8 Ways Your Business Can Thrive in a Recession
Recessions are very stressful for businesses. A downturn in the economy leads to a decline in sales and profits. Consequently, many companies face bankruptcies due to liabilities and cash flow problems.
Small businesses are more vulnerable in a recession because they often lack the scale, capital assets, and tools to buffer the shock of an economic downturn.
Typical reactions to recession include cost-saving measures such as laying off employees and reducing capital expenditure and investment. If this is not properly handled, attempts to solve recession problems may hurt your business.
In this article, we will explore various ways outsourcing and technology investment can help your business survive and thrive in a recession.
1. Reduce Operational Costs
Operational costs and overheads can make the difference between your business sinking or thriving in a recession. If your organization can reduce its overhead cost better than competitors, it will enjoy more stability and growth during a recession.
Outsourcing parts of your business to third-party providers is a sure way to save operational costs. Tasks that don’t require full-time employees and those that are not part of your business’s core functions can be outsourced to managed service providers (MSPs).
In addition, jobs that require specialized technical skills are good candidates for outsourcing as it may be too costly for small businesses to maintain an in-house team.
2. Improve Business Efficiency
The typical reaction of companies to a recession is to scale back investment. This can cause a massive dip in the company’s productivity and make it a less competitive player if mishandled.
With regards to personnel layoffs, more work is shifted to the remaining employees who are better off focusing on their core jobs. This approach leads to valuable time being wasted on tangential tasks. Employees’ productivity may reduce because retained staff lack the necessary skills or the knowledge of current best practices to execute reassigned jobs.
Outsourcing certain activities to managed service providers is an effective way to improve efficiency and boost productivity.
3. Boost Sales With Technology
The desire to reduce expenditure in a recession may negatively impact essential departments such as sales and marketing. This can cause a reduction in sales and revenue and resultant financial woes.
With the aid of technology, your organization can maintain a functional sales and marketing system while reducing the overall cost of getting more clients.
Investment in new sales technologies and Enterprise Resource Planning software can help your business understand the sales cycle and its challenges. Technology also makes developing a better marketing strategy that works in a recession.
4. Reduce Liabilities
In a recession, the lower your company’s liabilities, the higher its chances of survival.
Hiring third-party technical experts to handle the non-core aspects of your business is a powerful way to reduce liabilities. You will not only eliminate benefits and remuneration to maintain an in-house team but also reduce the risk of violating industry regulations or missing deadlines due to oversight from stressed-out staff.
5. Reduce Costs with Automation
When looking for ways to cut costs in a recession, automation solutions are an obvious choice.
Many organizations spend a large part of their budget and time on human resource management and other administrative functions. According to recent research, managers spend about 8 hours a week on business tasks that could be easily automated.
Automation allows businesses to tighten budgets without sacrificing critical business operations. Creating automated routines for handling various business tasks will help your company during a recession and position it for stronger growth post-recession.
6. Improve Customer Relationship
Customer relationships are a big factor in improving your company’s sales. It is much easier and cheaper to keep an existing customer than to prospect for new ones.
Clients may also refer more business to your company because of excellent customer service.
The stressful period of a recession may cause a weakly planned customer retention and acquisition system to collapse. Mismanaged customer relationships are one of the factors that can push your clients into the arms of competitors or make prospects lose interest in your company.
With the right technology, your business can maintain its customer base, gain insight into clients’ behavior, adopt methods to keep existing clients, and also generate new quality leads.
7. Save Office Space
One result of outsourcing some parts of your business operations is the reduction in office space needs. Also, adopting new technologies with advanced collaborative features makes remote working more convenient for employees.
Businesses with fewer office space requirements can save money on rental costs during a recession. The savings may be invested to boost your business’ chances of surviving a recession.
8. Prevent Business Disruption
A business disruption that could be successfully managed in a booming and stable economy could prove fatal in a recession. This is because companies have fewer resources to mitigate its effects. Hence organizations must deploy solid strategies for disruption prevention and disaster recovery .
Outsourcing parts of your business operations such as cybersecurity and disaster management can reduce the risk of business disruptions by putting skilled experts in charge of critical infrastructure.
In summary, restricting your business activities until a recession blows over is a bad strategy. A better approach is to maintain your business momentum through smart investment and outsourcing.
A recession can create wide gaps in performance and revenue between companies within the same market.
To thrive in an unstable economy and be on the winning side post-recession, invest in technology and outsource your IT tasks to experienced and skilled managed service providers such as SDTEK.
Ready to make your business recession-proof?
Get in touch with SDTEK today to discuss your options.
8 Ways Your Business Can Thrive in a Recession
