When he read that the category killer was heading to Eau Claire, Wis., he followed suit. When Wal-Mart arrived in Plover, Wis., where Friendship Manor already operated one home, Kramer built two more. "It has made a huge difference in the time and money we have to spend on expansion decisions," he says of the strategy. "We do less homework ourselves now because we know they've done theirs."
Of course, more than a few entrepreneurs quite rightly see competition, not coattails, when they study the category killers. If they're like Tom Flink of Office Stop (#74), in Butte, Mont., they stay well out of the way, playing only where the big boys don't. What Flink and his two brothers have done is take the discount office superstore to places (such as Missoula, Mont.) where Office Depot and other national chains fear to tread. It's a hit-'em-where-they-ain't strategy. And it has boosted Office Stop sales nearly 3,000% in the company's last five years, to $7 million in 1993.
With locations in four Montana cities, Office Stop employs the same marketing and discounting that superstores do in large metro areas -- counting on volume to compensate for razor-thin margins -- but throws in enough service to draw business away from the mail-order office suppliers it must compete with in a rural market. "We're bringing big-city distribution and pricing to small cities and rural areas, places most national chains either overlook or can't afford to go to," says Flink.
Some, of course, build growth companies without ever leaving home. Take Paul Argall of PCBM Management (#286). Let others strike out for new economic frontiers in far-flung places; Argall has found his in his own backyard, in Ishpeming, Mich. A small mining town in upper Michigan, Ishpeming is home to some 7,000 souls as well as one motel, two bars, a restaurant, a bowling alley, a convenience store, a gas station, a car wash, a quick lube, a construction company, and a real estate developer, all owned by Argall's PCBM Management. Argall even sells the dirt in Ishpeming -- sand and topsoil from the land he clears to develop properties. "I own a lot of Ishpeming," avows Argall, who reckons he's now the largest property-tax payer in town. His varied ventures, built from scratch and "pure stubbornness," would never have been started if he hadn't been such a willful local boy, Argall reports. "Ishpeming was not going anywhere," he recalls. "But there was so much opportunity."
Argall recognizes the risks of tying his fortunes to one very local economy, but he hedges his bets by diversifying the businesses he owns, he says, and financing them largely out of cash. "We carry very little debt and watch the balance sheet very carefully," says Argall, who claims he has no ambitions to expand beyond the bounds of Ishpeming. "Who knows why?" he says. "Maybe because I'm from Ishpeming, maybe because I want to prove something to somebody. But I'm happy making something out of nothing right here at home."
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Off the Beaten Track
It may not be easy to find Cave City, Ky., or Sandpoint, Idaho, on a map, but you'll find them on this year's Inc. 500 list, along with Poulsbo, Wash., and Madill, Okla., the last of which is just a hop, skip, and 3,000-mile jump from Silicon Valley. Unlikely as it may sound to those struggling to grow businesses in suburban office parks or pricey downtown quarters, you don't have to set up shop in Santa Clara, Calif., or Norcross, Ga., or Arlington, Va., to stand a chance of building a growth company. A handful of resourceful business builders gracing this year's list demonstrate that Inc. 500 companies can, in fact, be grown in the outback. Yes, Virginia, you can get there. From just about anywhere.
"This is the last place you'd look to start a business," says Ron Jackson, CEO of Contract Manufacturer (#58), a $17-million maker of livestock trailers. Set in the sparse and rolling hills of southeast Oklahoma, Madill is a town of 5,000 built in the settlement days and, "like every other place around, is just hanging on," according to Jackson, a native son. But the town's grip may be getting a little firmer, at least for the 46 locals whose checks are signed by Jackson, thanks in part to the growth of Contract Manufacturer to more than $12 million in sales last year.
While Jackson's company has benefited from the relatively low costs of labor and real estate in his rural outpost (and boyhood home), it has not relied on Madill for customers. "Not enough people drive by here in a day to buy the trailers I could make in my backyard, never mind in my factory," he says. Instead, Jackson, who has never employed a single salesperson, draws on the contacts he's accumulated over 20 years in his niche to sell his trailers nationally, with little more than a few phones and a fax machine to aid him. There are, after all, only a couple hundred livestock-trailer dealers in the nation. And they're not on Madison Avenue, either.
Dennis Pence, who fled New York City 10 years ago in search of a new Eden, couldn't give a damn about Madison Avenue now. That's how good life has been in Sandpoint, Idaho. By virtue of his company's rapid growth and burgeoning payroll, Pence has become a big man in the mountains: one of the largest employers in the wilds of northern Idaho and a power broker in the state.
Pence's company, a mail-order marketer of nature gifts called Coldwater Creek (#279), posted sales of $29 million last year, nearly 10 times its revenues in 1989. Set on the shores of the pristine Lake Pend Oreille, minutes from the mountains but an hour and a half from the nearest airport, Coldwater's remote location has proved to be a distinct, if quirky, advantage, according to Pence. He had decided while on the Pennsylvania Turnpike, bound for Sandpoint, to start a company with his wife, Ann, that could trade on such an outback location. "Our address charms customers," says the 44-year-old CEO. "People are always impressed that they're not talking to some phone bank in Chicago when they call us." And because a mail-order company can operate from anywhere a phone line and a UPS truck can reach, it hardly matters that Pence is often thousands of miles from big-city customers.
