California came up on top in a number of measures in the latest Inner City 100 ranking of the fastest-growing inner-city businesses in the U.S. The companies on the list are selected from inner-city firms based on compound annual revenue growth over a five-year period. The Boston-based not-for-profit Initiative for a Competitive Inner City (ICIC) compiles the ranking.

California has the most Inner City 100 companies in 2010 — a total of 15 companies. Among metro areas, California's Bay Area came out on top. Oakland-San Francisco had eight companies on the Inner City 100 list.

The first firm in the 2010 list is West Sacramento, Calif.-based Total Team Construction Services, which had a five-year compound annual growth rate of 141 percent over the 2004 to 2008 period. The company, which employs 28, had 2008 revenues of $8.9 million.

Overall, the 2010 rankings show that several clusters of businesses are driving inner-city job growth, including business services, construction and real estate development, healthcare, hospitality, and education and knowledge creation.

The ICIC's aim is to foster economic growth in inner cities, and identifying high-growth inner-city companies is one way it showcases the competitiveness within inner-city communities. For the 12th annual list (2010), companies were ranked on their compound annual growth rate from 2004 to 2008. To qualify for the 2010 list, companies needed to be located in an inner city and needed to have had at least $200,000 in revenue in 2004, at least $1 million in revenue in 2008, and employ at least 10 people full-time.

Since its start in 1999, the Inner City 100 program has recognized 607 high-achieving businesses. From 1999 to 2010, the 607 firms have:

  • Created 72,000 new jobs;
  • Employed nearly 100,000 people, of which 40 percent are inner-city residents;
  • Had an average compound annual growth rate of 50 percent; and
  • Generated $2.3 billion in total sales per year.

To apply for recognition on the Inner City 100 list, companies were asked to complete a one-page application form. Companies that qualify based on the application then complete an extensive survey and provide financial documentation to verify self-reported sales figures.

ICIC is using the Inner City 100 data to benchmark cities and fine-tune city strategies in business creation and economic development. ICIC works with U.S. cities to identify their competitive advantages and design private sector-led action strategies.

The Golden State's strong showing in inner-city business growth is in contrast to other surveys that show businesses have a tough time in California. CNBC's recent "America's Top States for Business" special report, for instance, ranked California number 49 out of the 50 states in cost of living and business friendliness, and 48 in cost of doing business. In CNBC's overall ranking, California tied for number 32 among all 50 states.

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