To the stakeholders of Better World Books:
To this point in its history, Better World Books has posted a cumulative loss. In short, more money has been spent than has been earned, sacrificing short-term profitability for long-term growth. We’re hardly the first company to do this: Amazon lost over $1 Billion before it turned the corner. We do not have a billion dollar cushion. We have neither a dot-com bubble nor wealthy founders to draw upon to fund continued losses. As a responsible B Corporation, we have succeeded in many ways: creating jobs, funding literacy, and saving books from landfills. Economically, the company has grown revenue year-over-year in a way that very few businesses have. But towards the goal of becoming a profitable enterprise, we have not yet succeeded. As a management team, we regret it deeply.
In a better economy, we may have grown our way to profitability or raised additional outside funding. As the world looks now, we see the very real possibility of a deepening worldwide recession and have to prepare for the worst. This means making sure that Better World Books supports itself and its future growth solely through the sale of books. As such, we’ve worked since November to implement a “profit improvement plan” that spanned every aspect of the business.
Many aspects of this profit improvement plan have been achieved over the past three months with significant improvements in productivity, decreases in expenses, and growth in sales on BetterWorld.com. Unfortunately, this only gets us part of the way to our goal. While we expect considerable sales growth and future operational improvements, they are far from certain and we can’t bet the company on them. Most of the expenses that are discretionary have already been cut. Regretfully, we have to get the rest of the way to profitability by reducing payroll.
There is no good or painless way to reduce payroll, but we tried to do it in a way that best fits with our company’s values. By instituting across-the-board salary cuts, at the suggestion of some employees, we saved 30-40 jobs. The salary cuts will be in place for at least six months. These cuts will be reviewed in August 2009 and our hope is that we can reinstate compensation to its previous levels if we are running profitably.
1. The salary of the founders and CEO will be cut by 20% for at least six months. VP’s will take a 15% pay cut for at least six months.
2. Other employees, both hourly and salaried, will take a 10% cut if they make over $30,000, or a 5% cut if they make $30,000 or less, for at least six months.
3. We will cut 42 full time positions across Indiana, Georgia and California. In most cases, the reduction will be a capable person who was working in a role that the company can no longer afford. In some cases, it was a relocation of mission to consolidate or save the company money. In no cases was it easy.
4. We are consolidating the marketing team to Atlanta to reduce costs and increase effectiveness.
Along with these announcements, we have refined our strategy to reflect that we will have to do more with less. It comes down simply to some things we will do a lot more of, some we will stop doing, and some we will maintain while focusing on profitability. Your supervisor will share this list with you and can discuss how it may change your role. As always, we encourage you to contact members of the leadership team directly with any questions, big or small.
Again, we empathize with you during these painful changes. We thank you for your continued support during this transition and for being a part of Better World Books.