What makes the list of recession-proof business ideas may surprise you. These are, nevertheless, items and services that are in high demand even amid a downturn. In a terrible economy, here are 12 good businesses to start:
Baby products
Baby items are one of the recession-proof sectors. After all, just because you have a kid when the recession hits doesn’t mean you won’t need diapers and bottles.
Many parents will cut back on their personal spending before cutting back on their children’s purchases. Children’s items are usually recession-resistant, even if they aren’t completely recession-proof.
During a difficult year, parents may not be able to spend hundreds of dollars on goods for their children at Christmas, but they will still buy gifts. Babies grow quickly and require new clothing on a regular basis. And, come September, youngsters will always want a new pair of shoes to wear to school.
Consider creating a business that caters to children, particularly babies, if you want to start a firm that can weather a recession.
Food and beverage
The food and beverage businesses are also recession-proof. People still need to eat, even amid a downturn. People will splurge on certain small things even if they cut out on splurges like eating out at restaurants. During a recession, food store sales, confectionery sales, and alcohol sales all tend to rise.
Why do these recession-proof firms continue to prosper even when times are tough? Because they are regarded as “affordable pleasures” during difficult times! As a result, people will continue to treat themselves to these products before making a larger purchase.
Did you know, for example, that Snickers and Mars Bars were created during the Great Depression? This demonstrates how much sugar we crave when our stress levels raise.
People prefer to dine at home, thus grocery stores are a wonderful industry to be in. That implies they’ll devote more time to preparing meals at home. And, of course, people will always require toothpaste, laundry soap, and other essentials, regardless of the economy.
Retail consignment
One of the first things people cut back on when times are tough is new clothing. However, this does not mean that people are willing to give up their passion for shopping.
During the last recession, sales at secondhand stores increased by 31% while sales at other merchants decreased. Indeed, the thrift store frenzy persisted long after the recession had passed. Furthermore, buying worn garments is just as popular as buying new ones.
People frequently try to save money by buying used electronics, jewelry, musical instruments, and other items. In a difficult economy, retail franchises and other second-hand shops, such as pawn shops, are good enterprises to establish.
Courier and delivery services
Mail will always be required. As a result, courier and delivery services are among the most recession-resistant industries. Courier and delivery services are less susceptible to recession than other industries.
Even if sales are down, there is still a need to dispatch packages. And, as more people resort to the internet to buy and sell used items, the need for delivery is only going to grow.
Some companies may even choose to outsource their courier services. So, whether it’s pouring, sunny, or in the midst of a recession, delivery services are always in demand.
Childcare / daycare
Remember how I claimed that baby things are recession-proof earlier? This is also true in the case of daycare. When resources are tight, it can be difficult for parents to pay for things like childcare, but it’s one of the last things they cut out. This is especially true if both parents work or if the family lives in a single-family home.
Even if a parent loses their job or has to reduce their working hours, they will maintain their children in childcare. There are numerous advantages for younger children to remain in a safe and secure setting, particularly when there is a lot of change that they may not comprehend. As a result, childcare services are one of the recession-proof businesses.
Health and senior services
According to the Bureau of Labor Statistics, healthcare and other services for seniors are predicted to expand by 23% by 2024. This is a service area that has been quickly increasing during the previous decade.
As more members of the Baby Boomer generation reach retirement age, demand is expected to increase. Seniors will continue to require assistance with fundamental requirements as they age, and this is unlikely to change in the event of a recession.
Even if they don’t live in a nursing facility, elders may need to hire a caregiver to help them around the house or run errands. So, basically, any sector that works with elders can be excellent recession-proof business opportunities!
Technology and IT
Quarantines and social isolation, on the other hand, have demonstrated that technology will be even more in demand in the next years. Telecommuting and working from home are only going to grow in popularity, especially now that so many companies are understanding the benefits of doing so and saving money on overhead expenditures like rent.
As firms everywhere look to improve their telecoms, the popularity of working from home is anticipated to increase demand for enterprises that cater to IT. Even doctors are urging patients to call instead of traveling to the hospital, citing the benefits of technology.
Technology-enabled at-home services and businesses are also becoming recession-proof.
Repair services
Things break down even in the best of circumstances. Something will always need to be repaired, no matter what! During a recession, consumers may opt to repair rather than acquire new items, or at the very least postpone purchases as much as possible. Repair services are one of the best businesses to start in a difficult economy because of this.
Repair services for essential products, such as auto mechanics, roofers, and plumbers, are likely to see just as much work during a recession as they do when circumstances are good. When opposed to organizations that are more specialized, automotive services that offer a wide range of services do particularly well during a recession.
Cleaning services
No, I don’t mean that home cleaning services will become more expensive during a downturn. Other regions where cleaning services are legally needed likely to be recession-proof. A cleaner is required in any job, including banks, office spaces, classrooms, hotels, and lobbies.
Typically, these services are contracted out to a cleaning agency. Even if a company has to reduce its workforce, it will require a cleaning. Corporate cleaning companies are regarded as recession-proof businesses since they generate a consistent stream of revenue even when the economy is in decline.
Accounting services
Accounting services are another industry that will continue to be in demand even when times are difficult. In fact, during a recession, their services may be even more in demand as organizations look for methods to cut costs.
Businesses will need to pay their bills and maintain track of payments and earnings even during a recession. The individual who knows the numbers is unlikely to be fired. If you’re skilled with numbers, accounting or starting a similar firm could be one of the finest recession-proof businesses to start.
Freelance services
When a recession strikes, businesses turn to freelancers as a cost-effective alternative to recruiting full-time workers. As a result, freelancing is one of the most recession-resistant professions to consider.
The best part is that you can diversify your services to generate numerous revenue sources. You could, for example, work as a virtual assistant and freelance writer. This manner, you’re not reliant on a single source of revenue for your entire income! Check out our guide on how to get started freelancing if you have no prior experience.
Pet care business
In 2020, the national pet industry’s sales surpassed $100 billion for the first time in history! As a result, pet care and supplies have been proven to be recession-proof enterprises. Another encouraging and heartwarming statistic is that 54% of pet owners would rather spend less on themselves so they could spend more on their dogs!
Despite the economic downturn, veterinary appointments, grooming sessions, and vital pet goods thrived. So, if you’re looking for recession-proof company ideas, think about these areas!
What industries are resilient to downturns?
Industries That Are Critical Healthcare, food, consumer staples, and basic transportation are examples of generally inelastic industries that can thrive during economic downturns. During a public health emergency, they may also benefit from being classified as critical industries.
What types of firms are recession-resistant?
A recession-proof business can be extremely profitable for people in both good and bad times. Whatever the state of the economy or the stock market, certain company concepts, such as those listed below, have a good possibility of succeeding despite the rest of the financial doom and gloom.
Many well-known or historically successful enterprises were founded during economic downturns. The Walt Disney Company was created in the late 1920s, at the commencement of the Great Depression, and the Hewlett and Packard electronics company was founded in the late 1930s, during the second recession.
Rising interest rates and shifting GDP pose far less of a threat to the finest recession-proof enterprises mentioned below than they do to most other businesses, with many of them having the ability to do even more business than usual.
Food and Beverage Business
Because everyone still needs food and drinks to live, the food and beverage business is one of the most recession-proof industries. Because it is not a luxury that can be put aside in difficult times, enterprises in this area can thrive even in a downturn.
In a downturn, how do you make money?
During a recession, you might be tempted to sell all of your investments, but experts advise against doing so. When the rest of the economy is fragile, there are usually a few sectors that continue to grow and provide investors with consistent returns.
Consider investing in the healthcare, utilities, and consumer goods sectors if you wish to protect yourself in part with equities during a recession. Regardless of the health of the economy, people will continue to spend money on medical care, household items, electricity, and food. As a result, during busts, these stocks tend to fare well (and underperform during booms).
A recession favours whom?
Question from the audience: Identify and explain economic variables that may be positively affected by the economic slowdown.
A recession is a time in which the economy grows at a negative rate. It’s a time of rising unemployment, lower salaries, and increased government debt. It usually results in financial costs.
- Companies that provide low-cost entertainment. Bookmakers and publicans are thought to do well during a recession because individuals want to ‘drink their sorrows away’ with little bets and becoming intoxicated. (However, research suggest that life expectancy increases during recessions, contradicting this old wives tale.) Demand for online-streaming and online entertainment is projected to increase during the 2020 Coronavirus recession.
- Companies that are suffering with bankruptcies and income loss. Pawnbrokers and companies that sell pay day loans, for example people in need of money turn to loan sharks.
- Companies that sell substandard goods. (items whose demand increases as income decreases) e.g. value goods, second-hand retailers, etc. Some businesses, such as supermarkets, will be unaffected by the recession. People will reduce their spending on luxuries, but not on food.
- Longer-term efficiency gains Some economists suggest that a recession can help the economy become more productive in the long run. A recession is a shock, and inefficient businesses may go out of business, but it also allows for the emergence of new businesses. It’s what Joseph Schumpeter dubbed “creative destruction” the idea that when some enterprises fail, new inventive businesses can emerge and develop.
- It’s worth noting that in a downturn, solid, efficient businesses can be put out of business due to cash difficulties and a temporary decline in revenue. It is not true that all businesses that close down are inefficient. Furthermore, the loss of enterprises entails the loss of experience and knowledge.
- Falling asset values can make purchasing a home more affordable. For first-time purchasers, this is a good option. It has the potential to aid in the reduction of wealth disparities.
- It is possible that one’s life expectancy will increase. According to studies from the Great Depression, life expectancy increased in areas where unemployment increased. This may seem counterintuitive, but the idea is that unemployed people will spend less money on alcohol and drugs, resulting in improved health. They may do fewer car trips and hence have a lower risk of being involved in fatal car accidents. NPR
The rate of inflation tends to reduce during a recession. Because unemployment rises, wage inflation is moderated. Firms also respond to decreased demand by lowering prices.
Those on fixed incomes or who have cash savings may profit from the decrease in inflation. It may also aid in the reduction of long-term inflationary pressures. For example, the 1980/81 recession helped to bring inflation down from 1970s highs.
After the Lawson boom and double-digit inflation, the 1991 Recession struck.
Efficiency increase?
It has been suggested that a recession encourages businesses to become more efficient or go out of business. A recession might hasten the ‘creative destruction’ process. Where inefficient businesses fail, efficient businesses thrive.
Covid Recession 2020
The Covid-19 epidemic was to blame for the terrible recession of 2020. Some industries were particularly heavily damaged by the recession (leisure, travel, tourism, bingo halls). However, several businesses benefited greatly from the Covid-recession. We switched to online delivery as consumers stopped going to the high street and shopping malls. Online behemoths like Amazon saw a big boost in sales. For example, Amazon’s market capitalisation increased by $570 billion in the first seven months of 2020, owing to strong sales growth (Forbes).
Profitability hasn’t kept pace with Amazon’s surge in sales. Because necessities like toilet paper have a low profit margin, profit growth has been restrained. Amazon has taken the uncommon step of reducing demand at times. They also experienced additional costs as a result of Covid, such as paying for overtime and dealing with Covid outbreaks in their warehouses. However, due to increased demand for online streaming, Amazon saw fast development in its cloud computing networks. These are the more profitable areas of the business.
Apple, Google, and Facebook all had significant revenue and profit growth during an era when companies with a strong online presence benefited.
The current recession is unique in that there are more huge winners and losers than ever before. It all depends on how the virus’s dynamics effect the firm as well as aggregate demand.
What should I buy before the financial crisis?
Having a strong quantity of food storage is one of the best strategies to protect your household from economic volatility. In Venezuela, prices doubled every 19 days on average. It doesn’t take long for a loaf of bread to become unattainable at that pace of inflation. According to a BBC News report,
“Venezuelans are starving. Eight out of ten people polled in the country’s annual living conditions survey (Encovi 2017) stated they were eating less because they didn’t have enough food at home. Six out of ten people claimed they went to bed hungry because they couldn’t afford to eat.”
Shelf Stable Everyday Foods
When you are unable to purchase at the grocery store as you regularly do, having a supply of short-term shelf stable goods that you use every day will help reduce the impact. This is referred to as short-term food storage because, while these items are shelf-stable, they will not last as long as long-term staples. To successfully protect against hunger, you must have both.
Canned foods, boxed mixtures, prepared entrees, cold cereal, ketchup, and other similar things are suitable for short-term food preservation. Depending on the food, packaging, and storage circumstances, these foods will last anywhere from 1 to 7 years. Here’s where you can learn more about putting together a short-term supply of everyday meals.
Food takes up a lot of room, and finding a place to store it all while yet allowing for proper organization and rotation can be difficult. Check out some of our friends’ suggestions here.
Investing in food storage is a fantastic idea. Consider the case of hyperinflation in Venezuela, where goods prices have doubled every 19 days on average. That means that a case of six #10 cans of rolled oats purchased today for $24 would cost $12,582,912 in a year…amazing, huh? Above all, you’d have that case of rolled oats on hand to feed your family when food is scarce or costs are exorbitant.
Basic Non-Food Staples
Stock up on toilet paper, feminine hygiene products, shampoo, soaps, contact solution, and other items that you use on a daily basis. What kinds of non-food goods do you buy on a regular basis? This article on personal sanitation may provide you with some ideas for products to include on your shopping list.
Medication and First Aid Supplies
Do you have a chronic medical condition that requires you to take prescription medication? You might want to discuss your options with your doctor to see if you can come up with a plan to keep a little extra cash on hand. Most insurance policies will renew after 25 days. Use the 5-day buffer to your advantage and refill as soon as you’re eligible to build up a backup supply. Your doctor may also be ready to provide you with samples to aid in the development of your supply.
What over-the-counter drugs do you take on a regular basis? Make a back-up supply of over-the-counter pain pills, allergy drugs, cold and flu cures, or whatever other medications you think your family might need. It’s also a good idea to keep a supply of vitamin supplements on hand.
Prepare to treat minor injuries without the assistance of medical personnel. Maintain a well-stocked first-aid kit with all of the necessary equipment.
Make a point of prioritizing your health. Venezuelans are suffering significantly as a result of a lack of medical treatment. Exercise on a regular basis and eat a healthy diet. Get enough rest, fresh air, and sunlight. Keep up with your medical and dental appointments, as well as the other activities that promote health and resilience.
What should you buy in advance of a recession?
Take a look at the suggestions we’ve made below.
- Protein. These dietary items are high in protein and can be stored for a long time.
What industries are always in demand?
Tax preparation and bookkeeping services have cheap overhead because they don’t require a fancy location or expensive equipment. In addition, the normal rate for good tax preparers and bookkeepers is a respectable living wage.
However, if you don’t like numbers, preparing people’s taxes and keeping track of their accounts isn’t the business for you.
Catering Business
To manage a catering business, you don’t need pricey, fancy kitchens or skilled chefs. You could also run your business from your house, lowering your overhead. People and businesses are prepared to pay a premium for professional caterers, making this a lucrative business for those who work hard and have a strong desire to succeed.
Website Design
Websites have evolved into the “windows of all successful businesses.” As a result, website designers who are both talented and imaginative are in high demand. Again, cheap costs and high rates make web design one of the most successful enterprises to operate, assuming you have the necessary creative and technical skills.