Businesses that prosper during a downturn
- Groceries. Grocery retailers, unsurprisingly, do the best business in a depressed economy.
What should you put your money into during a downturn?
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).
Which industry is immune to the downturn?
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.
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.
In the event of a financial meltdown, what will be valuable?
In the case of an economic collapse, food will become one of the most precious commodities on the planet. You will not be able to survive if you do not have food. Most American families could not survive for more than a month on what they currently have. So, how do you feel? How long could you survive on what you have today if calamity hit right now? The reality is that we all need to begin stockpiling food. If you and your family run out of food, you’ll find yourself competing with hordes of hungry people raiding stores and roaming the streets in search of something to eat.
You can, of course, cultivate your own food, but it will take time.
As a result, you’ll need to have enough food on hand to tide you over until the food you’ve planted matures.
However, if you haven’t saved any seeds, you might as well forget about it.
When the economy fails completely, the remaining seeds will vanish swiftly.
So, if you think you’ll need seeds, now is the time to purchase them.
Who profited from the financial crisis of 2008?
Warren Buffett declared in an op-ed piece in the New York Times in October 2008 that he was buying American stocks during the equity downturn brought on by the credit crisis. “Be scared when others are greedy, and greedy when others are fearful,” he says, explaining why he buys when there is blood on the streets.
During the credit crisis, Mr. Buffett was particularly adept. His purchases included $5 billion in perpetual preferred shares in Goldman Sachs (NYSE:GS), which earned him a 10% interest rate and contained warrants to buy more Goldman shares. Goldman also had the option of repurchasing the securities at a 10% premium, which it recently revealed. He did the same with General Electric (NYSE:GE), purchasing $3 billion in perpetual preferred stock with a 10% interest rate and a three-year redemption option at a 10% premium. He also bought billions of dollars in convertible preferred stock in Swiss Re and Dow Chemical (NYSE:DOW), which all needed financing to get through the credit crisis. As a result, he has amassed billions of dollars while guiding these and other American businesses through a challenging moment. (Learn how he moved from selling soft drinks to acquiring businesses and amassing billions of dollars.) Warren Buffett: The Road to Riches is a good place to start.)
Do banks fare well during a downturn?
First, during a recession, interest rates tend to fall. Because banks’ principal business model is to lend money and profit, lower interest rates tend to result in reduced earnings. For instance, if a bank’s average vehicle loan interest rate is 5%, it will make significantly more money than if the average rate is 3%, all other circumstances being equal.
Second, and more importantly, during recessions, unemployment tends to rise, and more consumers get into financial difficulty. Consumers sometimes have difficulties paying their bills during recessions, which can result in an increase in loan losses for banks.
The longer answer, though, is that each bank is unique. Consumer banking (accepting deposits and lending money) is very cyclical, particularly for banks that specialize in riskier forms of lending like credit cards. Investment banking, on the other hand, performs even better during stormy times, therefore banks with strong investment banking businesses typically see profits hold up well. Goldman Sachs, for example.
During a recession, which industries suffer the most?
The retail, restaurant, and hotel industries aren’t the only ones that suffer during a recession. During periods like these, industries like automotive, oil and gas, sports, real estate, and many more face significant decreases. Although the recession brought on by the coronavirus epidemic is unusual, many of these businesses have had difficulties in the past.
However, as we already stated, not all is doom and gloom. Certain industries have done a good job of riding the wave and adapting.
Consulting
Consulting might be a lucrative alternative if you are skilled and passionate about a specific issue (such as business, social media, marketing, human resources, leadership, or communication). You can start a consulting firm on your own, then expand and recruit other consultants as your business grows.
Online reselling
Those with a passion for clothing and/or sales might want to explore beginning an online reseller company. You may start as a side hustle and grow it into a full-time reselling business with time and devotion plus an eye for fashion. You may start by selling your unwanted clothing on online store websites like Poshmark and Mercari, then expand to your own resale website.
Online teaching
Entrepreneurial opportunities have arisen as a result of the increased demand for online education. Because this is an internet business, you may teach a course on any subject you know about, regardless of your location. Consider teaching English as a foreign language to pupils in other countries if you don’t have advanced knowledge in any topic.
Online bookkeeping
Many bookkeeping services can now be performed online, just like schooling. Take use of contemporary technology to start your own online bookkeeping service if you are an accountant or bookkeeper who desires the independence and autonomy of running your own business.
Medical courier service
Consider starting your own courier service, specifically a medical courier service, provided you have a trustworthy car and solid time management skills. You’d be responsible for transporting medical things such as lab specimens, prescription medicines, and equipment as a driver. You can either establish your own courier business or employ other drivers to help you.
What if I told you that The healthcare industry is growing, which bodes well for job security in the medical courier service industry.
App development
You might wish to seek a job in app development if you are informed and experienced in technology. For many Americans, smartphones have become an everyday item, resulting in a spike in the demand for mobile apps. Virtual reality software has also grown in popularity in recent years, resulting in a demand for VR app creation.
Transcription service
A transcription business will allow you to work from home with a flexible schedule if you have a good ear and can type swiftly. Medical transcription services are in high demand as speech recognition technology for healthcare provider dictation becomes more common. You can accept as few or as many transcription tasks as you’d like if you don’t want to start all at once or if you have a day job you’d like to keep for the time being. Consider becoming a licensed transcriptionist and digging into a few specialty to increase your business possibilities and justify charging extra.
Medical transcriptionists often charge between 6 and 14 cents per line, which adds up quickly. Because transcription work often takes 24 hours to complete, it’s critical to keep track of the projects you accept. However, because you can accept only a few requests at beginning, you can scale up as needed. The best part is that there is relatively little initial investment and overhead. Only a computer, the necessary software, and a secure messaging service are required.
Professional organizing
Are you looking for a business concept that would make you happy? Professional organizers, such as Marie Kondo, make a profession by assisting others with decluttering and minimalism. Many people are yearning to reduce and regain control of their stuff in this age of materialism. Minimalism is gaining popularity, but many people find it difficult to leave with items they’ve had for a long time. As a professional organizer, one of my responsibilities is to assist customers in developing a downsizing method.
You might be effective at encouraging others to do the same if you’re a highly organized person who appreciates making environments efficient and comfortable. People will pay you to assist them in decreasing their belongings and maintaining an orderly environment. To advertise your service, ask your clients whether you may take before and after images of the sections of their homes you’ve arranged, and then use those photos to create a portfolio that you can share on social media to attract more customers.
Cleaning service
Cleaning can simply be turned into a company if you enjoy it. You can provide cleaning services to households, apartment complexes, and commercial properties with a small team, a variety of cleaning materials, and vehicles. The majority of cleaning firms charge between $25 and $50 per hour. Cleaning services are simple enterprises with low expense; all you need is a little strategy, dedication, and promotion to attract consumers.
If you want to set yourself apart from other cleaning services, consider charging more for quality services like floor waxing or outdoor power washing. These services could make the difference between your new cleaning business and established companies with too many clients to deliver that level of cleaning.
Freelance copywriting or content writing
You can work as a freelance copywriter or content writer if you’re a natural wordsmith with some marketing experience. Many companies may pay for your services if you write blogs, site material, or press releases. Increase your worth by assisting customers in developing a plan based on specific keywords that their target audience is already searching for online. Most freelance copywriters charge between $40 and $50 per hour, although those who specialize in a particular industry may be able to charge considerably more.
Freelance copywriting is an excellent business to start since you can work from anywhere with an internet connection. It’s a business you may run from the comfort of your own home or, if you travel, from the road. You may even make freelance writing your full-time profession if you build up a large enough network and receive referrals from happy clients.
Home care service
Supporting housebound seniors who require in-home care can be made easier with a background in care and hospitality. It’s also a service with an ever-increasing demand. According to the National Institute on Aging, the global population of those aged 85 and more is expected to grow 351 percent between 2010 and 2050, with the number of centenarians (those over 100) increasing tenfold. Many people may require care and support, frequently in the comfort of their own homes.
Fortunately, you don’t need a history in healthcare to aid elderly while still growing a profitable business, though those abilities will be in high demand. Many elders require assistance with a variety of duties, such as errands or home repairs. With enough expertise, you may expand your firm to assist seniors in transitioning from their homes to assisted living facilities, including services like packing, moving, setting up, and storing their furniture and belongings.
Translation service
According to IBISWorld study, the translation services industry, like many others, had a dip in 2020; however, IBISWorld predicts a “significant rise” in the industry during the next five years. The internet has opened up entrepreneurs in other nations to English-speaking audiences and vice versa, so the expected growth isn’t surprising.
This development has opened the door for multilingual speakers to provide specialised services like document translation and online information translation into languages for use in various markets. You might be able to carve out a niche in the translation services market if you’re fluent in numerous languages.
Digital marketing
With each passing day, the internet’s value grows, but it also gets more difficult for businesses to cut through the online clutter and properly market themselves. Digital marketing services are always in demand, and many small and midsize businesses would like to outsource them rather than hire an expensive in-house team. You could embrace a business opportunity that allows you to work from home if you have skills in SEO, content marketing, pay-per-click advertising, web building, or social media management.
Because digital marketing is such a vital component of any company, you’ll need to keep up with changes in your clients’ marketing plans. Not only does social media management include constantly monitoring for comments and messages, but it also entails scheduling postings with a set-it-and-forget-it mentality. Digital marketing may be the appropriate business for you if you appreciate painstakingly developing and implementing marketing strategy. You might also pursue a career as an affiliate marketer, which is a type of digital marketing.
Owning a food truck
Because indoor dining is currently limited in many areas, ambitious restaurateurs may find greater success with a food truck. Food trucks come in a variety of sizes and styles, serving a variety of foods and cuisines. Take your favorite cuisine on the road and sell your culinary creations to hungry consumers. Sure, you’ll be working, but you’ll be doing it in an area that you’re passionate about, with the opportunity to meet individuals who share your interests.
Food trucks may appear to be an outlandish concept, but they are gaining popularity. A truck has substantially lower costs and upkeep than a restaurant, and you also have the added benefit of mobility.
Tip: If you’re interested in serving up smiles, check out our guide to launching a food truck business for more details.
Lawn care service
If you grew up with a lawn, it’s likely that your parents forced you to keep it up. Lawn care is inconvenient for many of us, yet it provides a sense of tranquility and serenity for others. Working with your hands to tame and beautify the natural landscape may be a joyful experience, yet because so many people find it boring, it can also be financially rewarding.
Depending on how many clients you have and how big the jobs are, lawn care services just require some basic equipment, a trailer, and sometimes some workers. Offering premium services and creating a reputation as a brand that does a thorough job with a smile might help you turn a modest lawn care service into a full landscaping company. This could be the company for you if you enjoy working outside and creating beautiful landscapes.
Rideshare driving
You may always utilize your car to become a rideshare driver if starting your own business sounds intimidating or too risky. The rideshare service takes care of the overhead and management of the business, allowing you to work as much or as little as you choose. Uber and Lyft, for example, allow people to launch side hustles that pay well and need little more than a willingness to drive people to their destinations and engage in nice chat on occasion.
Drivers who work for rideshare companies have the independence of a small business owner without the burden of managing behind-the-scenes operations. If any of the other business ideas seem too time-consuming or capital-intensive, ridesharing could be a good way to get your feet wet in the world of entrepreneurship.
Real estate
The property market can be stressful for many people. As a real estate agent, you can assist clients in finding their dream homes at a reasonable price. To become a real estate agent in many states, you simply need to take a few months of classes and pass a test. Keep in mind that you’ll need excellent social skills even if you have a qualification, so if you’re not a people person, this may not be the path for you.
Graphic design
Corporations, small enterprises, and sole proprietorships all require eye-catching advertising materials, but not everyone has a keen sense of aesthetics. Start a graphic design firm to create flyers, internet ads, posters, and other engaging visual materials if you have an artistic streak and know how to organize content into a visually beautiful structure. Aside from a laptop and a desk, graphic design takes little physical instruments.
T-shirt printing
If you have an artistic sensibility or appreciate taking someone else’s drawings and screenprinting them onto a blank tee, you might enjoy starting a T-shirt printing business, just like with graphic design. In either case, if you have the room, you may easily obtain the essential tools and get started.
Dropshipping
Not all businesses that sell products keep them on site. People who manage e-commerce sites use dropshipping to have their purchases fulfilled by a third party. A wholesale merchant or other organization that runs a warehouse and shipping operation is most likely the third party. Dropshipping is a wonderful startup concept if you’re concerned about overhead costs and physical space because it requires very little inventory and tools.
Pet sitting
A pet is owned by almost two-thirds of American households. Your pet-sitting small business can give these families peace of mind when they go away for extended periods of time. As a pet sitter, you’ll look after your customers’ dogs, cats, and other pets at their home, feeding, watering, playing with them, spending time with them, and (with dogs) walking them as needed. You’ll also need to keep your clients informed about how their pets are doing on a frequent basis.
Pet sitting may be an especially good small business idea if you have other sources of income that only require an internet connection and a laptop. Almost all pet owners would gladly let you work on your laptop while spending time with their pets at their home, allowing you to manage two income streams at the same time.
What businesses will be in great demand in 2021?
Our economy was rocked by the COVID-19 outbreak in ways we couldn’t have predicted a year ago. Despite the negative impact on businesses that put individuals into close proximity to one another, other firms have benefited.
As people continue to socially isolate ourselves, the US Chamber of Commerce predicts that seven service-based enterprises will be in great demand:
This list will serve as a springboard for forward-thinking entrepreneurs looking to develop or pivot their businesses. Use questions like these to find your next opportunity:
Is our company capable of providing any of the services listed by the Chamber?
Only service-based enterprises are included in the US Chamber’s list. Many goods providers have noticed increased demand since the start of the pandemic. Bedding manufacturers and wood floor providers, for example, anticipate a successful year in 2021 as consumers spend more time at home than ever before. Winnebago also anticipates a surge in RV purchases.
Identify trends in your sector and related industries to determine where you might be able to grow the market for your product, like Clyra Medical Technologies did with its wound-care disinfectant. They discovered that their solution could be used as a spray to disinfect masks and other personal protective equipment. The product is now available to frontline medical personnel.
There are undoubtedly more options than those listed here. Check out Entrepreneur’s tips for coming up with a great business concept during the epidemic to learn more.
Do you have any queries about business banking? Online or by phone, reach out to our experienced business development managers. In addition, we may assist you in person at your local office.