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Growing In The Fast Lane These entrepreneurs put their engines in overdrive and blazed their own paths to furiously fast growth. Here's how.

By Mark Henricks

entrepreneur daily

Opinions expressed by Entrepreneur contributors are their own.

Entrepreneurs don't follow rules--they break them. Rules about tradition, rules about convention, and rules about what can and cannot be done--they all fall before the perseverance and innovation of entrepreneurs.

At least that's the legend. But what about the rules for creating a fast-growing company? Are there certain financial, market or other conditions that must be met for a company to grow rapidly? To find out, we asked experts in small-business growth what they saw as the rules for rapid business expansion. Then we talked to successful fast-growth entrepreneurs for their takes. We found that entrepreneurs do not all take the same paths to fast growth, but they do all believe that rules were made to be broken.

1. You Must Have Big Money

Of all the conceptions about what it takes to be an entrepreneurial success, access to bountiful sources of investment capital is probably the most widely held. There are good reasons for that, says George Foster, Wattis professor of management and director of the Executive Program for Growing Companies at Stanford University in Palo Alto, California. "Dollars clearly enable a company to invest in research and development to fast-track a process," Foster says. "Dollars enable you to hire a sales force of 40 as opposed to 10."

But starting a business with little capital can also work--if you find innovative ways to cut costs. Tampa, Florida, entrepreneur Stuart Suddath, 34, started self-service moving company Movex Inc. in a spare bedroom of his father's home in January 2000. Its customers save money by loading their own household goods onto professionally driven trucks supplied by Movex. The company did well almost from the start, generating $2 million in revenues its first year. In 2004, Movex made $13.7 million with just 34 employees.

The company's major outlays include advertising its nationwide service and developing software to monitor the moves in progress. But other than that, capital outlays have been minimal. "The real kicker of the whole thing is that Movex is a non-asset-based business," says Suddath. Rather than rent or buy a fleet of trucks, Suddath contracts with independent truckers and trucking companies and monitors their locations, keeping them fully loaded at all times. "It's a lot cheaper than owning the trucks," he says. "We'd have to spend $100 million to haul what we need to get hauled."

2. You Must Have a Deep Management Team

Another standard ingredient in the fast-growth recipe is a broad and deep management team with high-end skills and experience--"a resilient, focused, top-shelf management team" is how Foster puts it. "Until you have been knocked down and shown you can pick yourself up, take an obstacle and overcome it and make an opportunity of it, it's hard to become a viable company," he says.

Executives of Round Table Group Inc., a business that connects independent subject-matter experts with attorneys and money managers to help with litigation support and investment research, have certainly been resilient: All three co-founders of the Chicago company have been there since it was founded in 1994. The organizational chart is not, however, particularly deep--the company still has just 12 employees despite growing to $6 million in 2004 revenue, nearly doubling 2003's $3.6 million. And CEO Russ Rosenzweig was just 24 and fresh out of college when he co-founded the company.

Rosenzweig says that keeping the business simple and focused has helped grow revenue rapidly while keeping the management ranks thin. "Having a simple story and a focused customer segment were the two key ingredients for fast growth for us," says Rosenzweig. "It can't be a complex business that's hard to explain. You need to be able to explain yourself in a sentence."

3. You Must Have a Technological Competitive Advantage

The dotcom boom may be long gone, but the idea that proprietary technology is a prime component of the jet fuel that powers fast growth is still around--and for good reason. "We like a technology-based competitive advantage because it allows you to create wealth, not just move it around," says venture capitalist Jack Biddle, co-founder and general partner of Novak Biddle Venture Partners in Bethesda, Maryland. When a company has a technological edge, it can essentially create brand-new markets for its products and services, he explains. Then it doesn't have to take sales away from established competitors to grow.

It might be said that Karen Booth Adams succeeded in spite of technology. The 35-year-old from Atlanta had founded four startups in the IT field when she and a partner began PoshTots, an online retailer of baby d�cor items, in November 2000. At that time, of course, the fuse on the dotcom implosion had already been lit, and yet the company not only survived the blast, but also grew to 22 employees and a projected $10 million in sales for 2005.

Despite Adams' tech background, PoshTots had no particular technological edge over its competitors in online retailing. And the company's plan to sell furniture such as cribs and beds online was, at the time, almost an icon of internet futility, having been the same strategy adopted by a number of spectacularly unsuccessful dotcom ventures. PoshTots prospered for the simple reason that no one, online or offline, offered what Adams did--a single, convenient place to go for high-end children's d�cor and furnishings.

"We picked a niche, stuck to it and did it the best," she says. Another factor was that Adams' partner, Andrea Edmunds, skillfully made the most of the firm's celebrity clients, and nurtured relationships with media outlets that provided lots of free publicity for the upstart retailer and its sometimes amazingly pricey products.

Hot Markets, Business Passion and More

4. You Must Tap a Hot Market

Being in a rapidly expanding market can make up for a lot ofmistakes. But is it a requirement for rapid growth? In addition toa new technology or new application of technology, Jerome Katz saysit usually is. "[You need] a tipping-point-type market, wheresomething has been building and all of a sudden it's hot,"elaborates the St. Louis University Coleman Foundation Chair inEntrepreneurship. Entrepreneurs can choose to market aggressivelyand ramp up demand themselves, or husband their resources and buildslowly until the market reaches a tipping point on its own. Eitherway, a fast-growing market is practically a prerequisite for afast-growing company, Katz argues.

It's a persuasive argument, although it doesn't accountfor companies like Movex. "The industry is stagnant,"concedes Movex founder Suddath. "But it's a $12 billionindustry." Under that roof, Suddath, who previously worked inhis family's full-service moving business, found ample spacefor innovation, essentially creating a new market for a servicemidway between full-service movers and drive-it-yourself truckrentals. The CEO thinks the sky's the limit. "We'rehoping to brand this type of service," he says. "Peoplesay they're going to U-Haul something. We're hopingthey'll say they're going to Movex it."

5. You Must Have the Desire

Inside the chest of every fast-growth entrepreneur beats a heartfull of passion for business, says Jeff Williams, president ofbusiness startup training and coaching company inArlington Heights, Illinois. Williams is most scornful of thepantheon of fast-growth idols, including the requirements for lotsof money, teams of managers and best-in-class products andservices.

But after helping more than 4,000 small firms get under-way,Williams does feel that a true passion for the business isessential. "It is so demanding, and almost always takes longerto be rewarded than you think it would, that it requirespassion," he says. "You truly love the product orservice, you love the selling, you love the customers, youdon't even mind customer-service problems."

That's one rule Adams agrees with. "[Passion] plays arole in every startup if they're successful," the serialentrepreneur says. "You'd better be tenacious andyou'd better be determined to make that business successful nomatter what--even if it requires a lot of sacrifice and latehours."

So is passion the truly unbreakable rule for fast-growthcompanies? Perhaps, but it depends on what your passion is for.Venture capitalist Biddle points out that for most companies toexpand rapidly, the founders must have more passion for growth thanfor control. "You have to distinguish between those companiesthat have the capacity to fast-track and those that are willing todo it," he says. In many cases of unfulfilled potential, hesays, the reason is that the founder cared more about keepingcontrol than experiencing growth.

The Rules About Rules

Part of the reason that the rules of fast growth appear tofrequently be broken may have to do with sheer numbers. After all,there are millions of entrepreneurial businesses in the UnitedStates, all unique. "There isn't just one way," Katzsays. "You can pick any 50 characteristics you want, and thereare a hundred thousand people that fit that model." At thesame time, there probably isn't a model without a hundredthousand exceptions.

Is your company one of those exceptions? Adams urgesentrepreneurs not to be too quick to follow the advice ofinvestors. "We were fortunate that we had already had somesuccessful startups, so we didn't need venture capital to startit up," she says. "But had I presented [my idea] to [VCs]at the time, they would have laughed me out of the room."

Rule breaking may, in fact, be inescapable for fast-growthentrepreneurs, many of whom attribute their success specifically tobeing unlike anything that has ever been seen before."It's something different-a hybrid," Suddath says ofMovex. "We're building an industry where there wasn'tan industry before."

Mark Henricks is Entrepreneur's "StaffSmarts" columnist.

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