One of the keys to fast growth among Missouri companies is corporate volunteerism, according to a survey released at the 53rd annual Governor’s Conference on Economic Development, held Sept. 21–23 at University Plaza and Convention Center.
Results of the survey – collected by the Missouri Economic Research and Information Center and the Business Research and Development Group at the University of Missouri – were shared with roughly 30 attendees of the Cheetahs Continue conference breakout session.
The Missouri Department of Economic Development previously defined “cheetah firms” as those that doubled employment between 2001 and 2006. State officials have conducted a follow-up survey with Missouri’s 6,200 cheetah firms and found that 1,630, or roughly 26 percent, added employees between 2006 and 2009, despite difficult economic conditions.
MU researchers conducted 593 telephone interviews with those companies to glean reasons for success.
Highlights in the statewide survey include:
- 58 percent of respondents serve in a volunteer capacity for committees or boards in their communities;
- 60 percent of cheetahs believe customers choose them because of internal factors, such as quality of service, which easily outpaced external factors such as low price (9 percent);
- 55 percent of the businesses buy at least two-thirds of their goods and services from firms within 100 miles of their location; and
- 27 percent of those surveyed said strategic planning enabled employment growth, while 23 percent said demand caused the need to hire.
More than 200 of the companies interviewed operate in the 26-county southwest Missouri region, and among them is Bolivar-based construction equipment rental company Superior Rents Inc.
Co-owner Steve Wohnoutka said he and his brother, Dan, started Superior Rents in 2005 to meet a need in the Bolivar area, and the duo watched revenues jumped nearly tenfold to $700,000 in its second year. The fast growth posed a bit of a problem – the brothers were working 110 hours a week to keep up.
“Our industry peaked in 2006, so our timing was a liability we had to overcome through hard work,” Steve Wohnoutka said.
Superior Rents peaked in 2008, with $1.74 million in revenues, before dropping 45 percent to $1.2 million in 2009. The company also operates retail centers in Springfield and Joplin.
The business has since operated in recovery mode, and Wohnoutka says this year could bounce back to 2008 levels.
The survey found that 44 percent of cheetahs relied on bank loans or lines of credit to finance their businesses, while roughly 30 percent relied on earnings.
Wohnoutka said a good relationship with Bank of Bolivar helped to grow the company in its early days, and despite opening a Republic store that ultimately closed, an aggressive attitude toward sales and expansion has kept the company afloat.
Wohnoutka said he didn’t utilize tax credits or government-backed financing to start Superior Rents, and he believes there is little economic development types can do to jump-start the economy.
“Capitalism should be done by capitalists,” Wohnoutka said. “The best thing the government can do is creating a stable and secure environment that allows capitalists to do what they do.”
The fast growth at Springfield medical records company Intuitive Medical Software LLC has led to its buyout by Newark, Del.-based health care solutions firm Endo Pharmaceuticals (Nasdaq: ENDP).
Craig Frazier, co-founder of the company that writes software for urologists, said the sale closed Sept. 1, and a name change to Healthtronics Information Technology Services is forthcoming. Intuitive Medical Software was among the cheetah firms interviewed.
Frazier said early growth was built on a strong knowledge of the urology and ophthalmology niches, in large part due to co-founder Dr. Howard Follis.
“About seven years ago, (Follis) identified a need for specialty-specific, easy-to-use medical records. He didn’t find any when he went looking, so he decided to build one himself,” Frazier said, adding that he helped Follis develop a business plan and secure investors as they prepared to enter the market.
Conference presenter David Schmidt, director of MU’s Business Research & Information Development Group, said most cheetah firms followed a similar path. He said 43 percent of those who started cheetah companies recognized a need in the marketplace, and 21 percent cited industry experience in determining a viable opportunity.
“It’s an issue of confidence. The more someone does something and is successful, the more they tend to gain confidence,” Schmidt said.
Intuitive Medical Software started with seven employees in 2007 and currently employs 49. While Frazier declined to disclose revenues, he said sales have paralleled employee growth, and the company plans to roughly double its staff in the next year to meet the needs of its 800 clients nationwide.
Being picky in the hiring process, Frazier said, and focusing on those who could provide quality customer service played an important part in the company’s growth, which falls in line with the study’s results on internal factors.
“We compete with companies that are in New Jersey, Chicago, New York, … and the population that we draw from here has some very real advantages,” he said, adding that high community values foster quality employees, which only helps in growth mode.
As to government policies that helped or hindered growth, 77 percent of survey participants said “nothing.”
“The No. 1 thing that the government can do is to get out of it – totally do nothing,” Frazier said. “Everything the government does makes running a business harder. Every tax they increase to make up some program that they think is going to help, makes it worse.”
Of those who said their success had been impacted by the government, 38 percent said regulations hindered growth, while 27 percent said tax credits helped.
Two out of three cheetahs said they incorporated a new process or technology that contributed to its growth. Eighty percent said they had a Web presence, but 68 percent said none of their business comes from online sales.
The full survey results are available at MissouriBusiness.net/bridg
, under the Research Reports tab.[[In-content Ad]]