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How to Protect Your Business From Recession With Automation

Oct 11, 2022
automation-recession – 2

Recession is the talk of the town - or the entire world, if we look at current Google search trends. 

However, something strange is happening. 

Even though some of the typical signs of a recession are here - two negative quarters of GDP, high inflation, rising interest rates - there is no clear consensus about whether we're currently entering one or not.

And unlike the previous recessions of this century (the 2000 dot-com bubble, the 2008 financial crisis), most people aren’t panicking - not yet at least. 

recession-search-trend

Source: Google Trends

Opinions aside, this is a good time for high-level managers and CEOs to evaluate the state of things inside the company

If recession eventually hits in the upcoming months, the moment to pay attention and be prepared is today. 

Automation can be instrumental in shielding your company from recession by cutting costs and allowing you to do more with already constrained resources - but there are other factors involved as well. 

Let’s take a quick look at them before moving on to how automation plays out in this unusual scenario.

Key factors to consider when recession looms

Exposure to a recession varies from company to company, but according to the Harvard Business Review, there are four factors that deserve special attention. These are:

  • Financial leverage

  • Decision-making profile

  • Employee retention policies

  • Technology investments

Research sources indicate that the factors above tend to play a significant role in the risk level a company faces during a recession. 

Companies with higher risk levels are usually associated with the following:

  • The company doesn’t have enough cash to keep operations running and meet their debt interest payments.

  • Decisions are centralized in the highest-ranking executives, with managers having little power to decide. 

  • Layoffs are preferred over operational improvements.

  • Digital transformation and employee re-skilling efforts are stalled or insufficient.

On the other hand, available cash, decentralized decision-making, operational efficiency, and the right tech put companies in a better position during recessions.

While it's harder to automate your way out of debt in the short term, every other factor can be directly or indirectly improved by automation. 

Let’s see why.

1. The opportunity cost of onboarding automation tech is lower

The opportunity cost of investing in automation is lower during a recession than when the economy is booming. 

This happens for a fairly straightforward reason. In times of prosperity, companies usually focus on ramping up production more than anything else. 

Diverting resources that could be used to satisfy rising demand levels results in a high opportunity cost: You are giving up too much to get access to something else (instead of satisfying the market). 

On the contrary, the opportunity cost drops sharply during recessions, simply because demand is decreasing. 

That alone reduces the opportunity costs of automating your company processes, as you are not risking production or customer satisfaction by placing the money somewhere else.

Interestingly enough, the opportunity cost of training employees in new skills (such as automation skills) is also lower when economic activity slows down.

2. A single source of truth, right when you need it the most

While the first reason applies to most tech, automation software plays a huge role in achieving a single source of truth (SSOT) that stores all the relevant data your managers need to make the right decisions. 

And as you know, decisions carry a different weight during recessions. Signals multiply, and the immediate future becomes harder to decode. As uncertainty grows, a step in the wrong direction can have terrible consequences.

To minimize the chances of such occurrences, a single source of truth becomes more relevant than ever.

In days where most of a company’s data lives in the cloud, automation platforms like Make are the perfect solution to gather, categorize, and consolidate that data into repositories that are easy to access and understand. 

Make allows you to get all your marketing, sales, and business data in a single spreadsheet, dashboard, or visualization tool, allowing you to get the information you need and paving the way for faster, data-driven decisions. 

3. Operational improvements left and right

At its core, automation is about optimizing business operations, achieving greater productivity and efficiency

Needless to say, all of this takes a whole new dimension when the menace of a recession looms. 

By implementing a comprehensive automation strategy, your company will be better equipped to face a sluggish economy. 

The operational improvements will also reduce the chances of having to take drastic decisions - such as massive layoffs - that leave long-lasting wounds in both operations and morale. 

Whether recession comes or not, automation will help you meet performance goals, stay within budget, eliminate inefficiencies, and cut away the dead weight of manual, repetitive processes from your organization. 

Where (and how) to start with automation

While every company is different, the best starting point for automation is deeply connected to strategy and culture. 

The decision to automate must be made clear from the top-down, and translate into a solid strategy to be carried out by managers and employees in a concise, structured way.

If the strategy and drive aren’t there from the beginning, you might as well onboard the best automation tool in the market and still fail miserably at automating company processes. 

On the other hand, once the strategy is in place, there are areas where you can rapidly implement automation and produce results on the spot, such as:

  • Marketing operations

  • Workforce management

  • Project management

  • Accounts payable management

  • Financial reporting and compliance management

  • Internal communications

If you want to read more about automation solutions for specific business processes, take a look at our use cases section, where you’ll find inspiration, ideas, and tutorials.

Ready to recession-proof your business? Sign up to Make, and start today!

senior-content-writer-saas

Martin Etchegaray

Senior Content Writer and Editor at Make. I enjoy writing and reading about history, science, and tech.

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