CRN's 2012 Fast Growth: How To Kickstart Your Business10:00 AM EST Mon. Sep. 24, 2012
CRN's Fast Growth solution providers are a unique breed. Between 2009 and 2011, a time when many businesses were saddled with stagnant -- if not decelerating -- growth, these VARs have seen sales soar. How they achieved such impressive balance sheets is a combination of working smart and knowing both their own businesses and their customers' markets.
The numbers tell the story, in part: Among the entire 150, the average 2011 revenue was $140.68 million, up from $75.38 million just two years ago. That's an increase of 87 percent. That mean revenue figure is also higher among the 2012 crop of solution providers; last year's Fast Growth companies averaged sales of $103 million. Those robust figures prove there is opportunity in even the most dismal economic times.
The average two-year growth rate among this year's 150 is 171.59 percent. That figure is down slightly from 187 percent -- the two-year average growth rate of the companies that were on the 2011 list. However, the solution providers comprising this year's list had double the revenue of last year's: Overall, the Fast Growth 2012 had sales of $21.1 billion, compared with $10.35 billion in 2011, and $5.3 billion in 2010.
Large or small, Fast Growth is a management style more than anything else. These 150 companies are not a homogenous lot: Fast Growth companies range from the smallest, HillSouth, with $2.5 million in revenue and two-year growth of nearly 170 percent, to the largest, World Wide Technology, with $4.1 billion in sales and two-year growth of 86 percent. Fast Growth companies come in all sizes: 20 percent have revenue of $2 million up to $10 million; 15 percent, $10 million to $24 million; 19 percent, $25 million to $49.9 million; 18 percent, $50 million to $99 million; 11 percent, $100 million to $249.9 million; and 13 percent, more than $250 million.
The leaders of Fast Growth companies seem to recognize opportunities more quickly and nimbly than others. They strike when the iron is hot -- but they've set a foundation in place so that the move is planned and successful, not random and doomed to fail. Here, Fast Growth executives offer seven tips on how to revitalize a business, so that when opportunity knocks, not only do you know how to answer, but you'll also have your bags packed and be ready to go where the market takes you.
NEXT: Get On, And Stay On, The Right Path
1. Be Sure You Are On The Right Path ...
Ask your team: Is the business profitable overall? Are there areas that are not? Although it may be difficult to excise the areas of no growth (or worse, markets that are losing money), make the decision to be free of segments that are not productive. Know what areas you do not want to be in, or get into. That's the only way to gain the resources to sustain and grow the business, and improve your position.
"Take a brutal look at yourself and assess why growth has stalled, keeping in mind it's not 'them,' it's you," said Dr. Jane Linder, managing director of NWN (Fast Growth No. 75). "Your company may be in the wrong markets, offering the wrong products or services, or failing to provide enough comparative value. Take your best customers to lunch and ask them what they are buying that you are not selling. Consider edging out into areas where you have a foothold in skills, know-how, or customer relationships."
2. ... Then Stay On That Path
It's common for business owners to get frustrated when business is not growing, or is not meeting expectations. For start-ups especially, it's easy to get thrown off, make adjustments on-the-fly and lose focus. Often, it's not what your firm builds, it's how you build it. Customers expect quality, but also want budgetary constraints respected and the schedule adhered to.
"Slowly climb the mountain. It takes a lot of time," said Mark Galyardt, executive vice president of XIOSS, No. 1 on the CRN Fast Growth 2012 list. "We are growing it incrementally brick by brick, and that is making it easier and easier each step of the way."
He and his wife Susie run XIOSS, a $10 million solution provider specializing in storage solutions. The pair has bootstrapped their way to the top of this year's Fast Growth, with 3,266 percent two-year growth.
3. Know Your Customer
Many companies stuck in the doldrums are simply not giving the market what it wants. Those that do, prosper. Some may think they know their customers, but their sinking sales figures tell the true story. It's a simple and all-too-common mistake, said Steve Charles, executive vice president, immixGroup (Fast Growth No. 67).
"I'm reading a book right now, 'Designing the Customer-Centric Organization,' by Jay R. Galbraith, in which he illustrates how many market-driven companies think they are focused on the customer. In fact, they're organized -- and employees are compensated and recognized for doing things their customers already count on them to do. That is not enough," Charles said. "In the tech industry, where we have constant change, it's easy to get fatigued and lose sight of the fact that our real job is to get inside the heads of our customers to not only understand where they are going, but also to have substantive conversations, so that they think of us in terms of future solutions, not for the things they already know we do."
Too often, company executives meet with clients to sell a product, or themselves. Take a step back and realize the customer can be a valuable partner on the road to "recovery." Let them help define problems that they see not only in the market but also within your organization. By allowing them to be a part of the solution process, they can be a critical part of reenergizing your business and provide perspective you would not otherwise have.
Customer meetings that aren't sales-driven let you hear why customers might be aggravated, and tempted to take their business elsewhere. When Agilex asked its government customers, for example, what their biggest concern was, Jay Nussbaum, co-founder of Agilex, said they replied: "We spend a lot of money and do not get value." Nussbaum and his team worked to make Agilex unique, to differentiate itself from competitors, and to provide what those customers wanted: value. "To do things the same old way was going to turn people away," he said. "Refresh yourself, and understand customer demands."
However, it may be the case that your company's difficulties may in part be due to your customers' business problems. "If your customers are in extremis themselves, identify a vibrant vertical market that you're not yet serving and take your show on that road," Linder added.
NEXT: Make Good Hiring Decisions
4. Hire Staff Who Make A Difference
Evaluate your staff, and look for gaps in competencies. Because you are looking to energize your revenue, hiring good people is not enough. You'll need experts. The people you hire should have specific qualities that are going to help you reach your goals.
"These people come in many different 'flavors,'" said Agilex's Nussbaum. "Hire subject-matter experts, known players who have a desire to start from zero and grow. For example, if you want to be in the DoD segment, you need someone with experience. We hired experts in the markets we focus on."
Hiring star-caliber players can not only earn your company name recognition, but it can also open doors that have otherwise been closed, or have been at least pretty tricky to get through. For example, Agilex hired a former FBI executive who ran an office within the Justice Department.
"He has great credibility. If one of our solutions doesn't meet his 'sniff test,' it's a no-go," said Nussbaum, adding that having such a gatekeeper helps the solution provider present only the most well-developed solutions. "We hired the best people in contracts, finance, messaging, etc. When we see talent, we get excited … we find talent is coming our way, as others have cut back, because we are committed to hiring outstanding people, not just average."
5. Think Big
Even small firms can employ the strategy of "if you build it, they will come." Companies such as Agilex installed a big company infrastructure long before it needed to. It laid a foundation incorporating groups focused around large company needs: human resources, finance and marketing. It also bought a building larger than it needed -- it wasn't paying rent every month and wouldn't have to move in the near future.
By behaving like much bigger companies, they visualized their success -- and enacted plans to support their anticipated growth.
Determine where your company’s strengths are, and capitalize on them. Create a scalable framework that will support and not inhibit your revenue growth.
If, after you've taken that "brutal look at yourself" (see Tip No. 1), you've discovered a real strong suit, capitalize on it.
"Remain open to successes in other parts of the business and cross-pollinate," said Tim Hoechst, CTO of Agilex. "Challenge one part of the business to improve on what another part has done." That's how Agilex integrated mobility into each of its business sectors: It first developed the technology in the government support services (GSS) area, but it quickly saw how it could help customers in its health-care segment.
7. Give Employees A Bigger Stake
Agilex is owned by its employees, a distinction that is significant to its success, said Hoechst. There is a spirit of innovation that is embraced by employee-owned companies that is tough to find at traditional firms, which are commonly owned by their presidents, or by stockholders. That's not simply one executive's opinion; there are numbers to support the case that employee-owned firms have better sales figures.
A 2008 study by Brent Kramer, Ph.D., then an economics doctoral student at the City University of New York, found that majority employee-owned businesses typically have higher sales per employee. Kramer’s figure for the average "advantage," $44,500, translates into a $9 million annual sales edge for the employee-owned firm with a staff of 200, over its nonemployee-owned "twin."
Editor's note: In print and online are the Top 25 Fast Growth solution providers. The Fast Growth 100 and 50 Up-and-Comers lists can be purchased by contacting Laurie Condon at email@example.com or Nora Uriarte at firstname.lastname@example.org, or by purchasing the CRN Tech News app for iPad in the App Store.