An inside look at the companies creating jobs and wealth in a recessionary economy.
Where did the founders get their seed capital? Who are their heroes? Which are the hot industries? And more
When it comes to entrepreneurial drive, Max Fuller sure doesn't have it. He never had any great desire to start a company -- or even to buy one, for that matter. It was only outside circumstances that pushed him into starting his Inc. 500 company, U.S. Xpress (#445), located in Tunnel Hill, Ga. What Fuller thinks accounts most for his company's growth is not his niche, strategy, or hell-bent desire to succeed, but his talented managers and strong profit-sharing program. What's more, Fuller's partner and cofounder, Patrick Quinn, agrees entirely.
What's going on here? Profit sharing? Partnerships? A full-fledged management team? Is that any way to start a fast-growing company? What ever happened to the entrepreneur as Lone Ranger, the guy (and it almost always was a guy) who made things happen in his garage, thanks to an unshakable belief in a big-picture plan no critic in the world could touch?
We're not sure, but he seems to be a dying breed. In our survey of the 1992 Inc. 500, our annual list of the fastest-growing privately held companies in America, the theme can be summed up in one word: teamwork. The form of the team varies, but contrary to all the myths about going it alone, building a fast-growing company in the 1990s is clearly a group effort. Fifty-eight percent of 1992 Inc. 500 chief executives began with at least one partner. Three out of 10 work with a spouse. Thirty-five percent have an informal advisory board, and 33% have a formal board of directors. Less than a third of the CEOs still own all the stock in their companies, and 46% don't even have majority control. And, yes, almost half share profits and financial information (49% and 41%, respectively) with their employees.
Welcome to the 1992 Inc. 500. This is our 11th year of compiling the 500, and the qualification standards are daunting: the slowest-growing company on this year's list saw sales increase 606% over the past five years. Together the 500 accounted for $8.4 billion in revenues and 72,308 jobs in 1991 -- up from $530 million in sales and 8,221 in employees in 1987.
In effect, the Inc. 500 screens the nation's newest batch of growth companies -- and highlights the ones off to the best start. Experience suggests that some of each year's crop will go on to build national reputations, while some will stagnate or die. Most, however, will grow into the successful private companies that are a mainstay of our economy.
In the following pages you'll find the shape of things to come. What industries are growing explosively? What management styles are producing dramatic results? What strategies? If you want to know what the company of the '90s and the early 21st century will look like, take a look at the 500.
Our survey results emphasize again and again that these are not traditional small businesses. Just ask Quinn and Fuller. They got their start working together in an old-fashioned entrepreneurial business -- one run by Fuller's father. What did they learn there? That -- despite their great respect for the senior Fuller's accomplishments -- they wanted to do things differently. "When I worked for my dad, he was the dictator," Fuller says. In contrast, Quinn and Fuller divide the company's management areas between them and rely heavily on their management team, which approves all major policy changes. The two founders see their management style and profit sharing as crucial in a world that has grown far too complicated for one businessperson alone to master. "I don't know how one person can remotely begin to be an expert in every business area," Quinn says.
Instead, by harnessing the power of its people, U.S. Xpress has grown to a profitable $142 million in sales in just seven years, and the company, which does long-haul trucking, is one of the top job generators on the Inc. 500. And in a fitting sign of the times, Fuller and Quinn have acquired Fuller's father's company. You could call it an entrepreneurial changing of the guard.
The Start-Up Machine
Some people like to grow businesses. Then there are people like Gregory Squillante -- who'd much rather just start them. Last time they counted, Squillante and his wife, Jo Ann, reported starting 16 businesses in southeastern Massachusetts and Rhode Island, of which he says 13 are still in business. The two big casualties -- a computer demographics company and a fast-food restaurant -- were both companies in which Squillante had invested a lot of money and high hopes. "I am very good at running small businesses. I am not very good at running big businesses," he admits.
Many small-business people would probably say the same, but what do you do if a business grows of its own accord? That's easy, according to Squillante: when a company reaches about 50 employees, he begins to look for a way to spin off some part of it and create a new company. All told, he estimates his 13 companies have about $10 million in revenues. In the process, Squillante has made the Inc. 500 not once but twice, with Diagnostic Testing, a medical laboratory, in 1987, and this year with S&S Management & Consulting (#372), based in Somerset, Mass. What is S&S's line of work? It provides management-consulting services to small-business owners. Somehow we're not surprised.
The Oldest Company
Like many fledgling entrepreneurs, Mary-Clare and Michael Molony were sure they had a great new concept to bring to their market. Then, while shopping for a location in 1985, they came across a local business already using their hot idea. Worse yet, the business was 99 years old. Still worse, it was going out of business.
Michael Molony readily admits the whole thing made him just a little nervous: if the Molonys' idea -- stores that sell nothing but pet foods and supplies -- was so great, why was this other company, P. T. Moran Co., closing? On closer examination the couple learned the owners actually had devoted most of their space to garden supplies and wanted to get out for personal reasons. So instead of starting from scratch, the Molonys bought the P. T. Moran name along with some of its assets in 1986. With six stores operating under the P. T. Moran name, Pet Ventures (#220), based in Arlington, Va., sold $5.8 million in pet food and supplies in 1991 and is the oldest company on this year's Inc. 500. Says Michael Molony, "An old company that has a person's name on it tends to give people a warm, fuzzy feeling."
