Penny pinching and keeping costs under control is at the top of mind for businesses everywhere during a recession. Doesn’t matter if you’re a B2B or B2C business. While B2C companies usually suffer the first hits during a recession, every business feels the impact of people spending less. With less revenue, companies have to find ways to control the cost side of the equation. So, how can they use technology to keep costs low while still growing?
The fundamental equation for every business is the same. P=R-C, where P equals profits, R equals Revenue, and C equals Cost. Regardless of what industry, segment, or location your business is in. This equation stays the same. What changes, however, is the amount that every letter represents. Especially during times of recession.
The question that always pops up every time an economic downturn comes around is, how can we grow our business, the P side of the equation, while lowering the costs, the C variable in the equation?
One of the most common methods of lowering costs in a recession that we see is layoffs. We won’t discuss this in this piece, but instead, we’ll talk about how businesses can use technology to keep their costs under control.
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Spend less on physical materials
A crucial way that technology can aid in reducing costs is that by implementing certain tools, it can bring down costs on material items used for work. For example, if you go with a digital contract solution, you can reduce your spending on paper, pens, scanning, and fax machines.
Sure it’s nice to have a branded notebook, some cool letterheads, or fancy new business cards. The truth is, tech has pretty much replaced all of those now. Need to take notes? Use google docs or the notes app on your phone, tablet, or laptop. Want to a draft a letter? Use a digital template that you can make and craft yourself. And business cards? Who uses those these days? LinkedIn has become the de facto way of connecting and communicating with our professional network, so send them a connection request instead.
There are tons of digital tools that can help you reduce the costs on traditional office supplies that are increasingly becoming outdated. Save money by going paperless and digital, as during downturns, every penny counts.
Read also: What to do when you get laid off?
How technology helps business grow? Optimize processes
While most of us weren’t around for the industrial revolution, we’ve been around for the newer vision. The digital revolution. This is when technology was implemented vertically and horizontally across businesses to improve efficiency, and productivity skyrocketed. As a whole, society has never been more productive than we are right now. The average worker is 253% more productive now than they were seven decades ago. Some of those productivity gains we have to attribute to technological advancements.
One of the best things about technology is how it improves processes and allows us to work even more efficiently. We now spend less time, to get more things done. As an example, it used to be the case that a salesperson would have to go through the phone book and cold call every number they found. Trying to qualify their prospects and figure out who was interested in their product. Now, thanks to a bunch of tech tools, it’s easier to identify potential customers and get in contact with them. Leading to better qualified leads and more closed deals.
It’s about finding the right tools that can have an impact on your processes that can lead to saving costs. Identifying where you can optimize or trim the fat a little bit is one huge way on how technology keeps costs low.
Technology and business: Work remotely
A significant cost for a business in the modern day is real estate. Renting out space is expensive, especially if you’re operating in a city or urban area. Take a look at this data, you’ll see how insane prices are in major metropolitan areas worldwide. It’s also true that large numbers of people move to major cities to increase their standard of living. Because, historically, the better jobs were in urban areas.
That meant that companies used to need an office in a major metro area, because let’s be honest, it’s tough to attract top talent to a rural area in Ohio or the small Swedish city of Åmål. Versus the exciting New York City or Stockholm metro areas and all they have to offer.
That’s starting to change with the rise of remote work and the tools that have facilitated it. Zoom, Financial Cents, Google Meet, Slack and Teams have made collaboration between teammates instant because it only requires an internet connection. Of course these tools cost money, but it’s more cost effective to give all your employees access to Google Workspace versus renting out an entire floor in Uptown Manhattan.
This is only one example of collaborating across locations. There are many other tools that can allow your teams to work together from wherever they are.
Increase engagement and employee development
Every company knows that it’s more expensive to hire and retrain a new employee than to retain their current ones. It’s both an increase of investment in time and money, which is not going to help you lower your costs. It’s much better to keep your current employees happy and focus on their development. A study from the university of Oxford has shown that happier and more engaged employees outperform their unhappy counterparts. And during stressful economic times, it’s important that your business is firing fully and operating at maximum capacity.
Using the tools out there to you to keep your teams happy and outlining a clear path of their future at your company can pay dividends later. In a few different ways. First off, you’ll save money on not having to hire and retrain a new employee. Secondly, you won’t suffer from the institutional knowledge loss or brain drain that occurs when employees leave a company. And last, but certainly not least, your employees will be motivated. Focused on their job and doing it to the best of their ability. It’s a win win for you.
There are many costs associated with running a business. Each line item on a balance sheet is attributed to some expense and cost. Now, more than ever, every company is trying to find a way to decrease the numbers they see in that part of the equation. Using the technology available to us is one sure way to see that number go down. Implementing it in the suggested ways above can certainly help, but accounting can be tricky after all. So creativity can come in handy here.