Companies to watch: new Indiana program recognizes 50 that are reaching second-stage success.

• Author: Hromadka, Erik
• Position: Cover story - Company overview

THE FUTURE OF THE state's economy will likely be shaped by 50 privately owned companies recognized in an inaugural awards program that lauds the success of business leaders who have taken their operations to the "second stage" of growth. That such companies will continue to create new jobs in their communities and industries was the premise of Indiana's "Companies to Watch" program, which kicked off this year in a partnership among the state's Small Business Development Centers, Purdue University and the Edward Lowe Foundation, based in Michigan.

The winning companies were selected following an extensive nomination and judging process that reviewed some 420 companies from 66 of Indiana's counties that had at least $750,000 in annual revenue or working capital and between six and 150 employees. Each of the winners had progressed past the "start-up stage" and together the 50 winners represent $969 million in projected annual revenues and employ 4,125 across the state.

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"There is no better story to tell than that of a homegrown Hoosier company that continues to grow and create new jobs," says Gov. Mitch Daniels. "We're committed to creating the best business environment we can so these 50 Companies to Watch and all the businesses across our state continue to succeed in today's global economy."

"Second-stage businesses are quietly yet steadily generating new jobs and raising the quality of life in their communities," says Darlene Lowe, chairman of the Edward Lowe Foundation, which provided the direction for the new awards program.

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The Indiana event was the third in an effort to recognize and support such second-stage companies across the country The program was launched in 2005 by the Edward Lowe Foundation, an organization that recognizes innovation such as that inspired by its namesake, the man who created Kitty Litter and a $1 billion industry segment based on a new use for absorbent clay Michigan was as the first state to host a Companies to Watch program, followed by Arizona's inaugural event in 2006. A fourth program focused on Florida's Jacksonville area is currently underway.

According to the Lowe Foundation, a growing business typically begins to enter its second stage when it approaches $1 million in annual revenue. The transition process can continue until it hits $100 million, although for most companies $50 million represents the upper limit of second stage. The foundation notes most companies in the category have between 10 and 100 employees and typically do not have full-scale professional management teams.

One feature of Indiana's new program is that winning companies will not be eligible to compete in subsequent competitions, explains Jeff Heinzmann, director of the Indiana Small Business Development Center. He says that will keep the annual competition fresh and focused on each new group of companies that have reached second-stage growth, while allowing previous winners to serve as mentors for those following in their footsteps.

"Many second-stage companies fly under the radar screen of typical awards programs," notes Alan H. Rebar, executive director of Purdue's Discovery Park. "Through Indiana Companies to Watch, we will honor companies that demonstrate high performance in the marketplace, exhibit innovative products or processes or otherwise make those companies worth watching."

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Statistics on the winning 50 companies show their combined revenues grew rapidly from approximately $330 million in 2004 to nearly $1 billion in 2008, while employment grew from 1,700 jobs to a projected 4,125 in the same period.

"KeyBank is proud to support the Indiana companies that are successful today ... and that show tremendous promise in creating Indiana's economic future," says Gary Hentschel, president of KeyBank in Central Indiana, which is the program's flagship sponsor.

"Katz, Sapper & Miller is proud to be a part of such a wonderful event that celebrates the many innovative and high-performing companies we have throughout our state," says David Resnick, managing partner at the accounting firm. "We celebrate these second-stage companies for their accomplishments thus far, and look forward to their continued future successes."

Other sponsors of the event include Barnes & Thornburg, Duke Energy Corp. and Premier Capital Corp.

WATCH THESE COMPANIES

This year's inaugural class of Indiana Companies to Watch include a variety of businesses and entrepreneurs. Here are a few examples of stories that demonstrate business success in areas from blogging software to steel products and from old-fashioned candles to cutting-edge computer simulations.

COMPENDIUM BLOGWARE

Indianapolis

Chris Baggott and All Sales have been ramping up quickly since launching Compendium Blogware in 2007 and now have 30 employees in the Indianapolis software company They are focused on using corporate btogs to help companies generate new business by increasing their ranking on Internet search engines. Compendium helps companies identify the top 25 or 50 search terms they want to "win" and then creates blogs for each of those topics so that employees and customers can constantly update those web pages with new postings and comments.

"We're selling stuff that really resonates when people are measuring their dollars," Baggott says, noting that the company had its best month in October, despite the economic turmoil. He stresses companies must continue to spend marketing dollars to drive new business and argues that the metrics and analytics of internet-based systems give the most immediate return with a clear cost-per-lead.

Baggott has some experience launching new ventures in difficult times. He was a co-founder of ExactTarget, the e-mail provider that has grown into a major Indiana employer and was launched in the aftermath of the dot-com collapse. He says such environments when investment dollars are difficult to obtain make the surviving companies stronger.

"Those early lean lessons of having to focus on the company and creating value can make a big difference,"...