If you’ve been alive 10 years, you’ve been through a recession – the Great Recession actually. If you’ve been alive 20 years, you’ve been through two recessions. 30 years on the planet will give you…you guessed it, three recessions. Although recessions do seem to be cyclical, they don’t always happen every 10 years. Over the last 50 years, there have been 7 recessions.
Gas Lines and Baby Food Jars
The ramifications of a recession also change over time. Being 53 years old, I recall my grandparents saving every coffee can, baby food jar, and plastic container to repurpose and use for storing things throughout the house. As products of the Great Depression, they were raised to literally save everything. I can also distinctly recall having to wait in long lines for gas during the recession in the 1970’s. My father and I would park the car in line at the gas station and go to the nearby strip mall to kill time for two hours while we waited for the line to move.
Although not a recession, I recall Black Monday in 1987 when the stock market dropped over 22%. I was working at a financial planning firm at the time and that was not a good day, and not just because it was Monday.
Dot Bomb Bubble Burst
In the early 2000’s, the dot com bubble burst, and turned into the dot “bomb”. It seemed like anyone with a web-based idea was given millions of dollars in funding without having to show any profits (a scenario which still occurs today). eToys.com, Webvan.com, Pets.com, and many more all wiped out almost overnight.
Most recently, we can all recall, if not relate, to the Great Recession that occurred in 2007-2009 when the housing bubble burst due to the subprime mortgage crisis. The term “government bailout” became a major thorn, and the nemesis for many household brands. Many are still recovering from this economic meltdown. However, the prosperity over the past 10 years has dulled some of the sting.
But, some are now warning us that the great run we have enjoyed may be slowing down, and we’re potentially headed for a recession. Search Google for “Recession 2019” and you’ll find blue-chip names discussing the very likely possibility that a recession is looming.
Before it's too late!
I have owned a technology company, Fluid IT Services, for the past 17 years, and we felt the impact of the 2007 recession – but in an interesting way. We provide IT solutions and support for small to mid-sized businesses, and the cost of our services is typically less than the cost of one full-time employee. Although we lost the clients who unfortunately went out of business, we gained new clients who needed to cut costs and couldn’t afford full-time IT staff.
We certainly had to cut costs ourselves and manage everything more tightly, but we were okay because our risks were spread sufficiently, and we provide a service that is “recession friendly”. We continued to grow as the economy improved, but always with a keen eye on our market segment and the economy as a whole.
As the economic signs, signals, metrics, statistics, etc. started showing a downturn, we’ve used it as an opportunity to get our business in order. It’s much easier to evaluate all your people, processes and technology-related costs, and make sure that your business is operating as efficiently as possible, before things go south.
Every company has and uses technology (IT) constantly. Most companies today wouldn’t be able to function without IT. But, when times are good, costs related to IT (and other business functions) may not be closely monitored because sales and revenue can cure many ills. However, it’s best to ensure your IT house is in order before the times get tough and budgets get tight.
Start by asking questions
An analysis of your current IT spend at a detailed level, may be as exciting as watching paint dry, but it’s crucial when dollars tighten. IT cost analysis can also be difficult. Even knowing which items to include when analyzing your IT spend can be confusing. I’ve found that it’s easiest to start by asking questions…
What are my costs for internet, phones, software subscriptions, IT support, computers, etc.?
What hardware needs to be replaced soon? How much will it cost to replace?
What costs can be reduced or eliminated?
What costs are a bare minimum to keep the lights on?
When was the last time I evaluated all my contracts related to technology and what are the terms? Being locked into an expensive 5-year contract at the beginning of a downturn is no fun.
We can help! At Fluid, we help companies analyze their IT costs almost daily. So, we already know where most of the IT costs are found, where the skeletons are buried, what is reasonable, and what is outrageous. As a provider of outsourced IT services for small to medium businesses, we have to know these costs because we’re responsible for managing them in order to be a good steward with our clients’ hard-earned money spent on IT.
We also take it one step further by using a more proactive and strategic approach to IT. We will hope for the best, but also help you plan for the worst by discussing current and future business needs, goals and “what if” scenarios. Once we have this information, we can provide guidance on ways to cut IT costs and suggest solutions that will generate revenue, and specifically align with each clients’ business plan.
Don’t be afraid to say you don’t know and bring in experts to help you understand your costs. It will reap rewards now and help you sleep better when economic conditions do change. Feel free to call Fluid IT, we love this stuff! Our main objective is to help people with their businesses and see IT in action!