2018 North Carolina Mid-Market Fast 40
Appeared as a supplement to Business North Carolina
Meet the mightiest of the Mid-Market
From bankers to medical laboratories to logistical companies, North Carolina boasts a diverse array of mid-market companies. And with a growing economy, more of those companies are thriving.
That made choosing this year’s Business North Carolina Mid-Market Fast 40 tougher than ever. “We had more applicants this year than I think we’ve had in the existence of the program,” says Erik Horstmann, Managing Partner, Charlotte, for Cherry Bekaert LLP.
Horstmann’s company compiles the annual list of businesses that made strong gains in workforce and revenue for two consecutive years. Those businesses were honored at an awards luncheon at Pinehurst Resort.
Each of our Fast 40 companies took a different route to success. But they all share certain traits, such as commitment to community and aggressive growth plans.
We invited several to a round table discussion earlier this fall at High Point University. There, they shared the challenges they face and their outlook for the years ahead.
One of the biggest challenges in today’s economy, they agreed, revolves around attracting and retaining top talent in today’s tight labor market. Success on that front often revolves around growing your own players.
“We try to promote from within. If you try to bring in an executive, sometimes that person doesn’t mesh with the culture that the company has built,” says Zeb Hadley, CEO of National Coatings. “We’ve been able to take guys who were making $14 an hour and are now making six figures a year.”
Another challenge in almost any industry is the potential for technological and global disruption, says Brian Noonan, CFO of Flexential.
“Even if the economy stays strong I don’t think people have the appreciation for how much more disruption there is to come, how quick the pace of change is, how you could be relevant today, and within three weeks that outlook changes,” Noonan says. “You better be looking over your shoulder because someone’s coming, and they come from all over. I mean, they really do.”
Insights like those can help any business learn and grow. There are many more from the round table and from business profiles in this month’s edition. Take time to learn about the Mid-Market Fast 40 and where they landed in the final rankings.
From left to right: Brian Noonan, Thomas Lyon, Sean Willoughby-Ray, Josh Arant, Scott Duda, Erik Horstmann, Jeff Brinkman, Zeb Hadley, Lewis Quinn. Photo by John Gessner
The road ahead
The leaders of these Mid-Market Fast 40 companies have a clear vision of today’s challenges and opportunities.
The companies on the Mid-Market Fast 40 list have a clear vision of where they’ve been and how to stay on top as they navigate challenges ahead. They understand their customers and their competitive environment. They know how to grow their own talent and keep an eye out for global competition and technological disruption. Here’s what they see.
Ben Kinney, Business North Carolina publisher, moderated the discussion, which was hosted by High Point University. Scott Insurance provided support. The transcript was edited for brevity and clarity.
What was notable this year?
HORTSMANN: We had more applicants this year than I think we’ve had in the existence of the program. There’s not really one industry where all the growth was coming from. You had construction, you had technology, you had industrial, you had health. You could look across the board and you saw varying degrees coming from each direction. Each company had their own niche that they were pushing and growing with.
What do you see happening in the state’s economy?
WILLOUGHBY-RAY: We’re a service provider so we serve clients on the employee benefits side. Ten years ago, providing benefits was a reluctant obligation. People didn’t want it, don’t like it, had to do it. That has changed significantly. We have a very diverse client base, every business, industry you can imagine, and I would say they could add 10% of their workforce tomorrow if they could find the people. There’s a lot of factors that drive business and growth and every business is different, but one thing I would say is absolutely consistent, it’s talent, talent, talent. So it’s not surprising as employers are clamoring for keeping people and retaining and finding new people that they really pay attention to benefits. It’s not just benefits. I’m seeing a lot of clients really focus on leadership, culture, just to really amplify who they are and what they are to keep and attract talent.
DUDA: I’m seeing our clients be very flexible about their benefits. They’re trying to find whatever the hot button is for whoever they are trying to recruit. It’s different by industry. It’s different even by company.
BRINKMAN: The economy is doing great. We can’t get enough people. And that drives one of two things: Either you have to have a culture that can attract employees or you try to automate and we’re seeing a lot of investment and capital in automation.
ARANT: We’ve had a really big push to develop our current team and get them from point A to point B and develop them, so they can be the next leader, the next manager of our company because the unemployment rate continues to drop. You either have to build a pipeline or overpay for an individual or for a position. And then to the rural market, we recently expanded to Henderson, and what we found out was that over 65% of the workforce was traveling to Raleigh or Durham from that five-county region. We just took all those individuals and now they’re working for us in their backyard. So many people are coming to Raleigh and Durham that the Dukes and everybody else that we pulled from, they can easily rehire. The economy as it expands, it’s going to help those outer markets.
QUINN: If you can’t hire people, you have to grow the people you have. We’ve done a lot of that. We’ve taken our frontline manager and sent him to do things like scale up, just to develop critical thinking skills. Our employees are great caregivers, they’re great nurturing people but they haven’t developed critical thinking, strategic management, process improvement, delegation. We’ve looked for those people and they’re just not out there in our world. We’re always looking for ways that we can do recognitions, whether it’s a speak-up program, or whether it’s participating in a strategic development program or just the conventional things like raises, compensation, bonuses, but also being on committees, doing 100-day plans, letting them come up with mission and vision core values. They appreciate that recognition and the genuine ability for them to control the direction of the company in ways that the conventional employer-employee relationship doesn’t permit.
HADLEY: We try to promote from within. If you try to bring in an executive, sometimes that person doesn’t mesh with the culture that the company has built. We’ve been able to take guys who were making $14 an hour and are now making six figures a year. They’ve been with the company for a long time, have learned the processes. They have a good attitude. They have integrity and you can teach those people.
HORTSMANN: If you’ve been familiar with public accounting for the last 20 years you can’t hire somebody that’s got between three and seven years of experience. You just can’t find those people in the marketplace when you have a need. What we’ve done is gone to different campuses and tried to find college recruits, find the people that fit our culture and bring them in and then help grow them and develop them into those senior managers that we’re going to need in our business.
How do you attract and retain the best employees in this tight labor market?
NOONAN: It really comes down to a little thing. It really comes down to: Do they like the person they work for and is that person they’re working for looking out for them or themselves? It sounds very basic, sounds very old parochial, but it really comes down to whether think they’re part of a team. It’s the little things that they really value and that’s hard because you realize when you do something you thought was not that big a deal; you’ve created a big deal.
BRINKMAN: You have to be candid with yourself and your employees. And culture is important when hiring. Because our team is a good solid team, they mesh together and to get someone who conflicts with that is a poison pill. It’s just not worth the risk.
QUINN: If you’re doing acquisitions and merging disparate companies that may be competitors, they don’t think the same way. These are small mom and pops and so they’ve grown up in these little micro cultures and we try to bring them all together. We bring our mid-managers together every 90 days to do 100-day planning. That is their opportunity to say what’s important, what they see in the field. Because they own it, it becomes infectious. Because they create it, they own it and they take it out to the masses and it makes your job as the leader so much easier.
How are you using the explosion of data and data analytics in your business?
NOONAN: Data is really critical to our business. And understanding the data, to get a better understanding of where to make investments because we’re making long-term investments, is critical. What you find is people search data to find what they already think is happening and they stop. They’re proving out that they’re right and then they stop rather than turning it around and analyzing the data and figuring out what it is really telling them. Our goal is that by the end of 2019, there is a single source of truth. It’s data integrity, it’s using data to make decisions, but more importantly developing processes and making sure that the data is accurate so that when people go to it they believe it and they act upon it rather than try to figure out why it’s wrong.
HADLEY: For everyone that has been part of an M&A or a rapidly growing company, things are always shifting. You’re always making changes, and I think my biggest mistake is making changes without fully thinking about how that change affects every single piece of your business. Now I have to really analyze any change that I do, and not just for the end result. I have to think about each little piece and each person that it affects. I think that’s really important — having that internal communication about the changes and why you’re making those changes.
Finding and keeping great employees is clearly a challenge. What else is affecting businesses?
NOONAN: We’re a capital-intensive industry. The low cost of capital to us is like crack cocaine. It gives you a lot of runway in terms of how you can make investments. As the cost of capital starts to change, you have to make good decisions. That’s why you have to have good data, because you think you can make mistakes but there’s really only a certain number of mistakes you can make. And the larger mistakes that you made, you can’t fix. You’ve done a lot of acquisitions. One thing in business you can’t fix is a bad acquisition. The money is gone, everything is done. You can only plow through to do a better job to make it work. That’s why you have the data to do what you need to do.
HORTSMANN: The cost of capital has been huge. I used to tell my clients: Growth is great, but don’t outgrow your cash. Well, because you’ve been able to find resources there’s not a lot of companies that have outpaced their cash. They’ve been able to find the capital to infuse into the business. The M&A side of the market is actually interesting because it used to be all these highly leveraged deals. Now you’re seeing transactions where private equity is put in on 50% of the capital. They used to go to the banks and say, we’re going to put up five, 10%, you put up 90. Now it’s 50/50.
QUINN: It’s a lot easier to get cash now than it was —whether it’s senior, mezzanine, private equity, angels. It’s all easier today than it was a year ago or two years ago, at least for us. We’re a service business. We have no collateral. It’s all cash flow. When we first started, financiers couldn’t even sniff us, and now I get 10, 15 calls a week from somebody wanting to put money out there.
What do you expect in the future?
NOONAN: Even if the economy stays strong, I don’t think people have the appreciation for how much more disruption there is to come, how quick the pace of change is, how you could be relevant today and within three weeks that outlook changes. You’d better be looking over your shoulder, because someone’s coming, and they come from all over. I mean, they really do. I could lose a deal in infrastructure to Singapore. That’s really pushing it on the edge, but I think that the competition comes from places you never expected to ever see it and it’s hard. That’s where we’re trying to remain nimble. The problem is, it’s happening faster but we’re not any smarter. That whole pace creates uncertainty, creates change and you have to manage that change because the one thing your employees hate the most is change.
QUINN: That’s the cool part about what’s going on because all this disruption, it’s changing the nature of businesses and the way we do business and the way we buy things and sell things. If you can kind of figure out that chaos and participate, there’s so much opportunity in being a disrupter in all these different industries. The rules are changing because of technology.
WILLOUGHBY-RAY: Before there’s meaningful change, there’s always chaos in anything in life. I think that’s where we are right now. I’d say in the very near future we’re going to see a rapid change in provider reimbursement on the health care side. Add technology and the efficiencies that go there and there are some interesting things that are going on in the marketplace. There’s incredible innovation, too. The fee for service — I’m talking about hospitalization — can’t last. It’s broken. Companies are working hard to help employees appreciate what they have, but what we’re seeing is that while there’s a desire to innovate, employers don’t want to do anything radical to affect costs yet because they don’t want to disrupt too much. You will see a lot of transformation if and when we hit a recession because there will be desperation — like we’ve got to save money at all costs. Then there will be radical change. Just hold on tight.
ARANT: I think when you get to a point in business from a size standpoint, you tend to lose some of the things that made you great in the beginning. I think that’s where we’re excelling right now. We’re excelling at the little things that people like a lot and that LabCorp and Quest potentially have lost because they’ve gotten so big. Being in the middle market, you’ve got the growth of the startup, but we’ve got the infrastructure of middle market to a large cap company so there’s that stability for the people. So I foresee us continuing to grow.
The 2018 Mid-Market Fast 40 Award winners
2018 North Carolina Mid-Market Fast 40Representatives from 2018 North Carolina Mid-Market Fast 40 companies attended a luncheon at Pinehurst Resort on Oct. 10.
2018 North Carolina Mid-Market Fast 40The luncheon included an awards presentation and a video of a round table discussion with representatives from some of the winning companies.
2018 North Carolina Mid-Market Fast 40Flexential. Photo by Bryan Regan
2018 North Carolina Mid-Market Fast 40Mako Medical Laboratories. Photo by Bryan Regan
2018 North Carolina Mid-Market Fast 40CareTech Management Inc. Photo by Bryan Regan
2018 North Carolina Mid-Market Fast 40National Coatings. Photo by Bryan Regan
2018 North Carolina Mid-Market Fast 40DMA Sales LLC. Photo by Bryan Regan
2018 North Carolina Mid-Market Fast 40Dude Solutions. Photo by Bryan Regan
2018 North Carolina Mid-Market Fast 40Spangler Restoration. Photo by Bryan Regan
2018 North Carolina Mid-Market Fast 40Dazzle Up LLC. Photo by Bryan Regan
2018 North Carolina Mid-Market Fast 40ECMD Inc. Photo by Bryan Regan
2018 North Carolina Mid-Market Fast 40Concrete Supply Co. Photo by Bryan Regan
2018 North Carolina Mid-Market Fast 40Hissho Shushi. Photo by Bryan Regan
2018 North Carolina Mid-Market Fast 40Blythe Development Co. Photo by Bryan Regan
2018 North Carolina Mid-Market Fast 40CPI Security. Photo by Bryan Regan
2018 North Carolina Mid-Market Fast 40Transportation Impact. Photo by Bryan Regan
2018 North Carolina Mid-Market Fast 40Bold Construction. Photo by Bryan Regan
2018 North Carolina Mid-Market Fast 40Omega Construction. Photo by Bryan Regan
2018 North Carolina Mid-Market Fast 40South Atlantic Packaging. Photo by Bryan Regan
2018 North Carolina Mid-Market Fast 40Bulk TV & Internet. Photo by Bryan Regan
2018 North Carolina Mid-Market Fast 40ImagineSoftware. Photo by Bryan Regan
2018 North Carolina Mid-Market Fast 40Sealing Agents Waterproofing Inc. Photo by Bryan Regan
2018 North Carolina Mid-Market Fast 40Infranet Technologies Group Inc. Photo by Bryan Regan
2018 North Carolina Mid-Market Fast 40Rhino Assembly Co. Photo by Bryan Regan
2018 North Carolina Mid-Market Fast 40Commercial Credit Inc. Photo by Bryan Regan
2018 North Carolina Mid-Market Fast 40Spatco Energy Solutions. Photo by Bryan Regan
2018 North Carolina Mid-Market Fast 40Samet Corp. Photo by Bryan Regan
2018 North Carolina Mid-Market Fast 40First Carolina Bank. Photo by Bryan Regan
2018 North Carolina Mid-Market Fast 40Wray Ward. Photo by Bryan Regan
2018 North Carolina Mid-Market Fast 40Global Value Commerce Inc. Photo by Bryan Regan
2018 North Carolina Mid-Market Fast 40The Remi Group. Photo by Bryan Regan
2018 North Carolina Mid-Market Fast 40Allen Industries Inc. Photo by Bryan Regan
2018 North Carolina Mid-Market Fast 40Cherry Bakaert. Photo by Bryan Regan