Oct. 19, 2005--Today's most successful small and mid-size companies are also engines of job growth, this year's Inc. 500 ranking shows.
The businesses that made Inc. magazine's 24th annual list of the country's fastest-growing private companies, which hits newsstands Nov. 1, together generated some 25,180 new jobs last year alone, up a full 35% on a year-over-year basis. They're also planning to add 17,000 more jobs in the coming year.
By contrast, Fortune 500 companies lost jobs on average between 2001 and 2003, before rebounding by just 1.3% in 2004.
Since being founded, this year's Inc. 500 companies together created more than 95,000 jobs. Project manager Jim Melloan called the scale of that job growth nothing short of amazing. He said it underscored the changing nature of the economy, crediting small and mid-size firms with having the necessary flexibility and adaptability to deal with a new and rapidly developing business landscape.
"With unprecedented global competition, companies have to be able to turn on a dime, and discover innovative new ways of doing business," Melloan said. "Increasingly, it's the smaller, agile companies like those on the Inc. 500 that are best equipped to meet these challenges."
About 75% of all new jobs in the U.S. economy come from small, entrepreneurial businesses, government figures show.
Yet beyond job creation, this year's Inc. 500 companies posted an average three-year sales growth of 769%, with aggregate revenue last year of $15.9 billion. A full 84% were profitable. While many of these companies will go on to become household names, like Inc. 500 alumni Microsoft, Oracle, and Domino's Pizza, most are still flying below the radar of the mainstream business press.
Among them is Video Gaming Technologies, which fetched the No. 1 spot this year, growing a stunning 9,720% since 2001. The South-Carolina-based company, which makes touchscreen gaming machines and leases them to Indian Casinos in Oklahoma, took in $99.8 million last year.
"Video gaming is like a permit to print money," said CEO Jon Yarbrough, 48, who founded the business in 1991 after lending his foosball table to a local game parlor and watching people line up to pay for a game.
"The light went on right then," Yarbrough said. Today, VGT has garnered about 30% of the Oklahoma market and is now looking abroad to South America and China, which Yarbrough said "will dwarf the American market."
Not far behind VGT is Greenwood Village, Colorado-based Merlin Technologies, the No. 2 company, which handles software integration for government agencies and grew 7,978.9% over three years. Joining them in the No. 3 spot is Esilicon, a custom microchip provider based in Sunnyvale, California, which grew 7, 088.5% over the same period.
To be eligible for the annual list, companies have to be based in the U.S. and privately held through their fiscal year 2004. They also must have had at least $500,000 in net sales in the base year of 2001, with 2004 sales exceeding those from the previous year. Companies are ranked on cumulative three-year sale growth since 2001. Interviews with company officials, tax forms and audited financial statements from certified public accountants are used to verify company information.