At the start of 2020, multiple industries were gearing up for an economic slowdown. What they couldn’t anticipate was a near-complete shutdown, followed by an immediate recession.
Most experts didn’t believe a recession was likely in 2020, despite fears of ongoing trade conflict. Still, Gross Domestic Product (GDP) slowed some in 2019. And in some sectors, sales growth showed signs of decline. The 2019 third-quarter MDM-Baird Industrial Distribution Survey showed flattened pricing and a growing trend of cutting inventory in the industrial sector. So, companies did have cause to prepare for a slowdown to ensure strength in business continuity and competitiveness.
Then, shortly after the year started, COVID-19 restrictions took hold and the U.S. economy entered a recession in February.
From Preparation to Coping with a Recession
The 2020 recession caught many companies off guard, and most now face the uncertainty of whether recession conditions will continue, recede or worsen.
Priorities revolve around survival, recovery and disruption preparation. Amid economic stress and continued pressure from competitors, your instinct may be to withdraw and tighten purse strings to protect yourself.
But one of the most effective solutions for businesses to survive, recover and prepare for future disruption is to continue investing in technology. When you invest strategically in the right technology and service offerings, you are more likely to come out ahead after the market bounces back.
How Business Recession Survival Has Changed
This recession, coupled with social distancing requirements, demands remote capabilities, expanding the importance of digital investment. The unprecedented nature of the crisis that hit earlier this year caught most businesses by surprise, as they hadn’t prioritized remote capabilities as part of their preparations for a potential downturn.
This recession has changed the role of technology. Formerly, technology investments to prepare for and manage through an economic downturn or recession may have included:
- Adding support for better operational or sales systems.
- Embracing analytics so you can enhance your understanding of what’s driving your business and doubling-down on those drivers.
- Providing better service to your customers than ever. (A downturn is no time to let up on tools that make it easier to serve your customer base.)
Now, businesses must address pandemic restrictions:
- Sales professionals are limited by remote operations, increasing the need for tools that enable a company to maintain a connection with customers.
- In-office staffing may be limited and reduced, increasing the need for remote internal capabilities.
- Increasing remote capabilities and digital tools presents security risks that must be addressed.
Even if conditions change, businesses are now aware of the “what if” and don’t need to be caught off guard without the right technology.
How Technology Helps Businesses Do Well in a Recession
Here’s how investing in technology can benefit your business in an economic downturn:
Tech Improves Internal Efficiencies
Rather than cut staff or services, this is the time to turn attention toward internal processes.
- How can you serve your customers more efficiently with customer self-service options (chat bots and e-commerce), improved order efficiencies and remote customer service?
- What challenges have you been facing with sales and operations, and in what ways can you tackle those?
- Can you identify and improve inefficiencies by embracing a data-driven culture?
Boosting Sales Team Productivity with Technology
Investing in technology can keep your sales team productive and creating opportunities. They can also experiment with new sales techniques.
- For example, Microsoft Relationship Sales combines the power of Microsoft Dynamics 365 for Sales with LinkedIn Sales Navigator, giving salespeople critical data on 500 million professionals, which allows salespeople to spend more time engaged in activities that could lead directly to increased sales, instead of spending tracking down prospects and qualifying leads. Such technology is also immensely helpful to salespeople who typically interact in-person and must work remotely more often.
What’s more, investing in your sales team during a recession is a smart way to retain your best people and limit turnover, which can be a good sign of a solid workplace when things pick back up.
Consider revisiting goals and processes for both internal and field sales reps. Take some time to learn what challenges they face and how they might take more initiative in their roles, and enable them to take greater ownership of the data through productivity apps, Enterprise Resource Planning (ERP) or other Cloud-based tools.
Tech Can Help You Solidify Customer Relationships
According to a 2019 article in MDM, “Too many firms reduce their marketing expenditures during a recession only to find that when the market rebounds they have lost contact with key customers.” Even if you feel stretched, remember not to lose focus on your customers.
- Keep a firm grasp on technologies that offer insights into customer information, and don’t skimp on customer communication tools or customer-facing tech.
- Invest in a strong CRM, nurture existing relationships, and generate targeted leads to ensure that your customer base will stay strong through the economic ups and downs.
Technology Helps You Become Disruption-Proof
Old, inefficient technology can put your organization at risk of not being able to continue during a significant disruption. If your ERP system is on-premises and you only operate a few applications in the Cloud, unexpected events could easily halt your operations. At a severe-risk company, for instance:
- Most technology is old and on-premises.
- There are few integrations.
- Work is limited to the office.
- Operations could not be up and running quickly if something happened.
- Security policies haven’t been updated or established.
At a limited-risk company:
- Cloud solutions and a Cloud infrastructure limit security and business continuity risks.
- Applications and data are integrated.
- Employees can work from anywhere.
- Operations could be up and running within hours following an issue.
- Security is built into the Cloud ERP solution and/or hosting platform.
If your organization doesn’t operate primarily in the Cloud, now is the time to consider migrating.
Next Steps for Companies During (and After) a Recession
Many companies are hesitant to adopt newer technologies, whether it’s e-commerce or an ERP platform. But to conquer change and come out ahead after a downturn or recession, instead of scrambling to catch up, we must take action. Cloud-based Microsoft Dynamics 365 and NetSuite, for example, can support data-driven decision-making so you can feel confident in your next steps. Additionally, there are some great tax advantages to purchasing a SaaS ERP solutions this year through IRS Section 179 and bonus depreciation for 2020. (A detailed blog on this is coming soon!)
If you’re not sure which move to make and you’re concerned you’re at risk, Enavate can help you evaluate your current challenges and systems. Learn how disruption-proof your ERP is by taking our quick quiz. You will get answers on how equipped your business is to handle disruptions, risk and growth.
You have choices on what technology path addresses your needs. Enavate can help you prioritize risks and requirements, and help you take a phased, methodical approach to get you where you need to be. Talk to an Enavate expert today.