Recessions can be challenging times for businesses of all sizes. Due to recent events, many businesses are fearful of what lies ahead economically. Thankfully, there is wisdom abound from the financial crisis of 2008, and a plethora of strategies to help you prepare your business for a recession so that you can maintain growth!
During a recession, customers may be more cautious with their spending. As a result, businesses that rely on a single product or service may struggle to generate enough revenue.
That's why diversifying your offerings and opening new streams of revenue is a great way to get ahead. By expanding your product or service offerings, you can appeal to a wider range of customers and reduce your reliance on any single product or service.
To do this, consider areas of value your business has the capabilities of providing that you aren’t currently making any revenue off of, or additional products that you can invest in creating that may provide a great profit for you.
For example, a restaurant might consider offering catering services or selling branded merchandise. Alternatively, you could expand your menu to include more options, such as vegetarian or gluten-free dishes.
If, like us, you’re a tech company, this concept can still apply to you! Perhaps you have an abundance of expertise in your field that you can use to create and sell courses through sites like Udemy.
You might also consider challenging your expertise and adding more value to existing clients. For example, if you are a software provider with content writing talent, you can potentially use that to create a content writing service for existing clients.
During a recession, customers may be more selective about where they spend their money. That's why it's essential to focus on providing exceptional customer service. Providing consistent, quality customer service will help you build customer loyalty while also attracting new customers through word of mouth.
To do this, consider the areas that may affect the quality of service your staff provides. If there is opportunity to boost your teams’ internal engagement and morale, be sure to tune into that. Creating a healthy and engaged working environment sets the stage for your teams servicing to improve.
It’s also wise to consider investing in additional training for your staff. Ensure that your employees understand your business's values and are equipped to handle customer inquiries and complaints. You may also want to consider offering incentives to customers who refer new business to you.
History has taught us that businesses who lean into advertising and marketing during recessions tend to perform better. It can be tempting to cut back on marketing expenses to save money. However, investing in marketing can actually help your business grow during tough economic times.
For one, increasing your marketing efforts in general allows you to reach new customers and increase brand awareness. However, and most importantly, marketing during a recession means there will be less competition.
Many businesses will try to get ahead by giving into cost-cutting temptation or will sadly not have the means to advertise, giving a small amount of other businesses more opportunity to shine. That being said, you want to be sure you budget your advertising and marketing efforts appropriately.
To make the most of your marketing budget, consider investing in online advertising, social media marketing, and email marketing campaigns. These forms of marketing can be highly effective and cost-efficient.
Leaning into free marketing tactics can also make a large impact on lead generation. For this we recommend rolling up your sleeves and putting in the effort to boost your SEO and social presence as much as possible.
Another great and cost-effective strategy is collaboration. Consider partnering with other businesses or organizations to co-promote each other's products or services.
This part probably goes without saying but it's essential to focus on improving operational efficiency to reduce costs and increase profitability. To better help you prepare your business for recession, look for ways to streamline processes and eliminate waste.
You may also consider outsourcing certain tasks to reduce overhead costs, but we’ll discuss that more later.
To improve operational efficiency, consider using technology to automate manual tasks. For example, you could use a customer relationship management (CRM) system to manage customer interactions, or a project management tool to streamline your team's workflow.
If this sounds a bit overwhelming, you can also look into freelancing or booking a consultant to help you identify inefficiencies and implement solutions.
Cash flow is critical during a recession. Make sure that you are closely monitoring your cash flow and again, taking steps to reduce expenses where possible.
If possible, try negotiating with suppliers for discounts or better payment terms, and be on the lookout for opportunities to reduce inventory levels.
To manage your cash flow effectively, consider creating a cash flow forecast. This will help you anticipate your cash needs and plan accordingly.
You may also want to think about working with a financial advisor to help you develop a cash flow management strategy.
As the economy slows, it may prove challenging to fund new projects or initiatives. However, by forming partnerships and collaborations with other businesses, you can pool resources and achieve common goals.
To form partnerships and collaborate with other businesses, start by identifying businesses that share your values and target market. Reach out to these businesses and propose a mutually beneficial partnership or collaboration.
Using social media platforms or attending industry events are also great ways to network with other business owners and find potential partners.
During a recession, it may be difficult to justify hiring new employees to handle non-core functions. That's where outsourcing can be a valuable tool. By outsourcing non-core functions, you can reduce overhead costs and free up resources to focus on your core business.
To determine which functions to outsource, start by identifying the tasks that are not critical to your business's success. This may include tasks such as accounting, human resources, or IT support. Then, research outsourcing providers and compare their costs and services to find the best provider that fits your budget.
Keep in mind that when outsourcing, it's critical to choose a provider that aligns with your business's values and goals. Look for a provider with a proven track record of success and good customer reviews.
It's also essential to establish clear expectations and communication channels to ensure that the outsourcing relationship is successful.
Diving a little deeper here into our area of expertise, outsourcing some or all of your IT services can greatly benefit your business during a recession and in general.
Read our full article on that here. But to keep it short and sweet, outsourcing your information systems can help you reduce costs, improve efficiency, and access specialized expertise.
To outsource your information systems, start by identifying the specific functions of IT that you want to outsource. This may include software development, data management, cybersecurity, or Helpdesk support. Then research outsourcing providers that specialize in these areas.
Like all outsourcing goes, you want to be sure to choose a provider with experience in your industry and a proven track record of success. Look for a provider that offers a range of services and can provide customized solutions to meet your business's specific needs.
As unpleasant as economic crisis are, there are so many creative strategies and opportunities to help your business thrive. By expanding your offerings, boosting your marketing, collaborating with other businesses, outsourcing, or doing combination of these things – you can prepare your business for a recession and whatever else life throws at you!
If you’d like to learn more about IT outsourcing, let us help walk you through the process to give you a better idea of what it looks like and how much you can save!
Today's many technological revolutions are changing the business environment, almost beyond recognition. When it comes to the financial sector, artificial intelligence (AI) is finally addressing some long-pressing compliance issues.
Out of the $35.8 billion projected expenditures on AI across all industries in 2019, banks and other financial institutions are investing $5.6 billion in AI. This sum will go into things such as prevention systems, fraud analysis, investigations, and automated threat intelligence. Alongside retail, manufacturing, and healthcare providers, the banking sector is the top spender in AI.
This investment isn't without merit either, as the McKinsey Global Institute estimates that the financial sector could generate more than $250 billion over the coming years. It will be a result of improved decision making, better risk management, and personalized services. Despite these projections, many financial firms are cautious when it comes to implementing AI. But those that want a competitive advantage need to overcome this instinct and benefit from what artificial intelligence has to offer.
When it comes to lead handling and distribution, most banks employ a "round robin"-type system where every lead officer is assigned an equal number of leads in circular order and without any priority. But NBKC Bank, a midsized financial institution based in Kansas, introduced AI into the process.
They realized that some loan officers performed better in the morning while others in the evenings. To that end, they've implemented a platform that distributes leads based on the officers' peak efficiency times. While a quarter of leads are assigned randomly, the rest are assigned based on this intelligent system. And while it still takes into account individual workloads so that everyone gets an equal number, NBKC Bank managed to improve their loan officers' performance by 65% and their closing rates by 10 to 15%.
Various statistical models have been used to evaluate risk by financial institutions for some time now. The most significant difference today, however, is that the use of such algorithms is much more extensive than it was in the past. Likewise, the amount and type of data available are also much more considerable than in previous years. All of these put together, coupled with the introduction of AI and machine learning (ML) will result in solving many problems.
Fraud analysis is one such example. By using AI, banks and other financial institutions will be able to spot frauds faster by detecting unusual activity in real-time. Similarly, AI can detect and filter out fraudulent or, otherwise, high-risk applications. Agents will, thus, only have to review those that have made it past the system, significantly increasing their overall effectiveness.
Alternatively, AI can use alternative sources of data, allowing banks to offer lending products to new groups of people. In the future, AI is predicted to take on even more complex tasks such as deal organization or Financial contract reviews.
Sumitomo Mitsui Banking Corp (SMBC), a global financial organization, is one institution that's deploying AI for its customer service. It makes use of IBM Watson, a question-answering computer system, that's able to monitor all call center conversations, automatically recognizing questions and providing operators with real-time answers.
The introduction of Watson into the mix, the cost of each call reduced 60 cents, with equates to over $100,000 in annual savings for the bank. The system also managed to increase customer satisfaction by 8.4%.
SMBC also uses IBM Watson for employee-facing interactions, answering questions that staff members may have about internal operations. The AI system is also used to deal with a variety of cybersecurity issues.
Investing in AI should be on every financial institution's priority list going forward. Nevertheless, knowing how to navigate all implementations and compliance issues can prove to be a challenge. With Managed Solution, you can find the application that will best suit your needs. Contact us today for more information.
We live in a time and age where you can’t even say the words finance, or financial services without having them almost immediately interconnect with IT. It’s that simple. Today, in the midst of the IT challenges in the financial services industry, they can’t go one without the other.
IT is present in every industry, and its role is even more critical when it comes to Financial Services, Healthcare, Biotech and many more. But let’s stick to Financial Services for now, due to the vast IT challenges currently facing this specific industry.
Hackers are continually attacking financial Services and the entirety of the financial sector from all around the globe. Whenever someone works on any devices connected to the Internet or even an office network, those devices are in danger of being hacked.
Some online attacks happen, and no one notices them, especially if the internal IT department is overcrowded with other types of work (which are plenty!) related to financial services. To be sure that your company and your clients are secured to any IT challenges and outside threats, consider hiring IT management professionals. Security is imperative to any business and the sooner a company incorporates specialized IT protection and prevention systems, the better.
Although financial services and the entire financial industry are very well connected to everything that’s taking place in the world, in some emerging economies, making people trust IT systems with their accounts or money is still proving to be a challenge.
Most people in emerging countries are afraid of using credit or debit cards for online payment. It is a huge IT challenge because it’s the role of IT specialists to make online payments as accessible and user-friendly as possible. They also need to inspire trust, and some people seem to rely more on traditional forms of money, rather than virtual accounts.
The big IT challenge here is convincing people that no matter what they do online when it comes to your company’s services, their money is secured and in the unfortunate event of a cyber-attack (like mentioned above), they will receive their funds back. It is why you need to make sure that your company has a professional IT department when it comes to dealing with financial services. You don’t want to waste vast amounts of money on compensation when you can spend money wisely on IT management.
As technology evolves at a more and more rapid pace, staying up to date is not only proving to be hard but also very expensive for most companies. It is especially important if you are in financial services where you always need to have the best of the best to secure your company’s reputation and your clients’ funds and trust.
IT infrastructure is aging fast and spending money on new technology usually means that companies can’t afford to hire top-notch IT specialists at the same time. IT Directors, CTOs and CIOs are always faced with deciding in this sense. They either renew their IT infrastructure or hire new people who better qualify with the latest IT challenges facing the financial sector today.
However, there are still some ways in which you could have the best of both worlds without having to affect your company’s cash flow or economic stability.
IT management companies offer their IT services at lower costs than the ones involved in hiring new IT specialists as part of your own IT department. It can cut the price of continually renewing your infrastructure, spending only a fraction of the cost of hiring new personnel.
If you’re interested in learning more about our services and solutions, be sure to visit our official website where our specialized consultants are prepared to answer your questions and give you any additional details you require.
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