A Look Inside Canada’s Fastest-Growing Companies
June 14, 2014
Canada needs its companies to grow. For all the boasting about our flashy national success stories, for all the hype bestowed on hip new startups, for all the political lip service given to stable mom-and-pops, the real drivers of our economy are the legions of often unassuming businesses working to gain more clients, to penetrate new markets, and to sell better mousetraps. These growing ventures are the unsung heroes of Canadian business. They create jobs during an era of downsizing; they secure international sales as national trade deficits grow; they bring cutting-edge technology to market as wonks and politicians fret about Canada’s “innovation gap.” These firms don’t often make the news, but you’d notice if they weren’t around.
Which is precisely why we’re celebrating them with this, the 26th annual ranking of Canada’s fastest-growing companies. The PROFIT 500 evaluates businesses in all sectors on five-year revenue growth, meaning that each company on the list has a) proven itself viable, b) found a stable and scalable group of customers and c) sustained growth for longer than many companies even exist. And in almost every case, they have a strategy to keep the momentum going. That’s why this ranking is not just another fascinating list, but an important one: it’s where you’ll find the next BlackBerry, GardaWorld and WestJet (all PROFIT 500 alumni).
Consider this: the average PROFIT 500 company increased its revenue by 536% from 2008 through 2013; that’s 59 times the rate of inflation over that time. During the same period, the firms on the ranking (which collectively employ nearly 84,000 people) created the equivalent of 33,972 new full-time jobs—and that’s not including the 18,000-plus jobs added as a result of acquisitions. Last year alone, they contributed $18.5 billion to the national economy, and they got more than a third of it—nearly $7 billion—from foreign buyers.
Each company on this year’s ranking has an inspiring story of growth. Take the spectacular performance of the No. 1 company, FourQuest Energy Inc., an oilsands services provider that increased its sales 7,308% from 2008 through 2013. Right from day one, the strategy of FourQuest’s founders was to structure the business to become a big player (and fast), which it accomplished by taking bold approaches to hiring, sales, exporting and financing. Its success is in no way a fluke. (You can read thefull story here). Or take the No. 2 firm, Life Science Nutritionals Inc., which achieved 5,525% growth by identifying a lucrative opportunity to sell a consumer staple (vitamins) in a new way (gummy-based chews). Or the No. 3 company, Loyalist Group Ltd., which sprouted from a modest single language school into an international empire by going public (via a reverse takeover), acquiring competitors and recognizing that education is a beautifully recession-friendly vertical. Click here for the full list of companies, and check out plenty of related content at PROFIT500.com. For now, here’s what we learned from these entrepreneurial overachievers:
They go where the growth is
Business-to-business operations may not sound as glamorous as consumer-focused companies, but the PROFIT 500 shows why the B2B market is worth pursuing. More than 80% of the firms on the list sell primarily to other companies, from HR consultancies and advertising agencies to machinery suppliers and general contractors. (And if you had any doubts about the move to a digital economy, note that IT providers and software developers comprise nearly a quarter of the firms in this year’s ranking.) Why are B2B businesses so prevalent? It’s hard to know the exact reason, but it’s probably safe to assume that living so close to the home of the world’s most developed and aggressive consumer brands makes it difficult for Canadian competitors to scale up. Those PROFIT 500 companies that have won consumer adulation have, by and large, done so by focusing on niches, such as auctioneering services (North Toronto Auction, No. 397), robot parts (RobotShop Distribution Inc., No. 186), native footwear (Manitobah Mukluks, No. 201) and extramarital dating (AshleyMadison.com, run by Avid Life Media Inc., No. 185).
They're always looking (and leaping)
The leaders running these firms aren’t afraid to take some calculated risks: some remortgaged their homes to fund their growth, some staffed up to vie for contracts that were by no means guaranteed, while others opted against collecting a salary. The optimism of (relative) youth may have something to do with this; the average PROFIT 500 CEO is 45, and there are 13 executives on the list who haven’t yet celebrated their 30th birthdays. But the willingness to gamble may also stem from experience. Some 65% of the executives on the ranking are serial entrepreneurs. On average, people who started and left, sold or folded a company before their present one achieved sales growth nearly 150% higher than those who are new to entrepreneurship. Whatever the reason, it’s hard to find a single business on the ranking that doesn’t challenge the stereotype of the conservative Canadian company.
They never hear "no"
As Gordon McArthur, president of Tribe Medical Group Inc. (No. 248), puts it: “When somebody says ‘no, you can’t,’ be the one who just goes ahead and does it anyway.” It’s hard to think of a better motto for the smart, innovative, odds-defying companies on this year’s PROFIT 500.