Rainy days come and go, and there is no way to escape the economic downturn. Eventually, it will shake any economy, but luckily, there are ways to protect your business from recession – at least to a certain extent. Some of them are technology-driven.
These solutions add up to an organization’s business resilience – or the ability to swiftly react to sudden disruptions and accurately adapt to changes that occur during the company’s operation. And such ruptures, on a macroeconomic or just a corporate level, are something inevitable.
Recessions may naturally follow periods of sustained economic growth. They can, however, be triggered by raising interest rates due to high inflation or by using collateral debt obligations, as was the case of the Great Recession of 2007.
Whatever the reason, recessions will certainly happen from time to time. That’s why it’s vital to get prepared for them right not to get overly affected.
In this article, we’ll list some ways to do it, tech-wise.
Table of contents:
1. Recession – what it truly is
2. 7 ways to protect your business from recession
3. Economic downturn protection – key takeaways
Recession – what it truly is
But before we dive into the ways technology can help companies deal with a recession or economic downturn, let’s see what these terms really mean.
In brief, an economic downturn can be boiled down to an economy going down or shrinking. A basic indicator of such a state is real GDP contraction, followed by a drop in employment, income, manufacturing, and retail sales. Recession is just a more prolonged and widespread version of this condition.
An economic downturn doesn’t have to end with a recession – but when it lasts for two consecutive quarters, this means that it has gone into it. In practice, a recession is a more significant decline in economic activity, industrial production, and consumer demand, resulting in a rising unemployment rate
It may be very difficult to get out of this chain of events that badly affects the economy as a whole as well as particular businesses alike. Corporate operations and assets, as well as economic output and ordinary people, can all get harmed by recession.
Owners and managers can at least try to protect their companies by saving money for the bad times in advance and cutting losses when they finally come.
7 ways to protect your business from recession
Recession is something big, and making sure it doesn’t affect your company that way or another is virtually impossible. There are, however, ways to limit the negative impact of an economic downturn.
Here are some of them:
Way 1: Being tech-savvy
Technology may help you kick off your business with a bang, but it may also help you strive when the market situation is getting worse. Times are changing lightning-fast today, and flexibility and adaptability are vital when running a business, also when it comes to using information technology.
New technologies can make your company recession-proof because they help you tighten relationships with your clients or automate processes, making your business stronger in the long run. Failing to keep up with the latest technology trends can be the first step to getting out of the game and losing customers’ interest even when the times are still good.
Way 2: Enhancing communication and collaboration
New technologies can also change your company culture for the better, e.g., by enabling exchange of ideas and knowledge sharing. Making communication smoother and enhancing collaboration can bring added value to your business, with employees feeling more empowered and getting more proactive.
There are many cutting-edge tools meant for that, such as:
- interactive whiteboards,
- editors enabling real-time collaboration and team communication,
- group chat and file sharing solutions,
- voice and video conferencing tools.
Zoom, Slack, Miro, Asana, and Trello are some of the most notable and popular solutions in this regard.
Way 3: Using workflow and project management tools
Workflow and project management tools can help your teams be on the same page when it comes to task completion, but they are way more powerful. They simply let you cut costs related to daily operations and project coordination, and allocate resources better.
On top of that, modern solutions for task management, document management, synchronization, or calendar sharing, let managers plan activities in advance and track them effectively. In the case of an economic downturn, it’s easy to assess the workload of particular employees and decide if fewer workers are needed.
Way 4: Measuring processes
For your own good, you should have processes in your organization under control. Luckily, there are appropriate high-tech tools and solutions that let you measure anything, for example:
- efficiency,
- productivity,
- profitability,
- cost-effectiveness,
- error rate
- competitiveness.
Using metrics, measurements, and benchmarking gives you space for evaluation and, subsequently, improvement. Moreover, it lets you see any red flags promptly and act accordingly. Of course, they may occur not only when the economic recession is on the horizon but also in case of some company-related problems.
Way 5: Using data analytics tools
As for the company’s current state, nothing can give you so many conclusions – including actionable insights – like detailed, in-depth analyses. And technology can be priceless in this respect, too, providing many practical solutions that help business owners get the most out of various types of data.
These solutions – powered by data analytics software – cover things like:
- business intelligence tools,
- data visualization tools,
- solutions that streamline workflows or provide instant metrics,
- predictive analytics tools (that use artificial intelligence and machine learning, data mining, statistics, and modeling).
Analytical tools help make accurate business decisions, also in terms of getting ready for potential – and inevitable – crises. In retail, for example, this can mean understanding buying patterns and customer loyalty better, pricing products right, but also predicting clients’ future behavior trends and digital sales risks – in order to mitigate losses.
Way 6: Using cybersecurity tools
It’s always good to save money for worse times, and one of the means to achieve this goal is using appropriate cybersecurity tools. Antivirus software, firewall tools, encryption tools, and network security monitoring tools are just some examples of how cybersecurity can be enhanced with technology.
Protecting your organization from data losses or other security breaches is one thing, but cybersecurity tools can also be helpful in uncovering different types of vulnerabilities in your systems. They can safeguard your company not only from losing money and other resources but also from reputation damage.
Way 7: Keeping digital talent
Last but not least, you should take care of your digital talent – scarce and expensive – properly. Although many IT professionals have been losing their jobs recently, it’s good to at least consider keeping the best people on board. They can help you solve many technological and operational problems along the way, thus cutting costs.
Another thing is that, in better times, it probably took a lot of work to attract, source, and hire them. So before you lay them off, think twice. And think about the staggering 46% rate of bad hires that can affect a company’s brand, reputation, and operations – something particularly negative during a recession.
Economic downturn protection – key takeaways
Among many vital outcomes, digital transformation has brought many interesting technology solutions for economic downturn protection or, more generally, crisis management. It’s especially important in the turbulent and uncertain times we’re living in.
Economic research proves that an economic downturn is something inevitable that occurs regularly. Changes in the labor market with high unemployment rates, decline in economic activity and consumer spending, and dropping investment are some of the indicators of such a state.
Luckily, there are some ways, tools, and solutions that help track the organization’s current situation, standing, and health – and tackle the alarming symptoms for better risk management. It’s good to monitor the early signs of any changes, and technology solutions are perfect for reaching this goal.
Afraid of the next recession? Want to protect your company from an economic downturn? If you’re looking for tailor-made solutions to help your company weather future economic storms, contact Codete now.
