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Performance and Significance
of Top Inc. 500 Companies

by Dr. Jim M. Namaste
Director of Communications, EHS.

    Anyone interested in, or a responsibility for, public welfare and prosperity should be familiar with the performance of the top Inc. 500 companies. The significance of that list goes far beyond the question of business performance.

    The Inc. 500 are a list of privately held companies that are selected annually by Inc. Magazine as among the fastest growing companies for the previous five years. It is useful for professionals who are interested in economic development to review this list to get a sense of the possibilities that are inherent in small business growth. Most people are just not aware of the kind of business growth objectives that can be achieved.

    The Inc. 500 are actually not a particularly extraordinary group of businesses, in the sense that they are esoteric or that they all hold patents or have other special advantages. However, even the 500th company each year has grown at least 100% per year!

    Table I shows how the top companies from 1987 through 2002 have performed (the qualifications were changed starting for the 2003 list.) These results are significant because they prove that small businesses can grow extremely fast, with relatively small initial investments, AND that it is not a fluke. It happens every year. This means, of course, that it should be possible to design a relatively low-cost system that can effectively support the creation and success of very fast growing businesses.

Table I. The #1 Inc. 500 Growth Companies from 1987 through 2002

Year Company Growth Rate 1st year sales (1000's) 5th year sales (1000's)
1987 American Photo Group 52,244% $ 149 $ 77,992
1988 American Central Gas 82,168% $ 113 $ 92,963
1989 Cogentrix 96,716% $ 134 $129,734
1990 Cogentrix 151,681% $ 133 $201,869
1991 Gateway 2000 24,468% $1,037 $275,525
1992 Kingston Technology 117,122% $120 $140,666
1993 Drypers 49,101% $285 $140,222
1994 Object Design 23,376% $105 $ 24,650
1995 Furst Group 42,300% $217 $ 92,202
1996 Equinox Int'l 35,625% $545 $194,699
1997 Optiva 31,507% $230 $72,695
1998 Justice Technology 26,899% $205 $55,348
1999 Roth Staffing 20,432% $361 $73,761
2000 Parson Group 27,992% $200 $56,184
2001 High Point Solutions 29,902% $200 $60,004
2002 Outsource Group 54,330% $541 $294,469
  Avg. Growth 54,116% $286 $123,936



     Many of these Inc. 500 companies were employing a few employees at the start of their growth and generated an average employment of more than 100 employees five years later. Some of the companies employed hundreds of individuals.

    The average sales growth for these companies is 10,823%. Over the years I have informally surveyed professionals, including those in the economic development field, and asked them what they thought an outstanding annual rate of growth might be for a business. Most answers were in the range of 20 to 100% per year. I met no one who could even imagine that a company might grow more than a 1000%, but the fact is that each year a number of companies grow by more than that

    The relevant conclusions with respect to prosperity and economic development that can be inferred from this list are:

  1. High business growth rates are feasible and not accidental.
  2. Small companies with sales of less than $300,000 can grow into business giants very quickly.
  3. There likely is some pattern for rapid business growth that can be replicated.

 

© 2009 Business Growth Partners, Inc. All rights reserved.