Product Development
There are many different aspects to running a company and one of those aspects in certain cases is the development of new products. Any company that relies primarily on the sale of goods will have to develop new products at one point or another to remain competitive, but with economic times slow the money for product development can seem hard to come by.
The argument against product development during economic times is a relatively obvious one. Since it tends to consume a large amount of internal financial resources, it is often argued that easing up on product development can help a company survive the economic downturn of a particular country.
On the other hand, product development is often what fuels economic growth. The development of new products creates a consumer response within the marketplace and that in turn can lead to new jobs and opportunities for the population. This would suggest that product development is quite important, even in times that are economically bad.
While there is no set answer to this question, the best way to proceed vis-à-vis product development would be to continue it only insofar as it does not affect the primary financial stability of your company. The details of that however are something you will have to decide as the head of the company.
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One of the only industries that have been doing well with the current economic crisis is the electronics industry. They have slashed prices to many of their products and are still getting orders pouring in everyday from companies that are interested in abandoning a lot of their physical infrastructure and making the move to virtual real estate in the form of websites and servers.
This is a good idea and one that you might consider for your own business
to help get through the current economic rough patch. If you have physical buildings under your control, not only do you have to pay for the maintenance of that property, but you also have to pay for the amenities inside it as well as the taxes on the property that you own. Switching to electronic holdings reduces the maintenance costs and virtually eliminates everything else, allowing you to really save some money when all is said and done.
Switching to electronic infrastructures over physical ones in areas like retail and management might seem like a less than ideal situation and with the majority of the world still based on last generation’s technology it probably is less than ideal. However, in times of economic crisis nobody can afford to pass up on money-saving ideas, especially if those ideas will allow you for the most part to maintain your business as it currently is, just in a different form.
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If you are looking for ways to survive as a business during recessionary times, you can either do it by increasing inflows or decreasing the amount of money that you spend. Since no business really expects increased inflows during times of economic crisis, the natural way for you to try and survive is to decrease the amount of money that you spend.
After salaries, the next largest single cost for most businesses tends to be energy. Well, the interesting thing about energy costs is that most of them are unnecessary. If you take a close look at the way your business expends energy, it might be possible to save hundreds of dollars a month in energy costs without actually changing anything about your business. You can do this by making sure everything is off when you leave for the day and also only turning things on when you actually need to use them.
Things like lights, energy intensive appliances and computers tend to run around the clock at most businesses even though they are only actually used for a few hours each day. A little intelligent use of energy will allow you to save a lot of money each month on your energy costs and you won’t even really have to change the way you do business in order to realize those gains.
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As a general rule, one of the largest expenditures that a typical company makes is in the hiring and paying of personnel. While technology and infrastructure costs might also be enormous, generally speaking it is paying employees a salary that takes up the largest chunk of resources of a typical company operating in the world today.
While you should try and avoid mass lay-offs unless there are no other options left to pursue, there are ways that you can save a little bit of money here and there by trimming the hedges a little bit. One strategy that you can employee is to rotate employee shifts, taking a handful of employees and letting them off work one or two hours early on Friday. If you rotate this throughout the different people that are working, you can save a few hours of salary once a week and the rotation should ensure that people do not lose so much of their work that it makes it difficult for them to continue working for you at the current rate of work and pay that you give them.
Strategies like this often have the added effect of increasing employee morale, something that directly contributes to higher productivity. This in turn can allow you to add a permanent rotated employee shift situation into your business until the economy turns around. While it will not save nearly as much money as mass lay-offs, it will keep morale high and might just save enough in conjunction with other cost saving measures that your company can get through the current hard times.
A big mistake that is made by a number of people during economic downturns is to layoff employees starting at the bottom of the chain. While it may surprise you to learn this, only the very large corporations can actually get away with this and even then they only do it to protect senior employees as opposed to doing it because it benefits their bottom line.
The simple fact of the matter as far as small and medium businesses are concerned is that keeping lower rung employees is a lot cheaper than keeping management and since management tends to be hired in larger quantities than necessary anyway, laying off some management employees can serve to save you a large amount of money while at the same time ensuring that your management employees end up working at peak productivity. It is a nice way to kill two birds with one stone and it could save you tens of thousands of dollars each year.
Money like that could easily be the difference between the sky and the grave for a small business and therefore it is something you should definitely consider if the company falls on hard times. Businesses do have a moral imperative to its employees in times of economic downturn however, so make sure that all other options have been exhausted before you act on this option.
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