When evaluating the decade-long bull market, it’s reasonable to assume that entering a recession is a possible outcome. With economists unsure on the future of the world’s financial stability, it’s best to prepare for the possibility of fluctuations in the market.
Here, we’ll give you our IT admins’ guide to saving money, focusing on how to best prepare organizations for economic hardship and giving professionals the tools they need to protect the prosperity of an organization from the outside influence of the spiraling effects of ever-growing threat of recession.
What Happens in a Recession?
The last recession to occur in the United States began in late 2007 and lasted until mid-2009, marking the deepest economic downturn to hit the U.S. since the Great Depression in the 1920s.
It’s important to keep an eye on economic prosperity, especially for organizations that thrive under manufacturing and selling a product. According to Bloomberg, as of October 2019 there is a 27% chance of recession within 12 months, but Fortune warned that the slowing global economy could mean trouble on the horizon, possibly causing the probability of a recession to increase.
With a drop in market expansion, consumers, and therefore businesses, commonly react by dramatically reducing their spending in hopes to save enough to get through the hardship, which perpetuates the halt in purchasing that commonly causes a recession. There is a sort of hush that falls over the market and organizations — where consumers and sellers hold their breath, are afraid to spend or invest.
Unless your organization is incredibly well-capitalized, it is likely that a downturn will affect you and your team. Here we’ve listed tips on staying afloat in harder times.
Rank Your Projects
When it comes to taking an economic stance, it would be best for an organization to prioritize the current and upcoming projects slated for the approaching quarter or year. Budgets and headcounts could change, and it’s crucial that leaders prioritize what needs to be accomplished and what can wait.
Having a plan allows organizations to generate the resources needed for projects they find are important to their overall success. This prevents organizations from making drastic cuts reflexively, which could ultimately cost jobs and eliminate the benefits that were planned.
For IT admins, it’s always better to budget against the upside case, but potentially spend to the downside or current trajectory. This way there is slack in the budget and if things are tight, you can easily adjust. As a result it is critical to determine what projects or initiatives are necessary, and what updates or new releases — that require money or labor — can wait for a season or two. What can be planned as a long-term investment, rather than an immediate, large purchase?
Create Flexibility Now
Be prepared for whatever might come your way. If forced to make changes, IT admins should be able to do so quickly and efficiently so they can focus on delivering on the most critical priorities of the organization. In general, this could be accomplished through shorter term contracts with outsourced solutions and allocating funds to critical projects. Sharpening focus on key areas with shorter-term deadlines can ensure that value is being delivered on an on-going basis and projects can be paused at natural break points more often.
True flexibility within an organization means that, no matter what level they perform at, every employee is prepared for the possibility of taking on a new task or making changes to their day-to-day operational structure. As an IT admin, it’s important to prepare for implementing changes within an organization’s structure to facilitate shifting responsibilities to areas of need.
Reduce Spending Where Possible
In the same vein as keeping flexibility in mind, a great way to prepare your organization for the possibility of a recession is by cutting unnecessary spending ahead of the curve. Making trims, while difficult, is incredibly important for organizations that want to maintain current output and standards. Make sure to keep focus and “perks” (like free meals and company get togethers) to boost employee focus. It’s vital to reward the people that get companies through a recession, and cutting a project is not a “forever” choice, it is a “just not now” choice.
Maintaining open communication with vendors and contractors is also important when reducing financial expenditure. This way an organization can protect itself from financial hardship while outside resources prepare themselves for a drop in revenue, ensuring a continued relationship once that organization can afford increased spending again.
Automate Manual Tasks
Organizations need to evaluate what and where the majority of investing should go. To do so, they need to find areas for automation that can save time and money when possible.
This could apply to a variety of tasks, but most commonly organizations can leverage self-service software. These applications are useful for generating schedules and automating onboarding or offboarding to give employees more freedom and flexibility in managing new or current tasks. This process of IT automation frees up time for an organization to approach new projects and utilize employees for more budget-friendly or labor-specific tasks.
Prosperity Through Planning
Surviving a recession can be a significant challenge for many, and the idea of preparing for something that hasn’t happened yet may be daunting. These are just a few of the ideas that organizations should start to consider now to make sure that their system of operating is not affected by an economic downturn, if and when it happens.