One of the great under-told stories in business is the power of private companies.
Most business magazines and business news sections in newspapers focus not on private companies but on public companies. That makes sense because public companies generally are bigger, and since they attract investment from the public, they should get scrutiny.
But where many go wrong is in mentally dismissing private companies. They’re often viewed as small, insignificant, family affairs. The B-team.
In fact, the opposite is true. Private companies are the backbone that holds up the economy.
Most businesses are private. In Los Angeles County, there are more than 200 public companies, but there are 235,000 companies total (not including the self-employed). Simply put: 99.9 percent of businesses here are private.
What’s more, private companies represent the future. Today’s obscure fast-growing young enterprises are tomorrow’s Countrywide or Hot Topic or Mercury General.
The importance of private companies may be overlooked and underplayed, but this issue of the Business Journal is one attempt to shine a light on local private companies by ranking the fastest-growing among them. If you haven’t done so already, I invite you to look over the special section within this issue. We rank the top 100 private companies in the county by growth in revenues from 2003 through 2005. If you scan down the list that begins on Page 40, you’ll see true economic strength and vitality.
For example, the last company on the list No. 100 had growth of more than 40 percent over the two years. (By the way, last year the lowest on the list had growth of 30 percent.) Most any public company would brag in their slick annual report about a growth rate of half that.
The No. 1 company on the list, Major Properties Realtors, grew more than 990 percent. The No. 2 and 3 companies each grew more than 600 percent. For that matter, all companies in the top 12 grew at least 200 percent.
Granted, most companies on our list are small. But some are sizeable. Newegg.com (No. 17) has 1,200 employees. American Apparel (No. 18) has 4,400.
I’m lightly amused by the civic hand-wringing that occurs whenever a big local public company gets bought out. When that happens, civic leaders inevitably ask what they believe is an important question: What can we do to stop losing “all our headquarters”?
I don’t like losing big public companies either, but in a philosophical sense, the loss of a big public company is simply part of the life cycle. Companies are born, they grow, they get old and they go off to their end, perhaps in a merger.
A more important question is this: Do we have a bounty of thriving private companies?
If the answer is yes, that means the main pillar of the local economy is sturdy. If the answer is yes, that means many of the fastest-growing and most successful of the private companies will become our next generation of public companies. If the answer is yes, then the civic minded can get a decent night’s sleep.
If you look over this special section, you can’t help but see the power of our fast-growing private companies. And I’m sure you’ll discover that the answer to that more important question is yes.
Charles Crumpley is editor of the Business Journal. He can be reached at
[email protected]
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