Smaller Companies Rise Above Pack During Downturn

Download the 2010 SF VALLEY’S FASTEST-GROWING PRIVATE COMPANIES list (pdf) If there is a year that most owners of private companies want to forget it would be 2009. After the economy began to seriously tank in late 2008, the next year proved to be painful on every level and no industries were spared. The 2010 Fast Growing Private Companies list (see page 18) reflects that downturn. There are fewer companies on the list this year, and fewer big companies. Past lists had included a revenue band of $100 million or more but not so this year. The highest revenue on this year’s list was $54 million at NewMark Merrill Companies. The list was determined by three years worth of revenue growth. Some companies that had participated in the past did not take part because they did not want to reveal revenue figures from 2009. Those companies that did participate were on the smaller side, with many falling in the $5 million to $10 million category. As with a year ago, consumer-oriented companies were few in number. Those consumer businesses that did make it offer specialized or niche products. Falling into that category was the overall No. 1 company, Backjoy Orthotics LLC, manufacturer of ergonomic and orthopedic devices to reduce back pain. Also making the list was Inkjetmadness.com Inc., a seller of ink jet and toner cartridges. The Simi Valley company ranked No. 35 on the list with a 11.48 percent revenue growth. “There are not many products you can say that everyone needs,” said President Keith Ramirez. “That’s partly why we grow well.” As in past years, technology companies were well represented, as were professional services firms. There were two insurance companies, five manufacturing companies, and four businesses in the finance industries. Among the technology companies making the list was Cloud Creek Systems in Agoura Hills. With a 75.56 percent growth, Cloud Creek was No. 15 on the list. When the economy began to dry up spending for computer systems, Cloud Creek executives took notice. Rather than have clients buying new equipment they instead were asking the Agoura Hills firm to get more mileage out of the equipment they already had. “Like so many we reacted to a business climate that had changed,” said Rhos Dyke, executive vice president. A drop in equipment sales has also been seen by CPI Solutions, in Camarillo. The growth the company has seen comes from its consulting business, application development and managed services group, said President Arnie Friedman. Consulting services are being asked to backfill after staffing cuts. The managed services group will perform the duties of an IT department for a company without the overhead of providing salaries and benefits. But the economy has put a compression on margins that reduces capital spending, Friedman said. “If they (the client) have to write a check it is more of a challenge,” he added. CPI Solutions has made the Fast Growing list multiple times and this year comes in at No. 20 with a 20.55 percent growth between 2007 and 2009. Right positioning While not on the development side of the tech industry, Microcom Technologies distributes hardware used for wireless Internet connections. Microcom was able to grow because it had positioned itself early in the then-nascent wireless market. There were emerging technologies that could do powerful things at low cost that Microcom could partner with, said President Dave Golob. When the economy soured and consumer cut their expenses, the question arose in Golob’s mind of whether Internet access would be considered a luxury that could be eliminated or a utility in the category of water and electricity. The answer was the latter and so Microcom aligned itself with manufacturers providing equipment wireless service providers would need. “We guessed right,” Golob said. The growth at accounting firm Goldman Kurland and Mohidin LLP is attributed to a specialization in working with Chinese companies that want to go public in the U.S. Between 2007 and 2009 the company saw its revenue jump by 131.82 percent to put it at No. 11 on the list. Interest by Chinese While working with Chinese companies isn’t necessarily new that type of work has picked up speed, said managing partner David Goldman. The U.S. market is attractive to overseas business because it is considered the safest and most scrutinized with checks and balances that are not found elsewhere, Goldman said. Having Chinese companies as clients requires knowledge of Chinese law and having to deal with time and cultural differences. The office has several Mandarin speakers on staff, and travel to China is required several times a year. “When you are auditors you have to make sure the company actually exists,” Goldman said. As survivors of the poor economy, all these business owners are optimistic about the coming new year. Golob will continue selling wireless networking hardware because demand for Internet access will not decrease. Dyke, from Cloud Creek, believed that after a year of sitting tight, companies will begin to spend again once there is more direction on where the economy is going. Friedman is excited about what the new year brings, especially as CPI Solutions positions itself in terms of providing cloud computing services. At Inkjetmadness.com., Ramirez forecasts hitting close to $10 million in revenues and keeping more existing customers with better customer retention and online advertising techniques. Download the 2010 SF VALLEY’S FASTEST-GROWING PRIVATE COMPANIES list (pdf)