It started with a phone call from Whole Foods in 2004.

Officials with Las Vegas-based Just Like Sugar had just developed a natural sugar substitute designed to look and cook like the real deal. They hadn’t even marketed the product when a grocery coordinator from Whole Foods in Florida called and ordered 100 cases of Just Like Sugar. Today, the company’s products line shelves in Whole Foods stores countrywide, and Just Like Sugar is reaping the rewards. Its annual revenue gained more than 13,200 percent in three years, going from $345,438 in 2004 to $46 million in 2007.

Now, the company’s quick rise has drawn attention from a national publication.

Just Like Sugar joins seven other Nevada businesses on the Inc. 500, a list of the nation’s 500 fastest-growing businesses based on revenue between 2004 and 2007. The roster, published in the September edition of Inc. magazine, features Silver State companies in a wide range of industries, from real estate and finance to security and printing.

Despite the state’s ailing economy, Nevada fared well in the 2008 Inc. 500. The eight businesses on this year’s compilation doubled 2007’s four Nevada-based Inc. 500 companies. And Nevada’s Inc. 500 contingent grew faster by far than any other state’s grouping; its average expansion rate of 4,690 percent handily beat out No. 2 New Jersey, where Inc. 500 businesses grew 2,545 percent on average.

Mike Hofman, executive editor of Inc., said Nevada’s slowing economy needn’t spell doom for companies. Businesses that produce an unusual good or service, for example, can put up brisk sales even in harder times.

Innovation proved the path to success for Just Like Sugar.

Doctors asked the company’s owners in 2003 to develop a sugar substitute sans artificial sweeteners and man-made chemicals. The answer? A sugar replacement made from chicory root, calcium and vitamin C, with orange peel for sweetness. It’s a natural product that appeals to health-conscious consumers leery of the warning labels slapped on some faux sugars, said Chief Executive Officer Michael Sylver. Doctors refer the sweetener to patients, and Just Like Sugar execs plan to expand the business in coming months with a brown-sugar substitute, cookbooks, chewing gum and a fiber drink.

“It’s a recession-proof product,” Sylver said. “It’s totally unique. You have doctors all over the country and all over the world telling patients they need to get off sugar for their health.”

Just Like Sugar isn’t the only Nevada-based Inc. 500 member capitalizing on health issues.

HealthDataInsights, an information-technology business that helps insurers, health plans and Medicare recover claim overpayments, landed at No. 388 on the roster.

Other Inc. 500 businesses in Nevada were Group Gemstone, a Las Vegas condominium developer; SellingSource, a Las Vegas company that provides marketing, technology and data services for financiers of auto loans, cash advances and credit cards; Elko-based Modern Concrete, which makes Ready-Mix concrete for residential and commercial customers; Sting Surveillance, a Henderson security business; The Siegel Group, a Las Vegas redeveloper of apartment communities; and commercial printer Abbott’s Custom Printing of Las Vegas.

When they’re not scoring thanks to one-of-a-kind products, Inc. 500 businesses find prosperity through “superior execution of a familiar idea,” or by seeking out a business model that countervails economic trends, Hofman said.

For new and improved execution of old ideas, take Sting Surveillance. The company provides customized surveillance systems to businesses and homeowners. Sounds straightforward, right? A camera, a video recorder, some monitors. But Sting carved a special niche through regularly updating its technology. Company officials have worked with a software developer for six years, constantly adding new functions to its digital video recorders.

“We identified an industry that hadn’t changed the technology in three decades,” said President Jonathan Fine. “A lot of new technologies were being introduced in the industry, and the companies that had been in business for 15 years, 30 years or 50 years were not adopting those technologies. We came in and provided the technology. We literally never said, ‘no.’ ”

At SellingSource, economic downturns play into the company’s business plan.

SellingSource — the only Nevada company from 2007’s Inc. 500 to make the 2008 roster — operates credit-reporting functions and provides software for banks that provide cash advances, credit cards and installment loans. Today’s tighter financial markets mean fewer conventional funding options for consumers, and rising unemployment and falling home values make it tougher for people to stay ahead of their bills. Thus the rising demand for small, short-term loans such as cash advances.

“Our business thrives in soft and strong economies because there’s always a group of people living on the financial edge,” said Derek LaFavor, chief executive officer of SellingSource. “But when the economy turns, that market increases, and it’s a boon to our lenders. We have the tools and strategies to identify consumers and get them to lenders.”

Entrepreneurs also thrive in hard times when they position themselves as low-cost providers looking to steal business from established competitors, Hofman said.

“They say, ‘We’re mean, we’re lean and we’re aggressive, and if you’re used to paying a certain amount for this service, we can save you 10 percent to 15 percent,’ ” Hofman said. “They feed off negative trends in the economy.”

Today’s business climate offers plenty of negative trends to exploit. Taxable sales in Nevada fell 6 percent in June when compared with the same month in 2007. Visitor volume in June dropped 3.1 percent compared with June 2007, and the median resale home sold for 23.9 percent less in July than it did a year earlier.

Still, Nevada posted more growth in the Inc. 500 than any other state. On top of its nation-leading average expansion rate, the Silver State also boasts the only city — Las Vegas — with two companies in the top 10.

Hofman credited sustained business growth in Nevada to nonstop ferment among the state’s businesses. Regions with higher-than-average bankruptcy rates typically enjoy greater startup activity as well, he said.

“Economic churn is painful,” Hofman said. “It’s not as pleasant to live through as a period of stability. But stability can also be paralyzing. One thing about Nevada, it’s a really dynamic place. You may have companies going out of business, but you also have new companies that are small and nimble and creative starting up and taking on entrenched interests. They’re looking for better ways to do things, and they can grow very fast.”

It’ll be interesting to see what happens to the Inc. 500 next year, when 2008’s economic torpor factors into earnings, Hofman said. It’s conceivable that local companies, especially operations related to the real estate sector, will post less-impressive revenue increases. But if the Inc. 500 offers one message, it’s that opportunities always exist for entrepreneurs willing to rethink traditional business models.

“Even in trying times,” said Hofman, “you can have great economic success at the company level.”

Credits: Review Journal

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