The past five years have not been the easiest of times for Canadian exporters. Just ask Gerry Price, the founder, president and CEO of Price Mattress Inc.
The Toronto-based mattress manufacturer does 70% of its business stateside—no simple feat in the face of rising oil prices and the continuing fallout from 9/11. But working through those challenges went for naught in the latter half of 2004, when Price’s revenue declined due to the Canadian dollar’s rapid ascent. Says Price: “We had to do something about it.”
He started with a hedging strategy that saw him counterbalance the effects of the falling U.S. dollar by paying for supplies in greenbacks. Eschewing Canadian suppliers, he negotiated price cuts on materials from the U.S. and imported them to his Canadian factories. At the same time, Price refocused on stateside customer service and higher-margin products.
“We became better at what we do,” says Price. “From an operational standpoint, we’re better; and from a materials standpoint, we’re better shoppers on a worldwide basis. And we’re competing more in the value-added categories that aren’t as price-sensitive.” Thanks to the two-year effort, says Price, “we can operate now in U.S. or Canadian currency at par.”
The moves also triggered a 50% climb in Price Mattress’s revenue from 2004 to 2005, when it did more than $21 million in sales. Moreover, that figure is up 1,588% from 2000, earning the company 38th place on the 2006 PROFIT 100 ranking of Canada’s Fastest-Growing Companies.
Despite the obstacles to international success, the PROFIT 100 know that endless business opportunities lie beyond our borders. So they’re applying a formula worldwide that could serve your company well, no matter where you choose to do business: find an unmet need in a well-defined market, foster innovation, always be customer-centric and never say die.
Indeed, this strategy is helping our entrepreneurial go-getters establish strong positions in international markets. Customers from Toledo to Taipei are lining up for the high-quality and often groundbreaking products and services of the PROFIT 100, from digital X-ray machines and gee-whiz surveillance systems to solar-powered lighting and soft-soled baby shoes. The result: Canada’s Fastest-Growing Companies generated $3.6 billion in sales to foreign markets in 2005, compared with just $286 million in 2000. That global success is the primary reason why the average member of the 2006 PROFIT 100 achieved revenue growth of 2,597% over the past five years. It’s the highest overall growth rate seen on the PROFIT 100 since 2001, and it hasn’t come at the expense of profitability: fully 79 of the 100 firms on the list were in the black last year.
Geotech Ltd. (No. 63 on the 2006 PROFIT 100) proves that if you can make a better product, the world will come. Launched in 1981 to design and manufacture geophysical equipment for the mining industry, the Aurora, Ont.-based company became a service provider after developing an innovative technology that conducts remote-sensing surveys by air. Customers such as Inco and Falconbridge use it to quickly and cost-effectively generate precise information on mining deposits and where to drill. “My life’s career has been developing this technology,” says Geotech president Edward Morrison. “It’s pure Canadian technology. There are no comparable systems anywhere in the world.” In the Athabasca Basin, where Geotech is currently working, the technology has plumbed uranium deposits to a depth of 800 metres, well beyond the 100-metre norm.
Apart from its product, Geotech has another competitive advantage. Whereas its rivals bought and installed equipment on large fixed-wing aircraft, Geotech went the more economical route of renting helicopters, which can gather good data despite diverse topography, and installing its equipment on an as-needed basis. Today, eight of the firm’s systems operate on four continents; it generated sales last year of nearly $12 million, up 1,014% from five years earlier. Two more systems will be online this year, and Geotech recently opened an office in Barbados to facilitate its work in Africa.
To accelerate its sales abroad, QuestAir Technologies Inc. (No. 26) taps the resources of Canada’s consulates, embassies and the Trade Commissioner Service to gain understanding of its target markets and identify potential partners. The tactic worked particularly well when the Burnaby, B.C.-based company, which sells gas separation and purification technology, set its sights on Japan.
Unlike most jurisdictions, Japan doesn’t translate its trade codes and standards into other languages, making the export process even more complicated. So QuestAir used government resources to find the right distribution partner and slowly build a relationship—standard practice in Asia—that finally allowed it to move forward. “They helped walk us through the codes,” says Jonathan Wilkinson, QuestAir’s president and CEO, “and even then it was difficult.” Despite the challenges, in the past five years QuestAir’s annual revenue has increased by 2,558% to $6.3 million in 2005; 98% of that comes from foreign customers.
Exports also figure prominently in the hypergrowth exhibited at the top of the PROFIT 100 charts. At No. 1 is Rutter Inc. of St. John’s, Nfld. It’s the first Atlantic-Canadian company in the 18-year history of the PROFIT 100 to lead the ranking, and it did so emphatically. Over the past five years, sales rose by 31,598% at Rutter, which is known in ports around the world for its innovative voyage data recorder, the marine equivalent of an airplane’s black box. Fully 60% of Rutter’s 2005 sales of $70.9 million is derived from customers in 15 countries, which have been sourced with the help of foreign distributors (see “Ramming speed,” page 60).
This year’s runner-up, with five-year growth of 23,070%, is Workbrain Corp. Last year, the Toronto-based company sold US$88.7 million worth of its workforce-management software to large corporations in Canada, the U.S. and the U.K, which use it to streamline the nightmarish process of scheduling the shifts of their thousands of employees. No. 3 is Fruit d’Or Inc., a blueberry and cranberry processor headquartered in tiny Notre-Dame-de-Lourdes, Que. The company, which grew out of the hobby farm of president Martin Le Moine, sells its berries to food processors and packers in the U.S., U.K. and Australia. It’s now North America’s largest processor of organic cranberry products, with 2005 revenue of $19.7 million—an increase of 19,501% over its 2000 sales.
Fruit d’Or also provides proof positive that you can succeed in business from anywhere you choose. Besides small-town Quebec, you’ll also find Canada’s Fastest-Growing Companies in such unexpected places as Camrose, Alta., Ste-Anne-de-Kent, N.B., and Niagara-on-the-Lake, Ont. Provincially, Ontario continues to dominate the ranking, placing 50 firms on this year’s list. British Columbia contributes 20 companies to the PROFIT 100, while Alberta adds 12. Quebec checks in with 11 and Manitoba with two, while Atlantic Canada occupies five spots on this year’s PROFIT 100: two from Nova Scotia, and one each from New Brunswick, Newfoundland and Labrador, and Prince Edward Island.
While companies in the high-tech industry or supplying it are atop the growth wave, the PROFIT 100 is also home to companies as diverse as a junk-removal services franchisor, a hemp-food manufacturer and even a used-car dealer. In all, 42 companies deliver services to businesses, while 25 make stuff. Software development is the trade of 12 PROFIT 100 firms, while six are wholesale distributors. (See “How fast is your industry?” at left.)
Regardless of their respective industries, the mantra of Canada’s Fastest-Growing Companies is the same: customers come first. It works for Oceanwide Inc. (No. 45), a Montreal-based application service provider to the insurance and transportation industries. Its software eliminates redundant data entry and streamlines workflow while providing standardized data for analysis. Instead of churning out products that the company’s engineers might like to make, “We bring our customers into our design meetings,” says CEO Mitchell Wasserman. “They help us decide how the product is going to evolve, which features are going to be added to it and how they should be added.”
Moreover, Oceanwide doesn’t get paid until customers have successfully implemented its systems. “We have a vested stake with our customers,” says Wasserman. “We’re hand-in-hand trying to solve every implementation problem that they may have.”
That kind of service is in demand by large corporations looking to offload their non-core operations. So, it’s no surprise that many of Canada’s Fastest-Growing Companies provide outsourced services in numerous areas, including IT, HR and marketing.
Claybrooke Marketing Inc. (No. 64) is one of the PROFIT 100 firms netting rich rewards in the outsourcing craze. The Mississauga, Ont-based provider of turnkey marketing services, whose clients include such big businesses as Telus and Unilever, looks for customers that want an integrated, long-term relationship—which gives the firm the opportunity to become a partner rather than a mere supplier: “You have to understand their business as well as they do,” says Claybrooke CEO David Harvey. That’s why each of Claybrooke’s large clients has a key-account team responsible for meeting customer needs, some of which work out of customer locations.
Of course, “wow” products and bend-over-backwards service are the products of great employees. PROFIT 100 CEOs use plenty of perks and practices to attract, retain and motivate staff, including bonuses tied to performance (used by 87 companies), open-book management (75), profit-sharing (48) and formalized flex-time (46).
PROFIT 100 CEOs don’t take their jobs lightly, either. From reading business books to employing mentors and joining peer groups such as the Young Presidents’ Organization, the bosses of Canada’s Fastest-Growing Companies are constantly improving their leadership abilities. Take Brian Scudamore, president and CEO of Vancouver-based 1-800-GOT-JUNK? (No. 24). Scudamore, who is also a PROFIT columnist, recently graduated from MIT’s “Birthing of Giants” executive education program, which brings together entrepreneurs from around the world for rigorous training on everything from HR to operations.
No less committed to self-development is Robert Jacome, president of Product Management Corp. (No. 92), a Brampton, Ont.-based firm that transports and destroys outdated or damaged goods for manufacturers and distributors. Jacome gathers monthly with 10 other entrepreneurs as a member of ExecuForum, a Mississauga-based peer-networking group. It’s like having a board of advisors who have been there, done that, says Jacome. He also enjoys one-on-one mentoring sessions with a business coach.
In the end, it may be their openness to learning and improving that puts PROFIT 100 leaders—and, therefore, their companies—on the winning path. After all, knowledge is power.
How we found them
The main source of candidates for the PROFIT 100 was a self-nominating ballot published in PROFIT, L’actualitÃ© and on PROFITguide.com, plus mailings to previous entrants, qualifying public companies and prospects identified through the media and other public sources. Calls for entries also ran in Canadian Business, Maclean’s and PROFIT’s two e-newsletters, PROFIT-Xtra and PROFIT Xchange. Finally, the organizations thanked on page 122 publicized the nomination drive directly to their members or customers.
Companies were ranked by five-year revenue growth; qualifying companies’ revenue was verified through financial statements, and their chief executives were interviewed by PROFIT. The information contained in this issue and at PROFITguide.com is the only data PROFIT will release on the PROFIT 100.
PROFIT would like to thank PROFIT 100 interviewers Kara Kuryllowicz, Jennifer O’Connor, Laura Pratt, Susanne Ruder and Deena Waisberg for their energy and enthusiasm. Special thanks to PROFIT 100 research associate Heather Chan for her hard work and diligence.