Navigating Your Laboratory Through a Recession

Economic downturns have a higher impact on laboratories than most other business types. Due to the high overhead costs of lab operation, most laboratories function on a very limited margin of profit and even a small downturn can have a huge impact on earnings. Prepare yourself to weather the storm of the next recession by heeding some of the following advice:

Keep Your Experienced People Close

During difficult times when finances get tight, a lot of lab leaders tend to focus on the numbers, and eliminating some of those higher salaries that show up next to the names of your more experienced staff can look like an quick way to save a big chunk of monthly overhead. This is a huge mistake however and will end up costing your more in the long run. Training lab staff and building experience is actually a tremendously huge hidden cost for a laboratory, and you should never underestimate the power of having somebody who knows exactly what needs to be done in place during a crisis, especially a financial one.

If you must cut staff numbers down, focus on eliminating temporary, casual, and part-time workers, followed by the less experienced team members if necessary. Even though your overall headcount may be smaller in the end, you will thank yourself in the long run.

Make Your Processes More Efficient

A great laboratory doesn’t see a recession as a hardship, but rather uses it as an opportunity to position themselves as a market leader in their field with a team of experienced people and better processes. Using the downturn as an opportunity to increase your profit margins, boost your throughput, and better your quality will position you to burst out of the gate at a pace your competitor’s won’t be able to match.

Using proven continuous improvement methodologies such as Lean Six Sigma and implementing well positioned automated digital solutions can make a dramatic difference in how you operate and give you the edge you need to increase your market share.

Limit Those Service Calls

If your lab is fast paced you usually can’t afford even a day or two of downtime for your instruments. Manufacturer service calls to support and repair your instruments are a massive expense however, and a lot of the time are completely unnecessary.

By maintaining a core team of highly experienced instrument operators on the payroll, as well as a healthy supply of spare parts (these can usually be scrapped from older and non-functional instruments), you should be able to solve more than 90% of your instrumentation or software issues internally.

Defer Major Purchases in Favour of Economical Investments

A recession definitely isn’t the time to purchase a > $40,000 software license or that shiny new instrument. Instead use a fraction of that cash to invest in smart solutions for your lab that will improve your processes with the resources you already have on hand.

Continuous Improvement Activities or Smart Digital Solutions are smaller investments that can have a huge impact on your profitability.

Build Your Client Relationships

Even though your clients may not be spending during a recession, it’s a great time to foster stronger connections with your existing clients, rekindle relationships with previous ones, or offer something of value to potential clients and attract new business. This is a time when your sales and customer service team should be busier than ever getting out and ‘pounding the pavement’ to prepare you for the inevitable upturn.

Get in touch with us today if you would like some expertise implementing a game-changing digital solution into your lab to reduce your overhead costs!