How to Make Bigger Better

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PARTNERING UP.

That little epiphany prompted him to stop thinking like the founder of a struggling startup and to start acting like the CEO of the company he hoped DrinkWorks would become. In 2000 he hired a director of operations. The next year, DrinkWorks moved into a 2,000-square-foot space with room to expand. "We created a fun, amazing environment, with a large creative room for brainstorming and a surround-sound system on which we played our favorite music," says Humphrey. "Immediately we found that good people wanted to work for us and we had almost no turnover." By 2003 the $6 million company had 14 employees.

When it seems the only way you can take on a new client or launch a new product is to clone yourself and your staff, take a look beyond the four walls of your company. Merging with another company, outsourcing, or acquiring another business may be the best way to keep growing.

Outsourcing became a necessity for Morgan Roach, who started Ncompass in June, 2001, to make software that helps luxury auto dealers train their sales staff. The $2 million Orange (Calif.) company had a handful of clients its first year. Then Roach signed one of the largest Mercedes dealerships in the country. "After that, things started moving really fast," Roach says.

FLEX TIME.

Soon Roach was spending three-quarters of his time on the road visiting prospects and installing his proprietary software systems for about 80 clients. He hated being away from his wife and four young sons. But he knew that expanding his 23-employee staff would be a mistake. "Adding staff would be a huge management expense for me, and ramping up that fast could have killed my company," he says.

So in June, 2004, Roach partnered with Anaheim (Calif.)-based USnet, whose computer technicians now handle the installation, training, and implementation of Ncompass' software. Roach has slashed his travel from several days a week to three days each quarter. "My wife really needed me home to help out, " says Roach. "My not having to travel so much has been great for all of us." In the past six months, Ncompass' revenue has doubled.

Ada Shapiro faced a similar decision -- whether to expand to accommodate customer demand -- at an age when other business owners are thinking about retiring. The 70-year-old became CEO of Carolina Marking Devices in 1996 after the death of her husband, Sol, who had founded the Charlotte (N.C.) company in 1957. Shapiro brought steady growth to the $3 million, 45-employee company, securing dozens of government contracts for its custom-made rubber stamps, corporate seals, and badges.

HELPING HANDS.

Her customers began requesting vinyl banners and signs. But producing them would have required costly digital equipment and the creation of an art department. Shapiro didn't want to make the large investment that would entail, nor did she want to take on any debt at this point in her life. She didn't relish the thought of putting in longer hours, either.

At an industry meeting in 2003, Shapiro asked the CEO of another similar business, Kinney Stamp & Engraving, to consider a merger. The companies had been friendly rivals for years, but in January, 2005, Kinney's 13 employees and sophisticated equipment moved into Carolina Marking's 23,000-square-foot production facility. Shapiro is CEO, and Fred and Ron Kinney are senior vice-president and senior manager, respectively.

"The extra management layer will really help me, not only to take time off but to do more of the creative work and planning and less day-to-day administration," says Shapiro. She's spending more time with her 3 1/2-year-old grandson. "My kids say they hadn't heard me this happy and excited in 10 years," says Shapiro.

SCHEDULE FOR CHANGE.

Often, important partnerships are less formal. Humphrey joined the Young Entrepreneurs Organization in 2000 to take advantage of its mentoring program. Later that year, he created an advisory board of entrepreneurs he had met through that group, including the president of a regional accounting firm and the former president of a military contractor.