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Saturday, April 04, 2009

Why I'm Optimistic

"Are things ever going to get better?" That's a question I've heard several times this week and here's why I think the answer is, emphatically, "Yes."

In the midst of a tough economy, and after an exceptionally hard year I see signs that make me feel like the worst is behind us. Externally there are signs of life in the general economy. First time home buyer activity is higher than expected, and manufacturing activity (while depressed overall) beat analysts expectations this week. These developments helped bolster the stock market and as it improves we should start to gain back some of our depressed 401(k) values. The market analysts with which I've spoken tell me that the stock market typically leads employment gains by about six months coming out of a recession.

Remember that six month number because you'll see it again below.

Internally we now have a single operational executive running Sales, Marketing, and Publishing. These formerly separate divisions now can't help but coordinate their activities and work together, and that's huge.

We now have our best marketer and product developer (our CEO) developing product and strategizing with our Publishers. In our business new product from inception to market is about 200 days, but product currently in the pipeline can be improved or marketed more effectively in about half that time. Look for the impact of Mike Hyatt's influence on products to show up in about 4 - 6 months.

There's that number again.

During this past year our sales began to falter as retail activity dried up, beginning somewhat around July but taking a big hit in October. Since that time we've reduced our overhead significantly with painful staff reductions but also in other more positive moves such as consolidating all offices into the Corporate Office Building (except for the Live Events division in Texas). Our overhead expenses are the lowest that anyone with less than 10 - 15 years service can remember.

When we start to annualize 2008 sales (our FY '09) we'll be against weak numbers with extremely low overhead, and that's a recipe for sales increases and profitability. Combined that with what I hear is a very reasonable sales budget, and we have a recipe to beat expectations in the last half of FY '10 or in about six months.

There it is again.

With the executive reorganization also comes the ripple effect of management realignment throughout the company. With new managers over different areas comes a different perspective on each business unit. That generally leads to fresh ideas and an uptick in efficiency. For example, Vance Lawson will be making some HR decisions at Live Events in his new role there, and I picked up his Travel and Facilities departments. Neither one of us may be a better or worse manager than the other, but all three areas will benefit from a fresh perspective.

The Executive Leadership Team is pared-down and making faster decisions. Rather than a group of 10 that often lumbered through decisions the ELT is now three people (CEO, COO, and CFO) who go into a room and make a decision. That will make the whole company more nimble and able to respond quickly to changing business conditions.

Our core sales channel, Christian Retail Sales, was our strongest FY '09 performer. That tells me that our core business is healthy and that the weakness in the business is mostly the external economy and in non-core products.

I'm not saying that all the bad stuff is over. I think we're in for about 4 - 5 more tough months but with our situation improving after that. If we will all stay focused on executing our roles, serving our core customers, putting great core products out into our core markets, and constantly looking for dumb stuff to stop doing (every business has these) then we're going to be fine.

1 comment:

Michael S. Hyatt said...

Jim, I couldn't agree more. I just tweeted your post. I think people need more of this kind of thing. Thanks!