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SMBs Are Cutting Costs Due To Economic Uncertainty

SMBs Are Cutting Costs Due To Economic Uncertainty

by john roman

6 months ago

Amer and I discuss a recent article about Small and Medium-sized businesses trying to cut costs due to inflation.

Transcript from video:

John: so a lot of articles about SMBs trying to cut expenses lower their costs you there's two sides of this one as the business and then all of these technology and software companies that are going to be dealing with with attrition

Amer: yeah I I think there's been a ton of talk about what is happening with inflation cutting consumer spending but not that it hasn't happened but I think it's becoming more visible that businesses are being a lot more conscious when it comes to investing or subscribing into products and it seems like really this year since q1 and we felt it as an agency uh as well decisions are taking way longer but I think the curtain or the the veil is being removed and people are really going to take a step back and say what is a necessity for my business and this platform that I'm paying $500 a month on is there something cheaper even though it's not as good that I can cut cost or can I potentially move to a spreadsheet

John: no I think I I think the reality is you should probably be always be doing this when you're running a business but you know when things are great you tend to uh it becomes kind of back burner and you become a little wasteful at times possibly in spending you know we're going through this um exercise where we're going to switch we're switching one of the credit cards we use but the great thing and and the the real reason one of the great outcomes of this is going to be all of our reoccurrin charges everybody so we're having everybody move them whoever owns them right so if if it's a marketing then marketing is going to move it to the card that's specifically designed for marketing and and vice versa but it's causing us to look at all of these individual charges you know $20 a month for this little little sass that we might just not even be using anymore because it's $20 a month we're not even noticing it right and it sound like the users are actually seeing what the controller and accounting sees so we're probably wasteful and I think we'll we'll be able to pick up it might not be anything monumental but could be a few hundred a month or a couple thousand and that that adds up and you know we're just paying for it so I think I think and it's probably smaller the business the more more important it is but it's something we all should be doing so it's a shame that us being in a recession are we in a recession can we can we say that economic downturn that we're in is causing us to do that but it's healthy and something we should all be doing anyway you shouldn't be spending wastefully

Amer: I I think when we're growing when anybody's growing the subconscious response to Investments or expenses however you want to label them is that hey I've plugged all these Tech Solutions in and they're helping me grow because consumer spending is actually driving it I'm not saying it doesn't have anything to do with technology technology has certain impacts but we are not sitting down and analyzing like hey if I'm using so and so CRM or so so email marketing tool what is the lift they're giving me because everything collectively is giving you a lift and you're feeling good about it when I think we hit a plateau of growth or a downturn then it's like it almost becomes I need to micro partition every single Solutions or platform that I'm using and analyze what does this actually do for me has this contributed to my growth was it was a camouflage your success by other platforms and then to your point and I think we don't do we should do it I don't know quarterly by anually depends on the business and their spend but I think when you're comfortable with that growth and you're kind of assuming like hey subconsciously I put together a tech stack that is a driving force to this and is doing well for me and when that hits a wall and that breaks her head and it's like what where just screws loose

John: yeah no so it you know I had a moment last week I was talking to um a pear a very very good friend of mine you know him you're friends with him as well and we were we were talking about some best practices I said hey you know we're talking in this slack over here why don't I just slack connect you and um you can just be in our slack and we can be in your slack and we can bring in team members and just hammer through all of this and I sent the slack request I said hey do you want to do this he's like yeah send it and he's like oh that's the paid slack I don't I don't have the paid slack and this is I mean this is a a a large company you know relatively large right they're doing um I think they're doing eight figures um in annual revenue if not close so a decently sized company and they're using free slack and then I started thinking well we pay a few hundred a month for our slack do we need paid slack

Amer: me

John: yeah I mean I think I do but then I start thinking about it like do I really like could I could I get byy without it I think I might be able to now it does have nice there's some bells and whistles and slack connect and um not losing your chat history there's definitely there's some some benefits that I use regularly every day I I can't tell you how much how how often I jump in slack and I hit contrl F and search for something that was s and it might be a year or two years ago it's not I don't know if it's a necessity it's a nice nice to have I don't know if it's a need to have

Amer: so the interesting part is um actually happened last couple of weeks and I just happened to be in somebody's shop I saw a few Shopify apps that had like unlimited plans per se they might have been grandfathered or whatever they were removing them and they were saying hey you got to pick one of the paid plans so are we now also entering this economy whether it's slack or another platform where they're going to say hey you want to use slack you got to pay and I'm assuming I'm not saying slack is going to do that or Microsoft teams whomever who has these freemium models but I I think think there's going to be a lot of discussions in meetings for these SAS Solutions when people start unsubscribing is okay if we can't keep people and there's not a retention then how do we take these hundreds of thousands of users and convert them to a paid plan it may not be the premium PID plan but 100 bucks a month is better than zero bucks a month

John: no you're right so that that's the other side of this equation so you have um these businesses that are trying to cut costs and then that indirect through churn is affecting the other side where they all of a sudden their revenues are going and they have to bridge the gap in revenues so then the people that are remaining or people that maybe weren't paying they're trying to get revenue from it's a it's a weird seesaw

Amer: I think there's going to be this space where I don't know if you remember I'm going to probably scroll up my uh time frame but I think it's like 10 15 years ago and it's still kind of applicable but at one point there was just like we use these charts I think for we do them for AI now but before we used to be for marketing where it was like a circular chart and for each like Subs segment of marketing it had like 20 to 30 to 40 companies that you could choose from that are competing within that space and of course some had like crossover and what happened at one point there was an either a exits of these companies uh mergers Acquisitions whatever you want to call and the noise reduced drastically and the people that or or the companies that really excelled triumphed over all the challengers or whatever the case is um I think we spoke a couple of times about the example of you know I remember Constant Contact being the group MailChimp uh parot maretto I don't remember the last time somebody mentioned parot or maretto or you have Bronto who was big at one point you know they're no longer around so I think what's going to now happen there's going to be a huge injection or at least a uprising of smaller Solutions offering same or similar products at a lower price

John: yeah I mean it's you know we we've talked about Klaviyo a good bit it's going to be exactly that these these larger companies are going to have these Rebels coming in and trying to disrupt them and you know you you look at how MailChimp was this this big guy Klaviyo did it to them but it's very cyclical someone if Klaviyo is not careful someone will do it to them but it's like that for all of them it's it's all the the big players

Amer: and that's applicable to anything I don't care if it's

John: it's applicable to Prella and and BattlBox

Amer: yeah 100%

John: 100% if someone if someone comes in if we get too comfortable and we start or we stop providing the value and support and experience to our customers that they deserve someone will disrupt us someone should disrupt us if we if we start acting in that behavior

Amer: it's funny I uh I was at the Shopify Enterprise Summit and I was talking to more a few more established larger agencies people that have been around the ecosystem one way or another for a long time a few people were saying oh all these new guys are coming in they're undercutting us they're doing these things and these services and my response was good and they're like what do you mean good I was like the only way you stay young and Innovative is if you hang out with a young and Innovative

John: makes you better

Amer: it does and we need that and I I love

John: and if you don't and if you don't adapt you die

Amer: 100% And and that's anything life that's in sports that's in politics that's in business that's in technology you name it you got to involve and um there's a lot of conversations and uh I was talking to a few developers and they're like they think AI is going to take you know a huge leap but their thing was like oh I don't want to I don't want to jump into that feel free that's your decision but you know the writing the writing is on the wall if you don't adapt you're going to get phased out and I'm not saying you're going to be without work or without a job but your opportunities are going to become a lot more limited

John: yeah so so so true