What drives growth? In a word: innovation. The 50 Fastest Growing Private Companies in the greater San Fernando Valley have not just embraced that concept but applied it throughout their operations and cultures. For instance, creativity in finding new lines of business has been vital to the growth of a venerable family-owned travel agency Montrose Travel, which has expanded even as the industry has contracted around it. It’s also been a key component for Reflex Sales Group of Encino, a young company started by two fraternity buddies that is bringing a fresh outlook and new technology to a long-established industry. The companies on this year’s list, which ranks companies by revenue growth from 2012 to 2014, experienced an average growth rate of 217 percent, compared with 110 percent on last year’s list and 88 percent in 2013. This year some new criteria were introduced: For the first time, companies had to have at least $5 million in 2014 revenue in order to qualify for the list. What hasn’t changed is that technology and online companies dominate, accounting for nearly half the fastest growing local companies. But don’t look for sexy Westside names such as Honest Co., Tinder or Snapchat. The Valley list is more likely to contain fastest growing firms you’ve never heard of – back-office players expanding in the B2B space, particularly in financial services, staffing and IT. That’s true for the No. 1 business on the list, Payscout Inc., a Sherman Oaks global payment processor that has gained acclaim as a new-generation provider of merchant banking services. Its emphasis on processing online credit card transactions for e-commerce retailers has brought a 4,124 percent increase in revenue since the company was founded in 2012 by Chief Executive Cleveland Brown. Brown said finding talented employees and space to house them have been the biggest hurdles so far. “We resolved the office-space issue by building out a brand-new worldwide headquarters,” he said. In order to keep up with the workload, he has allocated more time and budget to recruitment activities, along with having to set higher entry standards for new employees after a few people didn’t work out and had to be let go. Putting an arcade room in the company’s new offices “didn’t hurt” recruitment, he said. Unusual entries Payscout isn’t the only payment processor on the list. It’s joined by No. 24, USAePay in Glendale, which reported 70 percent revenue growth over the past three years despite its longevity: It was founded in 1998. Another fast growing industry that is heavily represented in the Valley is employment staffing services, which has benefitted from the state’s improving employment picture. In September, California’s unemployment rate fell below 6 percent for the first time in almost eight years. Companies such as Ronin Staffing in Glendale; Versi-Staff Solutions Inc. in Encino; and DNA Search Inc. in Reseda, which specializes in health care industry job placement, are taking full advantage of the employment upturn, with all reporting more than 50 percent revenue growth on this year’s list. Automotive firms stood out on last year’s list because they reappeared after suffering a revenue downturn during the recession. Keyes Automotive Group in Van Nuys, Toyota of North Hollywood and Galpin Motors Inc. in North Hills are back again, with revenue continuing to grow but at a slower pace than last year. Three companies on the list are in the food service category: Lenny & Larry’s in Northridge, Mendocino Farms in Studio City and Sharky’s Woodfired Mexican Grill in Westlake Village. Lenny & Larry’s, a high-protein snack maker, announced this month that it has inked a marketing partnership with Madison Square Garden as part of its expansion to the East Coast. The company’s snickerdoodle and chocolate chip cookies will be sold at the sports venue and the company will partner with the New York Rangers youth hockey program as part of the deal. Another company from a traditional sector is Reflex Sales Group. The Encino company, which ranks No. 12 on this year’s list, liquidates overstock merchandise from consumer brands and redistributes the products domestically and internationally. “We’re always buying at a discount – paying around half of wholesale – and we pay upfront for everything,” said Chief Executive Travis Smith. He co-founded the company with fellow Cal State Northridge grad Joe Notaro, who serves as the company’s president. At ages 29 and 31, respectively, Smith and Notaro are considerably younger and more tech-savvy than most people in their industry, Smith said. That has given them an advantage, especially in developing international buyers for their goods, which range from footwear to electronics, toys, housewares and cosmetics. Two years ago, the company won an exporter of the year award from the Small Business Administration. But their youth has also been a challenge. “We had to develop a reputation for ourselves in an industry where there’s an inherent lack of trust,” Smith said. “We pride ourselves on being a brand that stands behind everything we sell, but gaining that trust is still a battle.” One firm that is perennially on the list is Montrose Travel, a family-owned travel agency founded in 1956. Joe McClure, president, took over the company in 1990 when it had revenues of $4 million. At the time, there were 45,000 travel agencies in the country. But travel was one of the first traditional service industries to be upended by the Internet, and as a result, there are now 11,000 to 12,000 U.S. travel agencies, McClure said. Montrose has buoyed its business by expanding into five unique operating divisions. Along with the traditional personal vacation, group travel and corporate lines of business, the firm has established two fast expanding divisions – handling travel bookings for credit card reward accounts and partnering with 1,000 home-based travel agents – that account for much of its growth. McClure noted that his firm’s longevity is due in part to its remaining debt free and better able to withstand devastating events such as the Sept. 11 terror attacks and the economic meltdown of 2008. “We sailed through those hard times and had the cash to invest and spend on advertising and marketing when most companies were hunkering down, laying people off and closing offices,” he said.
