Typically, though, the idea for a fast-growing business appears in much more pedestrian fashion. The structure of a marketplace shifts, maybe ever so slightly. A new niche opens up. And all at once people like the aforementioned Hanahan or Smith, people who may never have expected to become entrepreneurs, are out on their own and amazed by their own success.
Market shifts come in many guises. For Hanahan, the key factor was a federal court ruling allowing corporations to set up self-funded health-insurance plans, a murky legal area until 1978. That "opened the floodgates," he says, in that it created a market for specialists in setting up and administering such plans. Hanahan's St. Petersburg, Fla., firm, with the self-defining name of WHP, First in Employee Benefits Inc., was among the first in the marketplace. Smith also was the beneficiary of a change in the regulatory environment. Railroad deregulation created a niche for companies that could negotiate deals with the rail lines and with truckers, then sell packages of door-to-door transportation services to shippers. Smith's $15-million Hub City Kansas City Terminals Inc. grew 783% between 1983 and 1987, thus making last year's 500 list.
Sometimes it's technology that shakes up a marketplace. Computer companies, for an obvious example, can get started by taking advantage of ever cheaper processing power. Solution Systems Inc. founder Neil Kleeman, 41, spent about $300,000 on a computer equivalent to his former employer's million-dollar machine, and was able to lure customers away with lower prices (see "Your Basic Good Career Move," page 7).
But technology crops up in less likely places as well. When we heard of Consolidated Glass & Mirror Corp., in Galax, Va., a mirror and glass fabricator for the home-furniture industry, we thought we'd found the quintessential low-tech, rural business. Our mistake.
"A lot of technology came on the market about 1980 that hadn't been there," says cofounder Bobby N. Frost, 51, explaining in a rich southern accent where he got the idea to start the company. "It's all computer numerical control equipment, and it's revolutionized the manufacture of glass and mirrors for furniture." Frost, then a superintendent for another company in the industry, had worked in glass and mirror fabricating for 22 years. When he learned his employer wasn't really interested in the new technology, he and his brother John set up shop with state-of-the-art machinery. Eight years later they're up to more than 600 employees and $36 million in sales.
UNLIKELY SOURCES
If you have a lemon, goes the saying, make lemonade. And if you're facing a problem, turn it into the idea for an Inc. 500 company.
* Ministering to the sick. Jean Griswold, wife of a Presbyterian pastor, tried to find volunteers to help elderly parishioners with errands and household tasks. Her success was sporadic, until she realized that the old folks were willing to pay for help. She then began hiring students to do the work. From these modest beginnings Special Care Inc. has grown to a $10-million, multistate operation supplying full- and part-time help to the elderly and infirm.
* Reinventing the wheelchair. Allan Thieme, a plumber for 12 years, was visiting Mexico with his wife, who uses a wheelchair, and found the chair offputting as well as awkward -- "People wouldn't get near us; they just stared." For the next six months he worked in his spare time to build a light, motorized, three-wheeled scooter that performs the same function as a wheelchair but doesn't carry the stigma. Now, Amigo Inc. sells $10 million worth of the vehicles annually, which -- according to an owner who is now a company salesperson -- "bring a sense of self-respect and independence" as well as mobility.
* Blackmailed into business. While still in his twenties, Philip Walkenshaw tried repeatedly to start an enterprise he called Tartan Laird Ltd., selling family histories and tartans to people of Scottish descent. But he couldn't find the capital. Finally Ralph Jansen, a former boss of Walkenshaw's, said he'd invest if Walkenshaw first started an agency to handle the advertising for the publishing company Jansen worked for. Reluctantly Walkenshaw agreed, running the tiny ad agency out of his back pocket while developing his Tartan business plan. The latter, alas, went nowhere -- so Walkenshaw finally turned his attention to the agency, landing Montgomery Ward as his first big client. Today Walkenshaw's Townsend Agency Ltd. is doing nearly $15 million in billings.
FIRST STEPS
Helping Hands
Who helped you develop your idea?
52% Potential customers
51 Spouse
50 Partners
44 Colleagues in same industry
29 Potential suppliers
26 Professional advisers (lawyers, consultants, etc.)
19 Potential backers
Time Line
How long did it take to start your Inc. 500 company, from the original idea to the beginning of operations?
29% A matter of weeks
37 A few months
28 Six months to a year
9 More than a year
Start-Up Ambitions
What was your original intent for your company?
12% Planned to start small and stay small
27 Planned to grow slowly
29 Didn't plan, just wanted to get started
32 Planned to grow as fast as possible
What was your company like when it first began operations?
50% "Regular" business but small
48 Informal operations in home, garage, etc.
2 All systems in place for fast growth
When we planned the questionnaire for our Inc. 500 chief executives, we figured we'd write a here's-how-to-get-started section of the article. So we asked the respondents: who helped you develop the idea? Who helped you turn it into a business? What, exactly, did you do first? We also asked them how long it took to get the company operating and whether they planned on fast growth or on any sort of growth at all. When we began browsing through the responses, we realized our textbook-style approach was in trouble.
For starters, there was the head-down, do-it-don't-talk-about-it minority, the one-eighth or so who checked "didn't really discuss the idea with anyone" and a like number who said "didn't really get help from anyone." Hard to recommend that lone-wolf model, though it sure worked for some. For the others, the difficulty was in teasing out patterns. First steps? Except for developing a business plan (58% had a casual one, 21% a formal workup), fewer than half the respondents checked any one answer on the questionnaire. Only 45% consulted a lawyer. Only 31% met with bankers. Only 25% developed marketing materials.
