Fast-growing companies bring more than their own bragging rights to Orange County’s economy.
Their ripple effects stir the local market with demand for goods and services, providing a boost that’s no doubt magnified amid an economic recovery that remains slow.
Don Nikols, principal of Newport Beach-based bridge lender Nikols Co., has broken down his own fast-growing firm’s spending in the local economy. It has come to about $27 million since the company started in 2007—spread over various vendors and service providers ranging from bankers and lawyers to printers.
The firm has almost doubled its annual revenue since 2010 and had $2.3 million in revenue during a 12-month period through June. That’s landed Nikols Co. in the No. 68 spot on this week’s list of fastest-growing local companies (see list, starting on page 36; related stories throughout issue).
Nikols Co. shifted its focus in 2008 from financing commercial buildings to the residential real estate industry, funding construction services on 1,000-plus homes that have been rehabbed and resold.
“We can see ripple effects … many multiples of our direct internal volume or profits,” Nikols said.
The firm’s growth has recently been accompanied by a boost in spending on professional services, including work by a small law firm in Irvine and a Costa Mesa-based marketing company.
“Eighty percent of the total vendor and service expenses … has been in the last 12 months,” Nikols said.
Kareo Inc. in Irvine has seen its revenue quadruple during the past two years to $13.8 million. The healthcare-software maker, which has boosted work force from 14 to 130 in the same time span, is No. 22 on this week’s list (see story, page 8).
“We believe company growth has big local and societal implications,” spokesperson Terry Douglas said. “Kareo grows through selling to physicians, medical offices and other healthcare providers. Because of products we offer, these business run better. Frankly, some survive when the chances seem low. That means office staff, nurses and physicians get to keep their jobs.”
More jobs mean more corporate spending, including utilities, telecommunication resources and data-center space. “That [also] means more food ordered for staff lunches … more coffee and sodas ordered from local vendors,” Douglas said. “Corporate growth is broad-reaching, and for us it becomes personal pretty quickly.”
Irvine-based InnovaCounsel LLP targets growth companies for the part-time general- counsel services it offers.
“Whether it’s the utilization of outside law firms or in-house counsel, a company that’s accelerating its growth definitely increases the need for legal services,” said InnovaCounsel Chief Executive Stuart Blake, who has more than 30 years of in-house legal experience at Dallas-based Kinko’s Inc. and Baskin-Robbins USA Co. in Canton, Mass., among other companies.
A fast-growing company that doesn’t yet have its own legal department tends to “spend a tremendous amount of resources through a law firm or simply not address some of the legal needs,” Blake said.
“We’ve tried to address that gap in the market by making general counsel services available to that fast-growing segment,” he added.
InnovaCounsel’s 12 attorneys have been serving a client base that includes mostly local companies
Mark-it Smart Inc. in Santa Ana is another company that needs more services to keep pace with its fast growth. The company designs customer-loyalty programs for casinos, develops websites for online marketing, and makes sales kits for corporations, including Irvine-based Allergan Inc.
Mark-it Smart notched a 78% increase in revenue during the past two years to $3.6 million, good for the No. 84 spot on the list. It has 13 employees, up from eight two years ago.
“We’ve been growing fast, but we don’t really have middle management per se,” said Mark Ditteaux, president and chief operating officer.
Much of the work falls on Ditteaux, who said the company is getting ready to build a management team and invest in leadership training. He recently began meeting with Jill Tomac, owner of Leadership Resource Group LLC in Corona del Mar, about her executive coaching service.
“As Mark-it Smart continues to grow, it is no longer realistic that he can take this on himself,” Tomac said. “It is important for him now to consciously and deliberately create a corporate culture that emphasizes employee growth and development.”
Tomac was director of employee development at Pacific Life Insurance Co. in Newport Beach and a consultant to a number of other clients before establishing her firm in 2002.
Ditteaux said has been “interacting more with my attorneys, and a host of other organizations” as the company broadens its contacts and infrastructure. “This is a great indication of how our rapid growth will lend itself to more hiring and how we’ll continue working with other outside organizations to help us,” he said.
Real Estate Boost
Fast growers also give a boost to the local real estate market.
Revenue gains and expectations of more hires have prompted digital marketing firm 29 Prime to move from a 6,000-square-foot headquarters in Mission Viejo to a 45,000-square-foot office in Irvine late last year. 29 Prime reported $8.7 million in revenue for 12 months through June, representing an increase of almost 2,000% since its 2010 launch. The jump put the company on the No. 1 spot on this week’s list.
29 Prime has about 200 employees, including sales representatives, technicians and customer-service staffers, according to spokesperson Michael Orefice.
He noted the new office has room for 100 more workers.
29 Prime worked with the Santa Ana office of Lincoln Property Co. in securing a multiyear lease on two floors at 9701 Jeronimo Road. More money was spent with other local companies as 29 Prime settled into its new headquarters.
“We had to do tenant improvements, get cubicles, computers chairs—major investments for the company,” Orefice said. “We also have hundreds of people who go to breakfast and lunch in the surrounding restaurants and cafes.”
