For the average company, the Great Recession and its aftermath hardly provided ideal conditions for business success. But there’s nothing average about this year’s PROFIT HOT 50.
The firms on PROFIT’s 12th annual ranking of Canada’s Top New Growth Companies trashed convention, not only growing but growing spectacularly. From 2008 to 2010, they averaged a stellar revenue growth rate of 1,050%. Every single company on the ranking at least doubled its revenue during that period; this year’s No. 1 firm grew its sales at an astounding 10,330%. (See page 28 for more.) What’s more, 82% of the HOT 50 firms turned a profit in their most recent fiscal year.
These young growth stars are proof that even the newest, smallest and most resource-strapped businesses can achieve success in the nastiest of business climates. They serve as inspiration for any entrepreneur seeking to beat the odds.
What’s the key ingredient to launching a winning startup? Talent, talent and more talent. When asked to score their most important success factors on a scale of one to 10, HOT 50 CEOs rated hiring good staff at 9.3 and retaining them at 9.4. These youthful firms have found smart ways to entice A-players to join their fledgling ranks: the vast majority provide bonuses, employee training and profit-sharing plans.
Many among the HOT 50 learned early on that great riches lie beyond Canada’s border. For half of them, export markets are revving up revenue, with the U.S., the U.K. and Western Europe the most popular foreign destinations for their goods and services. In total, these companies sold $73.2 million abroad, comprising almost one-third of the HOT 50’s combined annual sales of $245 million.
The CEOs behind these firms are relatively young (their average age is 39, and 54% launched their firm when they were 35 or younger), well-educated (84% have post-secondary degrees) and, largely, old pros at entrepreneurship (52% had started at least one firm before their HOT 50 business). And, unlike the stereotypical entrepreneur, they can let go: asked what had helped them sleep better at night while in the throes of early-stage growth, the most common response had to do with delegating.
Finally, the 2011 HOT 50 didn’t rely on magic beans to grow their businesses. Early on, almost every one methodically structured their nascent firm to be able to expand painlessly later. As one CEO put it, “We always invested in processes and systems that were ahead of our size at the time. We were ready for growth.”
HOT 50 leaders are at once visionary and pragmatic; they’re dreamers and doers. In a stubbornly unstable economy, it’s hard to think of finer examples of savvy entrepreneurship.
How we ranked them: Entries are ranked by two-year revenue growth, and verified through financial statement review. All growth rates are calculated from base-year revenue of at least $100,000. For more on the ranking procedure and eligibility criteria, visit PROFITguide.com/awards.
Entries were solicited through a form published in PROFIT and at PROFITguide.com, and through targeted direct mailings to qualifying companies. The nomination drive was also promoted through Canadian Business, Maclean’s and several major business organizations. The information in this issue and on PROFITguide.com is the only data that PROFIT will release on the HOT 50.