Business owners in the last two decades have learned what it means to be resilient in crisis mode. Can AI help?
The 2008 financial crisis was the biggest economic downturn many business owners had to face in their lifetime, contending with a lending crisis and financial system freeze that almost shut down the entire system. Many drew parallels between 2008 and the financial challenges businesses experienced during the COVID pandemic in 2020, from which many are still recovering.
The 2022 challenge for businesses
Currently, businesses are experiencing continued, longer-term effects started or exacerbated by the pandemic. Much has been said about supply chain issues that still plague businesses at every level and industry. Inflation is a new concern this year, and for venture-backed companies, the venture capital market is experiencing a freeze period.
Getting a handle on cash flow and runway – a crucial statistic during times of restricted access to capital or economic downturn – usually takes a full team of people to oversee many moving parts in a business. But unlike in 2008, AI-backed technology exists to help simplify the process.
How AI can help
Businesses have so much helpful information but synthesizing it into insights can be especially challenging during times of crisis. But the more complex the business, the more benefits AI brings to that business. Here are four ways AI can help make it easier for businesses to thrive during a recession:
Get real-time financial health insight
During times of economic downturn, having a real sense of the financial health of your business is essential to staying as efficient and waste-free as possible. Understanding your revenue stream, as well as every transaction with vendors your business pays, makes a difference.
AI technology can pull in information from other data sources to help give you truer picture of your business’s financial health, from which you can make better business decisions. Ideally, these insights should generate in as close to real-time as possible.
For example, you may have paid a vendor for a service for the past few years. They signed on when the economy was stronger, but today, your team is not getting as much value out of this vendor. AI can help organize and analyze the impact of your expenses and help you prioritize which ones matter most. These insights can bring your attention to vendors that aren’t driving value for your business anymore, helping you stay lean as the economy swings down.
Make the most of your valuable time
As a business leader, time becomes even more valuable in crisis mode. Any tool that can reduce the amount of time it takes for leaders to analyze, strategize, and make important decisions for their business is worth its weight in gold. Every hour you team saves is an extra hour of burn your company has to survive. And the bigger the company, the bigger the impact. Cutting wasted time truly matters to the bottom line.
AI technology dramatically helps in cutting wasted time in addition to cutting costs. This does not mean that AI technology should replace humans – it’s the opposite. Collaborative AI tools take over time-consuming, manual processes, leaving workers more time and energy to do more human-centric work. Used well, AI makes human work time run more efficiently, maximizing their effectiveness in serving a business’s mission and goal.
In times of financial downturn, knowing your financial information is critical to being an effective business owner. Communicating this information to other stakeholders – internally, to vendors, to board members, to other external parties – is another challenge entirely.
Oftentimes during a crisis, some of the finer details can get lost in translation when communicating financial information. It’s akin to receiving information in a different language – without context or a translator, the information isn’t helpful to others outside of the finance team.
AI can help access that context and translate financial information into a language other stakeholders can understand. It removes steps in the process of transferring information, ensuring everyone is on the same page, in the same language.
Make more money
Just as AI can optimize time or highlight wasted resources in a business, AI can surface opportunities where your business can make more money.
Some AI tools have the capability to analyze and instantly know the value and impact of your customers, product lines and revenue streams. From this analysis, the AI can tell your team which customers lead to the best outcomes, or which resources do not lead to good outcomes. This type of insight can help business leaders direct their resources in the right way to achieve the best outcomes or highest profits.
In a recession, finding new opportunities to earn is just as important as finding ways to save and cut. Use AI to maximize opportunities that make sense for your business. Reaction times also matter when big market shifts happen, so lean on technology to help see you through change.
In the future, our society will look back on this time and wonder how businesses continued to do certain tasks manually, without the help and time savings that technology brings. A more universal embracing of AI’s role in business is inevitable because of the efficiencies, abilities, and cost savings this technology brings. Any business that doesn’t adopt technology will be at a severe disadvantage in future recessions.