In a free market system, recession and economic slowdown are inevitable. With core inflation hovering around 7% currently in the United States, everyone is feeling the crunch. The current economic scenario begs the question – is a recession around the corner? Considering the economic indicators, you should at least be prepared for a slowdown of some kind, even if we don’t slip into a full-fledged recession.
While the term “recession” may set off panic waves among business owners, it need not necessarily be the same for MSPs. IT is the backbone of every business, and industry observers are expecting the managed services sector to continue to grow, albeit at a slower rate, in the coming year. Slower growth might, however, mean it’s a good idea to pay closer attention to managing costs. Here are a few tips to prepare your MSP for an economic slowdown and build resilience.
Manage your cash flow
Generating enough cash flow every month can become a challenge for many business organizations, including MSPs. To overcome this issue, you must ensure that your investments pay off faster. For instance, if you can accelerate the pace of onboarding new clients through automation, workflows, checklists etc., you can onboard more clients without expanding your team. By implementing measures like this, you can ensure sufficient cash flow without spending too much on additional resources.
There are other ways to improve the cash conversion cycle as well. If you haven’t checked out our sister company ConnectBooster, do so now. They help MSPs get paid in weeks rather than months by eliminating manual reconciliation of A/R and chasing invoices.
Build an agile workforce
The lower economic activity caused by a recession often results in layoffs. Besides impacting your people and their livelihood, it can disrupt productivity and tarnish your MSP’s image. To avoid this, you need to build a versatile workforce from the start. Versatility is not about dumping more work on fewer people and expecting good results. You need to eliminate waste, automate busy work and hire the right people for the right job.
Besides hiring the right talent, you must ensure you cross-train your team in various specialties like cybersecurity, compliance, documentation and more. Most importantly, develop a plan for resource allocation and efficient use of existing resources.
Invest in the right technology
Robust MSPs leverage technology solutions to do more with less. You must invest in the right technology solutions to make your technicians’ life easier. For instance, a robust documentation solution can reduce waste by at least 50% and make information readily available for your team members.
The right technology solutions can effectively defend against all kinds of unexpected eventualities. Even during the COVID-19 pandemic, MSPs overcame the initial disruptions by embracing technology and offering new services that cater to remote businesses. Most importantly, adopting new technology can also help better prepare for the economic boost that will inevitably follow the slowdown.
Seize opportunities wherever you can
While many see a recession as a crisis, some see the opportunities presented as a result. If you are an MSP struggling with getting the right talent on board, you can take advantage of the massive labor market that didn’t exist before the recession. With companies laying off talented individuals, getting the right talent for a reasonable price is no longer out of your reach.
A recession is also the best time to acquire new companies that can supplement your growth. During recessions, you can look for bargain deals in the market that can benefit you greatly once the recession is over. If you have saved enough money for experimental projects, this is the right time to use them.
Riding the recession wave
If the COVID-19 pandemic has taught us anything, it is that MSPs play an integral role in the smooth operations of the business world. With technology adaptation at an all-time high, businesses are still going to need IT, irrespective of the environment they operate in. If you play your cards right, you can not only survive but also thrive and stay ahead of your competitors.
Despite these advantages, you cannot approach the recession period like any other time. Certain adaptations and flexibility are required to ride the recession wave on a high. Make sure you incorporate all the tips we have mentioned here. Most importantly, do not just plan for the current scenario. Instead, have the foresight to prepare for future opportunities that will inevitably present themselves at the end of the recession.
To learn more about using documentation to build a versatile workforce, request a demo.