Friday, October 3, 2008

Thriving in Tough Times

A number of people have asked lately how the credit crunch and economic slowdown have effected us at Legacy Learning Systems. The short answer is, we’ve felt the effects, but we’re doing fine. Here’s why.

1. Cash Reserves. I’ve done the build-it-fast-then-crash-and-burn thing. It sucked. Bad. I’ve since realized I’d rather have my company be successful than be successful fast. We have intentionally kept our growth in check and built up cash reserves instead of plowing all profits into pursuing break-neck growth. We certainly haven’t taken on debt to pursue growth. Some might call that overly conservative. Those people have never lived on corn flakes with water.

2. Debt Free. I hear there’s a credit crunch. Good thing we don’t need it. See #1.

3. Privately Held. Although we’re profitable and growing, thanks to the sagging economy we are going to miss my sales projections for this year. Big whoop. Few besides me even knew what those projections were. If we were a publicly traded company, there’d be hell to pay, regardless of our profitability.

4. Ramp-Up. It’s our good fortune to be in ramp-up stage. When you're young and growing fast, an economic slump just means you grow slower. For example, we are now selling fewer copies of Learn & Master Guitar than this time last year, thanks to the economy, but our new product launches have more than made up for it. I can take no credit for this. It was just fortunate timing.

While bad for many, economic slowdowns always benefit someone. Usually, it’s the conservatively run businesses that win in times like these. Regardless of size, un-leveraged companies with cash and no debt are going to win. They’ll hire great talent on the cheap, build their product lines, buy or crush their competitors, and position themselves to win big when the economy turns again.

We hope to be one of them.

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