Rapid growth can be hard to manage and even harder to sustain, so it’s perhaps no surprise that nearly two-thirds of the companies on this year’s list of fastest growing private companies were not on last year’s list (including nine of the top 10). And if history is any indicator, most will not be on next year’s list.

There are a few companies that have managed to hang on, year after year. Then there are those that have been successful, only to be acquired, see their sales flatten, or be converted to a public company.

That’s why this remains one of the most volatile lists published by the Business Journal. A discussion of the three types of companies newcomers, old-timers and drop-offs follows.

Newcomers

Of the top 10 companies on this year’s list all but one of which are new to the list seven are in some way related to technology.

Although not in the top 10, Avus Systems and Peripherals Inc. is typical of many of the newcomers on this year’s list. The City of Industry-based assembler and distributor of personal computers and peripherals had revenue growth between 1995 and 1997 of 214 percent putting Avus in the No. 14 spot.

Like many of its fellow newcomers, Avus is relatively young (founded in 1991) and has benefited from growing consumer demand for home computers and the accessories that go with them, such as printers, scanners and disk drives.

Avus assembles and then distributes what are known as “white box” computers PCs without a brand name. Those computers represent about 48 percent of the growing personal computer market, said M. Calvin Lam, Avus’ president.

Lam said the key to his company’s growth is building a strong distribution system including opening offices in Chicago and Dallas. “Once the pieces came together, growth came about pretty fast and pretty predictably,” Lam said.

Irvine Optical Co. LLC, another newcomer to the list, also relies on the computer industry. The Burbank-based company, ranked No. 12 with 1995-97 revenue growth of 226 percent, makes machinery used to inspect semiconductor chips as they’re being manufactured.

Kathy Mercer, director of business planning, said that as demand for computers has grown, semiconductor manufacturers must make chips more quickly and with fewer defects. “So the growth (of Irvine Optical) is because the semiconductor industry has increased process control and capacity,” she said.

Many of the other newcomers also rely on the growing demand for personal computers, including graphic design software maker Nova Development Corp., No. 3; electronic office equipment distributor New Age Electronics Inc., No. 5; and technology consulting firm Software Management Consultants Inc., No. 38.

But not all newcomers are tied to computers; many are in more traditional fields such as apparel, manufacturing and finance, including this year’s No. 1 fast-growing company, Manhattan Beach-based Platinum Capital Group, a mortgage broker.

Oldtimers

The very nature of fast growth is that it usually lasts a short time before giving way to steady, slower-growth maturity or fizzling into oblivion.

But more than one-third of the companies on this year’s list are returning members of last year’s class. And 10 of those 36 returning companies were also on the 1996 list, meaning they have been able to sustain a fast pace for several years.

What’s behind their ongoing success? Sometimes it’s internal growth, often it’s acquisitions, or both. Sometimes it involves broadening into new product lines, or expanding into new geographic regions, or both.

Take Belkin Components. The Compton-based computer accessories manufacturer is No. 28 on this year’s list, was No. 33 last year, No. 76 in 1996 and No. 45 in 1995.

Belkin’s market share for surge protectors devices that prevent computers from being damaged by electrical power spikes has gone from 6 percent two years ago to 40 percent today.

“You need to figure out how you’re going to grow,” said Chet Pipkin, Belkin’s founder, president and chief executive. “And in our case we have decided that our strategic approach will be to identify market segments and/or product families that we can add tremendous value to and be, by far, the best supplier.”

Belkin plans to have an 80 percent to 90 percent share of the surge-protector market within a year, Pipkin said.

Another company returning to the list and breaking into new markets is Torrance-based Sports Source. The seller of sporting goods and apparel is ranked No. 52 this year, was No. 45 last year and No. 71 the year before. The company has made most of its money selling golf clubs, backpacks, jackets and other sports clothing and equipment through retail stores and catalogs. It is now diversifying by soon opening an electronics store in Palos Verdes.

John Franklin, the company’s co-president, said sports equipment and electronics may not seem like similar businesses, but they are both highly competitive and price sensitive, with profits dependent on cutting good deals with product manufacturers. “We’ll continue to stick with businesses where you make your money on the purchase side,” Franklin said.

Calabasas-based Breath Asure Inc. another three-year veteran of the list also has kept growing by breaking into new markets. Initial growth was fueled by its breath-freshening tablets, but over the last year and a half Breath Asure has introduced a chewable mint and a chewing gum. “You have to continuously launch new products to remain competitive and remain attractive to retailers, because you’re constantly fighting for shelf space,” said Lauren Raissen, the company’s president.

One thing returnees to this year’s list have in common is that none is in the top tier and few have been in the past. The top-ranked company that has been on the list three years in a row is only ranked at No. 20.

Alan Carsrud, director of the UCLA Venture Development Program, said that makes sense, because the hyper-growth companies typically burn out.

“To me, it’s not, ‘Are you on the top of the list one year?’ ” he said. “To me, it’s the ones that continue to churn out 75 or 80 percent growth rates. These are the ones you’ve got to admire. They’ve obviously got something going right.”

Drop-offs

While many companies have returned to the list of fastest growing companies several years in a row moving up or down, or keeping a steady growth rate most drop off the list almost immediately after they appear.

Some disappear due to their business going sour, others merely experience a slowdown in sales growth. Still others are bought by another company or go public, and therefore no longer qualify for the list.

One of last year’s fastest growing private companies was Wareforce Inc. The El Segundo-based company, now called Wareforce One Inc., was 10th on last year’s list with 207 percent growth for the period. Spurred by such success, Wareforce went public last July.

Wareforce sells computer hardware, software and peripherals to businesses, universities and governments, including Los Angeles County. It also offers computer-related services, such as installations, network design and maintenance programs.

“We’re in a really kind of exciting growth period,” said Marcia Mazria, Wareforce’s vice president of marketing and communications.

Another company that does not reappear this year is Internal & External Communication Inc., a designer of employee training software. That Marina del Rey-based business, which was ranked No. 6 last year with a growth rate of 244 percent between 1994 and 1996, dropped off because it was acquired by a Dutch publishing company, Wolters Kluwer NV, on June 1.

Internal & External, which makes training software for Federal Express Corp., Toyota Motor Corp. and UAL Corp., continues to operate as an autonomous subsidiary, and has maintained the same management as when it was privately owned, said Jeannette Bloomfield, director of marketing.

“This industry is going through a lot of changes and it just made sense for us to hook onto (a company) we felt comfortable with and continue to run our business,” she said.

One of last year’s highest fliers was Culver City-based Kent & Spiegel Direct Inc., which marketed products through television infomercials and had a 244-percent growth between 1994 and 1996 that placed the company at No. 4 on last year’s list.

Earlier this year, however, the company filed for Chapter 11 bankruptcy protection. Founders Marsha Kent and Peter Spiegel did not return calls for comment last week, but according to the company’s bankruptcy papers, Kent & Spiegel’s debt was close to $30 million at the time of the May filing.

Kent & Spiegel had success selling the Abflex abdominal exerciser, which generated sales of nearly $80 million. But it began having problems when its Bun and Thigh Sculptors were found to be defective, and customers returned them, demanding refunds, according to the filing.

Another name not on this year’s list is Pico Rivera-based Power Lift Corp. The company, which sells Caterpillar forklifts and other industrial equipment, was No. 1 on the 1996 list; last year, it dropped to No. 15.

In 1997, the company had $43.1 million in revenues just 3.9 percent higher than in 1995.

Robert Ng, Power Lift’s director of marketing and strategic planning, said much of the earlier growth came from its 1994 purchase of competitor Clark Lift.

That acquisition boosted Power Lift quickly, but also has taken time to digest. Power Lift did not make another purchase until earlier this year when it bought Santa Fe Springs-based Certified Lift Truck Co., another competitor. Based on that purchase, Power Lift is projecting 1998 revenues of at least $60 million and it expects to continue acquiring competitors.

“We’re not fading away,” Ng said. “I can tell you that.”