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THREE AREA FIRMS HAVE SECRET TO SUCCESS

Deborah Williams started her computer company in 1992 with some space in her basement and a stack of credit cards. She picked up a business education along the way.

"It never dawned on me that a customer would bounce a check," she said. "I became more worldly about that."

Ms. Williams' company, Black Cat Computer Wholesale in Amherst, squeaked through narrow financial straits to land on Inc. magazine's prestigious list of fast-growing small companies. The computer maker placed No. 183 on the Inc. 500, one of three Western New York companies to make the list released earlier this month.

The others are Western New York Contract Staffing Services, a Williamsville employee leasing firm, and Oneida Sales & Services, a Buffalo concrete and fencing company.

The local companies show that it's possible to thrive in Western New York's economic climate. It took sales growth of 559 percent since 1992 to make the list. And companies had to start with already substantial sales of $200,000 or more.

"These companies are a pure case of what the entrepreneurial spirit is all about," said Franklin J. Sciortino, district director of the U.S. Small Business Administration in Buffalo. "If you have the right product or service and you work hard, you'll make it -- and you can make it in Western New York."

Could one of the three be a Microsoft in the making? List alumni like Microsoft, Gateway 2000 and Domino's Pizza show that some small businesses just keep growing, graduating from the Inc. 500 to the Fortune 500.

But the stories of the Western New York companies demonstrate that there's no formula for entrepreneurial success. They come from the basement of a home, a suburban office park and from the grounds of a closed steel mill. They're run by women and by men, one of them a minority. Their owners followed different paths, encountering their own trials and finding their own solutions.

Concrete Results Fred Saia's concrete and fencing company made the Inc. list by being in the right industry at the right time. Oneida Sales & Services was No. 321 this year, a repeat appearance after coming in at No. 488 last year.

"The construction industry in Buffalo in the past three years has been wonderful," said Saia, owner of the company. Major projects at Roswell Park Cancer Institute, the Buffalo airport and the Marine Midland Arena boosted Oneida's business, mainly its ready-mix concrete.

Saia, a Native American, started Oneida in 1974 as a contractor for Sears, installing appliances and garage-door openers. His focus shifted toward fencing during the 1980s. But during the recession of early 1990s, business slowed nearly to a stop.

"I kept going, but my wife was the main breadwinner at that point," Saia said.

Then a cement contractor approached Saia with an offer to lease a plant in the Gateway Trade Center in Lackawanna, part of the former Bethlehem steel site that's now a state economic development zone. The fencing part of his operation remains on Grider Street in Buffalo.

"It's funny -- if the fencing had been going well at that point, I probably would've turned them down," he said. "But I was looking around."

Oneida achieved sales of $7.2 million last year, nearly 10 times its 1992 sales of $733,000. Employment grew from five people to 40.

Minority contract set-asides have helped Oneida get a piece of major public projects, but that's not the reason for the company's success, Saia said.

"We were in business before affirmative action," he said. And it took an investment of $500,000 to get the concrete business going. The company has exceeded the hiring requirements attached to public-subsidized loans, and done it by hiring low-income and Native American workers, he said. Native Americans make up 25 percent of the company's work force.

Now, with several of the region's major construction projects complete, Saia doesn't expect to make a third appearance on Inc.'s list. But there's still plenty of work in smaller projects and city sidewalk replacement, he said. He plans a party for employees -- "a blow out," Nov. 15 in the Statler in Buffalo to celebrate the company's two-year run on the Inc. 500.

Perhaps the best thing about the publicity that comes with the list, Saia said, is being able to counter the negative image of Native American business, which has been tarred by gambling and state tax controversies.

"One of the things we're proud of is, we're creating jobs that Native Americans can support families on," he said, "not (in) casinos or cigarettes."

A Lucky Black Cat Ms. Williams decided to start her company in 1992 after an insurance company moved its corporate headquarters, taking her husband's job with it.

"We figured we had to either do something of our own or move," she said. "We were desperate to stay in the area."

Black Cat, which assembles desktop computers from components, grew out of her hobby experience as a home-based typist. She'd bought her first IBM-type "clone" computer back in 1986 and taught herself how it worked.

"The financing was tough," Ms. Williams said. "I knew I could make a go of Black Cat, but that was the biggest problem -- I don't think home-based businesses are taken very seriously by banks."

The company, located at 6020 N. Bailey Ave., experienced its darkest days in 1995. Ms. Williams and her husband, Michael, had moved the venture into rented quarters the year before, but were repeatedly turned down for bank loans.

"I was at the point where I was going to have to do something if it (the loan) didn't come through," she said.

In May 1995, the company finally got its $250,000, SBA-backed loan, after nearly a year of application work. The money put the company on a solid footing to pay suppliers and its employees, who now number 16.

High state taxes make it tougher for a venture to take off, Ms. Williams said. And she was turned down for state certification as a woman-owned contractor, which might have opened the door to greater sales.

But on the other hand, she credits the state-sponsored Small Business Development Center with helping Black Cat apply for the loan that saved the company. Without the SBDC's expertise in projecting future
sales, Black Cat might not have survived, she said.

Now located in a 6,900-square-foot office in Amherst, Black Cat recorded $5.5 million in sales last year, up from $415,000 in 1992. Like Gateway -- another Inc. 500 alumnus -- Black Cat builds computers to customer specifications. It shipped 1,859 systems in a recent fiscal year, ranging in price from $900 to about $10,000.

Now the company is getting buyout offers for more money than Ms. Williams wants to accept. Investors from Massachusetts and Texas have called, working their way down the Inc. list for likely investment prospects. "I don't want to give up any of it now," she said of her company.

Contracting for Workers Heated growth of 25 percent to 35 percent a year put Western New York Contract Staffing Services at No. 134 on the Inc. 500. But even that's not fast enough in the booming market for contract staffing, according to owner Michael LaMancuso.

"In our industry, bigger is better -- you want to be bigger than your clients," he said.

The company, located at 5547 Main St. in Williamsville, is a professional employment organization, serving as the legal employer for people who work elsewhere. The arrangement, called "employee leasing," lifts accounting burdens like payroll taxes and unemployment insurance from the backs of small businesses.

"We do the legal hiring -- once (a client) finds the right person, we make it easy to hire, employ, and perhaps terminate them, if that's what it takes," LaMancuso said. A larger competitor's marketing blurb claims it's "like having the human resources department of a Fortune 500 company on your side."

Only nine people work directly for LaMancuso's company, but he'll send out 1,300 W-2 forms this year. Revenues grew to $8.9 million last year, from $545,000 in 1992. Most of the figure represents wages passed through to clients' workers.

The larger an employee leasing company is, the lower its cost per employee. That principle is pushing a wave of consolidation in the industry. Big competitors like Vincam Group in Coral Gables, Fla., are snapping up smaller ones almost daily.

So far, the largest firms only have 2 percent of the market in Western New York, but LaMancuso doesn't think they'll remain at bay forever. He's expanding into Pennsylvania and Ohio while looking for his own acquisitions to increase the company's scale.

On the other hand, LaMancuso doesn't rule out participating in the merger trend as a seller rather than a buyer.

"Five years from now, if I make the list again, that'll be a big story," he said.

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