It was a time for good news. After the worst recession in a decade, the long-awaited recovery had finally come to pass. Inflation and unemployment were down; housing starts, consumer spending, and industrial output were up. The IPO market boomed, raising a record $12.6 billion for 888 new issues. After four years of decline, corporate profits made a stunning comeback, and Wall Street celebrated with a broad bull market that pushed prices to historical highs.

Not that all of 1983's news brought jubilation. A record 612,000 new business incorporations was matched by a record 31,334 business failures, including the demise of Osborne Computer Corp., the bankruptcy of Baldwin-United Corp., and the default of the First National Bank of Midland, the second-worst bank collapse in American history. While retailers, automakers, and real estate companies rebounded sharply, the video-game business entered a downward spiral, the airlines continued their deregulated bloodletting, and imports continued to eat away at the moribund American steel industry. The dollar kept climbing, but so did American trade deficits. Interest rates came down, but the prime stayed at double digits. While the recovery remained strong, the black cloud of the federal deficit loomed on the horizon.

Yet for all the uncertainties, it was an upbeat year. And the 1984 INC. 500 companies, along with thousands of other dynamic businesses like them, were the leaders of the national turnaround.

The INC. 500 lists the fastest-growing privately held companies in the United States, ranked by percentage increase in sales from fiscal 1979 through fiscal 1983. As a group, this year's companies have seen meteoric expansion: a 992% increase in sales over the five-year period. In 1979, sales for the 500 companies totaled only $521.9 million; the average company generated slightly more than $1 million, and only 19 topped the $5-million mark. In 1983, however, sales for the 500 came to almost $5.7 billion; the average volume was $11.4 million, and more than half exceeded the $5-million mark. Twenty companies climbed to more than $50 million, and 4 topped $100 million. The sales leader -- Gemcraft Homes Inc. (#19) -- hit $228 million.

The diversity of the 500 testifies to the wide range of opportunities open to the entrepreneur, from CEO Stanley Hermens's air taxi service, Hermens Air Inc. (#487), to CEO Len Ganote's Hawaiian Pacific Elevater Corp. (#133). Some reflect the passions of world-class athletes like marathoner Bill Rodgers, co-founder of Bill Rodgers & Co. (#93), a maker of running gear; or of amateurs like C. R. "Duke" Duclos, a golfer who designed a new putter to improve his game and went on to build Slotline Golf (#339).

The INC. 500 are primarily young companies. All but 49 were created since 1970, over half from 1977 to '79. A date of origin can be deceptive, however. The oldest company on the list -- N. Chasen & Son (#213), founded in 1914 -- has become a new business since the leadership torch passed from father to son. Irvin Chasen is still the CEO, but his 29-year-old son Jeff has turned the steady $1-million-a-year painting contractor into a $12-million office-furnishing operation.

Company founders, in 90% of the cases, have held on to the reins of the businesses they started, continuing to serve as CEO today. They have held on to their equity as well: 153 of the CEOs hold all of their companies' stock, and 43% hold at least half. Of the 130 with less than a controlling interest, all but 39 share in at least a quarter of the company. Only 5 CEOs -- including Dick Dotts, founder of #1 Pedus International (see page 60) -- hold no equity whatsoever.

Almost four out of five of the INC. 500 companies have relied exclusively on internal growth. Of the 113 who made acquisitions, most were in the service sector, and most acquired only one or two similar operations. The Windham Co. (#273), a Pensacola, Fla.-based owner/manager of hotels, motels, and condominiums, is the list's acquisition leader, with 21 different purchases (and four sales) over the past four years; Windham often buys properties at foreclosure, then renovates them for eventual resale.

All but a haldful of the INC. 500 ended fiscal 1983 with a healthy bottom line: 463 of the companies were profitable, including 34 that earned 16% or more of sales. Another 49 companies recorded profits between 11% and 15% of sales, 132 from 6% to 10%, and 248 from 1% to 5%. Over the five-year period from 1979 through 1983, 175 companies saw their earnings grow, 117 saw an earnings drop, and 208 stayed the same. Ninety-two companies reported losses in 1979; in 1983, only 26 were in the red.

The ability of the INC. 500 to generate new jobs is as impressive as their growth in sales. Employment at the 500 companies has increased 402.3% in the past five years, up from 11,668 to 58,605. The average company ended 1983 with 117 employees, 94 of them hired in the past five years. Employment leader Pedus International ended 1983 with 6,000 workers on the payroll, 5,923 hired since 1979.

Besides adding new workers, the 500 have also made their employees significantly more productive. Average sales per employee at an INC. 500 company stand at $97,239, up from $44,727 five years ago, an increase of 117%. Almost one-third of the companies on the list have seen productivity increases of more than 200%, and nine have seen increases of more than 1,000%. Enconi Inc. (#5), a San Jose, Calif., manufacturer and distributor of computer peripherals, boasts an increase of 2,511% in productivity, up to $265,304 from $10,162 five years ago -- in part, Enconi CEO Ken Kapur explains, because the company shifted from nuclear consulting to peripherals, and in part "because our employees own the company, so they work harder."

This year's INC. 500 is the magazine's third annual compilation of the nation's fastest-growing private companies. And although every year's list has certain obvious similarities, there are some notable differences between 1984's winners and those of previous years. Companies on the current list are the youngest in the history of the ranking. They are also the most productive and the fastest-growing -- but their profits have dropped for the second consecutive year.

Increased productivity is the most dramatic change in the INC. 500 since the list's beginning. While the average company on the 1984 list is only slightly larger than last year, employing 117 rather than 115, each worker is responsible for 56% more in sales ($97,239) than last year's $62,467, and 59% more than the $61,167 of the class of '82. This year also marks the first time that the INC. 500 companies have outperformed Fortune 500 companies in sales per employee; the latter averaged $92,226 in 1983.

The companies on this year's list have also grown the fastest of any group since the ranking began. The average company on the current list has grown from roughly $1 million to $11.4 million in sales over five years, an increase of 992%. The average company on last year's list had gone from $1 million to $8.8 million, and increase of 770%. For 1982, the increase was 571%. Ten companies on the 1982 and '83 lists had a growth rate over 5,000%; there were 20 this year. In 1982, one company was over 10,000%; in 1983 there were two; in 1984 there are five.

That increased growth rate has intensified the competition for a place on the list. This year the cut-off line for membership was 432% sales growth, up from last year's 397% and 1982's 235%. Of the almost 300 companies from last year's list that failed to return, over half continued to grow, but no longer fast enough to qualify, including 12 that recorded sales growth of more than 400%. Of the 208 companies that did return, only 55 climbed in their ranking. Sixty-three companies placed on the list three years running -- but only 2, Sage Systems Inc. (#284) and Creative Management Systems Inc. (#85) have seen their rankings climb.

While the 1984 INC. 500 companies recorded faster growth than their 1983 counterparts, profitability slipped slightly for the second year in a row. This year's list included only 83 companies recording profits of 11% or more of sales; last year's boasted 122. This year's list has 26 companies that ended the year with a loss; last year's had only 18. While this year's list has 8 fewer companies reporting a five-year drop in earnings, it also has 9 fewer companies with a five-year increase.

There have been changes in industry representation. There are more service companies this year, 205 compared with last year's 172, and more wholesalers, 77 compared with last year's 59. But there are less than half as many retailers, down to 34 from 73, and fewer manufacturers, down to 156 from 168. The largest increase has been in business and financial consultants, up to 35 from 22 last year, followed by real estate companies, up to 14 from 8. The largest decrease was in transportation companies, down to 15 from 27 last year, and food companies, down to 12 from 19. Industrial equipment and supplies, with 62 companies, and computer and related products, with 48, are the two largest categories. There have been geographical changes as well. With 86 companies on this year's 500, California continues to dominate, followed by Texas with 38, Virginia with 32, New York with 31, and Florida and Ohio, each with 26. But California also recorded the largest drop in companies on the list, losing 14. Colorado lost 8, New York and Maryland lost 6, Massachusetts, Florida, and Wisconsin each lost 5. Virginia added the most, with 13 more companies on the list than last year, followed by Ohio with 10.

Where will the members of the 1984 INC. 500 go from here?As the recovery continues, most will keep on growing; already, in fact, 437 of the 500 report further employment increases since year-end, including 35 companies that have doubled their payroll. But the history of the rankings shows that few will be able to sustain the stunning growth rate that put them on the list. Some will go public. Others will be acquired. And a few will go under. But although many of the names and numbers on next year's list will certainly be different, small-business growth leaders like the INC. 500 will continue to fuel the nation's economic engine.



Manufacturing 156

Wholesale 77

Retail 34

Service 205

Construction 28

TOTAL SALES IN 1983 ($ MIL.) $5,698.7

TOTAL SALES IN 1979 ($ MIL.) 521.9

Percent change (1979-83) 992%

AVG. SALES IN 1983 ($ MIL.) $11.4

AVG. SALES IN 1979 1.0



Percent change (1979-83) 117%


Total 81.78%

Range 51.89%-254.58%

Median 76.15%


16% or more 34

11%-15% 49

6%-10% 132

1%-5% 248

Breakeven 11

Loss 26

Over the past five years, 175 companies have been earnings grow, 117 have seen their earnings drop, and 208 have stayed the same.


1983 58,605

1979 11,668

Percent increase 402.27%


1983 117.2

1979 23.3


Before 1960 12 1975 36

1960-70 37 1976 63

1971 9 1977 100

1972 19, 1978 103

1973 15 1979 84

1974 22



100% 153 25%-49.9% 91

90%-99.9% 29 1%-24.9% 34

51%-89.9% 116 0% 5

50% 69 NA 3





Company 1983 sales

Rank (INC. 500 rank) ($000)

1. Gemcraft Homes (19) $228,310

2. Le Beacon Presse (212) 158,000

3. Continental Ozark (165) 154,634

4. Chioke International (72) 117,203

5. Forever Living Products (209) 90,400

6. Louisiana Energy & Development (138) 77,396

7. Harvin C. Moore (246) 74,924

8. International Medical Centers (183) 72,620

9. Travel Center (315) 72,304

10. Mark Ill Industries (148) 71,449



Company Sales per

Rank (No. of employees) employee

1. Chioke International (10) $11,720,300

2. Continental Ozark (19) 8,138,632

3. Ugly Duckling Rent-A-Car 3,125,000

Syst. (12)

4. Investor Life Services 2,518,083


5. Miami Printing & 1,773,667

Publishing (6)

6. Majestic Steel Service 1,681,878


7. Brady Marketing (15) 1,403,333

8. Duncan Oil (20) 1,175,863

9. Marshall Lewis & 1,130,410

Associates (11)

10. LaMarca Group (23) 1,108,348




Company employees Percent

Rank (No. of employees) 1979-83 growth

1. Pedus International (6,000) 5,923 7692%

2. Solectron (1,500) 1,440 2400

3. National Health Care (1,476) 1,418 2445

4. Hall Real Estate Group (1,653) 933 130

5. Healthcare Int'l. (1,700) 900 113

6. Inmed (875) 850 3,400

7. Advanced Technology (1,149) 819 248

8. Syst. & Applied Sciences (850) 650 325

9. Commonwealth Savings (759) 621 457

10. Gemcraft Homes (621) 590 1,903