Thursday, April 18, 2024

2019 North Carolina Mid-Market Fast 40

Appeared as a supplement to the November 2019 issue of Business North Carolina

Mid-Market Companies Making Moves

For several years now, companies in the state have enjoyed a prolonged period of growth. It’s no surprise that choosing this year’s Business North Carolina Mid-Market Fast 40 was tougher than ever.

Cherry Bekaert LLP pored over 70 applicants to determine the top firms. For years, the company has been compiling this annual list of businesses that made strong gains in workforce and revenue for two consecutive years.

“Especially this year, it continues to surprise me as we see growth not just in a particular industry,” says Erik Horstmann, managing partner at Cherry Bekaert. “North Carolina flourishes across multiple industries.”

The businesses chosen were honored at a reception at Pinehurst Resort to celebrate their status as some of the fastest-growing companies in the state. Several attended a round table discussion at High Point University in early September, where they shared the current status of business as well as what they expect in the future.

With discussion of a potential recession in the news, the future of the economy was on the minds of many. Business leaders shared thoughts on some of their fears with a potential economic slowdown after appreciating such a long period of stability, as well as some of the steps they’re taking to protect themselves in the event of a recession.

“It’s just being real cautiously optimistic about everything, which has been the case for a while, but it feels like you’re inching closer to that cliff just because the news continues to be persistent,” says Thad Walton, senior vice president and commercial market manager at Regions Bank. “What I’ve been preaching for the last year is, you may see slow growth, but it’s still growth. It may be more strategic, but people are still very optimistic about what’s down the road.”

Another challenge many are facing, particularly because of the extended period of economic growth and fast-changing technological advances in all industries, is a well-trained, passionate workforce.
“In the more rural areas we serve, workforce development is a significant issue for the bigger industries,” says Lee Hodge, business attorney at Ward and Smith P.A. “Keeping the right people in place is a significant challenge as we continue to move forward and our economy continues to move forward.”

More insights like these from the round table and other business profiles are in this month’s edition. We hope you enjoy learning about the Mid-Market Fast 40 and their positions in the final rankings.

Click here to see a PDF of the listing


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From left to right: Doug Beane, Jessica Simmons, Thad Walton, Alyssa Pressler, Jody Lockhart, Erik Horstmann, and Bill Elkin

Flourishing Fast 40

Many middle-market businesses are experiencing success and growth during the current economic climate.

Middle-market businesses in North Carolina have enjoyed a prolonged period of growth and economic success. This round table brings together several of the fastest-growing, mid-market companies to talk about successes, challenges and the future.

  The round table was hosted by High Point University and moderated by Alyssa Pressler of Business North Carolina. The transcript was edited for brevity and clarity.

[media-credit name=”Bryan Regan” align=”aligncenter” width=”800″][/media-credit]

What’s an overview of the Fast 40 this year?

HORTSMANN: The Fast 40 includes middle-market companies with revenue sizes ranging from $10 million to $500 million, give or take, across any industry you could possibly think of.

Especially this year, it continues to surprise me as we see growth not just in a particular industry. North Carolina flourishes across multiple industries. Manufacturing and distribution tend to get a dominant share when you think about North Carolina, but it’s about 20% of the revenue for the state.

We went through and interviewed more than 70 applicants this year. We spent time getting to know businesses, understanding what they were doing from a growth perspective. For me, it was like being a sponge, getting to hear from you guys and learn what you were doing to help grow your practices across the state.

WALTON: What’s exciting to me is to see not just a lot of Charlotte- and Raleigh-centric companies. There are so many companies that are in some of these smaller areas within North Carolina that may or may not be benefiting from our state’s economy and where it is nationally. People are bootstrapping and doing neat things in some areas that you wouldn’t expect across the state. It’s exciting.

How has business been over the last year?

ELKIN: We manufacture and distribute building products, and the construction industry has been really buoyant. We don’t sell much to commercial and industrial. It’s mainly single-family and multifamily residences and residential projects. We sell through lumber yards and big-box retail and people like that. Our business benefits because we operate in the South.

We’re in Mobile, Ala.; Gulfport, Miss.; Charleston, S.C.; Raleigh and Charlotte. Those are all growth markets. So we benefited a lot just from growth in our geographic-market area. We’re privately held, and it makes us a little more nimble. So business has been good.

We hear a lot about the economy, and we’re very cyclical in our business, so we watch that very closely. I think our politicians will talk us into a recession if we don’t actually want one or need one. Most of [the] customers we’ve polled are still feeling pretty cautiously optimistic through deep into 2020 at this point. So we’re pretty excited about what the future holds, at least over the next 18 months.

WALTON: We’ve had clients reach out to us who are in industries like specialty retail [and] are experiencing growth like they’ve never had. They’re asking us, “Is this something that’s just specific to the markets that we’re in? Because industry news says this is bad, but we are feeling good about it.”

So it’s just being real cautiously optimistic about everything, which has been the case for a while. Still it feels like you’re inching closer to that cliff just because the news continues to be persistent. What I’ve been preaching for the last year is, you may see slow growth, but it’s still growth. It may be more strategic, but people are still very optimistic about what’s down the road.

LOCKHART: For BioDelivery Sciences, it’s really been a tremendous year for us so far in that we’re seeing the continual quarter-over-quarter increase in our prescription growth, which indicates that we’re really having a positive impact in being able to provide a therapeutic solution to our chronic pain patients.

We’re able to do that by way of our primary product: Belbuca. It’s scheduled as a Schedule 3 drug versus a Schedule 2, so that’s really an indication that it’s less prone to abuse and/or addiction. As we hear and talk about the opioid epidemic, we feel like we can be a solution to that issue.

We’ve picked up another product at second quarter that’s able to really fit right in with our sales reps’ bag. So, again, just tremendous script growth, expansion of our portfolio and we’re still tracking toward operating cash-flow positive by the end of the year.

HODGE: We spend our time talking to CEOs and CFOs in middle-market companies across the state and the Southeast, and everyone seems to be cautiously optimistic. You can’t get away from macro issues that are out there that are moving things back and forth. But notwithstanding all of that, business continues to expand. We’re in a situation where the unemployment rate is remarkably low and has been remarkably low for a long time.

The thing that I continue to hear, particularly from CFOs, is that we’re in the longest run here in the bull cycle, and it’s got to come back at some point. But we’ve been hearing that for two or three years now, and we continue to have this solid, somewhat slow growth. If we could keep that out and keep going, that’s obviously a great thing for everyone.

ELKIN: Because we are in a cyclical business, this prognostication of a recession out there has given us some time to focus on if are we doing the right things.

It’s given us an opportunity to really go in and make sure that all that’s aligned and [determine] where it needs to be so that if it does happen, we’re not reactive. We’re being proactive about that. That’s unusual compared to the Great Recession [from 2007-09] when it just came upon us, and then everybody was scrambling and trying to get above water.

We’ve got part of our team still focused on sales growth. We have another part of our team really focused on making sure the costs are in alignment. It’s not about driving the costs down; it’s about making sure they’re right-sized and appropriate for our business needs. That’s kind of unique, I think, for this cycle.

LOCKHART: For [BioDelivery Sciences], as we look at our year-over-year annual increases in revenue, it’s given us the opportunity to pay close attention to our financials. We’re tracking toward operating cash-flow positive by the end of the year, but it’s also given us the opportunity to scale up and grow our internal framework that supports all of this commercial activity that we’re experiencing.

From a commercial side with our sales reps, we’ve gone through two or three expansions of the sales force over the last couple of years. It goes hand-in-hand. We’re seeing that increase in demand, and we’re able to turn that into an opportunity to build and grow the framework within our home office just to make sure that we’re proactively staying out in front and can support all of that commercial activity.

In the event of an economic slowdown, how do you plan to continue to grow your businesses?

BEANE: For us, it’s diversifying our regions [where] we operate and the projects that we take on.

Samet Corporation was founded basically on industrial construction, but we’ve moved into education, health care and multifamily [development] to expand and maintain that kind of growth. During the Great Recession, we were heavily into commercial [construction], and people just called and said, “Put down your hammers. We’re done. Leave that brick wall where it’s at.”

But as you move into education and health care, those kinds of projects don’t stop. One way we’re trying to weather the next downturn is by having long-term projects that can’t stop midterm.

ELKIN: We’re a traditional two-step stream here, so we’re trying to look at different products that we can take to market and different construction technologies that are out there such as fiber cement siding or composite decking and things like that.

We’re trying to expand our products, and we’re also trying to expand our geography. We’re doing some of that through mergers and acquisitions, and we’re being very selective about that and making sure it fits our core strategic goals. We do not just go out and buy somebody for the sake of buying somebody, because size doesn’t always win the day.

It’s going to slow down. It’s going to be far worse, I think, in the upper Midwest and the Northeast and maybe out in California, for example, than it is across Texas, the Gulf states and the Carolinas, where people tend to be moving. So we try to focus on those areas.

Over the last year, what obstacles has your business overcome?

HODGE: One of the things that I consistently hear when talking with clients is attracting and retaining talent in an environment where the unemployment rate is so low, and it’s easy for key employees to move to a competitor.

We’ve been spending a lot of time with our CFO contacts and the HR departments to put together different types of incentive [compensation] plans and different ways to retain key talent. Regardless of what industry you’re in, whether it’s manufacturing, construction, legal or any others, we’re all in the talent business, and talent is what drives us forward and helps us grow. It’s attracting and retaining those key folks and even lower-level folks.

In the more rural areas we serve, workforce development is a significant issue for the bigger industries. It’s hard for them to keep the lower-level folks around at a level where they need them. Keeping the right people in place is a significant challenge as we continue to move forward and our economy continues to move forward.

BEANE: Finding the right people and then training them and keeping them up to date is challenging for us.

Colleges teach construction management, so we went out and said, “What software do you use to teach construction management?” We found out what it was, and we said, “Well, then that’s the one we should buy.” So now when we go to a college we say, “I want you to work for us. We use the same thing you just learned how to work on.” That’s really been a positive for us.

We also hire 20-plus interns every summer, and then we determine how many we can retain.

ELKIN: It’s our single biggest challenge. We’re a distribution center, so we’ve got two-and-a-half million square feet of unventilated warehouse space in Summerville, S.C., and Gulfport, Miss., and Mobile, Ala., and we just can’t find people. We’ve got three locations in North Carolina. We can’t find people there, either.

We hardly have any turnover in Wilkesboro. There’s not a lot of jobs in Wilkesboro. But everywhere else, we have people that will show up, and they’ll leave at lunch and won’t come back.

We talk about it all the time, and we’re trying all kinds of things such as sign-on and retention bonuses, improved benefits, and our 401(k) match. I know I was that age one time. I mean, a 22-year-old doesn’t care about that. He’ll leave for 10 cents or 15 cents an hour more. We’re just trying to convince them why a long-term career is good. That’s the one challenge I feel like we have that would impede us to continue to grow.

LOCKHART: We’re in that same competition for bringing in top talent to our organization as well. We have recognized for some time now that we’re definitely making very positive progress on the criticality of the culture within the organization.

We’ve got the recognition that we won’t realize the full potential of those plans if we don’t have the right culture to support that and help drive that. We’re paying a lot of attention to that now and making sure that we’re doing what we can to enhance that culture.

HORSTMANN: We created the same thing. We call them our shared values. As we’ve gone through acquisitions, we’ve continued to have to sell the message continuously, because that’s who we are, that’s what we want and that’s what we believe in. We hope that we’re retaining the talent based on their desire to work for a firm like ours.

ELKIN: We talk about culture every day, and the lumber and building industry is old school. It’s a bunch of old men. It’s early in the morning, and it’s predominantly old school. We’ve been spending a lot of time trying to figure out how [to] manage that when our senior management is 55 and up, and most people we’re recruiting are 35 and below. That’s one of our challenges right now. How do we recruit people who want to stay for a while?

When I was coming up, “for a while” meant 20 years. I’d be happy to keep somebody five years right now as an employee. If I keep them five years, I feel like that’s a win.

What are some other things you all are doing to try to retain key players?

BEANE: We do some signing bonuses. We’re focused on largely individual projects, so we put bonuses on individual projects. If that team is successful, they’re eligible for a bonus. Then, we have a bonus pool at the end of the year. We’re just trying to reward success and let people know that you’re part of a group. We’ve always referred to it as the “Samet way.” Everything we do is the “Samet way.” Every policy is a “Samet way” and we just try and promote that within our company. It’s the pride of the company, the pride of an individual project.

ELKIN: We do a lot of individual incentives, too. There are two things we’ve done that have really helped us. In our distribution centers, we’ve gone to a pay matrix sort of system where people control their own rate of pay. So if you’re there 60 days and you have no accidents and your attendance is good and your performance is average, you get a raise. You don’t have to wait a year for a cost-of-living increase. They can control their rate of pay and rate of growth.

Now, that didn’t help us recruit anybody, but our retention rate increased substantially in that group.

Then, we’re trying to find incentives that align with people’s goals and also drive the behavior that we want, because we had a lot of monetary incentives that were driving the wrong behaviors. We really spent a lot of time saying, “OK. What’s the result we want to achieve, and what are those incentives?” So sometimes you get Friday off, or the whole team gets to go to lunch, or something like that.

We have found that some of those little things gain a lot more trust and cohesion and build the culture versus waiting until the end of the quarter or the year for a cash bonus. People are motivated by that, but it’s the little things along the way that surprised me, because people are really into recognition. It doesn’t have to be a real big thing.

The 2019 Mid-Market Fast 40 Award winners

Representatives from 2019 North Carolina Mid-Market Fast 40 companies attended a reception at Pinehurst Resort on Sept. 23. It included an awards presentation and a video of a round table
discussion with representatives from some of the winning companies.

Photos by Bryan Regan



Click here to see a PDF of the supplement


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