Rapid Growth 101: Lessons From Those With Tenure

Companies that have sustained nearly a decade of quick growth face similar obstacles Danielle Starkey / Correspondent

Published by the Sacramento Business Journal, September 22, 2006

Increasing revenue more than 40 percent over two years is hard enough to do once. But it was the minimum amount of growth needed to make this year's fastest-growing companies list and some of them have done it again and again: one firm has made the list 10 years running.

So how do they do it?

Regardless of what products or services they provide, companies generally point to three factors contributing to their growth: good business, luck, and acquisitions.

But they also list a set of challenges especially relevant in the Sacramento area: finding skilled labor, diversifying, and pacing their growth.

'RECRUIT HARD, MANAGE EASY'

Finding good employees in a tight labor market means not only offering a compelling compensation package, but also creating an appealing and stimulating work environment, said Jonna Ward, chief executive officer of Visionary Integration Professionals, Inc., an eight-time list maker.

“The best people, right now, are employed.” Ward said. “But people have choices as to where they go to work.”

 Ward started the management consulting firm in the spare bedroom of their house in 1996. Today the company has 385 employees and Ward expects revenue to more than double from $28 million in 2005 to $60 million this year.

Acquisitions account for about 60 percent of the company's growth this year, but “the heart and health of this company is its organic growth strategy,” said Ward.

“Our philosophy in growing this company has always been ‘recruit hard, manage easy,' ” she said. “We're always looking for the best people – here in Sacramento, as well as nationwide,”

Employees are encouraged to challenge their boundaries and even, she said make mistakes.

“Constant perfection is a sign of no growth,” Ward said. “We tolerate people making mistakes (and) embrace a culture of entrepreneurialism.”

The tight labor market also means there is more competition for highly specialized workers. ECO:LOGIC Engineering and Wallace-Kuhl & Associates make it a priority to retain good employees once they've been hired.

“In 13 years, I've had a grand total of three engineers quit, so we essentially have no turnover – far less than the industry average, which is about 17 percent,” said Dave Bennett, managing principal at Ecologic, a nine-time fastest growing company. “What we have here is an environment that lets people see what they're capable of without being hindered by bureaucracy and layers of management.”

Ecologic was founded by Bennett and four others in 1993. The firm designs, inspects, and operates water and wastewater infrastructure.

“We're producing far better quality water than we ever were,” he said. “The more you know, the more you want to clean it up.”

The technology for detecting substances in water has improved to the point that people now speak of parts per trillion, so the level of expertise required to understand and develop solutions for wastewater treatment is far greater than it was 25 years ago, Bennett said.

The enterprise required to work for environmental engineering firm Wallace-Kuhl is also significant, said president Douglas Kuhl, but the training pays off in the long run.”

“It's a tough road,” he said. “It is a very difficult college curriculum. You have to have a very significant math and science background. But the pay will go up as the demand goes up.”

COMLEMENTING EXISTING SERVICES

Kuhl attributes part of the firm's success to Sacramento's rapid growth, which created a wealth of opportunities for environmental consulting and testing.

“A large percentage of our work is residential, but we do everything from shopping centers to schools to churches – everything that, as the community grows, these things follow,” he said.

Wallace-Kuhl, which has been on the fastest growing list nine times, was founded in 1984 and now has 230 employees in its three offices. Two more offices are on the way, and revenue was $23 million in 2005, up from $16 million in 2004.

One of the company's strategies that paid off was expanding its range of offerings beyond geotechnical services, such as making sure foundations are sound.

“Once we were done, they used to start pouring concrete,” Kuhl said. “But then people would say ‘you've already got people out here testing soil compaction; couldn't you also test concrete for strength?'

“We've looked for (work) opportunities that complement what we already do; that's why we've grown,” Kuhl said.

Ward, of Visionary Integration Professionals, took a similar approach to stimulate growth by adding a new market for the services that the firm was already offering to government customers.

“You never outgrow, no matter how large you are, the need to diversify,” Ward said. “It's always good to have a well-balanced mix. When we started our client base was 100 percent government, zero commercial sector. Now, our client base and our revenues are 50 percent government agencies, 50 percent various industries in the commercial sector.

SETTING THE PACE

Kuhl, Ward, and Bennett all say commitment to quality has dictated the pace for their companies' growth.

“The biggest challenge is balancing the workload – not taking on too much, too fast,” Bennett said.

Today, Ecologic has 150 employees and revenue for 2006 is projected to be $30 million, up from $23 million in 2005.

“It's important to know that growth and profit are not objectives of this company,” Bennett said. “Our goal is to be the best at (water treatment) and the growth has been a by product of that.”

Even without marketing, the company gets “all the work we can handle from people that know our reputation,” he said. “Other than our Web page, we do essentially no marketing.”

Word-of-mouth also contributed to growth at Wallace-Kuhl. Kuhl said the firm is known to be adept at problem solving. “It's best when solutions come quickly, because time is money,” he noted.

Pacing growth has been a challenge for the company, which until six years ago had no branch office.

“We didn't want to get overextended so we couldn't offer the service and care (that) people had grown to expect from us,” he explained. “Our philosophy is, we're not going to do anything else unless we can do it our way.”

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About VIP

Established in 1996, Visionary Integration Professionals (VIP) is a global technology and outsourcing firm that has provided solutions to over 900 clients in multiple industries as well as federal, state and local government. VIP helps companies challenge boundaries and uncover new possibilities to increase productivity, maximize revenue, improve performance, mitigate risk, and reduce costs. With nearly 1,000 staff companywide, VIP offers expertise in areas of Business Intelligence and Data Warehousing, SAP Integration and Consulting, Technology Integration and Operations, Talent and Learning Management, Quality Management, and Management Consulting. VIP’s corporate headquarters is located in Folsom, California with offices in Sacramento, Minneapolis, Dallas, Denver, New York City, Alexandria, Houston, and Bangalore, India. More information can be found at www.vipconsulting.com.