We live in the era of recessions. It means many companies can potentially become victims of a recession, and to avoid that, they are looking for high-quality technology consulting to recession-proof their business. So what facts do we have to support the idea above?First, according to the World Bank Group, four major recessions in the past seven decades. Namely, 1975, 1982, 1991, and 2008. Second, Bloomberg indicates a 50% chance the United States will experience a recession within the following year. Third, the U.S.GDP shrunk by 0.9% in the second quarter of this year. These numbers show the recession is highly likely, and businesses the first to recognize the phenomenon will be the most prepared.The above insights suggest becoming a recession-proof business is a necessity. Keeping that in mind, let’s dive deeper into understanding aspects showing the recession has started, determine how the phenomenon impacts businesses, suggest how companies can prepare for a recession, and present some key recession-proof business ideas to protect your IT department.
Factors Indicating the Start of a Recession
In short, a recession is a team that means the downgrading of an economy. In recent decades, the notion has been on the mind of many entrepreneurs and businesses because it pulls back most of the previously created economic value. Some certain economic factors and organizations label whether the recession has already started. While the recession has many definitions, in most general terms, it is linked to the decline in economic activity.What factors show the beginning of a recession? Most notably, experts report that the phenomenon started when there was a sharp decline in the demand curve for goods and services. In other words, consumers don’t consume enough. In such a case, the parties responsible for the supply are forced to reduce productivity and cut costs. From the macroeconomic perspective, it leads to a lower quality of life, harms unemployment, and prevents businesses from growing.As a result, businesses that do well in a recession are the ones that can effectively respond to the decline in demand. For example, recession-proof tech companies keep their departments intact while ensuring clients receive their projects and products on time.
How Does a Recession Impacts Business?
One of the initial signs that a recession has started is when a company receives fewer orders. For businesses, the phenomenon brings uncertainty. It means firms find it hard to plan for the future or decide to scale. On another hand, consumers are more varied in what they purchase, which means vendors experience a higher degree of competition.At this point, it means that tech companies get fewer long-term contracts and must provide products and services that stand out. In a nutshell, a recession-proof business can balance saving costs due to lower demand and offering high-quality products to stand out in the competition.Besides, according to Entrepreneur, recession comes with uncertainty in human resources. When used correctly, it can be a blessing. Employees who cannot afford to lose their jobs tend to improve their productivity. In addition, in the context of a recession, people are more willing to work for less frequent raises. Keeping that in mind, a recession-proof business might devise a strategy to avoid cutting costs and reducing the workforce. You can keep your IT department intact because people start valuing their job much more than in the pre-recession period.In such a context, a recession means your company will have fewer contracts, and you will face more fierce competition. But conversely, your developers will be willing to become more productive without pay raises. Balancing these factors is the key to becoming a recession-proof business.
Preparing for a Recession
When you know the recession is looming, it is time to make some preemptive steps. You understand that the demand will drop, and you will have fewer projects to deliver. Besides, clients will be more selective, which means higher competition. Yet, as we mentioned above, changing employee perceptions can help compensate for some losses in demand.In such a case, you must prepare for a recession through proper workforce planning. For example, you can prioritize different experts and place fewer essential professionals on unpaid leave. Besides, you can spend less on talent retention because employees don’t change their jobs during a recession.You need to tap into labor productivity spikes after the recession halts. Employees will boost their productivity, which means greater productivity for less cost. Mind the rising tension among workers. If pressing your IT professionals too much, they can experience burnout, and their output will drop.Finally, you can always restructure the workforce. Instead of having an extensive in-house team, you can hire freelancers and outsource projects to cut costs. While doing so, in-house specialists should remain on unpaid leave. As you can see, the answer to recession predominantly lies in proper workforce planning. Recession-proof tech companies can keep their IT departments intact while compensating for the lost contracts.
Recession-Proof Business Ideas
At this point, we know what points to a starting recession, how it impacts businesses, and how a company can use workforce planning to prepare for the economic downturn. Now, it is time to explore some recession-proof business ideas. These are the following:
- Lock on low prices and try your best to get long-term contracts and inputs. It is time to show commitment and sustainability. You can appeal to AI and blockchain to do that.
- If you are facing the prospect of shutting down, look for being acquired by other businesses. It is a drastic measure, yet it can be lifesaving in times of peril.
- In highly competitive markets caused by a recession, there is a chance to get a more significant market share. When companies fail, their customers and market share shift. It is time to pump your marketing to get that share or build a Fintech app to provide customers with what they need.
These are the ideas that can help give rise to a recession-proof business. A recession is a time of uncertainty. Yet, when appropriately managed, it can be an opportunity.
Wrapping Up
All in all, a recession comes with an economic downturn. For tech companies, it means fewer long-term contracts and fewer clients. It is a time when companies often try to cut costs and lay off their employees. IT departments cannot afford that. That is why it started becoming a recession-proof business through proper workforce planning. Turn a problem into an advantage. Last but not least, try to get the market shares lost by less successful companies and stay committed to getting as much market input as possible. Information will get your business new projects, and new projects will need a stable IT department.
