Hispanic Business Fastest-Growing 100 --> •View the 2002 Hispanic Business Fastest-Growing 100 Directory•View statistical charts on the Hispanic Business Fastest Growing 100
In a static market, companies with a competitive advantage grow, while those without it shrink. This classic economic model doesn’t completely explain how the Hispanic Business Fastest-Growing 100® companies increased revenues 62.6 percent compounded annually since 1997. Interviews with these companies’ CEOs reveal not only that their businesses grow within their niche; in addition, the niche grows larger as the customer base or product utility expands.
Sterling Financial Group, the number 1 name on the Fastest-Growing directory, provides a clear example. Sterling offers several investment services, but CEO Charles P. Garcia identifies research on biomedical equities as the company’s core competency. After gathering public information from the Food & Drug Administration, Patent Office, and Securities and Exchange Commission, a panel of Sterling scientists determines whether experimental treatments will pass regulatory muster. “They give their best guess as to what will happen. There hasn’t been one time in three years they’ve been wrong,” says Mr. Garcia. “It’s valuable information, and we get paid well for it.”
Mr. Garcia’s clients include most large mutual funds, banks, and brokerage houses, as well as wealthy individual investors. And with continuous research and new crops of drugs coming to market, the value of biotech investment advice keeps growing. “When the [stock] market was going up, every taxi driver thought he was a genius,” comments Mr. Garcia. “When the market went down, it proved they weren’t as smart as they thought, so they needed advice.”
Other CEOs on the Fastest-Growing list also report stories of carefully choosing their niche to benefit from market forces. Cetrom, a construction firm specializing in federal projects and ranking number 46 on the list, focuses on building hospitals, biomedical laboratories, and other health-related projects. Its market advantage lies in providing a one-stop shop for federal agencies by combining architecture, design, and construction management under one contract. The current trend toward streamlined government and larger contracts fits perfectly with the company’s strategy.
“We believe the turnkey solution method is where federal contracting should be going,” asserts Patricio Ochoa, Cetrom’s CEO. “It saves time, which translates into cost. It minimizes change orders. … Especially in the federal government, a lot of conflict develops between architects and builders, a lot of finger-pointing. The contracting agency wants one company responsible for the whole project.”
Mr. Ochoa also knows when to accept half a pie rather than lose a whole one, in keeping with the forces driving his growth. “We can’t be everything to everyone,” he says. “If we don’t have a certain expertise, we don’t place our position in jeopardy. We integrate the solutions provided by other companies. We act as the prime [contractor].”
The challenge for growth-conscious CEOs at start-up is whether to pitch their company as a niche provider or a generalist. While the niche strategy defines the company’s strength, it can limit growth later on. CEOs from the Fastest-Growing 100 advise Hispanic entrepreneurs to follow the niche route, with the caveat that they develop a long-term growth strategy.
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