The Benefits of Investing in Technology During a Recession

Though the exact number is debated by some economists, the United States has persisted through nearly 50 recessions, marking again and again the cycles of industry, agriculture, production, and consumption that define the national, and now global economy. While our current situation is a little bit different (to say the least), responding to the 2020 recession is going to be something of a memory exercise for established businesses and a history lesson for the new ones.

To put it simply: businesses need to understand that a recession is the perfect time to invest in their own businesses. For one thing, previous recessions have demonstrated that while the conditions responsible for a recession are different in nearly every case, the customer response is usually the same. When the tide turns, it turns quickly, and businesses need to be prepared in order not to be left behind. 

What Small Firms Can Learn from Big Tech 

With good reason, the Great Recession is one of the only relevant examples that economists and business owners alike can look to when creating their recession playbook, but sadly, too few are willing to recognize one of its primary lessons: that tech and software investment is perhaps the only consistently viable anti-recession measure that there is. 

 The “Big Tech” examples go far beyond the Great Recession: Microsoft and Apple in 1795, Netflix in 1997, Mailchimp in 2001. These seemingly disparate examples all tell the tale of young tech companies who had to invest in their own systems to survive a recession. The result was not only survival; the investments these companies made put them in a position to capitalize on the increased consumer demand that followed. 

Staying Lean with Systems and Software Upgrades

One of the oft-touted unexpected benefits of an economic downturn is that it forces companies to tighten their belts, so to speak, driving owners and operators to look for any way to trim the operating budget that they can. For slow-moving companies, these changes will be purely reactionary, and potentially too slow to have any meaningful effect. For companies with the forethought, on the other hand, these investments should already be in the pipeline.

The quickest way to reduce the operating budget? Streamline as many tasks as possible. No matter what industry you’re in, things like onboarding, payroll, attendance, and employee management can be massive time wasters even for small companies. In fact, according to one recent workflow study, most managers are wasting about 8 hours per week on tasks that could be automated.

For every industry from software to manufacturing, upgrading your systems software is a fast way to cut the fat, tighten productivity, and become a leaner company moving forward. 

Invest in Custom Software Solutions

Just as no two economic downturns are going to be exactly the same, no two companies can use the same exact playbook to get them through to the other side. Businesses need to consider strategies and solutions that are built around not only their specific industry, but also their current goals and resources. Custom designed software and equipment can boost your productivity levels far more rapidly than waiting on a market turnaround, and can often be more easily designed, tested, and implemented during slower growth periods. 

As an added benefit, technology tends to be less expensive during an economic downturn as many technology companies recognize that small businesses are conserving capital to stay liquid during tough economic times. It’s a great time to lock-in low subscription costs with a multi-year subscription for important software purchases.  

Take Advantage of IRS Section 179 Deduction

Contrary to popular belief, the IRS Section 179 tax deduction is neither as mysterious nor complicated as it has been made out to be. While Section 179 has changed quite a bit over the years, it has always been targeted at tax relief for small businesses, and to that extent, it is perhaps more important than ever before. 

Section 179 allows businesses to deduct the full purchase price of any equipment or software purchased or financed from that year’s gross income, up to $1,040,000. From a federal perspective, Section 179 is a handy tool to encourage investment and help stoke a lagging economy. For businesses owners, it is a valuable way to cut the bottom-line costs of the equipment, software, or technology that can position them to both navigate the downturn and thrive in the expansion. 

The 100% Bonus Depreciation: Extended for the 2020 Tax Season

The IRS has also extended Bonus Depreciation into 2020. This means that any qualified purchase with a value that exceeds the original limit of $1,040,000 will also be covered. For most small businesses, the entire cost can be written off, even if the purchase is being financed. 

IRS Section 179 Tax Deduction: Overview

  • The full purchase price of equipment, technology, or software purchases (or finances) can be deducted from a business’ gross income under Section 179
  • With the 100% Bonus Depreciation extended into 2020, even purchases of more than $1,040,000 can be deducted 
  • The first-year tax savings of a Section 179 deduction can be greater than the cost of a first-year lease, even when financed 

Thoughtfully Investing in a Future Economy

When combined with the practical operational advantages of investing in your facility or software systems during a recession, the additional tax benefits offered by Section 179 make it possible for businesses of any side to make bold, viable technology & equipment investments that might have not been possible otherwise.

In times such as these it can be tempting for businesses in such times to simply stick their heads in the mud and wait for everything to blow over. So far, this strategy has not worked well for many. In previous recessions and indeed in the one we are experiencing currently, it has been demonstrated that the companies that can maintain their momentum will have the best chance of making it to the other side of all this in one piece. 

On the other hand, it is the companies that take this opportunity to boost their momentum by investing in technology and themselves that are really going to come out of this better equipped to handle the potentially lucrative conditions of a newer, brighter spending market. 


In times such as these it can be tempting for businesses in such times to simply stick their heads in the mud and wait for everything to blow over. So far, this strategy has not worked well for many. In previous recessions and indeed in the one we are experiencing currently, it has been demonstrated that the companies that can maintain their momentum will have the best chance of making it to the other side of all this in one piece. 

On the other hand, it is the companies that take this opportunity to boost their momentum by investing in technology and themselves that are really going to come out of this better equipped to handle the potentially lucrative conditions of a newer, brighter spending market. 

Topics: HR

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