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With the looming threats of recession in the global economy, all the major developed countries are bracing for economic hardships, including the United States and most of the European countries. In October 2022, chief economist of the International Monetary Fund, Pierre-Olivier Gourinchas, mentioned in an IMF blog, “the 2023 slowdown will be broad-based, with countries accounting for about one-third of the global economy poised to contract this year or next. The three largest economies, the United States, China, and the Euro area, will continue to stall.”
A similar sentiment was observed in Davos during the annual meeting of the World Economic Forum. In World Economic Forum’s Chief Economists Outlook, January 2023, the WEF survey found that “Almost two-thirds of economists surveyed by the World Economic Forum expect there will be a recession in 2023.”
As an entrepreneur or a business head, how can you create a recession proof business? How do you keep your business ahead of the curve even when the market slows down?
The answer to ensuring the survival and sustainability of your startup or enterprise lies in the fourth industrial revolution. Rapid industrialization has always propelled the world out of a stagnated market, which translates to digital transformation in the 21st century.
By embracing technology, you can make your business recession proof and secure your future. Before delving into this recession proof digital transformation, it is vital to understand how the recession affects your business.
How Recession Impacts Your Business Operations
More often than not, recession in any major developed economy sends ripples across the globe, thanks to the ever-more interconnected and globalized world. With the global economy headed for a slowdown, businesses all across the globe, big or small, will feel its impacts in ways that are mentioned below.
During a recession, people spend money on essential goods. This impacts the sales of businesses across the board. The aggregate demand for products and services declines, translating into a drop in sales. Depending on the duration, companies might face bloated inventories.
With the decline of money circulating in the economy, raising capital becomes an increasingly daunting task during a recession. Venture capitalists, investors, and money markets stay skeptical of issuing capital, and small businesses find it challenging to stay afloat with limited means.
With less capital to work with, businesses often have to decide to cut down on their workforce. As harsh as it is, we are already seeing this play out in tech giants like Twitter, Meta, Microsoft, and Google. And this trend we may witness throughout 2023 as predicted by industry experts.
Data released by Internet Crime Complaint Center (IC3) of the United States clearly shows that during the subprime crisis of 2008, online crime complaints rose significantly during the recession’s peak. IC3 received a total of 336,655 complaints in 2009, an increase of 22.3 percent as compared to 2008. The total monetary losses associated with online fraud ballooned to $559.7 million, more than double the previous year’s $265 million.
A direct attribution can be linked to the lack of money circulating in the market, pushing more people towards illicit and fraudulent activities to keep themselves afloat. Therefore, companies face significant challenges on the cybersecurity front, and with limited capital to secure the digital infrastructure, the challenge becomes all the more real.
However, that being said, there are ways to navigate these economic downturns, and businesses can make themselves resilient and secure to such cybersecurity concerns. Cloud computing is one such technology that provides enhanced security to businesses, making them immune to cyber threats.
The idea of making a business recession-proof
Although the current recession has been anticipated for quite a few months now, that it will actually hit was a surprise for many. Organizations worldwide are grappling with the uncertainty of whether it will persist, worsen, or recede. To ensure your business is resilient to recessionary conditions, your priority should be to prepare for disruption and to recover.
Creating a recession proof business means making it shock-resistant, allowing it to experiment with innovations, and equipping it to capitalize on the eventual upswing.
One of the most effective strategies for businesses to survive, recover, and prepare is to continue investing in technology. Your business will likely come out on top by making informed investments in the right technology and services. This is because remote capabilities, social distancing, and digital investment expansion have replaced traditional survival tactics.
Especially during challenging times, emphasizing digital transformation helps businesses navigate challenges smoothly and efficiently. There are specific pain points that this digital transformation addresses; some of those are:
- Limited sales professionals due to remote operations increase the need for digital tools and systems to maintain the workflow
- Increasing demand for remote internal capabilities due to insufficient workforce
- Increased threats arising out of a lesser workforce to maintain the servers
According to a Harvard business review study, services running on technology investments such as smart healthcare, automated supply chain and logistics, Fintech, and intelligent education services are still in high demand since they are prepared for the change.
Therefore, technology investment can help you thrive in a recession, making your business recession proof and sustainable. Let us understand how investing in the right technology can help you create a recession proof business.
[Also Read: Defying Economic Downturns: The Success of Companies Founded During Recession]
What are the technologies that help you make your business recession-proof?
Advancements in technologies such as AI/ML, Internet of Things (IoT), Cloud computing, Big Data, Blockchain, etc., have provided organizations with low-cost solutions to strategic business challenges while yielding higher ROI than ever before.
Some technologies build a robust architecture for businesses while streamlining workflows and improving efficiency. Investing in some or all of these technologies can help you stay competitive even during economic slowdowns. Although there are a lot of strategies that you can deploy to make your business recession resistant, the ones that are most trusted are:
- Using advanced relationship mapping and management tools such as SRM, SCM, and CRM employing smarter and faster ways to upscale business development
- AI-powered analytics in the business delivers unparalleled data quality for business insights and market updates
- Automation solutions eliminate hours of administrative tasks for the workforce leading to increased productivity and time utilization.
- Intelligent data collection and management solutions provide better ROI in significant investments leading to the best business during a recession.
These applications are a few ways technology can help recession proof your business. But discussing technology is one part of the solution. Let us examine the real-world impact harnessing these technologies will have on your business.
How exactly does a business become recession proof with technology?
From managing large amounts of data to maintaining and strengthening relations or offering omnichannel customer experience, digital transformation impacts every avenue of your business. Here is a snapshot of what that impact looks like:
Solidifying customer relationships
Technology has always helped personalize the customer experience and strengthen business-customer relationships. AI trends, software and app development, and modern software systems offer key customer insights that help you stay updated on your users’ demands. Getting a custom CRM developed to generate targeted leads and nurture existing relationships will go a long way for your business, benefiting your business for years to come.
Improving internal efficiencies
Rather than cutting services and staff, you can enhance your business’s internal capabilities by choosing suitable business models running on modern technology. Investing in chatbots, remote customer services, eCommerce applications and strategies, and improved logistics can help you serve your customers more efficiently. Moreover, embracing a data-driven culture for complete enterprise digital transformation will make your business make strategic business decisions during the recession.
Boosting sales and productivity
During a recession, the competition becomes much stiffer, with the same number of companies competing for a smaller pie (of monetary circulation). This results in some organizations needing help to turn leads into customers or acquire leads in the first place. But businesses have found that they could perform better than their peers during economic slowdowns by making strategic investments in technologies such as productivity apps, Enterprise Resource Planning (ERP), and cloud-based development.
Pro tip: If your business doesn’t operate primarily on the cloud, now is the perfect time to invest in cloud data migration strategies for maximum scalability and agility.
Our approach has made organizations recession proof
With nearly a decade of experience, we have hands-on expertise transforming businesses preparing them to be productive and drive better results even during a recession. Here are two such examples:
When the Americana group got in touch with us, we knew that the business’s scale and complexity would require an ingenious solution. After all, launching 18 mobile applications for five brands in a single year across seven countries is not a walk in the park. But for our enthusiastic team, it wasn’t rocket science, either.
After months of hard work, we built a robust digital ecosystem to support their brands’ need to handle 50,000 orders daily. In the first two weeks of launching the apps on the stores, 15,000 users downloaded them, and consequently, the conversion rate of KFC and Pizza Hut rose by 28% and 30%, respectively.
Similarly, we improved supply chain visibility for a global manufacturer of heavy construction and mining equipment by 60% using AI and analytics solutions. We also designed and developed an intelligent supply chain software solution to help the company be more responsive to its customers’ needs. This resulted in a 30% increase in operational efficiency and a 40% reduction in transport and logistics costs.
How Can Apppinventiv Make Your Business Recession resistant?
Being at the forefront of digital transformation, we find ourselves extremely lucky to have helped numerous of our clients unlock their digital potential, which was trapped in siloed approaches. Our digital transformation services drive impactful business benefits, optimizing business processes and automating systems. Looking forward to recession proof/future-proof your business? Get in touch with our experts for consultation.
Q. What makes a business recession proof?
A. There are four characteristics of a recession proof business. A recession proof business is:
- operational on modern technologies and digital solutions
- Capable of providing products and services in demand
- Capable of serving customers insulated from downturns
- And technically and strategically prepared to adapt to any market needs
Q. How can businesses prepare for a recession?
A. To prepare for the recession in advance, start with investing in adaptable technology and digitally transforming your business process. Technology investment can further help you expand your customer base, cut additional expenses, diversify marketing channels, manage inventory and warehouse, and credit resources.
Q. How do I recession proof my business using technology solutions?
A. During an economic downturn, you can invest in various competency-based technology tools and software systems, customer support solutions, CRM software solutions, premium security software, and remote working solutions to sustain your business. You can talk to our industry experts and adapt technology services accordingly for customized business guidance.
CEO & Director