Twenty-five years after Jim Schultz launched Applied Educational Systems with his wife, Tracy, its sales had dropped to $0.
Begun in 1987 to offer technical training for schools, its first product was a tabletop simulator used to teach would-be car mechanics.
Schultz, who grew up in New Jersey, moved with his business — and his family — to Lancaster County in 1994.
Here the business evolved into a curriculum company with software that could be used by middle and high school business or health science teachers.
At one point, the company had 40 employees and was registering around $10 million in annual sales.
But then, the bottom dropped out.
Or, to put it more precisely, Schultz kicked the bottom out himself.
Worried about a business that relied on closing big-ticket sales, Shultz scrapped that entire business model and decided to start selling subscriptions for web-based software.
Since he opted to do away with all the former products, the company was left without any income as it built the systems that would let teachers access a web-based curriculum.
That decision forced the Schultzes to lay off all but five of his employee, tap some of their own retirement accounts, and line up new some new investors to stay afloat.
“There were a lot of dark days,” he says.
But recently things have been improving for the firm as Applied Educational System has enjoyed dramatic growth on the strength of its new business model.
In the last two years, Applied Educational Systems made Inc. magazine’s annual list of the nation’s 5,000 fastest-growing privately held companies, registering $2.9 million in sales last year.
Now with 24 employees working out of a converted tobacco warehouse at 312 E. Walnut St., Schultz says he expects to surpass $3.5 million in sales this year as he looks to add employees.
“We knew that if we did those things right within five years, we would build some momentum,” says Schultz who received the Lancaster Chamber’s “Entrepreneur of the Year” award in May.
“I believed that we could do something of value to teachers,” he says. “It always takes more time than you think. It takes more time and it takes more money.”
With the way teachers accessing their system has changed, Applied Educational Systems maintains its emphasis on curriculum for career and technology education teachers.
The company’s programs focus on health science, computer applications and business education. Its products help teachers plan lessons, create quizzes and track student progress.
“Our biggest competitor is textbooks,” Schultz says.
Yet unlike a textbook, which can make students passive, he says, students are forced to engage with the digital curriculum through drop-and-drag exercises, quizzes and tests.
“Our goal is we don’t want the students to passively sit there for more than a few minutes without having to interact in some way,” he says.
Applied Educational Systems has customers in all 50 states, with countywide school districts in Florida, Georgia and Texas being some of their biggest customers.
Adding new customers while getting existing customers to expand their subscriptions has been key to the company’s growth, Schultz says.
‘Schools can stop it at any time, so we have to provide value to them. We know if they engage and they’re using it, they’ll want to re-up with us again,” he says.
As the company grows, Schultz says it will continue to focus on its niche of a curriculum that helps teach the technical skills he says have been given short shrift when students are pushed into attending four-year colleges.
“We should look at each student and do a better job of having them go to their interest, or look at what their capability truly is,” he says. “Everyone takes a different path.”
Delivering curriculum through a web-based system has benefits for teachers as well as Applied Educational Systems.
Web-based software can offer costs savings to school districts while Schultz says free trials and annual subscriptions starting at $7.99 mean teachers can easily try it out for themselves.
For Applied Educational Systems, the web-based model allows the firm to improve the offerings by seeing what teachers actually use while responding to regular feedback they give.
“The nice thing is you can kind of change it on the fly,” he says.
At the heart of the system that has rebuilt Applied Educational Systems are its regular blog posts.
“We’ve written thousands of blog posts, thousands of articles, based on a simple premise — questions that we get asked, we try to answer, in an unbiased way,” he says. “Sometimes we answer questions and we talk about our competitors. Sometimes we answer questions and we tell people we’re not a good fit in these situations. Why do we do that? We do that to build trust.”
The posts also incorporate often-used internet search terms, which has the effect of making Applied Educational Systems pop up when a teacher anywhere is looking for answers online.
Then, once teachers find their website, they are invited to sign up for a free trial, which could lead to a subscription for themselves, or eventually their school or district.
It’s all helped grow a business Schultz says has the ultimate goal of making classroom instruction more efficient and effective, Schultz says.
“All we’re trying to do is make our digital curriculum system easy to use so a teacher can save time,” he says. “Then that teacher can go and leverage their extra time and spend it one on one with the student.”