, Eller-Moffett is dedicated to giving people a chance. "We want to get people into jobs so they can get on with their lives," she says. In fact, Eller-Moffett has installed a Brag Board in her office, a montage of employees' thank-you notes which, she says, "has ended up huge."
Her future's looking huge as well. This year, with the opening of a state-of-the-art computer training center, Eller-Moffett expects her com-pany's phenomenal growth to continue, reaching $4 million in sales. But whatever innovations she adds, she plans to keep her dedication to her employees the same. "We treat them the way we'd want to be treated," she says, "and it's paid off."-J.C.
Full Speed Ahead
Talk about zero to sixty. Auto-By-Tel Corp., an Internet service that makes the purchase process easier for new car buyers, has experienced such rapid growth in the two years since it started that somebody had better post a speed limit sign. With sales of $274,000 in 1995 and $5 million-plus in 1996, it's no wonder the Irvine, California, company landed the No. 4 spot in our ranking.
Sure, Auto-By-Tel was a bona fide overnight success. That success, however, didn't come without a few speed bumps along the way. Originally, founder and president Pete Ellis wanted the automobile-purchase service to air on TV shopping channel QVC, but after learning that marketing the business via the Internet would cost significantly less, Ellis changed gears. Auto-By-Tel went live on Prodigy in March 1995, with astounding results.
"In the beginning, we hoped [to get inquiries for] 50 cars a day," says Ellis, 50. "But on the fourth day, we got 1,348 requests for cars. That's when we realized this is the way mainstream America wants to buy cars."
Ellis started the business because he detested the way the industry worked. "I've always thought the [purchase and distribution] model was wrong--too many unpleasant practices for customers," says Ellis. He also felt the dealer-to-dealer competition that resulted "made it very difficult to do what you wanted to do for the customer." The solution? Create a whole new way of doing business.
Auto-By-Tel allows car shoppers to research vehicles via the Internet, then get referrals to a network of reputable dealers that will give them price quotes over the phone and a promise not to haggle once customers set foot on the lot. Through Auto-By-Tel, customers can also obtain low-cost auto insurance and financing, plus rock-bottom prices on used cars and leases.
The typical customer, says Ellis, knows what he or she wants. "Say I want a 1997 Eddie Bauer [Ford] Explorer with leather interior and a moon roof, and I want it in cranberry," says Ellis. "I'm ready to buy this car if the dealer treats me right. That's the customer we send to the dealer."
Not surprisingly, aside from cozying up to car buyers, Auto-By-Tel is a hit with dealers, whose per-car marketing costs go down when they're part of the Auto-By-Tel network. According to Ellis, the typical car dealer spends $200 to $300 to market a new car, plus $800 to $1,100 in personnel costs. "We get those costs down as much as 80 percent," says Ellis. Manufacturers also love Auto-By-Tel because customer satisfaction after purchase is sky high, which reflects positively on them.
What else has made Auto-By-Tel such a success? Word of mouth. "Plus," says Ellis, "we have a great network of dealers." Apparently, he's helping those dealers leave regular dealerships in the dust.-Lynn Beresford
Shelby Smithey and Tal Holloway's business is on a hot streak: After recording 1996 sales of $1.2 million, the pair expect to double that amount this year. Give these men a cigar!
But perhaps that isn't necessary. You see, Holloway and Smithey (37 and 42, respectively) are the founders of No. 24-ranked Cigar Classics Inc. in Cary, North Carolina. And just as cigars have caught fire in the marketplace, so, too, has this 2-year-old cigar accessories enterprise.
"One of the things we've done quite well is come up with innovative new products that fill a niche," explains Smithey, a cigar enthusiast who saw a need for protective cases to prevent cigars from getting crushed or drying out.
Enter Tal Holloway. A neighbor of Smithey's, Holloway drew on a mechanical background to help design prototypes for cigar-friendly products. The result? In August 1995, Holloway and Smithey came out with their Pocket HumidorT.
"We needed something that would protect cigars relatively indefinitely," says Smithey.
Echoes Holloway, "The true connoisseur of cigars realizes the importance of keeping cigars at their proper humidity."
And yes, there certainly is no shortage of cigar connoisseurs these days. "Right now, the demand is so great, it's unheard of," says Smithey of the cigar craze that's sweeping the nation. "People just like to savor [cigars]. I find cigars relaxing. It's almost a form of meditation."
Interestingly, Holloway did not always share his partner's enthusiasm. Prior to launching Cigar Classics, in fact, the pilot-turned-entrepreneur didn't even smoke cigars. That's changed, though: "Now, every time we have a meeting on his deck, we have a cigar and a beer and talk about business," says Smithey. "[Tal has] acclimated quite well."
Then, too, the same could be said of both partners with respect to the rigors of entrepreneurship. Fueled by burning ambition and a range of products from humidors to cigar cutters, Cigar Classics is clearly on a roll. -Debra Phillips
It's been said that a good reputation is more valuable than money. For Joseph Hurtado, Mark Gingell and Don Peters, founders of Mid-Continent Mechanical Inc., this saying could well be their mantra.
The trio of Missouri plumbers stressed the importance of cultivating an impeccable reputation for their full-service plumbing contracting firm well before opening its doors in 1995. That emphasis has paid off handsomely. After nearly two years in operation, the Kansas City firm, ranked 37th in our listing, posted sales of $1.8 million last year and projects more than double that in 1997.
One factor that helped the trio initially was the company's minority business enterprise (MBE) status. "[Originally], we expected about 50 percent of our income to come from our status as an MBE. But it's much less [about 17 percent]," says Peters, 54, who is primarily responsible for estimating jobs. (Gingell, 38, is the company's field superintendent.) While the trio did not expect to rely on their MBE status, they used it, along with their 76 years of combined industry experience, as a wedge to open doors.
One of the biggest doors Mid-Continent opened was that of J.E. Dunn Construction Co., a leading commercial contractor in Kansas City that in 1995 had more than $447.5 million in overall billings. "Through the MBE structure, we approached J.E. Dunn," recalls Hurtado, 47, Mid-Continent's president. "They didn't know a lot about us but knew our individual reputations and figured they would try us on a small job first."
Mid-Continent performed so well on that $5,000 contract, it quickly led to a second J.E. Dunn job worth more than half a million dollars.
"It was a large contract and also very hard to perform, and they were wondering if we could keep up with the schedule," says Hur-tado. "We not only kept up with our work, we finished about 45 days before any of the other [subcontractors]."
That success is a far cry from the early days, when the founders worked 14-hour days and forsook salaries for the first five months. But even during that long, hard stretch, they had no doubts their carefully laid plans and dedication to providing top-quality service would pay off.-Cynthia E. Griffin
About Dun & Bradstreet
Dun & Bradstreet (D&B), with the world's largest business information database, tracks 44 million companies worldwide, 10.7 million in the United States alone. Businesses use D&B's services to find new customers and evaluate their creditworthiness, identify potential suppliers and collect overdue receivables.
Through face-to-face and telephone interviews and public records searches, more than 200 million financial transactions are added to D&B's files annually, and that's just in the United States. D&B updates its information base continually-more than 750,000 times each business day.
When businesses are entered into the D&B database, they are issued D-U-N-S numbers (similar to Social Security numbers for companies). Required by the U.S. government for all businesses in its Central Contractor Registration database and used by the United Nations and the European Union, the D&B D-U-N-S number is quickly becoming the universal standard for identifying businesses on the World Wide Web as well.
For more information, call (800) 234-3867.
- Auto-By-Tel Corp., (714) 225-4500;
- Cigar Classics Inc., 114 New Edition Ct., Cary, NC 27511-3491, (919) 460-3882;
- Dun & Bradstreet, Small Business Services, 3 Sylvan Wy., Parsippany, NJ 07054, (800) TRY-1-DNB;
- Mid-Continent Mechanical Incc., 1924 Linn St., North Kansas City, MO 64116, (816) 471-5758;
- Quality Staffing Specialists, 107 Fountain Brook Cir., Cary, NC 27511-4491, (919) 481-4114;
- RCS Corp., (803) 641-0100, (http://www.rcscorporation.com).
- 3D Exhibits Inc., (630) 530-2648;
- Advantage Transportation Inc., (602) 331-0808;
- Electronic Design Group LLC, (602) 951-3200;
- GT Equipment Technologies, (603) 883-5200;
- Hearthside Lending Corp., (816) 452-8900;
- Ingear Corporation, (847) 821-9600;
- Intuitive Manufacturing Systems, (206) 889-2121;
- Lighting Management Consultants, Inc., (713) 777-4562;
- Magnum Machining Inc., (507) 288-1280;
- Necsas Corp., (401) 624-1420;
- Northwest Florida Home Center, (904) 547-5070;
- Octagon Air Systems LLC, (404) 608-8881;
- Palmetto Industries Int'l. Inc., (706) 790-6999;
- Performance Door & Hardware, (972) 721-1944;
- Phoenix Transportation Services Ltd., (606) 254-2400;
- RCS Corporation, (803) 641-0100;
- Resolution Graphics Resources Inc., (913) 599-5000;
- Shonfelds (USA) Inc., (201) 569-7557;
- Softline Consulting & Integrators Inc., (408) 988-6141;
- Switch Manufacturing, (415) 777-9415;
- Systems America Inc., (408) 987-4900;
- The Southern Group Inc., (601) 328-0636.
- Ability Center, (619) 541-0552;
- Baroli Engineering Inc., (310) 715-6191;
- Bri-Mar Manufacturing Inc., (717) 263-6116;
- Brittan Communications Intl. Corp., (713) 659-8700;
- Cabletec Inc., (410) 287-4915;
- Commercial Office Resource Group, (909) 693-9443;
- Davocom One Inc., (305) 854-4333;
- Hometowne Building Company LLC, (810) 539-7711;
- J & B Technologies Ltd., (314) 993-5528;
- Loss Control and Recovery, Inc., (407) 839-0088;
- Matteo Family Kitchens Inc., (609) 769-2490;
- Mediastore, (714) 997-5551;
- Micro Contract Assembly Inc., (714) 472-8880;
- Peter Carol Knitwear Inc., (718) 497-2573;
- Premier Roofing Inc., (619) 667-4565;
- Requirements Inc., (770) 476-4300;
- Sente Financial Corporation, (916) 569-0700;
- Team Contracting LLC, (812) 246-6111;
- Teksystems Fire Protection LLC, (414) 482-0808;
- The Computer Shack Corporation, (303) 986-2799;
- Total Systems Solutions Inc., (703) 502-4300;
- Westwinds Wholesale Doors Inc., (405) 947-3437.
- Adams & Taylor Inc., (510) 939-4838;
- Alliance Telemanagement Inc., (215) 340-0773;
- Apex Window & Bath Accessories, (520) 741-8115;
- Bear Cartage & Intermodal Inc., (773) 376-3500;
- CDS DataComm Inc., (214) 340-9199;
- Cabinet Connection of Treasure Coast, (561) 220-5870;
- Casa Di Oggi Inc., (305) 933-1022;
- Custom Truss Inc., (814) 687-4211;
- Damage Control & Restoration, (414) 672-3409;
- Data Vista Inc., (414) 790-1188;
- Davis Industrial Pipe & Supply, (562) 407-1188;
- Energy Alloys Inc., (281) 821-8787;
- Gorman & Gorman Residential Mortgage Services, (314) 994-9999;
- Leather Creations Inc., (770) 448-0333;
- Metro Fire and Rescue, (618) 539-3177;
- Midwest Fixture Group Inc., (612) 529-6404;
- Miller Paper Company, (806) 353-0317;
- Mortgage One Group USA, (606) 647-6479;
- Netcomm Group Inc., (317) 773-0620;
- Shop-N-Save Supermarkets, (201) 372-3300;
- Synapse Micro Inc., (972) 417-3959;
- The Network Group, (208) 388-1601;
- Travel Design Inc., (901) 683-0588;
- Unitrans Worldwide Inc., (617) 961-3540;
- Valve Solutions Inc., (770) 740-0800;
- Voyager Telecommunications, (703) 551-2075;
- Wasatch Security Group LLC, (801) 487-7233.
- AllTech Data Systems, Inc., (630) 595-5055;
- Architectural Doors & Hardware, (717) 767-7724;
- Aspen Landscape Services, (714) 756-8865;
- Clutch Cargo International Inc., (847) 860-4800;
- Comdex Group Inc., (305) 592-5153;
- Con Heart Construction Inc., (510) 373-9600;
- Cooper Randall & Fox Inc., (201)224-3800;
- Eastern Flooring Inc., (301) 772-5531;
- Excel Business Systems Inc., (614) 228-2112;
- Family Savers, (504) 828-2700;
- Hart Transportation Inc., (904) 786-0805;
- Kokopelli Ltd., (410) 997-9470;
- Lighting Energy Controls Inc., (201) 462-0900;
- MedRx Inc., (813) 392-9000;
- Pahrump Valley Door, (702) 727-1040;
- Patriarc Gas & Welding Supply Co., (814) 539-2833;
- Peach State Lumber Products, (770) 428-3622;
- R & R Supply Company Inc., (334) 213-0351;
- RD/Fox & Company, (415) 357-4545;
- RL Hoener Co. Inc., (217) 223-2190;
- Right Choice Staffing Services, (770) 988-9544;
- Sams Data Products Inc., (410) 626-1201;
- Total Office Solutions Inc., (601) 853-8400;
- United Paradyne Corporation, (805) 348-3155;
- Zabransky Mechanical Corp., (201) 296-0633.