Once you're on the shelf you have a good chance of staying there: Osher hopes for three to five years of sales from each toy, and he develops lines of toys that build on previous sales. That's why Cap's revenues, already up 2,392% in the past five years, will likely rise another 100% this year. At that rate, Osher will reach his start-up goal -- a $100-million company -- in short order.
Competitive Edge: A Unique Distribution Channel
Not many start-up entrepreneurs would care to plunge into a slow-growth manufacturing business dominated by big German and Japanese companies. But Eric Stetzel did just that -- and his company, Panoramic Corp. (#46), is now the nation's top seller of panoramic-X-ray machines, the kind that let dentists photograph a patient's whole mouth at once. Stetzel's secret: he developed a distribution channel competitors couldn't easily emulate. Stetzel began selling supplies to dentists right after he finished college. He took on a Japanese panoramic-X-ray line and soon was its largest U.S. distributor. But in the mid-1980s, with the yen rising relative to the dollar, Stetzel began thinking of eliminating his supplier. Knowing there was plenty of excess manufacturing capacity in his home-town of Fort Wayne, Ind., he sought out a partner capable of reverse-engineering the Japanese machine and producing a homegrown version of it -- much as Japanese companies once did with countless American products.
In 1988 Stetzel's new company, Panoramic, began marketing its U.S.-made machines direct to dentists, no distributors involved. Today, only four years later, it's still the only direct seller in the industry. Salespeople based in Fort Wayne make calls around the country and attend trade shows. Once an order is in, the machine is shipped out promptly; it can arrive in a dentist's office as early as the next day.
The maintenance of this distribution channel is a top priority for Panoramic. Customer-service reps call buyers monthly and visit their offices twice a year. The company offers a two-year parts-and-labor warranty, as compared with the one-year parts-only warranty standard in the business. "We feel that loyalty and word of mouth really help us," says Stetzel.
Eliminating the middleman, adds the 36-year-old founder, allows Panoramic to keep prices low even while offering services a buyer might expect from a dealer, such as below-market financing. Best of all, none of his big competitors can easily emulate the strategy of direct selling. "They'd have to cut off dealers they've had for years," says Stetzel with a laugh. "Besides, they sell everything from dental chairs to toothbrushes, and those products do need distributors."
Panoramic's sales this year are expected to hit $12 million, up from about $6 million last year.
ONE INDUSTRY, DIFFERENT EDGES
The task for a company in the construction industry: erect high-quality buildings at the lowest possible cost. But what if everyone else does the job (or claims to do it) as well as you do? Like any business, a contractor or builder has to develop an edge by choosing one key element of the trade and delivering it better than any competitor does -- and by pouring all necessary resources into that strategic focus.
Do the most successful contractors tend to choose the same focus? Nope. The builders on this year's Inc. 500 are the cream of anyone's crop: they recorded their rapid growth during a five-year period when construction nationwide was shrinking by 15%. Even so, they're as different from one another as a screwdriver from a blowtorch. Some examples:
Managing subcontractors. Doug Anderson of Union Pointe Construction (#205), in Salt Lake City, relies on subcontractors for 40% to 80% of each contract; he attributes Union Pointe's success to its "superior relationship" with them. Anderson carefully prequalifies subs before giving them a job, asking them to fill out detailed questionnaires indicating the size and types of projects they've worked on in the past. Once hired, subs must purchase and follow a standard specification manual, a tome that spells out company policy down to the tiniest detail. In return, Anderson says, he'll cut his subs slack when needed -- for example, providing them advance draws when cash is tight.
Drumming up new business. Joel Field of Field Brothers Construction, in Marion, Ohio, has made the Inc. 500 twice (#417 this year, #131 last year) by turning his business into a numbers game. The company -- run also by brothers Jon and Dave Field -- specializes in home remodeling and uses telemarketing to find new customers. The key: a predictive dialing system that lets operators cull numbers from a computerized database and call up to 14,000 households a day. Each day's calls typically generate 50 qualified appointments, 30 of which Field Brothers converts into jobs.
Creating a distinctive image. Ken Wells of Key Con-struction (#259), in Wichita, wants to make "customers so happy they can't stand the thought of doing business with anybody else." But first they must believe that Wells is different from everybody else. To that end, Wells has field workers wear uniforms on the job; his office staff wear regular business apparel. Stationery and envelopes are embossed, not just printed, with Key's logo. Job sites are neat and are posted with highly visible Key Construction signs. Wells's rationale, which he tries to instill in every one of his employees: each job is not just an opportunity to make money but an occasion to sell the company.
-- Alessandra Bianchi
