1987 The Inc. 100;

 

WE'RE AWAITING CONFIRMATION FROM THE observatory at Mount Palomar that all the planets and moons did indeed orbit around Wall Street last year. Certainly that's where the economic action seemed to be. A wave of mergers and acquisitions. More leveraged buyouts, financed with ever-junkier bonds. Massive sell-offs of money-losing divisions. Multibillion-dollar buy-backs of sagging company shares. And a spreading insider-trading scandal.

But the real story of economic performance -- the tough work of producing goods and services, of building companies and creating jobs -- occurred far from lower Manhattan. The enterprises on this year's INC. 100 list of the fastest-growing small public companies were expanding not merely by reshuffling their assets, and in that fact lies the continuing strength of the American economy. If hundreds of older factories closed down last year, for example, how did the United States generate millions of new jobs? Look at Fuddruckers (#85), a restaurant operator and franchisor, whose payroll jumped from 92 in 1982 to 3,050 in 1986. Or Apollo Computer (#62), which added more than 3,000 employees over the same period. The average INC. 100 company payroll zoomed from 46 employees in 1982 to 786 in 1986. And at no loss of productivity, either -- sales per employee nearly doubled during that period.

The companies on this year's list illustrate a simple point: giants often flounder when markets change because they fail to see the new opportunities. Is Sears, Roebuck & Co. stagnating? The off-price retail market served by Ross Stores (#58) and Consolidated Stores (#80) isn't; neither is the home shopping business pioneered by Home Shopping Network (#10). Is Time Inc. having trouble? There's little trouble at the 13 fast-growing communications companies on this year's list, some of which compete in the hot satellite broadcasting market. Is AT&T floundering in the new era of deregulation? Seven young companies on the list are profiting from the same deregulation by providing a wide array of new telecommunications services.

The INC. 100 reflects broad economic trends. For the first time in the nine years that we have published the list, for example, fewer than half the companies on it manufacture a product -- only 45, down from 55 last year. The difference, of course, is made up by a surge in the service sector, up to 37 companies from 26 last year. It's no surprise that representation from the energy and mining sector has caved in, too. Only 3 companies -- all independent power producers whose market was assured by the Public Utility Regulatory Policies Act of 1978 -- grew fast enough to make the list, as compared with 6 last year. Back in 1983, the last glorious hours in the oil industry's heyday, 17 companies were on the list.

Some things don't change. As in the past, computer and software companies (30) and health-care providers (16) head the INC. 100. California is once again the state leader, claiming 28 of the 100 fastest-growing small public companies; in fact, California, New York, and Massachusetts together are home to nearly half of the companies on the list.

You don't have to be a computer company from Silicon Valley to make the list, though. Suppose you sell mobile homes in Winston-Salem, N.C., or make pizza topping in Hutchinson, Kans. How do you grow fast enough to grab a spot on the 100 in a business that seemingly anyone could enter, in a place that is Anywhere Down the Street, U.S.A.? Senior writer Tom Richman explores the fundamental wellsprings of growth in "Ordinary Business" (page 73).

Growth had a special meaning for investors in the INC. 100 stocks. As senior writer Robert A. Mamis explores in "From Riches to Rags . . . and Back" (page 66), the portfolio of INC. 100 stocks rose 36% in a year, outperforming the major market indices. But investors didn't reward hot sales growth alone; if solid earnings didn't accompany those sales dollars, investors were apt to dump the stock.

Strategy and personality have a lot to do with growth, of course. In "The INC. 100 Portfolio" (page 58), associate editor Joshua Hyatt introduces us to the faces behind the company names. What company brought Oprah Winfrey national, and how did the popular TV talk-show hostess return the favor by helping to keep it on the INC. 100 for a second year? How did one founder's strategy bring his company $100 million in losses last year on $178 million in sales? And what chief executive officer's plane was stolen for a drug run?

 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10  NEXT