It's Getting Hot in Here

This story appears in the June 2003 issue of Entrepreneur. Subscribe »

While our economy may seem to be in a holding pattern, signs of change are evident in this year's Hot 100 list. Our 9th Annual Hot 100 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. What's changed since last year?

This year's hottest industry is business services: 25 of the 100 companies listed fall into this category. Within business services, a couple of subcategories stand out: There are nine companies providing logistics services (such as freight-handling, trucking and transportation) and six providing marketing and advertising services.

Find out more about the companies that ranked at the top of our Hot 100 list here.

Home-related products and services--from construction to home-improvement products and services--declined from 27 companies last year to 14 this year. Tech businesses have made a slight comeback, up from 13 companies last year to 19 this year. (However, telecom dropped from six companies last year to two this year.) And health care seems to be up-and-coming, growing from two companies last year to five this year.

Speaking of things that are going up, this year's Hot 100 companies reported total sales of $923.5 million for 2002, a sizable increase over $673.7 million for 2001. And while the average 2002 Hot 100 company started with $391,100 in capital, this year's launched with an average of $565,000.

But some things haven't changed: 37 of the companies on this year's list were on last year's Hot 100. In fact, our top company has held the No. 1 seat for the second year in a row.

Read on to see how these sizzling success stories happened--and be sure to click here for a look at our complete listing.

COKeM & Arbitech

COKeM
Lightning really does strike twice in this case.

He did it again. Chuck Bond, founder and owner of COKeM International Ltd., has taken the top spot in the Hot 100 for the second year in a row. With 2002 sales of about $125.5 million, up from $77.8 million in 2001, the value-added Plymouth, Minnesota, video game and home-entertainment software marketing company is really cooking. Those sales figures represent a heady rise from the company's start in 2000 with $250,000 out of Bond's own pocket. What's more, Bond expects COKeM to reach sales of $150 million in 2003.

While COKeM's sales have skyrocketed in recent years, the number of employees has stayed steady at 65. "I'd rather have fewer people and pay them more than have more people and pay them less," explains Bond, 47. Something else that hasn't changed about the company is the cloak of privacy COKeM employs. Search the Web for "COKeM," and you'll hardly find a peep out of them. That humble attitude stems directly from Bond's personal down-to-earth, no-need-to-brag approach to his business. "I don't buy a bright, canary yellow new truck. I buy a black one. It's still a truck," he says.

One reason for COKeM's remarkable growth and success over the past year lies in purchasing large amounts of product and then creatively repackaging or building customized sets of games and software for customers such as Best Buy, Sam's Club and Wal-Mart. The COKeM team works to keep all their products at low prices--"under the ATM-machine $20 bill," as Bond puts it. Those low price points, in combination with the strength of the video game market, help protect COKeM from the whims of an up-and-down economy.

When we spoke with COKeM last year, they were about to embark on a major bank financing expedition. It turned out to be one of their greatest challenges in 2002. Eight months of intense work finally landed them the cash infusion they sought. "Cash is king," Bond explains. "It enables you to play at that next level." They are also looking into expanding their "playground" by offering video games or computer software at places like children's hair salons and other nontraditional locations. Further growth in Puerto Rico, Mexico and Canada is on the list as well.

Bond's favorite advice for other entrepreneurs is not to set any limits for themselves and not to fear failure. With COKeM, he brings those valuable pieces of advice to life. "We'd rather not react; we'd rather be the leader," he says. "We don't mind taking chances. Occasionally, we take an arrow, but that's what pioneers do."-Amanda C. Kooser

Arbitech
Life's a beach for these successful entrepreneurs.

A "board meeting" at Laguna Beach, California-based computer commodities trading company Arbitech is more likely to include the Pacific Ocean and surfboards than a big table and office chairs.

Co-founders Torin Pavia, 31, and William Poovey, 32, really know how to have fun. Lunches for all 26 employees are catered every day, the group often surfs together, and an annual corporate retreat sends everyone off to lovely locales like Puerto Vallarta. Arbitech has the opposite problem most businesses do: "I have to call people and tell them to go home at my company," says Pavia.

Pavia and Poovey also know how to get down to business. Arbitech doubled its 2001 sales by hitting the $60 million mark last year. They've come in at No. 2 on our Hot 100 list for the second year in a row. They're shooting for $90 million this year and are already well on track.

Founded in 2000 with $500,000 from the founders' savings, Arbitech is blazing its way as a less expensive alternative to big computer products distributors such as Ingram Micro and Tech Data. Most people don't think of computer memory being a commodity like corn, but Arbitech does. "We take a securities and commodities approach.

It's very much like Merrill Lynch or PaineWebber," explains Pavia. "Why reinvent the wheel?" Their sales floor looks a lot like the floor of the New York Stock Exchange. This way of conducting business helps them offer computer products at low prices to mostly small resellers across the country. "We sell HP cheaper than HP sells HP," Pavia boasts.

Integrity is a way of life at Arbitech. Its marketplace has long been tainted by used and counterfeit goods and shady businesses, a fact that spurred the company's slogan: "Bringing integrity to the channel." Judging by its growth and the increasing number of small resellers that rely on the company as a lifeline, Arbitech is doing just that. Looking ahead to the company's healthy future, all we can say is, the surf is most definitely up.-A.C.K.

Concentric Marketing & Access Diabetic Supply

Concentric Marketing
Having high expectations and focusing on goals helped this company stay centered.

The three co-founders of Concentric Marketing in Charlotte, North Carolina, are the first to admit they started their company at the worst possible time. It was in September 2000, the beginning of the economic downturn, that Robert Shaw, 39; Tricia Snead, 34; and Frank Rizzo, 36, opened the doors of their marketing agency.

"We've never allowed the economy to be an excuse," says Shaw. "I'm by nature a hypercompetitive individual who sets unreasonable goals." Not that unreasonable, considering the fact that Concentric Marketing went from five employees at start-up to 19 employees today, and sales of $267,000 their first year to a projected $8.8 million in 2003. This year, the company came in at No. 78 on our Hot 100 list.

Although the three co-founders struggled in the beginning stages, their business exploded as they started to land huge accounts such as Coca-Cola and Sonic Automotive. Hiring the best people for the job has been an important factor in achieving success, according to the partners. Says Shaw, "The extra two weeks you take to find the right person pays off times 100 in the long run."

Not only does Concentric Marketing extensively screen and interview prospects to make certain they're as driven and competitive as the founders, but they also structure the company to play on everyone's strengths. For instance, Shaw is the company's visionary and strategic marketing guru, Snead is the creative force and Rizzo is the financial mind.

One of the biggest challenges arising from fast growth has been communication between the three partners. "As the company grows, yelling over the cube is not a good way to function," explains Snead. "When we started experiencing this huge explosion in growth, it was time to put the right people in place and make sure the processes were in place before the agency got too big for us to wrap our arms around--and that's what we're [still] doing."

That process includes maintaining a delicate balance between being happy with their growth and striving for more. The expansion strategy, Shaw explains, "is to allow people to catch their breath a little bit and feel great about what they've accomplished, and still keep that burning desire and ambition going to never feel satisfied."

With plans to grow the company more than 100 percent in the next year, Concentric Marketing's founders seem to have the burning desire part down.--Nichole L. Torres

Access Diabetic Supply
A health-care company reaches out to the masses.

Managing long-term illness is an unfortunate but real aspect of many people's lives. For Access Diabetic Supply's co-founders, Montgomery Byers Jr., 34; David Wallace, 36; and Timothy Stocksdale, 34, offering mail order medical supplies to the 17 million Americans who are afflicted with diabetes caused their business to skyrocket from its first-year sales of $400,000 in 2000 to projected sales of $25 million in 2003. Banking on a profitable niche market, Access Diabetic Supply's co-founders are controlling its growth while laying the groundwork for its continued expansion and success.

As former executives at specialty chemicals and materials company W.R. Grace & Co., where they handled health-care acquisitions, Byers, Wallace and Stocksdale knew that investing heavily in technology and automation--something most of their competitors have been slow to do--would be key to moving ahead of the competition as well as managing growth. Because Access Diabetic Supply employs a direct-billing process where Medicare and insurance companies are billed electronically, the company is a virtually paperless operation.

The No. 25 company on the Hot 100 list, Access Diabetic Supply is now determined to "overemphasize" customer service. Flooded with calls and enrollment prospects as they increase advertising, the company is meeting the challenge by creating a 7-to-10-day turnaround time for enrolling new prospects. The co-founders will also bulk up their staff from 50 employees to 150 by year's end. Luckily, South Florida's cluster of health-care firms has presented a pool of well-trained specialists for the company to wade through.

The Pompano Beach, Florida-based firm continues to grow its diabetic supplies division as well as its recently added respiratory pharmacy division. Distributing respiratory medications and supplies to those suffering from asthma, emphysema and chronic bronchitis, Access Diabetic Supply's most recent target market includes 30 million potential new clients. "It really is our platform to be one of the top three players in our business," declares Wallace. "The investment's made, and that's the direction we're heading."--April Y. Pennington

About the Listing

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 firm on the list a form that 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.

For a business to be considered for this year's Hot 100 list, it must meet all the following criteria:

• The founder is actively involved in daily operations and has a controlling interest in the business.
• The business was founded no earlier than 1998.
• Annual sales for 2002 exceeded $1 million.

To be considered for our Hot 100 list next year, your firm must be registered with D&B and have current information on file. .

D&B's research was conducted by the D&B Analytical Services Group; Entrepreneur's research was conducted by Maggie Iskander.

About D&B
It provides the information, tools and expertise to help you make confident decisions. D&B Small Business Solutions (SBS) offers a suite of online products designated to help small-business owners better manage their businesses. SBS tools use D&B information to help you find profitable new customers, manage vendors more efficiently, run instant online credit checks, monitor your own business credit and access valuable industry information. For more information about D&B SBS, visit www.dnb.com/smallbusiness.