Product Development in a Looming Recession

Unfortunately, the reality of business is that when revenue decreases, as it would in a recession, the cost base needs to reduce to maintain a level of profitability or cash flow.

For a lot of organisations delivering products, their number one cost is people. But reducing headcount to save costs, it often means that the business loses the capacity or capability to deliver new products or improvements to existing products. This results in the cancellation/postponement of product development projects and/or the reduction of the size of those projects. And this can further reduce revenue, therefore putting more pressure on the need to cut costs.

In my career I have gone through a couple of recessions and from them learnt a few lessons. So I'd like to share a couple of them with you.

1. Investing in a post-recession upswing

   There are many examples of new companies/products that were born out of recessions. History has shown that for every downswing, there is a bigger upswing that follows it. The key is to take a growth mindset and use this period to invest in the future of the company. While your competitors may try and downsize to save costs, this gives you an opportunity to catch up and overtake them. 

2. Supplement existing resources

   Instead of the fixed cost of a full-time employee, the ability to be able to outsource or supplement your existing resources is a way of reducing cost, but also gaining flexibility as the demand for resources naturally goes up and down. This is especially the case with electronics, where the demand for PCB design is typically high at the initial design of the product, but drops during the life of the product as most changes are made in firmware.

So, whether you want to invest in preparation for the upswing, or you need external resources to deliver critical projects with a smaller full-time engineering team, there are companies like FlexWare that offer flexible engineering & software service that can do as little or as much as needed, so you are not burdened with all the costs of permanent staff.

And lastly, remember that there will be impacts on people's lives, whether it be the staff that are let go, or those left to continue delivering and trying to fill the gaps left behind.

I have been made redundant a couple of times and experienced this first-hand. At the time it's not a nice experience that can really knock your confidence. But each time, it has opened up new opportunities that I would not have otherwise taken. One of those opportunities could be working for FlexWare.