- How Recession Impacts Your Business Operations
- The Concept of Recession Proof for Businesses
- How Technology Investment can Make Your Business Recession Proof
- Top 5 Recession Proof Business Ideas to Implement in 2022
- Starting Your Own Recession Proof Business With Digital Transformation?
- How Can Apppinventiv Make Your Business Recession Proof
- FAQs on recession proof businesses
The National Bureau of Economic Research officially declared a “recession,” which is defined as a “significant decline in economic activity that spreads across and lasts more than six months.” According to the Bloomberg survey of economists, the median probability of a recession over the next twelve months is 47.5%, up from 30% in June 2022. Moreover, the US economy is likely to experience recessions on an average of one every six years, which means every business industry is on the edge of survival.
If we look at the current US economic status, the real GDP shrunk by 0.9% in the second quarter of 2022.
According to the industry experts, the current recession is so far a technical and unusual one that can only be surpassed by introducing digital transformation processes. It is therefore crucial for every business to be recession proof with ongoing changes and thrive through the upcoming recession. But how do you do so?
All your questions are going to be answered here. This article introduces you to the prime causes of business recession, what businesses do well in recession and how a technology investment can make your business recession proof in 2022. So without any further ado, let’s begin.
The above graph is based on a survey of 525 retail and professional industry investors depicting the expected upcoming recession periods for businesses. As you can see, the US economy is going to experience a number of recessions with varying degrees of severity. For a business, a recession event may impact the ongoing operations profoundly. Let’s see how.
How Recession Impacts Your Business Operations
A recession event may touch companies large and small. Following are the three major business factors directly affected by recession:
In a recession, your business will most likely struggle with slow-to-no orders and services. During such economic contraction, the aggregate demand for your products and services declines, translating into a drop in sales. There can be a significant slump, and you might also have to face bloated inventories.
Your business’s financial health may enter uncertain, risky periods as equity markets close for debt costs and new issuance. Apart from this, fully operating companies cannot turn quickly and shed capacity either from a machine perspective or human capital. Either way, technology investment will be required.
Large or small businesses might need to cut layoffs to manage costs and meet the reduced demand for products and services. Recently, a host of companies, from Tesla to Coinbase, announced job cuts and froze hiring. On top of that, the tycoon of the entertainment industry that was expected to be recession proof, Netflix, eliminated more than 450 positions in a month.
If the recession hits such industry giants in the business cycle, it is all the way impossible to figure out what businesses do well in a recession. However, to sustain well and stay resistant to downfall in business, we can learn how to survive a recession. Let’s take a look.
The Concept of Recession Proof for Businesses
The ongoing recession has caught every business off-guard, and many now face the uncertainty of whether recession conditions will continue, worsen or recede. For a recession proof business, your priority must revolve around disruption preparation and recovery.
By making businesses recession proof, we mean making businesses shock-resistant, giving them the flexibility to experiment with innovations and preparing them to thrive on ensuing upturns.
One of the most effective solutions for businesses to survive, recover and prepare is to continue investing in technology. Experts state that by strategically investing in the right technology and service offerings, your business is most likely to come out ahead even after the market bounces back. This is because the traditional survival methods have entirely changed, coupled with remote capabilities, social distancing, and digital investment expansion.
The primary reason is the role of technology in every industry. Today, every business requires addressing current market operations such as the following:
- 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.
- Moreover, introducing technology software and systems for security and maintenance.
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 high in 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’s talk about this in detail.
How Technology Investment can Make Your Business Recession Proof
Advancements in upcoming technologies such as AI/ML, Internet of Things (IoT), Cloud computing, Big Data, Blockchain, etc., have surfaced lower risks and introduced high reward business solutions for organizations to grow. Here is a graph that depicts the digital penetration of technology across industries and businesses.
Below are some of the typical technology applications running successful businesses today:
- Advanced relationship mapping and management tools such as SRM, SCM, and CRM driving 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 current applications are a few ways technology can help recession proof your business. Besides, information technology and recession both impact businesses in different ways. Let’s see how investing in information technology and digital transformation services can benefit your business in an economic downturn.
Technology in solidifying customer relationships
A recent Gartner forecast says that rates of inflation, geographical disruption, and other factors cannot slow the investment in technology. This accounts for the worldwide IT spending to reach $4.4 trillion by the end of 2022. Studies also revealed that too many companies reduce their technology marketing expenditures in recession only to find that they have lost all key customers when the market bounces back.
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. It is also crucial to invest in good CRM to generate targeted leads, nurture existing relationships and ensure that your customer base remains strong.
Technology in improving internal efficiencies
Rather than cutting services and staff, you can enhance your business’s internal capabilities by choosing the 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.
Technology in boosting sales and productivity
Investing in technology creates innumerable business opportunities and is a smart way to retain your best talent and limit turnover. You can take some time to learn what challenges you face in sales and then enable greater ownership of data through productivity apps, Enterprise Resource Planning (ERP), and cloud-based development.
One powerful instance of integrating personalized software for sales is the Microsoft relationship sales system that combines the power of Microsoft Dynamics 365 with LinkedIn sales navigator, provisioning data insights on more than 500 million customers.
This helps the sales team engage in activities that directly lead to sales instead of tracking down prospective clients. Investing in customized sales software solutions is also immensely helpful for teams working remotely.
Technology in making business disruption proof
A recession proof business in 2022 operates entirely on technology. This is what it looks like:
- Cloud solutions and cloud infrastructure are operational for security and business continuity
- Applications and business data are integrated into best business practices during a recession
- Custom ERP and software solutions on hosting platforms for maximum maintenance and management
- Remote working where the business process is communicated and connected through automated and smart devices
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.
Here, we acknowledge the benefit of investing in modern technology irrespective of any business industry. To give you instances of two of the most powerful and established sectors; let’s check their case studies:
Modern Technologies used- Cloud computing, Data analytics and BI solutions
Appinventiv successfully implemented a data analytics platform for a leading US based telecommunication company optimizing the business data and increasing the data quality by 85%. Not only this, migrating the business data to the cloud ecosystem resulted in 100% processing of customer data and 26% reduction in hardware and maintenance costs.
Supply chain and logistics industry
Modern Technologies used- AI powered RPA (Robotic Process Automation) and Analytics
Appinventiv improved supply chain visibility for a global manufacturer with 60% using AI and analytics solutions. Apart from this, Appinventiv also designed and developed an intelligent supply chain software solution to help the company be more responsive towards its customers’ needs. This resulted in 30% increase in operational efficiency and 40% reduction in transport and logistics costs.
Appinventiv has introduced several innovative customer centric solutions to many other industries including using modern digital transformation services.
Apart from technology investment, you can also implement several recession proof business ideas to avoid and reduce the downturn’s impact.
Top 5 Recession Proof Business Ideas to Implement in 2022
During severe times of recession, the essential practices of good business recession hygiene should be followed first, along with long-term business strategies and advanced planning. In economic downtime, If you are looking to start a business during the recession, these recession proof business ideas have been known to make all the difference to business success.
To insulate your business against recession, below are the top 5 recession proof ideas you can work on:
1. Professional online communities and resource platforms
During the recession, people out of work need constant support to get back on their feet. You can avail this opportunity by starting a resource platform or an online community looking for jobs. You can earn money through advertisements, successful recruitments, or sponsorships. The benefit of creating online professional communities is the low, upfront cost.
This way, you can also help people with their side hustle, get them consultancy, and even provide professionals for skill development.
2. eCommerce stores with low investment stock
eCommerce is an extensive industry; therefore, you cannot attribute recession resistance to the whole sector. However, specific eCommerce models stand a better chance. You can start a low-investment eCommerce business that can survive recession due to small scale and low average cost. Since customers don’t have to spend much on unsponsored and low-cost products, the products will remain in demand even in difficult times.
3. Real estate businesses
There are unlimited technology trends driving and thriving real estate businesses in 2022. This is because the housing market has plenty to offer its investors even during economic downturns. Especially in a recession, real estate prices and mortgage rates decrease as supply increases. People tend to invest more in properties with low prices and interest rates. Therefore, real estate software or app development solutions are a big yes for a recession proof business idea.
4. Skilled trades contractors
The requirement for skilled trades contractors never stops because the customers always need carpenters, plumbers, electricians, and other professionals to manage their households. Therefore, starting an online platform or investing in mobile app development for skilled contractors is a full recession proof business option.
5. Food and beverage business
The food and beverage industry is also known to be resilient in spite of recessions. Admittedly one such recession proof small business idea is investing in an online restaurant or delivery services where people can avail your services to order food. Restaurant app development is extremely beneficial in fetching effective business, delivering an outstanding guest experience, and thereby generating revenue for your business.
Starting Your Own Recession Proof Business With Digital Transformation?
Making money may seem like a challenge during recession times, but viable business ideas collaborated with advanced technologies will continue to thrive. Eventually, you will be able to earn resources and grow your business.
Remember that investing in adaptable technology can help you avoid overhead costs during a crisis. If you are willing to start a small recession-resistant business or looking to survive a recession in the business cycle, the best solution is to implement digital transformation solutions.
How Can Apppinventiv Make Your Business Recession Proof
Appinventiv is a leading digital transformation agency that helps businesses digitally transform through the power of technology and innovation. Our digital transformation services drive impactful business benefits by optimizing business processes and automating systems. Our digital solutions include digital transformation consulting, strategy, legacy modernization, digital applications, AI automation, and more.
So without waiting any further, contact our digital transformation experts and start your journey now.
FAQs on recession proof businesses
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.