Lists & Rankings

The 19th annual PROFIT 100 ranking of Canada's Fastest-Growing Companies

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The exclusive list of Canada's Fastest-Growing Companies: who they are, where they're from and what they do.

Please read the overview to learn about the methodology.


Seize the day!

Jim McElgunn
From the June 2007 issue of PROFIT magazine

Roger Hardy's make-or-break moment came three years ago. His industry of online sales of contact lenses was consolidating with stunning speed, transforming it from a 1,000-company free-for-all in 2001 to today's dominance by just three giants. With booming revenue that had already reached $31 million, Hardy faced an enticing opportunity to sell his firm at what would surely be a high price.

But he made a different choice: to eat rather than be eaten. "I didn't want to be consolidated," says Hardy, president and CEO of Vancouver-based Coastalcontacts.com. "Why not become a global brand instead?"

He has done just that, adopting an aggressive acquisition strategy and innovative customer service to build his company into the biggest online seller of contact lenses in Europe and the second-biggest in the world. The firm's total shipments have topped 100 million lenses. And its 2006 sales of $81 million were up a blistering 2,901% from five years ago, enough to place No. 18 on this year's PROFIT 100 ranking of Canada's Fastest-Growing Companies.

Hardy knew Coastalcontacts.com had to bulk up fast to avoid getting squeezed out. Since 2004, it has considered about 10 acquisitions and executed four of them. And if you think its experience is irrelevant in other sectors that lack such rich buyout opportunities, Hardy disagrees: "In most industries, there are those kinds of possibilities."

Of course, it's not enough to spot the opportunity to achieve critical mass via acquisitions; you have to make the right acquisitions. Hardy says that his criteria for green-lighting deals include a like-minded vision with the potential acquiree's executive team, a collaborative mindset, a good corporate-culture fit and the chance to learn from each other.

In his $18.5-million purchase of Lensway AB in 2004, Hardy's new Stockholm-based partners shared his business mission to offer consumers a convenient way to buy high-quality lenses, a teamwork-centred management style and a culture he describes as "hard-working, over-educated and socially conscious." The deal also let the Swedes learn from the Canadians' 100% online-sales model, and the Canadians learn from the Swedes' expertise in direct marketing. It has proven a smash hit, with European sales tripling since 2004. Canada's homegrown contact-lens powerhouse has since made acquisitions in Japan, Singapore and the Netherlands, and has $30 million on hand for further deals as it drives to become No. 1 worldwide.

Coastalcontacts.com has several times had to face a question that confronts all growing businesses: should we pursue this opportunity? How you respond to that question can be decisive to your firm's fortunes. The phenomenal average revenue growth of the PROFIT 100—2,095% over the past five years—shows how skillfully they've done so. And their combined 2006 sales of $11.5 billion haven't come at the expense of profitability. Not only are 78% of the PROFIT 100 in the black, but their bottom lines have improved massively, from a weighted average net loss of 10.9% in 2001 to a net profit of 10.4% in 2006.

The firms achieving these results operate in a dizzying array of sectors. The 2007 PROFIT 100 boasts companies in debt collection, energy production, junk removal and GPS tracking. You'll find retailers, marketing agencies, software developers, Web-hosting services and IT consultants on the list. And if you thought Canadian manufacturing is a sunset business, then consider the producers of mattresses, clothing and furniture, each of which can lay claim to being one of Canada's Fastest-Growing Companies. The fastest of them all: Edmonton-based Rentcash Inc., which is doing brisk business in the crowded field of short-term consumer loans. Founded in 2000 by rent-to-own specialist Gord Reykdal, Rentcash notched 2006 sales of $154 million—up 33,700% from 2001—and offers further proof that you can build a great business in just about any industry.

The PROFIT 100 companies' dexterity at evaluating and acting on opportunity holds lessons for all entrepreneurs hoping to emulate their success. Pareto Corp. (No. 23), for example, grew 2,469% over five years, to $51 million in 2006, in part because of its clear-sighted analysis of which opportunities are worth pursuing. Kerry Shapansky, president and CEO of the Toronto-based marketing services provider, says Pareto concluded early on that it's in the business of selling its core capabilities: services that are profitable, easily replicable and scaleable. It's adept at producing top-notch point-of-purchase materials for its retail clients, such as L'Oréal displays customized to each of 1,000 Shoppers Drug Mart stores. Pareto knows how to recruit and train field-marketing teams efficiently, and how to execute complicated in-store promotions, incentive programs, direct marketing and loyalty programs profitably. It's not hard to find people with the skills required for this kind of work, and Pareto knows how to teach them fast to meet its standards.

In contrast, its non-core capabilities require highly specialized teams that you can't replicate and scale up overnight. What these teams offer clients—such as designing customized online portals so Shoppers outlets can order in-store materials from Pareto—is crucial. But, says Shapansky, "you have to use your non-core capabilities as an enabler to sell your core capabilities," because selling the former on their own would knock your business off course.

Pareto has the discipline to steer clear of opportunities that seem tantalizing but would distract from focusing on core capabilities. It pulled out of two promotional sectors, gas cards and movie passes, after it found they were eating up too many non-core capabilities of high-level management talent and technical expertise in return for thin margins. This tough call pumped up Pareto's bottom line. And, by freeing up scarce non-core capabilities, it positioned the company for another big revenue jump, this one far more profitable.

Pareto's disciplined approach paid off in 2002, when the then-upstart set out to gain instant credibility by winning a contract from Shoppers. Rather than staff up to convince Shoppers it could handle the demanding assignment, Pareto protected its cash flow with a reverse Field of Dreams philosophy: build it if they come. Shapansky's company knew it could quickly recruit and mould the teams it needed to deliver exceptional service to Shoppers. The retailer agreed and awarded a multi-year contract, since renewed.




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