In the current climate, many businesses are struggling to stay afloat. So it is no surprise to learn that a lot of owners are delaying investing in new equipment, technology, and training. While this is understandable, in most cases, reacting like this is not the wisest approach.
The right investment during the recession pays dividends
The Harvard Business School has studied the subject of whether businesses should invest during a recession or save their funds. Their research shows that those that continue to invest in new technology and equipment are the firms that emerge from the recession the strongest. As soon as the recovery starts to take place they surge ahead of their competitors. You can find out more about why that is by clicking here and reading some of the research yourself.
Deciding what to invest in
However, those investments must be the right ones. It would be unwise for a business owner to spend all their cash on something that does not generate additional profit. For example, new branding won´t move the needle on sales, but digital signage, deployed in the right way, will do so. Importantly it does not take long for this to happen. Increasing sales during a recession will help a company to weather the storm. To stay in business when others are folding. That in turn will increase sales more.
When the recession is over, there will be fewer competitors left and lots of pent-up demand. Having survived the recession, the business will be able to take advantage of this situation.
Below, we go into more detail and explain how to decide which equipment, technology, and training is worth investing in, even during a recession.
Look for solutions to your problems
Every business has things that are holding them back or stopping them from serving their customers well. Identifying the issues that are costing you the most and then finding solutions to them is well worth doing. For example, if you are a food business that is suffering high levels of spoilage, investing in a vacuum packer to re-seal ingredient packets tighter so it lasts longer is likely to be worthwhile.
Fully understand the costs
Before actually spending any money, understand the cost of implementing the solution. Be sure to factor in the following:
- Buying the kit
- Cost of installation
- How much training will cost, including the time staff will need to spend away from their job to train.
- Maintenance – including servicing, peripherals, wear and tear and rises in the price of these things and the cost of leasing if that is the way you are sourcing the equipment.
Fully identify the benefits for the business
It is also important to identify how much your business will make or save by using this new kit or technology. This is quite hard to do. Fortunately, most of the time, the company selling you the product will be able to help with this. They will have hundreds of customers whose experience they can tap into to tell you what you need to know.
But you do need to bear in the fact that their figures may be a bit optimistic. So, spend a bit of time working through them and identifying how much your company is likely to save.
If you can do so, speak to other business owners that are already using similar tech or systems. They do not have to necessarily be your direct competitors. For example, a café owner that has introduced digital signage into their business will be able to tell you how strong the uptick in sales was when they installed them. This gives you a rough idea of how much of a sales increase you are likely to see.
Spend some time on training
Allow sufficient time for your workforce to be trained. Be sure to factor this cost into your calculations and recognize that there will be a settling-in period.
Monitor the success of the new tech
Before you start using the new equipment or technology, set up a way to measure the impact it has. For example, the best digital signage keeps track of when each ad is deployed. When this information is combined with sales data, the retail outlet, café, bar, or restaurant that is using it can work out how effective each advert actually was. This enables the business owner to work out whether it makes financial sense to use digital screens in other branches. As well as highlighting which types of ads are the most effective. Doing this ensures that you accurately identify the ROI.
Businesses that continue to invest in the right tech are the ones that grow the fastest. This is just as true during a recession as it is the rest of the time.