By Adam Fard, CEO and founder of AdamFard UX Studio
2022 has been a difficult year for tech companies, with tech stocks plummeting and leaving staple tech giants such as Apple, Meta and Google losing more than $2.7 trillion. This has resulted in other companies such as Netflix and Cameo laying off high percentages of their tech professionals.
Let’s take a closer look at what exactly it means to face a recession and how you can keep your business afloat during one.
What Is a Recession?
Investopedia states a recession is a ‘macroeconomic term that refers to a significant decline in general economic activity in a designated region. It had been typically recognized as two consecutive quarters of economic decline, as reflected by GDP in conjunction with monthly indicators such as a rise in unemployment.’
This definition is exactly what’s being faced in the current economic market, which is drawing many comparisons to the ‘dot com crash’ of 2000. One of the more commonly cited reasons for this is the growing prioritisation of growth itself in the tech sector, rather than profits.
Is a Recession a Death Sentence?
The good news – no, it’s not.
It might appear that entering the economic landscape during a recession is a blatantly bad idea, but a multitude of large technology companies – Square, Asana, Slack, Zoom, Air BnB and Groupon – have done just that and emerged not only unscathed but successful.
This is because a recession does present opportunities that can be taken advantage of. These include:
- Fewer competitors
- Required efficiency and competency
- Highly qualified talent looking for jobs
- Customers and users seeking better, new alternatives
This isn’t to say that there won’t be potential struggles or difficulties, but it does highlight that there are clear prospects amid a recession that you can work with to create your own success.
How to Become Recession-Proof
There are a few crucial steps to make your tech company recession-proof.
Outsource to Experts
A recession typically leads to needing to cut costs, which usually causes layoffs and a severe shortage of talent and workforce as a result. Outsourcing your needs can be one of the best ways to save money and achieve a better return on investment.
By outsourcing, you can manage capital with more flexibility as you can measure and reallocate resources as you need to, without being bound. You also have much more control of your personnel, and you won’t be faced with needing to go through time-consuming and emotionally charged layoffs to rearrange or reallocate your resources.
Although operating within a recession can feel very overwhelming, try to stick to the facts – tech is not going anywhere and the demand for this type of product and service will rise again.
Investing in R&D, specifically into solid UX, is absolutely critical at this time. By advancing in R&D, you can make your product or service much more attractive to future investors while also retaining a current user base and beginning to appeal to new ones.
UX research can help you to spot the opportunities that may have otherwise been overlooked, continue building on what’s important for your business, and support and inform your product roadmap.
You’ll find that UX research really enhances customer-driven decisions and helps to keep that as your main priority instead of becoming obsessive over features.
Reduce Costs Through Better Product Experience
Product spending can be divided into key categories, such as research, design, coding and more. In steady economic periods, founders are eager to launch their product or service and attend to any issues that crop up as and when. This is an iteration-based approach.
However, during a recession this is not the path to go down as the ability to iterate can become limited. The solution, therefore, is to eradicate as much uncertainty as possible before your product launch.
UX research is hugely beneficial in preparing for this. It helps you to:
- Certify designs and features before implementation to avoid a reimplementing cycle
- Reduce the number of support tickets or manual onboarding time through better usability
- It increases perceived value and makes your product easier to sell
- Reduces necessary budget to acquire new users through self-signups and high NPS
During this tough period, it’s important to remember that a recession isn’t a death sentence and that there are key preventative measures that can be taken to ensure your business isn’t bowled over by hard economic times.
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