Discovering a new market niche is one way to achieve fast growth. Another is to put extraordinary thinking into building an ordinary business
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Can somebody please explain how the butcher, the baker, and the candlestick maker end up on the Inc. 500 list of the fastest-growing private companies in America? OK, so there's no butcher, but there is a baker (Saint Louis Bread, #18) and a candle maker (Our Secret, #103), not to mention a plumber, an exterminator, and a guy who sells parts for your Volkswagen Microbus. Quotidian stuff, you might think. Where are the software and health-care and high-tech enterprises more readily associated with rapid growth? They're there, all right, in spades. But so are their less glamorous brethren -- the kind of businesses no one would normally peg for growth stars. Come on, an antiques gallery? A housepainter? When was the last time you heard someone say, "I should have invested the kids' college fund in a hot plumbing business?"
Yet, here they are: the masters of the ordinary. The little businesses that could. And while the industries in which they compete might appear sleepy to the point of comatose, that's just the way the CEOs running those businesses like it. As Bear Barnes of Flying Colors Painting (#419), in Norwalk, Conn., puts it, "I don't want to compete against high-powered pros with lots of cash and know-how. I want to compete against some guy with a ladder who doesn't know a thing about business."
It's the competitive advantage of operating in a dog of an industry. And an edge, any edge, is essential for these unlikely growth companies. House painting, as a point of information, is not an exploding industry. One would hardly look to antiques or auto parts, either, for the prosperity of future generations. The growth train simply does not make scheduled stops at these stations. Without a surging market to propel them, then, these businesses are forced to thrive at their competitors' expense: the only way to get bigger is to eat somebody's lunch.
For Barnes and others like him, the beauty of doing business in a lousy business is that it's so easy to best the competition. "If you call five painters, you'll get four calls back, three will come to the house, and two will deliver bids," says Barnes, who figures follow-up alone gives him a 50-50 shot at every job he quotes. "In this industry, 95% of success is just showing up." A simplification, to be sure. More than a little of the $1.4 million Barnes reported in revenues last year might be credited to the two-year guarantees he offers customers. Or to the profit sharing and training he provides managers. Or to the detailed database he maintains to target his market, track bids, and record every shade of paint used on every house Flying Colors paints.
"It's just a matter of applying some basic business techniques in an industry where the competition doesn't," says Barnes. But hearing Larry Harmon of DeMar Plumbing, Heating & Air-conditioning (#465), in Clovis, Calif., tell it, it's also a matter of mind-set.
"I don't want to think like a plumber," says Harmon, who begins his day at 5 a.m. with a companywide cheer and exhorts callers to have a "Deee-Marvelous" day. "I want to think like Mary Kay." Mary Kay is not his only role model. He strives to emulate Federal Express, Walt Disney, and Nordstrom's, too. You see, Harmon figures -- and his company's growth to more than $3.3 million in sales last year would suggest he reckons correctly -- that in an industry as unloved by its customers as plumbing, a focus on customer service would be a stealth weapon.
"Most people in this business are technicians," he explains. "They're not really oriented toward customer service. That's what separates us from the competition." Harmon's flat pricing, same-day service, and Dale Carnegie-trained staff are all hallmarks, he says, of a slavish devotion to customers.
"A plumber thinks about fixing a toilet right. Solving that problem should not be the issue," argues Harmon the self-taught plumber. "Making customers feel so good about it they'll want to come back year after year -- that's the challenge."
Of course, keeping up with the demands of growth once you manage to ignite it is another challenge. Jim Jeffrey, cofounder of Pest Control Technologies (#350), in Dallas, maintains that the secret to exponential growth and, in his case, to killing off the competition, lies in building the right infrastructure from the beginning. To that end, Jeffrey has automated operations so that information about scheduling, inventory, truck routing, customers, and competitors is accessible in a matter of keystrokes. Every facet of his operation can run faster and cheaper that way. As a result, his competitors worry more about him than they do about bugs. "They're out there spraying, wishing they could exterminate us," he says. "Me, I never wanted to spray a house. I wanted to be in the office figuring out how to make more money."
So Jeffrey spends his time thinking about his $1.3-million pest-control business. And how to improve its image. White trucks and employees in white uniforms lend the company a professional air and run counter to slipshod standards in the industry, he says. Combined with aggressive pricing, that gives his company a distinct advantage over competitors who show up in blue jeans and T-shirts and flash vertical smiles every time they bend over. "We're taking market share from those guys big time."
One of the consequences of offering better service or adopting higher professional standards, particularly when it breeds the kind of success these companies have had, is that it raises the bar for the entire industry. If a tactic works, inevitably the competition cribs it. Linda Staples, CEO of the Antique Gallery (#329), in Richmond, Va., is banking on it. Having found herself in the auction business, an outgrowth of her foray into antiques sales, she is bent on rehabilitating the whole industry. With a little merchandising and the right setting, Staples aims to dispel the image of auctions as distress sales and perilous places for buyers, thereby growing the customer base and her profit margins at the same time. "We want to make auctions more reputable, more mainstream." That means, in this instance, the competition is cordially invited. -- Anne Murphy