SD&I Fast50: How does the Fast50 work?
The company’s ranked in the SD&I Fast50 are recognized and ranked based on percentage growth and revenue growth, and their overall ranking balances those two considerations. To do so, it employs a simple but effective algorithm that was provided by Karen Kohl, Ph.D., a professor with the University of Southern Mississippi’s Mathematics Department.. Here’s why we balance those two factors:
If we ranked companies purely on revenue growth, it would tend to favor larger companies. Think of it this way. Let’s set up two non-existent companies: ABCDEF Security and GHIJKL Protection. ABCDEF Security is a $400 million company and has $4 million in average growth, while GHIJKL Protection is a $200,000 company saw average growth of $125,000. On a purely revenue growth comparison, GHIJKL’s $125,000 growth pales in comparison to ABCDEF’s $4 million growth. Conversely, if we ranked the companies purely on percentage growth, it would tend to only favor smaller companies that can see early explosive growth. In that case, GHIJKL Protection’s 62.5% growth well outshines the 1% growth of ABCDEF Security. And that’s why we balance it.
We also balance the equation by studying two years of financial change. By using two years, we also ensure that high-growth companies aren’t just “flash in the pan” types of businesses, but are able to sustain themselves. It also balances ups-and-downs. For example, one company on our list had negative growth in its first year but had such strong growth in year two that the average was powerfully in the positive.
Strong mechanics make it work
To begin with, companies confidentially report to us there three most recent fiscal years worth of gross revenues. Using those numbers, we compute the revenue growth and percentage growth for each of their two most recent fiscal years. We average the two years of growth numbers to generate an average revenue growth for the company, and we do the same for the company to create an average percentage growth. Companies are then ranked based on their average revenue growth over the last two fiscal years, and we also rank them by percentage growth during that same time period. We publish those lists (you can find them on pages 55, 58 and 66). We compute the overall ranking by averaging their position on each of those lists and then ordering the companies by their average overall ranking. If there is a tie in the overall ranking, we let average revenue growth be the tie-breaker. And that’s how we come up with the list of the SD&I Fast50 Fastest Growing Systems Integrators in North America.
In addition to financial data, we also request additional data (markets served, growth verticals, public v. private), and we use that data to give you a more holistic view of these fast growing companies, so you can understand what’s driving growth for these dealers and integrators.
Companies may enter as long as one of their key business efforts is the installation of security solutions (e.g., video, intrusion, access control, perimeter detection, biometrics, etc.). It doesn’t have to be your sole business effort, but it does need to be a definitive part of your firm. The program accepts entries between Dec. 1 and Jan. 31, so if you missed out this year, mark your calendar to get with your CFO and get that data to us. If you’re growing FAST, we want to recognize you!
