Why cloud-based tech will help SMEs prepare for a recession

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As the United Kingdom enters a recession, SMEs need to look into putting systems into place that get them through the recession. Damian Hanson, Co-Founder & Director of CircleLoop, a business focused on communication systems, explores why cloud-based technology may be a key solution in creating a recession-proof business. 

News stories of high inflation and skyrocketing costs of living have highlighted the dire straits of the UK economy. Also, with the most recent announcement that the Bank of England raised interest rates to 1.75%, the biggest interest rate rise in almost thirty years and its sixth consecutive increase, SMEs are facing uncertain times, and it’s clear that we are in the midst of the most challenging macroeconomic environment for some time.

Virtually every business expenditure has increased due to record-high inflation rates, which puts business owners at a disadvantage when it comes to growth. So how can staying on top of technology trends and investing in the latest cloud-tech help businesses survive what’s to come?

What to expect?


Life has been good for small businesses. Money has been overflowing into technology ventures and startups are raising more in valuations than ever before. Unfortunately, startup fundraising and valuations are the first victims of a recession for new businesses. There will be less capital for investment, meaning raising cash needed to get a business off the ground is harder and more expensive. Some startups will fail before they get the chance to start.

For more established businesses that are less reliant on fundraising, the challenges are different. It’s less about getting started and more about maintaining what they have long enough to get through the recession. SMEs will need to accept that growth is impossible and do their best to weather the storm.

Sales will, at best, flatten and at worst decline, leaving excessive stockpiles in its wake. Your sales team will be working twice as hard to hit targets with lower success rates and on top of this, delays in the supply chain will also slow things down as money issues spread through your chain.

Layoffs may be necessary but for any business, this would likely be the last resort. Before pulling that ripcord, SMEs need to rapidly trim the fat by streamlining business operations to reduce costs and satisfy the declining demand for goods and services,

Recession-proof your tech stack


All of this seems a little bit gloomy. However, your businesses can stand a better chance of being recession-proof with a little early planning and innovative thinking.

Re-evaluating your tech stack is a great place to start. The technology utilised by your business can make a significant difference to the costs of doing business. Hardware that is costly to maintain or too many overlapping and inefficient platforms may not be a big issue during normal times but, during a recession, these issues can quickly become a drain on money, time and resources that SMEs simply don’t need.

While it's vital to invest in the right tech support for your company's needs, during a recession it’s also vital to reassess those needs. Are there technologies that your business isn’t using often enough to warrant the expense? Or perhaps there are ones that are vital but create more work because they don’t do everything you need and a better solution is required?

Identifying these small problems allows you to seek better and perhaps cheaper options. Cutting out unnecessary software subscriptions or replacing three different tools with one that does it all, will help streamline your operations and reduce business costs as times get tough, This is something cloud technology is well-place to support with.

Advancements in cloud computing for business now enable easy integration of common tools. For example, a cloud-based business phone system used by your sales team can be connected to your CRM app, Office 365 and your email provider on one platform that’s easy for them to use and gain insights from, increasing their productivity and chances of success when it matters most.

Another recession-proof tactic to consider is the importance of retaining marketing efforts during the recession. During the 2008 downturn, many companies diverted their plans away from scaling up and cut marketing budgets dramatically. Later research found businesses that retained their marketing strategy and budget emerged from the financial crisis stronger, outperforming the market average by more than 30%. Food for thought in the coming months.

Stay Flexible 


A final but important note for SMEs and startups facing uncertain times ahead is to be prepared to adapt. Stay flexible.

As the recession turns the market upside down, what worked for your business in non-recession times may no longer be effective. Refusing to acknowledge the rapid changes happening to your customers, your employees and your supply chain is the equivalent of sticking your head in the sand. Making significant changes to your business model or pivoting your offering in the middle of economic uncertainty may seem high-risk but it could also be the difference between survival and failure.

Evaluate and monitor your situation often to make well-informed but quick decisions if necessary. Cloud-based or remote-enabled business tools are increasingly necessary for building a modern and future-proof company, but during a recession, the added benefit of agility and flexibility provided by these tools throughout the turbulence isn’t something businesses can afford to overlook. The wealth of data these technologies can provide with little effort, will become the key insights your business needs to monitor to ensure survival.

Making it through a recession as a small business is not impossible. Those that made it through the last recession came out the other side leaner, more efficient, more flexible and more aware of how they measure success than they had been previously. Adopting this mentality will serve you far better than over or underreacting to what lies ahead.

Header image by Ricky Wong


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