Thriving Through the Recession
It is no surprise to most of us that “The economy could tip into [yet another] short but mild recession by the end of the year or early 2023.” (1). By now, most of us have lived through several economic downturns and many people are approaching the pending dip with equal parts anxiety and frustration. However, it does not have to be all bad news. There are three steps you can take to strengthen your organization and not just survive the coming recession, but thrive in it:
Get closer to your customers
Leapfrog your competitors
Improve your operations to reduce costs
Get closer to your customers
The natural human reaction to a threat is to withdraw and protect what you already have. To thrive in a recession, however, you must do more. Reach out to your customers. If anything, increase your communications, both digitally and in-person. Let them know you feel their pain and are there to help. They still need your products and services to protect their business and when you stand with them in tough times, you earn loyalty and advocacy which remains long-term.
Many customers will ask you to reduce your prices, you may be tempted to do so. Instead, resist the urge. Increase the value you provide your customer. At ISS, for example, instead of cutting our rates for digital design or software engineering, we are expanding what we deliver in our most popular packages, including new product strategy and design, product refresh, and IT audits. We intend to thrive in this recession by helping our customers do the same.
Leapfrog your competition
Of course, you may have to help your customer reduce costs but don’t let the hit to your balance sheet be the end of it. Use this opportunity to explore entirely new services at the lower end of your market. If your customers are asking for a low-cost offering, you can bet your competitors’ customers are too. Mailchimp was one of the first companies to offer a Freemium option for their services as they pivoted from large corporate clients to small and medium-sized businesses during a recession.
And it is not just current customers you can think about. Any overserved market is ripe for a low-cost alternative. Remember, both Airbnb and Uber were launched during economic downturns, providing alternatives to expensive hotels and ground transportation for consumers. In addition, the “sharing economy” offered a source of income to people hungry for work with existing fixed assets. The lesson is to not stop innovating but to hone your focus on where it has an increased chance of success.
Another way to reduce the inherent risks of innovation is to find partners you can rely on. ISS can design, engineer, and launch digital applications faster and with higher quality than most. From small websites to enterprise-wide platforms, our experienced, US-based teams will not only save you money, but we will also get you to value faster, increasing income on the top side.
Improve operations to reduce costs
No matter how much you can innovate and engage with your customers, you will likely have to reduce spending during a recession. To thrive instead of survive, don’t make cuts across the board. Instead, shift the focus of your investment. Investing in your customers and (smart) innovation is good. Some investments you should postpone including fixed capital, administrative services, and administrative costs.
Microsoft, Netflix, and Twitter are among many companies that have already reduced fixed (human) capital costs and laid off workers. But just because you must lower your payroll, does not mean you can get away with not doing the work those people used to do. After all, how else are you going to innovate and get closer to your customers?
Instead, shift from fixed investments to variable costs that you can control as needed. The SaaS revolution was driven by this revelation, and it still holds true for CFOs and controllers, business owners, and innovators across the world.
With a trusted, reliable partner like ISS, you can continue to make wise investments in your technology ecosystem. With on-demand access to top talent, ISS will help you to meet (if not beat) your deadlines, elevate your remaining team, and drive both efficiency and quality. When you bring ISS into your organization, we bring you into our family. And we always stand by family, no matter how hard the recession hits.
Tyson, Jim. “U.S. may fall into recession by early 2023: Conference Board” https://www.cfodive.com/news/us-recession-early-2023-conference-board/630030/. Dive Brief. CFO Dive, August 2022.