Methodology
Purpose
The primary purpose of the research and
data collection was to identify high growth companies in the Columbus
area. The secondary purpose
was to find from the list those companies that qualify for the Inc.
500 and the Growth 100 (now the Indiana Entrepreneurial Growth
Award),
and encourage them to apply for the awards.
While several companies from the area have received the Growth 100,
only a handful from Columbus, and relatively few from Indiana, compared to
other states, has ever been on the Inc. 500.
The concept is simple: if
businesses from Columbus, or Indiana in general, make it onto those lists
it automatically brings national attention to the area and with it, the
possibility of more businesses locating here. That means more jobs, more
income creation, and a better standard of living for all of us.
For the businesses that make it onto our list it brings them
visibility, attracting new customers and potential business partners.
It also rewards them for their hard work and commitment to the
area.
Defining
“high growth”
By
definition, a high growth company is one that experiences at least 20%
growth each year for four consecutive years and has a minimum of $100,000
in revenue. David Birch used
the term “gazelle” to define these types of high growth companies.
They make up a relatively small portion of the businesses today,
roughly 3%. While not all of the companies on our list would be
considered gazelles, each has grown over the past four years, some faster
than others. Some of the
companies on our list are well established and have been operating for
more than forty years, and are still “growing”.
Finding our 20
We used a variety of methods to find businesses we thought might qualify for the award. We contacted local professional service providers (bankers, lawyers, accountants, etc) and asked them to nominate the five companies they thought were growing the fastest in the area. We also did our own research by watching for press releases in the newspapers, and “cold calling” companies we thought met our eligibility requirements.
Selection
From the pool of qualified leads we calculated two growth rates: a two-year (from 2003-2004) and a four-year (from 2001-2004). While the growth rate we used for the CAG20 was based on four years of revenue, we included the two-year model to see which companies qualified for the Indiana Entrepreneurial Growth Award. The rates are calculated based on gross revenues or total net sales. Depending on the nature of the business, some companies on the list used revenue (services), sales (products), or a combination of both (sales and fees earned). There were also a few unique situations. For example, some of the companies on the list are considered not-for-profit and receive state or federal grants, which were also included.
We
used a basic formula (see figure 1) to calculate both growth rates, where
P2 is the most recent year.