Ohio Has Room for Improvement on INC 5000 List

As part of our work to better understand the economic growth of Ohio, Three Scale has analyzed the Inc 5000 list of fastest growing private companies in the US to see how the state stacks up in comparison to rest of the nation. Each year, Inc. Magazine releases the “Inc. 5000 List” which ranks the 5,000 fastest growing private companies in the US.

The Inc. 5000 list is ranked according to percentage revenue growth over the previous four years, in this case, from 2008 through 2011. The companies must have been founded and generating revenue by the first week of the year, able to show four years of sales, with revenue in the first year exceeding $200,000 and more than $2 million in the most recent year. Also, the companies must be US based and not subsidiaries or divisions of larger companies. The list further analyzes factors such as what cities and states had the most jobs created, which companies created the most jobs, the fastest growing industries, diversity, growth rates and revenues.
For 2011, of the 5,000 companies at the top, 3,284 were listed also in 2010. Of these companies, 514 have now been on the list for 5 years running. The “Top 10 Job Creating States” included: California (51,307), New York (37,335), Illinois (31,502), Texas (26,237), Maryland (20,074), Virginia (17,704), Georgia(16,518), Pennsylvania(13,274), Florida (12,565) and Ohio (11,608).
However, with Ohio topping the list with the 10th most jobs created, no cities in Ohio made the “Top 10 Job Creating Metros” list, which was topped by New York City, Los Angeles, Chicago, Washington D.C., Philadelphia, Baltimore, Atlanta, Dallas, Rochester and San Francisco. Across the US, the “Top 10 Job Creating Industries” list was led by Human Resources, Business Products and Services, Health, IT Services, Government Services, Software, Telecommunications, Food and Beverage, Financial Services and Advertising and Marketing.
There are 186 Inc. 5000 companies within Ohio, which at 3.7 percent of the total list is what we would expect given Ohio has 11.5 million persons relative to the United States 309 million. While this is a perfectly average number, none of our companies made the top 100 and only11 made the Inc 500 list. The average ranking for the companies within the State of Ohio is only about 2,886.
The top five companies in Ohio by growth were Product Movers in Holland (2659% growth), MFS Supply in Solon (2060%), HRM in Cincinnati (1830%), Znode in Columbus (1430%) and Mission Essential Personnel in Columbus (1356%). In terms of revenue, of companies that made the list, Momentive Performance Materials Holdings was first in Ohio with revenue at $3.8 billion and 50% growth. Filling the second spot was Newpage with $3.6 billion in revenue and 66% growth. Rounding out the top five was Jones Day ($1.6 billion, 12% growth), Staffmark Holdings ($1 billion, 76% growth) and Total Quality Logistics ($762.1 million, 82% growth).
To analyze The State of Ohio by region, we followed the regions as set by JobsOhio and The Ohio Department of Development, which are: Central, Northeast, Northwest, Southeast, Southwest, and Western. The regions containing the 3-C cities ranked the highest, with the Northeast (Cleveland) containing 71 companies, the Central (Columbus) with 52 companies and the Southwest (Cincinnati) with 39 companies. The Western (Dayton) and Northwestern (Toledo) regions were significantly back from the major city regions, with only 11 and 10 Inc 5000 companies respectively. Finally, while containing the highest number of counties (25), the Southeast region was the home to only 3 Inc 5000 companies.


Interestingly, while the Cincinnati metropolitan area fell into third overall of the three major Ohio cities in the number of Inc 5000 companies, the City of Cincinnati actually placed the highest of the three major cities, with 28 of the companies based in the area. Columbus was just behind Cincinnati with 25 Inc 5000 companies while Cleveland is home to 20. Dublin had the highest number of Inc 5000 companies out of any suburb in Ohio, housing 6 of the top companies.
The three next largest cities of Dayton, Toledo and Akron took the fifth, sixth and seventh spot on the list with 5, 5 and 4 Inc 5000 companies respectively. Mentor, just outside of Cleveland and Westerville, just outside of Columbus, also placed on our list with 4 companies each. Filling the final slot in our top ten was Miamisburg, just south of Dayton with 3 Inc 5000 companies. It should be noted that Westlake near Cleveland and West Chester near Cincinnati are also home to 3 companies but was ranked after Miamisburg due to the fact that that they have a significantly larger population.

In an attempt to create a level playing field for areas of Ohio that have significantly lower population numbers, we analyzed the counties based on the expected number of Inc 5000 companies based on the percentage of population in the county. For example, Ohio 11,536,504 residents as of the 2010 census, which is roughly 3.74% of the US total population of 308,745,538. Based on this, we would expect Ohio to have 3.74% of the Inc 5000 companies. Interestingly enough, Ohio hit this projection perfectly, as calculating this, Ohio would be expected to have 186.83 companies; in reality, Ohio has 186 of the Inc 5000 companies.
Evolving from the understanding that Ohio has exactly the number of companies expected based on percentage of population, the same calculation was applied to the counties in Ohio. From this, we built a data set that calculated expected number of companies per county compared to the real number. From this, the following performance labels were developed:
Poor: More than 2.5 companies below expected
Below Average: .50-2.49 companies below expected
Average: Within .49 companies expected
Fair: .50-2.49 companies above expected
Good: 2.5-10 companies above expected
Excellent: More than 10 companies above expected


The analysis of Ohio in this sense reveals some interesting patterns. While it comes as no surprise that Cuyahoga (Cleveland), Franklin (Columbus), and Hamilton (Cincinnati) Counties are all performing excellently, many of the surrounding suburb counties are extremely polarized. For example, while Lake and Geauga Counties are performing exceedingly well, Summit and especially Lorain are well below their projected number of companies. Similar situations are occurring in Cincinnati and Columbus, where Delaware and Clermont Counties are exceeding expectations, while most of the remaining surrounding counties aren’t performing to the level they should be based on the state average.
Other important notes include the poor performances by Mahoning (Youngstown) and Stark (Canton) Counties with both only housing 1 Inc 5000 company each and the “as expected” performances by Lucas (Toledo) and Montgomery (Dayton) Counties. Athens and Tuscarawas Counties also exceeded their expectations with 2 Inc 5000 companies per county.
In terms of jobs created by the Inc 5000 companies, Ohio ranks number 10 with 11,608 jobs created. Not only did the state as a whole rank number 10 in jobs created, the City of Columbus also ranked number 10 in jobs created by a city, with 5,796. However, the picture isn’t all positive news because the statewide average company ranking is fairly low and there appears to be very little dispersion of these leading companies throughout the state. It appears that Ohio may be able to prosper by incentivizing more of these companies to the state, especially in areas not performing to the expectation of this study.
It appears as though in some sense Ohio has exceeded the average performance of other states, but is falling short overall. While Ohio has performed in terms of number of Inc 5000 companies, it has underperformed in terms of the average company ranking, with the average being around 2800, in comparison to similarly sized. Hopefully in years to come, Ohio can build on the momentum of the existing Inc 5000 companies and draw more companies in to the state, spurring economic growth for many years to come.