FALSE ASSUMPTION 6
Fast Growers Always Have a Formal Plan
Steven Munroe wasn't the only fast grower to get a chuckle out of his preliminary miscalculations. Many founders didn't bother to calculate at all. (Twenty-six percent of the CEOs did no financial projections.) Says Igal Lichtman, who founded software company Magic Solutions (#238), in Paramus, N.J., in 1987, "We didn't know how to run the business, so we decided that after we started we'd learn what it was going to take. We went where the market took us."
FALSE ASSUMPTION 7
Your Family Gets Shortchanged When You Grow
With 80-hour workweeks and immersion in nonstop problems, growth-company entrepreneurs should expect their work to cut into life outside the office--if they have one at all. Yet only 2% of respondents reported that their personal lives had worsened as a result of sudden growth. In far greater numbers, founders said their personal relationships measurably improved. James Kelly is just one founder who's enjoying the growth-altered good life. When Syscom Services (#99), the communications-software and services reseller Kelly founded in 1988 in Silver Spring, Md., took off, he moved himself and his wife to the ski slopes of Fort Collins, Colo. He runs the company, still located in Maryland, from that home base.
In 1987 John Cummuta left a corporate job to start publisher Financial Independence Network (#295), in Chicago. "I wanted a business that wasn't location-sensitive, so I couldn't be forced to live someplace I didn't want to." Eight years later he moved the company to rural Boscobel, Wis., "because it's where I'd always wanted to live." The climate suits not only Cummuta and his company--revenues for 1996 were about $20 million, a fivefold increase over 1995--but also Cummuta's relatives. There are no fewer than 15 family members among his 100 or so employees. Likewise, Carl Amari's family benefited from the growth of Radio Spirits (#278), the mail-order and retail company he incorporated in 1989 in Buffalo Grove, Ill. With company revenues closing in on $5 million for 1996--a 60% surge from 1995--Amari bought his parents a home in Florida and treated his family to "a nicer house in a nicer community." When his brother needed a job, Amari hired him as warehouse manager, paying him more than he'd made before.
FALSE ASSUMPTION 8
Big Business Is a Good Training Ground for Small-Business Growth
Rodney Martin founded HCI Technologies (#259) in 1985, although he didn't own it at the time: he started it for the $5-billion company he was then working for. He acquired the Reston, Va., telecommunications-systems developer in 1987 through a leveraged buyout. But he didn't find the path to fast growth for four years. The problem: "Before, when I had $500,000 to spend every year, I paid cash for everything. Suddenly, a simple thing, like how to buy a PC, was a big decision--should I lease it or borrow from the bank for it?" Problem solving on a smaller scale was one challenge for Martin. There was at least one other: "We don't have many secretaries. We have to do everything ourselves."
Ironically, Martin's anecdote about scale may provide a clue to understanding the misunderstandings about the effects of growth. Scale affects the way a business can be managed, all right. The resources available to managers of a 5,000-employee corporation are different from those available to a business owner with a payroll of 5--but then again, so are the resources available to the manager of a growth company employing 50 (or 250). For one thing, when companies grow, their founders no longer face the challenge, as Martin did, of having "to do everything ourselves."
But that's just a specific example of the more general finding that because growth brings resources, it creates options and flexibility. By far the biggest reason our accidental hypergrowers intended to avoid swift expansion was their "desire to keep control"--over their companies, over their jobs, and over their lives. But their experiences suggest that it is growth itself, not avoidance of it, that has enabled them to achieve their aim. Growth-company owners are more likely than the proprietors of nongrowing companies to be able to choose their own roles (since they can hire help to do the jobs they vacate) and provide for their families (going so far as to furnish its members with paychecks), and maybe even reinvent their home lives (by relocating to wherever they want to be). With growth comes the wherewithal to make choices--and as our survey respondents kept intimating, isn't that what control is about?
Note: Rankings for all companies are from the 1996 Inc. 500 list, unless otherwise specified.
We Didn't Mean It
A survey of Inc. 500 CEOs who started with slow-growth ambitions
Interviews with CEOs on the current Inc. 500 list yielded an eye-opening discovery: more than a third of them never intended to grow fast in the first place. When we asked about their original ambitions for their companies, they replied as follows:
- 10% To just survive
- 3% To stay small
- 22% To grow slowly
- 45% To grow fast
- 20% To grow fast enough to make the Inc. 500
To ensure that we weren't misreading those rather broad findings, this past January we polled the 175 company builders who described their founding ambitions as no greater than "to grow slowly." Their responses were all the more stunning:*
