The Inner City 100: True Grit

The one hundred companies on our annual list are surviving the recession by watching costs, serving core customers, and aggressively pursuing new business

VisionIT's David Segura with his mentor, Lydia Gutierrez of Casa Hacienda Foods. MICHAEL NEMETH/WONDERFUL MACHINE

By Jeremy Quittner

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In this issue, BusinessWeek SmallBiz plans to take you on a journey to the heartland—although by "heartland" we don't necessarily mean Middle America. Instead, we'll be introducing you to the country's fastest-growing inner city businesses. Our purpose is twofold.

First, we at SmallBiz are excited to be the new media partner for the Inner City 100, a ranking of the 100 fastest-growing companies—based on the five-year compound annual growth rate of their sales—in America's inner cities. The list is produced by the Boston-based not-for-profit Initiative for a Competitive Inner City, founded in 1994 by Michael E. Porter, the Bishop William Lawrence University Professor at Harvard Business School. The ICIC's aim is to foster economic growth in inner cities, and identifying high-growth inner city companies is one way it showcases the competitiveness of these areas. The ICIC has pinpointed 172 inner cities, ranging from lesser-known enclaves such as Abilene, Tex., and Joliet, Ill., to more familiar places such as Chicago and New York City. Each inner city is defined as a central city area with a population greater than 100,000. On average, the poverty rates and unemployment rates in the inner cities are more than twice that of the surrounding city populations, and median household incomes are just half those of surrounding areas. Even a cursory consideration of these statistics makes clear the impact that a fast-growing company can have on its neighborhood. The Inner City 100 companies have collectively employed 34,500 inner city residents, and in the past 11 years have created 63,000 new jobs.

Second, as American demographics shift and the country becomes more ethnically diverse, these companies and their diverse workforces provide a glimpse of the future. Their leaders don't take that responsibility lightly. "The future of U.S. business is in creating truly diverse organizations," says David Segura, president of Detroit's VisionIT, an information technology staffing and solutions company, and the fastest-growing company on this year's list. VisionIT has a five-year compound annual growth rate of 103% through 2007. It had 2008 revenues of $103 million and is expecting revenues to jump an additional 30% this year. "Those who make their businesses centers of excellence, who know how to grow talent from all different backgrounds, age groups, and ethnicities" will drive the economy for the next 50 years, says Segura. VisionIT also shows how a successful inner city business can be a positive influence on its neighborhood. In addition to its outreach programs, scholarships, and internships, VisionIT makes a point of training and hiring from within the local communities in which it operates. So far it has grown to 850 employees, and Segura makes sure to locate each of his 15 offices—from San Francisco to Washington, D.C.—in an inner city.

The Inner City 100 list also calls out more vibrant sectors of the economy, as service companies take over the dominant position once held by construction companies. Most of the companies on the list focus on business-to-business products and services, rather than serving a consumer niche. But perhaps surprisingly, more than half of Inner City 100 CEOs say they have plans to add staff in the first half of 2009, and nearly the same amount say they expect steady growth. Only 11% expect a decline in sales.

In this package, we'll show how these enterprising entrepreneurs are managing to sustain themselves and even expand during a recession. We'll bring you an interview with Porter and some advice about how to work with economic development agencies to expand your company. We hope you'll learn as much from reading about these entrepreneurs as we did from hearing their inspiring stories.

Strength in Adversity

If a tattered economy is the enemy we battle, then America's inner city entrepreneurs are on the front lines. From the depths of Detroit to the downtowns of Boston, Hartford, and Denver, a unique group of urban business owners is powering through the recession—and in many cases, profiting from adversity.

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