Welcome global recession. We weren’t expecting you and you are not welcome in our house. But it looks like we have no choice and you are here to stay for a while.
The coronavirus has already put many people out of jobs and we are just at the beginning. Many more people will be out of work. That means less spending by consumers and businesses. The stock market is in bear territory and the net worth of many people has shrunk dramatically. Shrinking budgets will become the norm in corporations worldwide. And this situation will probably last well after the coronavirus crisis is solved.
How does an LSP prepare for the recession?
It appears that many industries will be impacted by this recession. Some more than others. Since the translation and localization industry is primarily a B2B type of operation, it will undoubtedly be impacted by the recession. So how to prepare for this? Here are some of my thoughts on this topic.
Time to downsize
Many LSPs, such as GTS Translation, are built around a small permanent staff and many temporary staff (i.e. freelance translators). These small LSPS will be better equipped to handle the recession. Large LSPs with large staffs will not fair as well and will regrettably have to terminate some of their staff. As an LSP owner/manager, you will need to trim the fat (figuratively of course).
The same goes for suppliers such as marketing consultants. SEO experts, CPC budgets, industry conference expenses, advertising agencies. These expenses may be expendable in times of recession.
Time to call in the markers
Now would be a good time to focus on receivables. Recession means a cash shortage with a trickle-down effect. If your customers owe you money, now would a good time to collect and keep a war-chest to weather the storm.
Time to diversify
As I mentioned previously, some industries will be impacted more than others. Airlines and aerospace companies, for example, will be decimated. If you are an LSP serving this industry, you are in deep sh!t. Consider moving your offerings to other industries. For example, online gaming companies should be doing very well now. Pharmaceutical companies should go relatively unscathed. Try to find industries which are working well even in times of recession and adapt your sales strategy accordingly.
Time to lower prices
With shrinking budgets and the ever-increasing competition that is inevitable in a recession, consider making your price points more attractive. A lower profit is better than shuttering the doors of the business you worked so hard to build up.
Time for patience
Things are bound to improve. Patience is required to weather the storm. Of course it helps if you have deep pockets and can sustain your business in times when orders are few and far in between. Following the points mentioned previously about reducing your expenses will help.
Time to invest in automation
The industry is shifting towards automation, with human-assisted machine translation becoming a staple. If you are not involved in this activity, and if you have some budget that you can allocate in this direction, consider developing new offerings around PEMT. It will help you come out of the recession stronger, and will also help you lower your prices.
Time to go
If you have any other ideas which you think are useful, please let us all know. We are all in this together and hopefully we will get back to normal soon.