There's a fine line separating the champions from the rest of the pack. To remain on top, title holders fend off challenger after challenger-ambitious contenders working to knock reigning champs off their perches. In the business arena, contenders are companies that are holding their own through today's combative climate or are retooling strategies to mount impressive turnarounds. Pressured to restructure operations as a result of demanding customers and the need to tap into fresh sources of revenue, these firms expanded into new businesses offering customized products and services. For instance, the nation's largest black-owned financial services firms spent much of the year fending off punishing blows from rising interest rates, a turbulent stock market, and an uncertain geopolitical environment. According to the Federal Deposit Insurance Corp., the number-and assets-of minority banking institutions rose in 2005, but their profitability fell. There were 189 minority-owned institutions, up from 174 in 2004. Their assets totaled $184.2 billion, up from $157.2 billion in 2004. But their return on assets was 1.15% in 2005, down from 1.34% the prior year, and their net interest margin last year was 3.38%, down from 3.54% in 2004. Both are key profitability measures. The business environment was challenging for Mary Pugh, CEO of Seattle-based Pugh Capital Management Inc. Her firm, (No. 15 on the BE ASSET MANAGERS list with $1.02 billion in assets under management) invests in fixed-income securities and had to contend with the Federal Reserve raising interest rates. Despite the Fed's policy, the company's assets under management grew by $122 million last year, up 14%. Pugh says the increase was a result of new corporate and public sector clients and additional assets for existing clients. "We're pleased that all of our products outperformed the benchmarks," she says. Fritzi Pikes Woods, president and CEO of Prime Source Food Service Equipment Inc. (No. 48 on the BE INDUSTRIAL/SERVICE 100 list with $84.1 million in sales), is looking to propel the company she acquired in 2004 into the upper ranks. Despite an 11.8% drop in revenues, the Dallas-based distributor of food service equipment actually saw an increase in profitability. Last year, Pikes re-engineered the company's business model. "We are focusing on companies that will increase our market share," she says, "and we're going after more profitable businesses versus going after new chains, where you have to invest more marketing and up-front acquisition costs." Advertising agencies have been against the ropes for several years now. In fact, few black agencies are serious contenders in their industry. Market conditions forced many to find additional lines of business to bolster their core competencies. Among them was Matlock Advertising & Public Relations (No. 7 on the BE ADVERTISING AGENCIES list with $63.1 million in billings). The firm acquired Ventana Marketing, a small Atlanta-based Latino agency. Although financial details were not disclosed, the deal included a handful of the agency's clients, including Western Union. "The Hispanic market is an area that is on everybody's mind right now. So what I had hoped to do was to find the right Hispanic agency to partner with or acquire that would give us an authentic platform with Hispanic consumers," says CEO Kent Matlock. In the sport of boxing, sometimes a good fighter has to take his lumps and learn from mistakes. In fact, a loss can produce a smarter and stronger competitor. Richard Copeland is hoping that's the case for his company, Thor Construction Inc. His firm (No. 93 on the BE INDUSTRIAL/SERVICE 100 list with $33.8 million in sales) suffered a 23% decline in sales as it shifted its focus from construction management, which consisted of heavyweight contracts but flyweight margins, to general contracting-a lower-volume business with much better returns. CEO Copeland, however, insists Thor's in fighting shape. "This year we are going to be over $60 million," he says. "We're seven months in and we are over $35 million already." William G. Mays, CEO of Mays Chemical Co., is employing a similar strategy. While the company (No. 27 on the BE INDUSTRIAL/SERVICE 100 list with $152 million in sales) posted a 4.4% decline in revenues on rising fuel costs, he says profitability actually increased due to a strategic decision to back away from low-margin business. For instance, he turned down a $15 million General Motors contract because the profit margin was only 3%. Mays also restructured pricing, adding a fuel surcharge to customers, and expanded joint ventures and international business from 5% to 10% of total business to lessen dependence on the lackluster automotive sector. "The strategies that we are using going forward will increase revenues," says Mays. No business is more exposed to the downturn in the automotive industry than its dealers. For Bowling Green, Kentucky-based Martin Automotive Group (No. 4 on the BE AUTO DEALER 100 list with $386 million in sales), the number of vehicles sold was down 5%. However, declining sales were offset by a 5% rise in revenues from service, parts, and body work. The company sold 15,631 vehicles; two-thirds were new models while the remaining one-third were used. All domestic manufacturers are represented within Martin's mix of 15 auto dealerships. Lincoln-Mercury models did worst, while Saturn and Chevrolet did well. Kia, Martin's only import, grew. "We'd certainly like to get some foreign brands in our organization in the near future," says CEO Cornelius Martin. Following the lead of an industry heavyweight is no small feat. Michael B. Russell, CEO of Atlanta-based H.J. Russell & Co. (No. 16 on the BE INDUSTRIAL/SERVICE 100 list with $316.9 million in sales) realizes this fact better than most. Russell replaced his father, Herman J. Russell, an icon in the construction industry, as chief executive in October 2003. The company's revenues remained relatively flat last year, increasing by 4.2%. "I think it has been important for us to show the continuity and growth of our organization as the founder stepped out of the spotlight," explains Russell. "At the same time, part of my mission is to recognize that being a great organization starts with great people." Russell made some key leadership appointments, including positioning his brother, Jerome, to focus on the potentially lucrative real estate division. Russell is also aggressively pursuing new markets such as New York City and the Dallas-Fort Worth metropolitan area. These contenders are hoping that by readjusting their business strategies they will propel their companies to the top of future rankings and maybe even snare a championship belt. Workforce Reductions Largest reduction in staff: Seventy-Five Auto Dealers March/Hodge Automotive Group 2004 staff: 800 2005 staff: 725 Our contenders not only held their own during a turbulent year, but many also repositioned their companies to stage impressive comebacks. The nation's largest black-owned financial services firms bobbed and weaved as they fought large majority institutions and dodged blows from rising interest rates and a lackluster stock market. These institutions, and other BE 100S companies like them, avoided kissing the canvas by restructuring operations, offering innovative products and services, and expanding into new businesses. Here's how some stayed in the fight. May 2005 FUSE Inc. (No. 10 on the BE ADVERTISING AGENCIES list with $52 million in billings) launches a new tourism campaign for the state of Missouri. The state's Division of Tourism chose the St. Louis-based firm to promote the state as a vacation spot for African Americans. September 2005 Dumas Siméus, chairman and founder of Mansfield, Texas-based Siméus Foods International Inc. (No. 33 on the BE INDUSTRIAL/SERVICE 100 list with $127 million in sales), is disqualified from the Haitian presidential election due to dual U.S.-Haitian citizenship. The CEO put running his company on the back burner to run in the election. June 2005 Jackson Securities L.L.C. (No. 7 on the BE INVESTMENT BANKS list with $41.4 billion in total managed issues) merges with Berean Capital Inc., an institutional brokerage and research services firm, to create a stronger company with greater geographic coverage. December 2005 Profits at Broadway Federal (No. 8 on the BE BANKS list with $292.3 million in assets) total $1.7 million, about the same as 2004. CEO Paul C. Hudson said earnings were flat, mainly because the thrift's net interest margin was lower in 2005 than in 2004. January 2006 Images USA (No. 11 on the BE ADVERTISING AGENCIES list with $51 million in billings) is chosen to handle marketing for Amtrak's mid-Atlantic and Southeast regions, an assignment that could be worth $4 million over four years. February 2006 OneUnited Bank (No. 2 on the BE BANKS list with $541.6 million in assets) becomes the first African American-owned bank to allow customers to open accounts on the Internet. -Additional reporting by Wendy Harris, Cliff Hocker, Tykisha N. Lundy, Jeffrey McKinney, Nicole Marie Richardson & Tennille M. Robinson