Inner City 100 home   | The Full 2004 List   | Further Details

 

General

• Average five-year standard growth rate: 872% (the highest average growth rate for the Inner City 100), Median: 426%
• Average Compound Annual Growth Rate (CAGR): 62%, Median: 52%
• 1991 was the average year the companies were founded
• 1993 was the average year the companies started operating in the inner city
• 5 was the average number of years companies had been located at their current address
• 11,619 new jobs created between 1998 and 2002
• 15,937 people are employed by the Inner City 100 companies
• 137 was the average number of full-time employees in 2002, 42 the median
• 23 was the average number of part-time employees in 2002, 2 the median

2002 Sales

Average: $26,531,420
Median: $8,000,000
Collective: $2,653,142,034

Geography

Nominations for the Inner City 100 came from 155 cities across the United States.

50 cities have companies on the 2004 list.
Top 5 Cities Represented:

1. Boston (6)
2. Chicago (6)
3. Rochester (5)
4. El Paso; New York (4) (Tie)

Profitability

Average reported profitability in 2002: 7.5%
10 companies reported profits of 20% or more, 10 companies broke even or were operating at a loss

Average reported profitability in 1998:--238%
One company was operating on VC funding at a loss of 19,224% of sales

Sector & Industry

Sector
Service	75%
Manufacturing	15%
Retail/Trade	5%
Distribution/Wholesale	4%

Industry
Business Products & Services	25%
Professional, Technical & Scientific Products & Services	17%
High-tech	14%
Consumer Goods	13%
Construction Products & Services	9%
Accommodation & Food Services	5%
Finance & Insurance	5%
Healthcare & Social Assistance	4%
Transportation	2%
Educational Services	2%
Environmental Products & Services	1%
Management of Companies & Enterprises	1%

Location

88% of companies rated their location as a "good" or "excellent" place to do business, with 39% saying it was "excellent."
1 company rated their location "poor" and one rated it "very poor."

72% of companies rated their location as "better" or "much better" than 3-5 years ago, just one company said their location was "worse" and none said it was "much worse."

81% said they were seriously considering expanding or relocating, of which 80 % said they planned to do so within their current inner city location, 20% said they were planning to do so outside the region in an inner-city area, and 29% said they were considering moving into a surrounding non-inner-city area.

Competitive Advantage/Disadvantage of Being in the Inner City

Advantages
46% said being close to transportation nodes was a main advantage of their inner city location
43% said proximity to customers was a main advantage, 35% said cost of land/real estate, 28% said diversity of workforce, and 24% said an available local workforce.

Disadvantages
34% said the perception of crime was a primary disadvantage (compared with 16% saying actual crime), 33% cited regulations and taxes, and 25% said recruiting qualified workers was a primary disadvantage of their inner-city location.

City Government
55% rated their cities' outreach to the company as "good" or "excellent", with 20% rating poor or very poor.

Company Strategy

In the Beginning
51% started with a clear, written business plan, while 82% have a detailed growth strategy for the next five years.
55% set out to create a high-growth company from the start.

Exit Strategy
31% said they started the company with an exit strategy in mind, of which 35% said they planned to sell the company to a larger corporation, 24% wanted to pass it on to family, and 21% want to go public.

Differentiation
75% said the quality of their product or service
57% said their customer service
45% said a quick response
30% competed on cost/price

Top Three Factors Currently Limiting Growth
1. Recruiting quality people	33%
2. Economy	28%
3. Access to capital	25%

Boards
59% said they had a formal board of directors, 14% have an advisory board with investors, followed by family members being the primary members of their boards.

Primary Customers
1. Small-mid-size businesses	37%
2. Fortune 1000	29%
3. Government	24%

Workforce

Breakdown of IC 100 Workforce

Gender
57%	Male
44%	Female

Ethnicity
56%	White
32%	Latino
21%	Black
10%	Asian
6%	Other
5%	Arab or Middle Eastern
2%	Native American
12%	Senior Management
37%	Mid-level/skilled
55%	"Rank & file"

Inner-city Employees
50% of all employees live in the inner city, including 73% of all "rank & file" employees,
20% of all mid-level/skilled employees, and 20% of all senior management.

30% said that 25% or more of their employees were immigrants to the United States.
23% said 25% or more of their workforce did not speak English as their primary language.

Recruiting & Training

Primary Methods for Recruiting Workers
1. Employee referrals	60%
2. Newspaper	41%
3. Internet	37%

42% said 25% or more of their mid-level/skilled employees were promoted from "rank & file."
17% receive wage subsidies or tax credits for job creation.
14% receive wage subsidies or tax credits to offer training.
6% of payroll was the average spent on employee training.

A lack of work experience (46%) and a lack of computer skills (32%) were the most commonly cited reasons for rejecting job applicants for "rank & file" positions.

Benefits & Wages

Average hourly wage: $13.00/hr.
Average annual salary: $43,100/yr.

Employer Subsidized Benefits
1. Health Plan	97%
2. 401k	69%
3. Life Insurance	61%
4. Disability	60%
5. Tuition Reimbursement	40%
Paid time off to take courses

Incentive Benefits
1. Bonus plan	74%
2. Pay-for-performance	39%
3. Profit-sharing	22%

Work/Life Programs
1. Business skills training	61%
2. Flextime	55%
3. Telecommuting	33%
Financial services (tie)

Average employee turnover: 14%

Sales & Marketing

Top Three Ways Companies Advertise
1. Word of mouth	79%
2. Internet	55%
3. Trade magazines	39%

47% said their urban location or community involvement were a part of their brand.

Information Technology
97% have their own Web site.
Average 5% of total sales from the Internet 90% said Internet sales were profitable.
52% use online cash-management services.

Finance & Banking

Start-up Capital
Average: $292,800
Median: $50,000

25% of companies started with $10,000 or less.

Primary Sources of Start-up Capital
1. Personal assets	90%
2. Family & friends	25%
3. Bank loan/line of credit	15%

Growth Capital
70% have raised additional capital since start-up.
$4,400,000 was the average growth capital raised (Range: $10,000 to $50,000,000).

Primary Sources for Growth Capital
1. Bank loan/line of credit	62%
2. Personal assets	39%
3. Family & friends	17%

49% of companies said capital was relatively easy to obtain.
48% said limited sources of capital were available resulting in a lower investment than planned.
4% said they were unable to obtain sufficient capital resulting in an inability to grow the business.

43% of companies had no plans for capital in the next year.
11% planned to raise less than $100,000.
46% planned to raise $100,000 or more.
70% are considering getting the capital from a bank loan.
27% are considering looking to get the capital from an equity fund or formal VC.

43% said they were interested in equity as a source of financing.

Economy

32% said the economy had lead to slower growth than before the downturn.
42% said they were growing at the same rate or faster.

22% laid off employees in the last year averaging 4% of their total workforce.

3% expect lay-offs in the next six months, 4% expect no lay-offs, but no new hiring, 67% expect to hire for 1-10 new positions, and 26% expect to hire for more than ten new positions.

Contracting customers and staying profitable are the two biggest concerns of CEOs in this economic environment.

68% expect the US economy to be moderately better over the next six months.
17% expect it to be the same.
11% expect the economy to be much better over the next six months.
4% expect the economic situation to get worse.

44% said contracting new customers has become significantly more difficult over the last two years.

CEO Information

Average age: 45
Average age at founding: 33

Gender & Ethnicity
77%	Male
13%	Female
73%	White
14%	Latino
6%	Black
2%	Asian
1%	Native American
1%	Other
3	CEOs chose not to respond
23%	minority-owned
27%	are the children of immigrants

Economic Background
46%	Middle class
37%	Working class
10%	Affluent
8%	Poor

Highest Level of Education Completed
Four-year college	56%
MBA	15%
High school	10%
Other Master's	7%
Two-year college	7%
Doctorate	5%
Some high school	1%

Inner-city Living
83% have lived in an inner city.
29% currently live in the inner city.

Top Three Ways They Became CEO
1. Founder or Co-Founder	87%
2. Purchased the company	6%
3. Hired/Promoted from within	4%

47% co-own or operate another business or businesses, averaging almost three additional businesses.

Motivation for Starting the Company

1. Thought it was the best way to achieve financial independence
2. Wanted to be their own boss; Wanted the challenge of starting a business (tie)

Compensation
$350,400 was the average salary of the CEOs.
$142,000 was the average value of non-cash compensation.

$4,700,000 was the average estimated net worth of the CEOs.

On average, the CEO owned 65% of the company.

Valuation
$18,000,000 was the average estimated value of the companies.

Future Plans

60% are considering acquiring another company.
42% are considering starting another company.
32% are considering raising substantial equity.

Inner City 100 Alumni

Benefits of Appearing on the Inner City 100
1. Increased local media coverage	71%
2. Increased credibility	64%
3. Recognition from Mayor/local gov't	54%

14% of respondents had gotten contracts as a result of appearing on the list.

1 company noted meeting a major investor through the Inner City 100 Summit.

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