No matter what industry businesses operate in, downtime cost is one of their main worries and outgoings. Downtime is something that all organisations want to minimise, as the less you face, the fewer costs will be posed upon your business. Therefore, less downtime means more profit – and what company doesn’t want more profit?
But what exactly is downtime? How is it caused? And what precautions can your business take to ensure that it’s kept to a minimum? Don’t worry if you’re not sure, this post will outline everything you need to know about the costs and consequences downtime may have on your business.
We’ll cover:
- What is Downtime Cost?
- Loss of Revenue
- Reduced Profitability
- Loss of Custom
- Reduced Productivity
- Damage to Reputation
What is Downtime Cost?
Unexpected downtime cost can seriously hurt businesses, especially if it happens regularly. It can derail turnover and productivity rates, cause bottlenecks with deadlines and increase pressure on your workforce – from both clients and superior shareholders. Downtime is where businesses are forced to stop operations partially or completely as a consequence of a series of events.
It can happen as a result of many things and it depends on what industry you work in. Perhaps the floor in your warehouse has become so dirty that it’s an increasing health hazard and could contaminate your products. Therefore, you’ll have to industrially clean it. If you can’t do this out of working hours, you’ll experience downtime whilst you wait for the clean to be carried out.
In this period, the business can’t continue any of their operations which means that deadlines will have to be pushed back and no revenue can be made within this time. Obviously, for industries that work to such strict deadlines, downtime isn’t ideal and needs to be minimised as much as possible.
However, there are some factors you just can’t control. For example, machinery breaking or power cuts. It’s the unpredictability that makes downtime a constant headache for organisations. Downtime cost and waste of resources add to the pain too. Not only will you have to pay to solve the issue but you’ll also need to compensate for the lack of production and diagnosing the root of the problem too.
Loss of Revenue
If you’re experiencing downtime and can’t run your usual business operations, you’re going to need to delay deadlines or at worst, turn away business. This will result in losing out on potential revenue that you would normally receive when you’re at full working order. Losing revenue is a business-critical consequence and could, unfortunately, be enough to bring some companies to their knees.
Loss of revenue is one of the most important downtime costs. If your business isn’t bringing in as much money as forecasted, it will have a knock-on effect on internal goals and milestones that were set quarterly and annually. If you’re not meeting these deadlines regularly, you can expect changes to be made within the business.
As businesses aren’t making as much money as they possibly can be, it can lead to frustration from above for sure. This could lead to instant redundancies and crisis plans being activated. As a result, a lot of team members, unfortunately, lose their jobs.
Reduced Profitability
All businesses want to be as profitable as possible, don’t they? Well, if a company constantly experiences periods of downtime, they can kiss goodbye to that wish. As we mentioned above, loss of revenue means that you’ll have less money coming into the business. So, automatically your accounts will be showing less profit with the current outgoings remaining the same.
To solve the problem and get operations back up and running, businesses will have to spend money and increase their overall cost levels. Reducing revenue levels and increasing costs will result in your profitability being eaten into even more. For stable businesses, it may only result in a loss of profit but for others, it may result in overall losses for their business.
If businesses are operating at a loss, it’s a worrying situation to be in for everybody involved. Not only are owners and shareholders worried about the overall health of the business but their employees also have no job security. This uncertainty can seriously affect morale, even when you get back up and running, which can then have a knock-on effect on productivity and work rate levels too.
Loss of Custom
Sometimes, downtime cost can’t be helped, which is extremely unfortunate but the business world isn’t forgiving. For instances such as natural disasters, global pandemics and power outages, downtime becomes a factor that’s out of your control and you may feel the repercussions of lack of custom.
Whereas, if you’re experiencing regular downtime because of factors that are in your control, then there’s definitely something that you can do. If you’re constantly missing deadlines or the quality of your work is inconsistent due to downtime, then your customers are soon going to get fed up with paying for a service that they’re not receiving.
With the amount of choice and competition in the current market, it’s easier for customers to move onto another business if they’re receiving a poor service. So, you need to make sure that you have everything in place to reduce the risk of experiencing avoidable downtime.
A loss of custom will result in a loss of revenue. Plus, they can spread the word that you’re unreliable and can’t deliver what you’ve promised, which could lead to a damaged reputation.
Reduced Productivity
During periods of downtime, workforces are limited to what they can do. Depending on what industry you work in or how bad the situation is, you could be facing partial or complete disruption. If your team is only working at a fraction of the usual rate or not at all, your productivity levels are going to take a huge hit.
This is a huge problem within various industries that work towards tight deadlines on larger projects. Time is money in these situations and delaying deadlines within a larger project will hinder the whole thing. Productivity is key and if your team isn’t working at full throttle, then you’ll be paying their full wage for only a portion of their usual efforts.
Damage to Reputation
Constantly missing deadlines and delivering late jobs isn’t going to sit well with your existing and potential customers, is it? Why would somebody choose to work with a business that’s well known for not delivering what they’ve agreed to? As a result, downtime can seriously affect the reputation of your business.
Bad reputations aren’t easy to turnover. If you’ve managed to get a bad name for yourself because of persistent downtime, it can be easy to be seen as unprofessional and unreliable. These are two unwanted characteristics that customers aren’t going to pay for and rely upon. If agreeing a project with somebody is seen as taking a chance, the likelihood is that they’ll opt for somebody else to work with.
A poor reputation will definitely stand in the way of business growth. How can a company expect to win big contracts and grow if they’re seen as a liability? The best in the industry are ever-reliable, flexible and will go above and beyond for their clients. They don’t let them down at different points because of avoidable downtime. A damaged reputation can be costly to your business.
Reduce the Risk of Downtime Cost By Cleaning Your Workspace
Some factors that can impose downtime cost upon your business are out of your control. However, experiencing downtime through means that you can control indicates poor business efficiency. If you can’t look after your business factors, how can you expect clients to put their trust in you with your custom?
One factor that influences downtime and is often overlooked is the cleanliness of your working environment, especially the floor. Some companies don’t see it as a necessity, however, making sure your floor is as clean as it can be is a business-critical task. Dirty floors can pose physical hazards and health hazards in the workplace and can potentially contaminate your products.
Contaminated products will lead to a serious amount of downtime that could end up costing your business a lot of unnecessary money. Industrial floor cleaning machines are the most efficient way of keeping your workplace as clean as possible. And most importantly, as safe as possible too.
They’re a worthy investment and can save your business a lot of money in the long-term. If you’re not sure about which ones are best suited to your business, download our free guide below that details our wide range of amazing products. Grab your copy today.
