In today’s environment, B.E. 100s companies must be fit, fast, and inventive to not only survive but thrive. Whether running a mom-and-pop or a leviathan, today’s CEOs must view their companies’ longevity through a Darwinian prism.
That business paradigm has not been lost on the chief executives of the nation’s largest black-owned businesses. The BE 100S have had to compete with their peers as well as Fortune 500 monoliths. Management must create bigger and better mousetraps with fewer hands. Companies are facing a more discriminating customer base that prizes, above all else, quality, value, and efficiency.
Against that backdrop, we found a number of BE 100S companies demonstrative of this new brand of excellence and dexterity.
Among the BE INDUSTRIAL/SERVICE 100, take a look at World Wide Technology, the Maryland Heights, Missouri-based information technology firm, which became a billion-dollar juggernaut and vaulted to the No. 1 spot. How did it snag the pole position? By meeting the infrastructure needs of companies such as Boeing and Dell with a no-excuses commitment to timely and cost-efficient delivery of services. Its reward: sales growth of 62.6%.
Cruise over to the BE AUTO DEALER 100 and you’ll find the same type of drive at the top level. Detroit’s Prestige Automotive expanded operations and increased sales by a staggering 241.7%, from $317.1 million to $766 million. In the process, it earned recognition as the second largest black-owned company in the nation.
For every BE 100S success story, however, there are tales of industrial/service companies and auto dealers that crashed and burned due in part to the economy and stiff competition. As a result, the sales growth of the top BE industrial/service companies and the leading BE auto dealerships was relatively unimpressive: $21.9 billion in 2003 compared with $21 billion in 2002, an increase of 4.6%. For the first time in years, the BE 100S was outpaced by the Fortune 500, which produced revenue growth of 7% for the same period.
The same no-holds-barred environment was an anathema for BE ADVERTISING AGENCIES as well. For the most part, these larger firms have had a rough time drumming up and holding on to business through recession and recovery. However, the list was balanced by small, nimble shops. For example, agencies such as Matlock Advertising in Atlanta (No. 10 on the BE ADVERTISING AGENCIES list with $38 million in billings) and E. Morris Communications Inc. in Chicago (No. 13 on the BE ADVERTISING AGENCIES list with $28.1 million in billings) were among the list’s growth leaders, expanding annual billings by more than 50% through the acquisition of premium accounts. As a result, billings for the 15 firms on the BE ADVERTISING AGENCIES list increased 14.3%, from $1.4 billion to $1.6 billion in 2003.
BE financial services firms contended with increased competition and fewer profits, and they discovered that growth came through two distinct means: acquisitions and the bull market. In banking, the standout performer was New York City-based Carver Federal, which reclaimed the top spot on the BE BANKS list with $529.6 million in assets. With its recent acquisition of Washington, D.C.-based Independence Federal (No. 11 on the BE BANKS list with $217.1 million in assets), CEO Deborah Wright is positioning the institution to make history as the first black bank to reach $1 billion in assets. Overall, the number of black banks will shrink as leading institutions like Carver, Boston-based OneUnited (No. 2 on the BE BANKS list with $438.6 million in assets), and Atlanta-based Citizens Trust (No. 3 on the BE BANKS list with $359.7 million in assets) continue to gobble up the smaller fish. By doing so, some wonder if they will have enough muscle to compete against larger, majority-owned institutions in the future.
The insurance industry is feeling the effect of downsizing as
well. Consolidation has forced BE to shrink its ranking of top black-owned insurers from 10 to five with perennials North Carolina Mutual in Durham (No. 1 on the BE INSURANCE COMPANIES list with $175.7 million in assets), Golden State Mutual in Los Angeles (No. 2 on the BE INSURANCE COMPANIES list with $121 million in assets), and Atlanta Life Financial Group (No. 3 on the BE INSURANCE COMPANIES list with $99.7 million in assets) leading this decimated pack.Of the sectors, asset management posted the most significant growth. In 2003, the bull market came charging back with the Dow Jones Industrial Average and the Nasdaq Composite Index posting annual gains of 30% and 50%, respectively. As a result, BE ASSET MANAGERS produced an average growth in assets under management of 36.2%. Among the big winners: Chicago’s Ariel Capital Management (No. 1 on the BE ASSET MANAGERS list with $16.1 billion in assets under management), which increased assets under management by 56.3% to break the historic $10 billion mark; and New York City’s Advent Capital Management (No. 6 on the BE ASSET MANAGERS list with $3.4 billion in assets under management), which targeted the convertible bond market and boosted assets by a breathtaking 140%.
As the performance of the BE 100S demonstrates, regardless of industry, to remain a player in American business, companies must have solid management, take bold action, and possess unyielding stamina. Yes, only the strong will truly survive.
TRACKING THE B.E. 100s
Over the past few years, there has been a rise in the number of business failures due to corporate improprieties, accounting irregularities, financial mismanagement, revenue overstatements and executive malfeasance. As a result, measures such as the enactment of Sarbanes-Oxley Act of 2002 have been put in place to require CEOs, CFOs, and corporate officers to take responsibility, for, among other things, financial accuracy and scrupulous reporting.
In developing this year’s ranking
of the BE 100S — the nation’s largest black-owned industrial/service companies, auto dealers, advertising agencies, and financial services firms, the BE Research and editorial teams have tightened our standards as they relate to the reporting of gross sales, billings, and other financial measurements of BE 100S companies. Why have we made our reporting and verification process so rigorous? So we can ensure that government agencies, corporate purchasing departments, economists, think tanks, media organizations, and, most importantly, our readership gain the most accurate account of the financial performance and ownership status of the nation’s largest black-owned businesses.In conducting due diligence for the 2004 BE INDUSTRIAL/SERVICE 100 list, BE AUTO DEALER 100 list, and the 15 companies that comprise the BE ADVERTISING AGENCIES list, BE Research and the BE 100S editorial team required all of the companies on these rankings to complete a survey that requested the following: total revenues for calendar year 2003, a detailed description of business activities, the company’s corporate structure, and confirmation that the entity is at least 51% black-owned or owns at least 51% of the controlling shares if the company is publicly traded. We also request historical data as to when the company came under majority black ownership. BE Research required that the CEO, CFO, or another current corporate officer sign and date the survey as verification of the validity of the information. And we don’t stop there. Once a company that received the survey responded, BE Research and the BE 100S editors made a series of phone calls to each company to verify survey information. They also checked the accuracy of financial and business information through government agencies, corporate purchasing offices, and industry reporting services such as Dun & Bradstreet.
Any company that received our survey and failed to provide financial information and confirmation of their black ownership, or that refused to respond to the queries of BE Research
and our editors was not included on this year’s rankings. These are companies that have not proven their financial viability or our 51% black ownership requirement. Some of the more prominent companies that failed to meet these standards are Harpo Inc., The Heritage Companies, Luster Products, Bad Boy Entertainment, Sean John Clothing, Roc-A-Wear, and FUBU.
Our BE financial services firms also underwent a stringent due diligence process. With the assistance of Barge Consulting L.L.C., we consulted the Securities & Exchange Commission to get an accurate account of the filed assets under management of our asset management firms — those companies that make investments in equities and fixed-income vehicles for institutional and individual investors. Asset management firms that failed to register with the SEC — a criterion for making the BE ASSET MANAGERS list — were not included on this year’s ranking. For example, according to the SEC, New York-based Paradigm Capital Management hadn’t filed its assets under management for calendar year 2003 at the time of the development of this year’s list. Therefore, the firm was not included on this year’s ranking. Asset managers that could not reconcile their reported assets with those found in SEC filings were required to restate their financials and resubmit new surveys that more accurately reflected their assets under management for calendar year 2003. Firms refusing to comply with this request were not included on this year’s list.
To confirm the validity of the transactions of the nation’s largest black-owned investment banks — firms that provide underwriting services for institutions and government agencies and engage in transactions involving equity and bond securities — BE Research used data from Thomson Financial Securities Data on municipal bond, corporate bond, and equity transactions to develop our listings. Thomson Financial is the industry standard bearer that researches such activity, as well as tracks information reported to the SEC.