When economic growth is slow, it can feel like there is no room for mistakes. Businesses are always looking for ways to improve resiliency and optimize resource utilization, but this becomes especially important during a recession or economic downturn.
Use Scalpels Instead of Chainsaws
Some of the first tools business owners tend to reach for at the first sign of recession are sweeping budget cuts, hiring freezes, and workforce minimization. Effectively, taking a chainsaw to whatever appears to cost the company the most money. But when these decisions are made too broadly, the company might let go of vital experienced employees, or reduce spending on programs that actually drive profitability for the company. Consequently, many companies that slash costs carelessly in response to an economic recession find themselves unable to achieve top-line growth when the recession ends.
But hacking and slashing at the basic expenses of doing business is not the only way to go. After the 2008 recession, Journyx CEO Curt Finch wrote about cutting costs with a scalpel, not a chainsaw, taking a data-informed approach to maximizing profitability and minimizing loss. From this perspective, the most effective way to cut costs is to understand per-customer/per-project profitability, focusing on how company resources are spent on individual customers and projects.
Find Profitability (Even in a Recession)
Business owners often struggle to answer two fundamental questions when it comes to making their company recession-proof:
- How do you optimize labor when labor is at a premium?
- How can you improve project estimate accuracy?
- How will you find and eliminate tasks that do not generate a worthwhile return on investment?
The answer to all three of these questions lies in having accurate data about your organization’s workforce, and a clear view of what drives profitability in your company. By tracking workforce hours, labor rates, business expenses and project time in one cohesive system you can make data-informed decisions about how to optimize your business.
Once you have a system in place that ties your data together, you gain significant insight into project progress, profitability, and adherence to estimates. With this data, you can easily see which projects are the most profitable, and which are the most labor-intensive or expensive to maintain. Rather than minimizing your workforce to cut costs, you can allocate your existing labor to projects that are profitable.
Do What You Do Best
Furthermore, this data can prevent undertaking projects that are loss-making, or otherwise too resource intensive for your team. Revenue is frequently lost when projects run over-estimate and over budget, and this problem is only compounded by the fact that each additional labor hour spent on these loss-making projects is taking that many hours away from the projects that are making money.
Having a clear understanding from the initial stages of a project can make all the difference. A profitable project begins with an accurate estimate, which is vitally important for both you and your potential customer. Don’t underestimate how much money it saves to decline work that isn’t the right fit for your business. It may initially seem counterintuitive to turn down work— especially during a recession— but taking on a project that your organization isn’t equipped for can tie up your resources in a loss-making gambit.
Automate What You Can
There are also numerous opportunities to save your employees’ hours where and when they matter most through automation. If your organization is tracking time for payroll manually, you might not even realize the difference automated time and expense tracking can make for your bottom line.
Easing time-intensive manual tasks, such as reducing the time it takes to fill out, submit, and approve timesheets, means that your payroll staff will spend less time manually processing your workforce’s labor records each pay period. Particularly when it comes to complex payroll tracking with overtime, weighted hours, and shift differential pay, an automated time for payroll solution can ensure your organization is tracking labor accurately and efficiently.
Ultimately, automated time tracking drives better return on investment for your organization, and helps you optimize your workforce without making painful cuts.
Get Started Recession-Proofing Your Business Today
With optimized labor, clear and accurate estimates, and time-saving automation, you can direct your organization’s attention to what matters most during a recession: concrete, achievable profits. Once you understand a data-driven view of profitability your organization will have a significant advantage over your competitors, no matter the economic climate.
Take the first step and gain visibility into what drives profit in your business with Journyx software for project time and expense tracking, and make your payroll personnel more efficient with Journyx time for payroll solutions. Request a free demo today!