Can Data Analytics Help You Ride out a Recession?
Can Data Analytics Help You Ride out a Recession?
Amid climbing interest rates, rampant inflation, slowing GDP, and several high-profile banking failures, experts are warning of a looming recession. The Federal Reserve Bank of New York estimates a 70% probability of a recession within the next year, and a recent survey shows that 93% of CEOs believe that we will experience a recession within the next 12–18 months.
Exactly when that recession will start or how long it will last is anyone’s guess, but already investors are becoming cautious and there have been widespread layoffs, particularly in the tech sector.
The market is down, and companies are starting to feel the pinch.
Fortunately, businesses don’t have to be passive in the face of economic turmoil. Good data and analytics are important when times are good but they’re vital when the economy turns south.
How can analytics help during a recession?
There’s a general consensus that data and analytics are valuable, but the pivotal role that data plays in managing downturns isn’t always fully appreciated. Even if you weren’t paying much attention to your data when times were good, it’s essential to start looking at it now.
Sound data and clear analytics are the keys to making informed decisions. While instinct might dictate slashing the budget across the board, it is essential that companies face economic downturns strategically.
Savings
First, and maybe most obviously, good data and analytics give companies insights into expenses, income, and operating costs. This can help them cut costs with surgical precision by allowing them to see which investments are generating the best return, and which are failing to pull their weight.
Automation
Automated data collection not only helps ensure that the information you work with is accurate and consistent, it also decreases the amount of manual effort needed to run your business. With an analytic infrastructure in place, you and your staff are freed up to focus on running and improving the business, rather than on collecting and organizing data.
Opportunity
Smart use of analytics during a downturn isn’t just about survival. Saving money and time is great, but data can also be used to maximize current opportunities and find new ones. As the economy shifts, data analytics can help companies analyze changes in customer behavior, update existing products or services to reflect changing demands, and identify potential new revenue streams.
How Private Equity Firms Benefit
Managing and operating partners at private equity firms can also use analytics to see what is and isn’t working in their portfolio companies. By identifying indicators that are stable during a recession, you can see what makes your port cos resilient. That’s good news for helping them thrive in the present moment, and it also helps you better understand what to look for in future acquisitions and add-on opportunities. With the data you glean now, you’ll be in a stronger position to discover the companies in your niche that are most likely to perform well both during and after a downturn.
Case Study: Analytics Help EdTech Company Do More with Less
Take the case of an EdTech company NuView worked with. Declining enrollment and overall contraction of the business had forced the company to limit internal resources, with the result that the remaining staff had to take on multiple roles. This in turn limited their ability to work on growing the business as they were stretched thin putting out fires and tending to day-to-day needs.
With NuView’s help, the company implemented a set of dashboards that were updated weekly. This let leadership focus their weekly meetings on how key KPIs were performing and how to turn them around. With a clear understanding of what was working and what wasn’t, they were able to increase enrollment by 25%, bring on an additional round of funding, and eventually sell the company to a larger entity.
Riding out the Next Recession
Economic downturns are never fun, but with the right analytical tools and insights, they can be strategically managed and even leveraged for value creation. The economic cycle of expansion followed by contraction is part of the business landscape, and successful companies are those who are able to thrive in both good times and bad.
Regardless of when the next recession hits, companies with a plan in place will have a better chance of riding it out. NuView’s services can help you collect and analyze data, integrate it into one key source, access it using customized visualization tools, and harness insights to optimize your business.
