The Secrets of Spectacular Growth
Though they do different things, Alberta's fastest-growing companies offer a similar recipe for preparing for, managing and sustaining growth: match the right product to a big market, and find the right people to pull it off
by Ross Henderson
Of course, matching a product to a market is one thing; actually delivering it to customers in a customer-friendly, cost-effective manner is another. Here the Fast 50′s leaders almost always credit exceptional employees, and you get the sense it’s more than just a self-serving platitude.
This is especially true for Calgary-based Trican Well Service, which has grown ferociously over the past five years. As almost every-one knows, a qualified employee, let alone a good one, is hard to find in the booming oilpatch these days. Murray Cobbe, president and CEO of Trican, says he’s lucky enough to have hired his employees long before the shortage hit. Trican makes a priority of hiring the best people and using them to train and mentor new employees. The strategy helped the firm achieve its 10th-place finish among firms above $20 million in sales. In its last financial year, gross sales jumped to $408.3 million, a 43% increase over the previous year.
“Right from the beginning our main focus has been to attract the best people, all up and down the organization, because these are the people who are going to be training the future of your company,” says Cobbe, 52. With that in mind, the company has a huge training facility, a school for new workers, a mentoring program and ongoing education for all the staff. “It’s a huge process that you have to go through to do it right,” Cobbe says. “You’ve got to keep up. You’ve got to keep ahead.”
Trican also has an extensive ethics package for its staff. The focus on learning bleeds over into business development, as part of the curriculum includes researching new markets. “Our management team has a huge experience in international operations,” Cobbe says, including 14 years he spent out of the country. So far, Trican’s entry into the global market is “a large operation base” in western Siberia, with more than 500 Russians on the payroll.
Even companies that have grown through acquisitions stress the importance of human resources. Looking to grow in the oilfield services sector, the founders of Eveready Income Fund researched a lot of oil service firms they liked. They liked some of them so much they bought the companies. But instead of shedding the management team of each successive acquisition to save on payroll, the Edmonton-based firm, which went public as a trust last March, has made a point of keeping the people most responsible for the acquisition’s sector outperformance on the job.
The company’s commitment to maintaining its growth comes from the top. Eveready’s senior management, the primary unitholders, have pledged to reinvest all their distributions from the trust by purchasing more units until 2010, marking five years from when the firm went public, says Jason Vandenberg, corporate financial reporting manager. The company is also protecting its cash flow by making the owners of its new acquisitions shareholders. “So, instead of having to pay it all in cash you bring on the former owners as shareholders of Eveready, by issuing them shares.” Eveready work in such areas as industrial cleaning, environmental services and oilfield services posted gross sales of $145.1 million last year, an 84% jump from the year before, earning fifth spot in the list of 25 fastest-growing companies with sales in excess of $20 million.
Each of the Fast 50 has faced unique challenges and ways of overcoming them. For Rifco Inc., it was finding the startup capital to compete in the capital-intensive financial services business. In addition to tapping “love money” from the founders, their family and friends, Rifco made an extraordinary commitment to its lenders. It pledged it would always have the money to pay them back their original principal. “When we borrowed money, whether it be from a bank or other sources, we only used that (money) to lend,” CEO Bill Graham explains. “We never used that to pay the light bill, pay salaries, or things like that.”
The guarantee “was pretty important to debtholders because of the nature of our finance company,” he says. Rifco, based in Red Deer, is a high-risk consumer lender, with interest rates reaching into credit-card territory, and the accompanying real threat of failed loans. The company’s market is somewhere in the area between banks and payday loans providers, or lenders of last resort. Rifco started up in 2002. Last year, gross sales reached $3.8 million, for an increase of 171% over the prior year and ninth spot for the fastest growing companies under $20 million.
But when it comes to laying the groundwork for growth and seeing it through, it almost always comes back to the staff, the product and the size of the market.
To maintain its goal of doubling its sales every year, Investopedia is planning to keep online investors glued to its site by developing more innovative, educational content, says co-founder Janssen. Although its investing dictionary remains the biggest draw, the site now includes a stock simulator which provides people with $100,000 of virtual money so they can practise what it would be like to implement various trading strategies. All they have to worry about is losing their virtual shirts. And it’s free to use. The simulator has opened up a new licensing market to universities and others involved with investment education. Investopedia now offers a subscription newsletter with investment recommendations, among its growing list of features. Now that millions of people use the site, Janssen says it is generating unprecedented cash flow, which gets plowed back into the business. “You can make things better every day.” Keeping their cyberspace customers happy is paramount to their long-term success. “There’s no shortcut. You have to create great content and great tools. People are smart. They know if what you’re putting up there is junk,” Janssen says. “And they’re not going to come back unless there’s something unique they can’t find anywhere else.”
Pages: 1 2
Follow Alberta Venture On: