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INC. 5000

A Few Thousand Reasons to Be Optimistic

Despite one of the most stagnant economic periods in recent memory, Inc. 5000 companies continue to growâ€"with a surprise industry leading the charge.
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Given all the drama of late concerning the nation's debt issues, the fact that the economy continues to sputter along has almost gone unnoticed. That slump stretches back to the onset of the Great Recession in 2008, where U.S. GDP growth over the past three years, the same period used to calculate the growth rate for the 2011 Inc. 5000 list, stands at 4.3 percent–making it the most sluggish three-year period since the Inc. 500 got its start back in 1982 (the economy grew 26.9 percent from 1979 to 1981, for what it's worth).

That's why it doesn't come as a huge surprise that the total growth rate (the percentage increase of the sum of all honoree's revenues) for this year's Inc. 5000 companies topped out at 42.6 percent, down from 45.6 percent last year (the median growth rate was also lower, weighing in at 94 percent compared to 96 percent in 2009). To help put these numbers in context, the total growth rate in 2007, the first year of the Inc. 5000, was 140 percent while median growth for companies on the list was 122.3 percent.

In other words, companies, just like the economy, aren't growing quite like they used to. The good news, though, is that they are growing. And, when you consider that the average company on this year's list is outstripping the pace of the economy as a whole by a factor of 10, it's easy to recognize that it will be Inc. 5000 companies leading the charge toward an economic recovery.

Interestingly, the fastest growing industry on the list is real estate, where companies recorded a healthy 233.0 percent median growth rate. The number of real estate companies on the list also climbed from 38 in 2009 to 52 in 2010, which could be another sign that a recovery, at least in the housing sector, could be in the works. Other fast-growing industries included Government Services, where companies had a 173.8 median growth rate; and Energy, which placed third with a median growth rate of 148.5 percent.

The sector with the most companies on the list is IT services, which boasted 639 companies with a median growth rate of 92.6 percent. Breaking the tape in second place after leading the list last year was Business Products & Services with a total of 577 companies and a median growth rate of 57.8 percent. Bringing up the rear was Travel, the smallest sector represented on the list with 37 companies and a median growth rate of 86.8 percent.

Not to be completely outshone, though, companies in the Business Products & Services sector reported $66.6 billion in total revenue, best on the list, which equates to an average revenue of $112.6 million per company (the average annual revenue for all Inc. 5000 companies is $73.3 million). Computer Hardware scored highest in terms of average annual company revenue at $437.7 million; thanks in part to the multi-billion dollar sales figures of companies like Kingston Technology (No. 3,671) and Vizio (No. 3,423).

Building on the strong sales reported by Healthcare giant HCA (No. 4,617) and the supermarket chain Publix (No. 4,796), which posted the largest individual figures on the list with revenues of $30.7 billion and $25.1 billion, respectively, total revenue for the 2011 Inc. 5000 companies topped last year's result: $366 billion to $321.8 billion. The number of companies with $1 billion or more in revenue also rose from 32 in 2009 to 51 in 2010.

Another hot economic topic of late focuses on the nation's so-called "job creators," an area where the Inc. 5000 as a whole excelled as companies on the list added some 370,592 jobs over the past three years–an average of 87 new workers per company. Companies in Human Resources added the most new jobs, 52,696, for an average of 428 per company. Seatoncorp (No.4,444) added some 14,680 new jobs–topping every company on the list. Special credit goes to Universal Services of America (No. 2,759), since the company, which provides facility cleaning and maintenance services, tripled its payroll by adding 7,393 new jobs over the past three years.

For all the naysayers out there who say manufacturing in the U.S. is dead, you might want to consider that not only did companies in the Manufacturing sector create 9,760 jobs (an average of 47 per company), they also added 33 new companies to the list this year. Just as interestingly, Manufacturing also had the most companies, 19 percent, who reported that they did business internationally (Computer Hardware was second with 14.6 percent of companies reporting they sell overseas). That means that when it comes to growing the economy through exports, U.S. manufacturers continue to lead the way. 

It's also worth noting that this year marks the five-year anniversary that the list expanded from 500 to 5,000 companies and that some 541 companies–which include names such as Pita Pit USA (No. 4,512) and Turtle Island Foods (No. 2,967)–have made the list each year since 2007, earning them an induction onto the Inc. 5000 Honor Roll. In a sign that the IPO market may also be finally heating up, the Inc. 5000 includes 82 companies who have filed or successfully undergone an IPO over the past year, including Honor Roll members Ellie Mae (No. 4,782), which had a successful IPO in April 2011 and Newegg (No. 4,316), which has filed for an IPO.

But if you think making the list five times is impressive, consider that two companies, Franklin American Mortgage (No. 2,032) and Marlabs (No. 4,729) have now made the list 10 times each, stretching back to 1999 and 2002, respectively. Only three all-time No. 1 companies have been able to retain their perch on the Inc. 5000, though, including the aforementioned Kingston Technology (No. 3,671), which earned the top spot in 1992. The other former No. 1 companies include ABC Supply (No. 3,671), which earned top honors way back in 1986, and Ambit Energy (No. 390), which was the fastest-growing private company in the U.S. in 2009.

Take some time to explore the 2011 Inc. 5000 list for yourself to find your own clues about why these companies should give every American a few thousand reasons to be optimistic about our economic future.

Last updated: Aug 22, 2011

DARREN DAHL

Darren Dahl is a contributing editor at Inc. magazine, which he has written for since 2004. He also works as a collaborative writer and editor and has partnered with several high-profile authors. Dahl lives in Asheville, North Carolina.




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