Nevada Business Journal, in cooperation with MRCGroup Research Institute, sent out survey forms to over a thousand Nevada businesses, asking them for information about their growth rates. Because most companies have not yet compiled their 2000 revenue figures, we asked for revenue numbers from 1997, 1998 and 1999. Comparing 1997 revenue with 1999 revenue provided a figure for percentage of growth. To qualify, a firm had to be a “for-profit” enterprise headquartered in Nevada, at least three years in age, not undergoing in bankruptcy proceedings, and generating a minimum annual revenue of $50,000. Participants in the survey were asked several general-interest questions, the results of which are reported here in sidebars and charts.
Following are brief profiles of the top 10 companies in our survey. Corporate representatives were asked questions about how they achieved high growth figures, whether they had any challenges dealing with rapid expansion, and what steps they took to cope with their situation. We also asked each one to give advice for other fast-growing firms.
1. Computer Surplus Outlet
The fastest-growing company in our survey buys computers and computer accessories, taking advantage of close-outs and liquidations. The firm also purchases used computers from large organizations, such as universities and government agencies, that are upgrading their equipment. It then re-sells the components from these systems (hard drives, CPU chips, memory modules, etc.) over the Internet through its Web site, computersurplusoutlet.com. Kirk Frantz, operating manager, started the business with a partner just four years ago, but has been involved in re-selling computer parts since 1981. Although his success can be attributed partly to being in the right industry at the right time, perseverance also played a big part, said Frantz. “Lots of other Internet companies are doing what we do,” he said. “However, we have been willing to hang in there and be persistent, knowing it would be at least two years before we took off and started to make a profit. We are unique in one aspect — we’re a profitable Internet company.”
Frantz said staffing has been his biggest problem in keeping up with a growth rate exceeding 5,000 percent. Even though 96 percent of his business is conducted over the Internet, the company still needs a few highly-qualified technical experts, as well as sales and customer support staff. Frantz has dealt with growth by upgrading his Web site and putting money back into the company to maintain its infrastructure. Future plans include developing more retail business and setting up an auction Web site.
Advice: Automation is the number one key to dealing with growth. It can make your life so much easier, but it’s hard to accomplish after the fact. Sit down in the beginning and decide how to automate your business processes, and make the investment at that point.
2. C.R. Homes, Inc.
C.R. Homes, based in Pahrump, has built approximately 60 custom homes since it was founded five years ago by the husband-and-wife team of Randy and Charlene Pasqualetto. Its impressive growth rate can be partly attributed to location, since the population of Pahrump has doubled since 1995. New residents, chiefly retirees from California, are drawn to the area by low land prices. They can buy a 2,100-square-foot home on 1.25 acres in Pahrump for under $150,000, according to Charlene. However, she stated, the real reason for C.R.’s success is referrals from satisfied customers. “We have great subcontractors who help us build a reasonably-priced, quality product,” she said. “Clients are happy with their homes and recommend us to their friends.”
Rapid growth has caused few problems for C.R. Homes, according to the Pasqualettos. “Things can get hectic at times, but we’re both very organized people. We were also willing to put in extra hours if needed to get a job done,” said Charlene. She also stressed the importance of self-discipline and fiscal responsibility. “We had to remember that the construction industry is sporadic, and to plan for its ‘boom-and-bust’ cycles,” she said. The Pasqualettos foresee continued success, especially since many Las Vegas residents are looking to Pahrump as an alternative to an increasingly expensive and hectic life in the city. “However,” they said, “maintaining a growth rate over 1000 percent may be unrealistic. It depends on what God decides.”
Advice: “Pray a lot,” asking for the wisdom to deal with whatever comes your way. Seek the Lord first and He will take care of the rest of it.
3. Bright Trading, Inc.
The Bright brothers, Don and Bob, began working in the stock market during the late ’70s on the trading floor. Don saw the potential of the Internet before most people had even heard of it, and registered the domain name “stocktrading.com” in 1979. After Bob retired from the stock market in 1992, he and his brother founded Bright Trading to allow licensed and registered traders to replicate on-floor exchanges, buying and selling stocks in what is known today as “day trading.” Don attributes the firm’s success to its pricing structure, and also to the fact that its traders have access to more capital than in a standard situation. “Most people who put up $25,000 have access to only $50,000,” he said. “With our company, they have use of $1 million.”
Bright Trading, with offices in 37 cities and two foreign countries, added nine new locations in 2000 and plans more openings in 2001. The company keeps a low profile, said Don, and its only concession to nationwide growth has been purchasing a corporate jet, used by COO Eddie Franco to criss-cross the country while establishing new offices. Since traders are all independent members of the limited liability company (LLC), the firm is able to maintain a small staff. Don said the only problem they have had with growth is, “We’re running out of family members.” He does not foresee problems for his company because of a slowing economy or a stock market downturn, pointing out that stock traders make money on the way up and also on the way down.
Advice: Stay directly in contact with your final product, whatever it is. Do not insulate yourself by building up layers of bureaucracy between executives and the field — be involved with the process.
4. Accountants, Inc.
Accountants, Inc. specializes in placing accounting and financial professionals in temporary and permanent positions. Chuck Burr, president of the corporation, bought the franchise in 1996 and opened an office in Reno, which he still manages. His son, Mike Mikone, joined him as a partner and opened the Las Vegas office in July 1998. Expansion to Las Vegas was a factor in the firm’s impressive growth rate, said Burr, but he added that the Reno office has been increasing its revenue volume at a steady pace over the last three years, due to the need for more professionals to deal with the growing Northern Nevada economy. “It’s important to earn the respect and trust of clients so they feel comfortable recommending your company,” said Burr, who said referrals form a large part of his client base. He also cited the importance of networking to develop new business.
Despite the speed of its growth, Accountants, Inc. has not experienced many problems, according to Mikone. “Because we hired good people in the beginning and built up the right team, everything fell into place with our new Las Vegas office,” he said. The firm sponsored two symposiums for controllers and CFOs, bringing in nationally-known speakers. This helped introduce Accountants, Inc. to professionals in the Las Vegas market, said Mikone. Burr and Mikone anticipate a continued growth rate of 20 percent to 30 percent per year.
Advice: Keep your thumb on the business. Don’t make major lifestyle changes until you’re sure you’re ready —growing quickly doesn’t necessarily mean that you’re making more money.
5. NOS Communications, Inc.
NOS Communications offers telecommunications services, chiefly business long-distance service, and also provides Web site development, hosting and e-commerce solutions. NOS was founded in Maryland in 1989 and moved to Las Vegas five years ago. Marty Mazzara, vice president of sales, said the firm’s dramatic rate of growth was partly due to the expansion of the entire telecommunications industry and also to the increased need for Web-based services during the last two years. Its Web division opened in mid-1998. “Our people were a big reason for our success,” said Mazzara. “You need to attract great employees to develop and maintain growth.”
He stated that the company encountered a few challenges in dealing with increased sales, since expansion of the sales force came first, followed by operations and customer service. “We had to make sure that human relations, payroll and customer service kept up as sales increased,” he said. NOS dealt with this challenge by making an effort to recruit support personnel, especially in the high-tech area, offering “more-than-competitive” salaries. The firm also invested in software to make back-office functions run more smoothly. Mazzara doubts that NOS can keep up the blistering 330 percent growth rate, stating that the market may be approaching saturation, but said the future will depend to a large extent on its ability to recruit and retain quality employees.
Advice: Pay your employees well, offer generous incentives and create a positive work environment. Community service and charitable work can be great teambuilding tools, helping employees develop positive feelings about themselves and their company
6. Vestin Group, Inc.
Mike Shustek started an investment firm in 1993 to provide opportunities for individuals, corporations and profit-sharing plans to invest in real estate deeds of trust. His company, now known as Vestin Group, finances residential and commercial construction, in addition to land acquisition and development and bridge loans. It is currently diversifying its operations to provide financial services and consulting, corporate finance, Internet financial services and insurance. “Vestin’s success came about because we have a great staff, with everyone making a commitment to excellence,” said Shustek. He said his firm dealt with growth by developing a policy of promoting from within. It also hired outside experts, when needed, to help the company move up to the next level.
Shustek likes to think big — he recently hired football legend Joe Namath to act as spokesman for his company. Vestin now has offices in Phoenix and San Diego and plans to open a Florida branch before the end of the year. “We have $300 million in investments now,” said Shustek, “and our goal is to reach $1 billion by the end of 2002.”
Advice: Develop a good executive committee. Build a team — at Vestin, we sit down with all of our employees, no matter what their rank, and make sure they set personal, financial and corporate goals. We then work together to achieve those goals.
7. Jerry Mitchell, Inc.
Jerry Mitchell, Inc. Professional Landscape Services has been operating in the Reno area since 1992, creating start-to-finish projects for high-end residential environments. In addition to performing landscape architectural services, the firm also supervises outdoor projects such as spa and pool construction, sports courts, hand-stacked rock walls, and lighting systems. President Jerry Mitchell said he made a conscious effort to find a niche market for his company. “It takes discipline to sustain growth according to your business plan,” he stated. “If you take on whatever jobs come along in order to make a quick dollar, you either get overextended and sacrifice quality, or you depart from your plan and get out of the niche.”
Like other business owners surveyed, he emphasized the importance of finding quality employees to help manage growth. “It’s easy to find labor,” said Mitchell, “but training laborers to produce quality work can be difficult, and requires staff to educate and supervise. Hiring for middle management positions is critical.” He said the company is in the process of reorganizing and will hire more staff soon in order to move up to the next level. “Our aim is not just to make money. Our main goals are to produce quality work and to give great customer service,” he said. “If we do that, word-of-mouth kicks in and the money follows.”
Advice: Chart your course according to your motives and values and stay with it – know where you’re going and why you’re going there. “My best all-purpose business advice is ‘Don’t panic.’”
8. Frehner Construction Company, Inc.
Michael Pack, president of Frehner Construction, said his company was able to grow quickly, chiefly because of an “explosion” in spending on federally-funded highway projects. The Transportation Equity Act, commonly known as the T-21 program, dramatically increased funding on highways throughout the West. Frehner Construction maintains permanent installations in Las Vegas, Reno, Elko and Park City, Utah. It builds roads, bridges and retaining walls, operates three major quarries in Southern Nevada, and performs underground work.
Finding and retaining good employees in a tight labor market has been the main challenge over the past few years, said Pack. “It used to be that construction workers would move from a slow area to a busy one, following the job market,” he said. “Now it’s booming all over due to the T-21 projects.” Pack said Frehner, a family-owned company, has dealt with staffing problems by being fair and by treating employees as family. He expects growth to continue, and said the firm plans to expand into California and Utah, and is exploring the possibility of moving into northern Arizona and Idaho as well.
Advice: Don’t forget what got you where you are today. Keep a hands-on approach to management. “When you think you’re big, that’s when you go out of business.”
9. Fortune Properties
Sharon Wilson, president of Fortune Properties and corporate broker, said the secret to her success has been one word — survival. “When I started out in 1994,” said Wilson, “I didn’t realize how much money it would take to start a business. I was evicted because I couldn’t pay the rent on my office, and had to work out of my home until I could afford a small place. I have worked my way up to a 3,000-square-foot facility with seven full-time staff people and 36 agents working as independent contractors.” Fortune Properties specializes in residential and commercial real estate sales and also manages homeowners associations. Wilson said her work with homeowners associations started out as a small part of the business, but now accounts for approximately one third of annual revenue.
Fortune Properties didn’t have many growing pains, according to Wilson. “I have a good workforce, and employees were willing to come into the office and help out if needed during busy periods,” she said. “It also helped that I made an effort to keep organized, and delegated responsibility so I wouldn’t get overwhelmed.” Wilson anticipates maintaining her steady growth in the years to come.
Advice: Don’t spread yourself too thin — get more staff if you need it to keep up with growth. Don’t be greedy as you get larger. The reason many small companies succeed is because their owners make a real commitment to their business. Some large companies see their business as just an investment, and jump to something else as soon as their profit margin drops.
10. Custom Cabinet Factory of New York
Israel and Susan Dorinbaum have owned and operated a custom cabinet factory in New York since 1980. In 1995, they decided to move to Las Vegas and open a similar shop here, while retaining possession of their New York company. Custom Cabinet Factory of New York manufactures one-of-a-kind built-in furniture, including libraries, entertainment centers, kitchen cabinets, vanities and television enclosures. Susan said the firm’s revenue doubled between 1997 and 1999 because satisfied clients recommended it to others. “We do excellent work, deliver on-time and pay attention to pleasing the customer,” she said. “Word gets around.”
In order to keep up with increasing orders, the firm has enlarged its facilities twice, and Susan said it is planning to expand again. Custom Cabinet Factory sometimes adds an extra shift to make sure it doesn’t fall behind in its production schedule. “At the beginning, we had a few problems finding employees,” she said, “but now we have developed a reputation for treating our staff right and offering benefits, so good employees want to come here. It’s like a family all pulling together.”
Advice: There will always be problems in whatever you do, but hard work and dedication will pay off. It’s better to expand quickly and deal with growth-related issues than to stand still and deal with problems caused by stagnation.