A number of vital services in the home restoration and repair business are recession-proof. With annual spending on home improvements in the United States exceeding $400 billion, it is an industry with a lot of room for growth.
Here are a few good business ideas that are still in demand even during economic downturns.
Plumbing: When a plumbing issue arises at home or at work, it is simply not possible to wait until a more financially secure time to have it repaired.
Auto Repair Services: Because many individuals rely on their vehicles and trucks to commute from home to work and cannot afford to be without one, auto technicians will be in high demand throughout a downturn.
What types of businesses can withstand a downturn?
Businesses that are recession-proof are the only ones that are relatively undamaged during a downturn. They are perfect industries for meeting people’s basic needs, whether in the form of a service or a product. Despite being financially strained, consumers’ needs are continually directed to their trade, so they will likely thrive and withstand the effects of the crisis.
Take, for example, Disney. During the Great Depression, the company was created. The Disney brothers realized that America needed to be cheered up again in a moment of terrible despair. They were able to expand their firm as a result of this chance, and they were able to overcome the recession’s problems.
As a result, in current downturn, every individual, business, and investment should reevaluate and seek sanctuary in the so-called recession-proof industry.
The nine finest recession-proof enterprises for surviving this critical moment are listed below, in no particular order.
Grocery and Food Stores
In an economic downturn, the food business and grocery stores, unsurprisingly, thrive. During a recession, profits in grocery stores, fast food restaurants, and retail establishments stay relatively stable.
A good example is the frozen meal and coffee industry. Frozen food manufacturers should anticipate a 4.8 percent increase in total sales. The retail coffee market, on the other hand, expanded by 6%, a significant increase over the initial prediction of only 2%. No crisis, not even the apocalypse, is likely to stop people from eating and drinking.
However, this industry may still be vulnerable to the recession’s consequences. During the past recession, each household’s food consumption fell by 7%, possibly because customers were more likely to buy on sale or hunt for cheaper alternatives in order to save money. However, the reality is that consumers can only cut their food spending so much.
Consumers’ eating habits are stimulated and increased in times of crisis, which is interesting. When people are worried, they crave and eat more, especially sweets and alcohol. During the Great Depression, Snickers and Mars chocolate bars were created. Cadbury chocolate sales have reportedly increased by 30% in tandem with McDonald’s amazing business development during the 2008 recession. As a result, the food industry is one of the most recession-resistant industries.
Accounting and Tax Services
It must be so tempting to avoid paying those taxes! Regardless of whether there is a recession or not, taxes must be paid on time or face the repercussions.
What’s even worse is for an individual or a corporation to attempt bookkeeping on their own in the hopes of saving money. While it appears to be a quick gain, there is a lot of danger involved, and incorrect calculations could backfire and cause more problems down the road.
Entrusting a trained accountant to deliver the work while you focus on and target revenues is a prudent decision to make, especially during difficult circumstances.
Accounting firms are another business area that thrives during economic downturns. It’s extremely important for firms to have a robust accounting and bookkeeping system in place during recessions.
In times of slowing economic development, a company’s initial instinct will be to decrease costs and balance its books. When cash flow is limited, many businesses will want accounting assistance. When a business is in trouble, an accountant’s skills are needed to review spending, manage remaining resources, and offer sensible advise on how to resolve financial issues.
Unfortunately, most business owners are unaware of their tax obligations. Accounting assistance will be able to tell you where these tax benefits can help you. More importantly, these experts will assist a person in navigating and comprehending the latest adjustments in company regulations brought on by the COVID-19 pandemic. When an economic downturn strikes, it’s critical to rely on accounting help.
Financial Advisors
Have you noticed that a growing number of financial advisors and money managers are emerging from the shadows recently? The most basic explanation is that they’re in the business of providing services that people will require as the market falls. To put it frankly, their work was designed specifically for current economic downturn.
Investors and rich individuals, like business owners, want to protect their assets and ensure that they are well cared for during difficult times.
It’s only normal for us to be concerned and defensive with our resources during a downturn in the economy. Financial advisors frequently advance at this phase because their profession is in high demand. Their sound guidance will inform investors about the various types of investment accounts available.
Information Technology
I.T. jobs are unquestionably the most in-demand profession in today’s age of technical breakthroughs. Its major task is to promote innovation, which leads to business success. In reality, one of the causes for high traffic online is the present recession, which has resulted in an increase in sales.
Every department in the business world relies on information technology to improve their work procedures and strategies. A company can’t function without information technology. During this epidemic, the information technology industry has shown a lot of potential for enterprises, especially now that the work-from-home experience is widely accepted. More businesses are allowing employees to work from home.
In addition, information technology is one of the key factors that has contributed to the expansion of international trade and the market. Businesses that engage in linked assets and exploit information technology get closer to the international market, perhaps growing sales despite the recession.
We’ll even go so far as to argue that, in order to increase efficiency, every industry today will need to include information technology. Their service has shown to be beneficial to businesses. Businesses that refuse to adapt to technological improvements face a gloomy future. There are many reasons why information technology is regarded as the world’s fastest-growing industry. Their services are required today and will continue to be required in the future.
Telecommunications
The telecom business, like information technology, is here to stay, regardless of the economy. The COVID-19 crisis’ ramifications only served to highlight the industry’s current prominence.
To communicate online, people need their phones, among other things. As a result, the industry became inextricably linked to the global economy. People are interested in learning how to talk naturally in the local language of their clients as a result of the globalization of consumers. Furthermore, as the telecom industry has innovated, online enterprises have thrived alongside it.
Many people have been able to make money and learn new skills without having to leave their homes thanks to the online sector. People can also sell products online because of this sector.
Furthermore, the pandemic prompted universities to follow suit. Since the implementation of social distance, telecommunication has become a prerequisite in educational institutions, along with the instantaneous rise of study materials.
Despite the fact that some consumers have lowered their units, telecoms sales continue to grow, indicating that they are one of the most recession-proof industries. Even before the pandemic, the sector had demonstrated its efficacy, and it will undoubtedly play a key part in the current global catastrophe.
Healthcare Services and Providers
Someone will become unwell every now and then. When people are sick, they will always seek medical help, even if their funds are limited. Because of its price inelasticity, the healthcare industry might be considered recession-proof.
Clinical institutions and medical occupations are among the few industries that are unaffected by economic downturns. In a down economy, this company is unlikely to slash costs.
For example, during the Great Recession, the Occupational Employment Statistics (OES) assessed nurse employment in the United States. Focusing on the recessionary years of 2007 to 2010, the study found that, despite a nationwide job loss of roughly 7,257,090 million jobs, nurse employment increased by 7.6% over the same period.
Healthcare and food (discussed before) are two key industries that can thrive during a downturn. We’ve even seen the public health response to the COVID-19 outbreak today, and how healthcare providers play a key role in the midst of unprecedented financial instability.
However, due to the unique circumstances and emergencies brought on by the pandemic, several medical industries, such as surgeries, were forced to close and were unable to thrive in comparison to past recessions. Furthermore, we thank our COVID-19 front-line fighters, particularly doctors and nurses on the front lines, who are valiantly fighting the virus today.
Auto Maintenance and Utility Services
During recessions, companies that focus on utilities, repair, and maintenance will likely survive and prosper. People are even returning to do-it-yourself crafts and mending items on their own. Some fixes, however, are simply beyond our control. This is where the service industry comes into play.
Things will eventually fall down as time passes. The so-called wear and tear elements on autos will require special attention. Plumbers will need to inspect a leak in water pipelines for utilities. During times of adversity, the services provided by these handymen remain unaffected. This is also true of companies who sell tools and materials for home and car improvement.
Furthermore, as the current epidemic continues to spread around the world, coronavirus cleaning and disinfection services are gaining popularity as they become more valuable to businesses and residences affected by the outbreak.
During a period of considerable uncertainty, utility services remained afloat and continued to operate alongside the influx of new cleaning-related enterprises. The simple reason for this phenomena is that such services are already considered important by the general public, particularly in light of the current global health crisis.
The bottom conclusion is that, as a result of the pandemic, everyone appears to be more aware of and concerned about hygiene. As a result, demand for cleaning equipment and commercial cleaning services increased dramatically. Cleaning is unquestionably one of the few industries that thrived throughout the COVID-19 era.
Children’s Goods and Dating Industry
The necessities for a baby, such as diapers, milk, and bottles, are virtually recession-proof. You must provide for your child regardless of your financial status when you are raising a child. As a result, firms that sell infant and childcare supplies can weather a downturn and rarely fail.
For the sake of their children’s health, parents are now compelled to confine them within their houses. The times have changed, and many parents are left to instruct and entertain their children on their own. As a result of the pandemic’s consequences, the number of purchases of children’s books, games, and crafts increased dramatically.
Even children’s toys and clothing are recession-resistant for both practical and emotional reasons. Shortly after the epidemic began, total sales of children’s toys in the United States increased by 27%. Parents can’t deny the reality that their children grow up quickly, necessitating the purchase of larger clothing and shoes. And, while a toy is only a “wish,” parents will require it to calm their children.
Parents frequently prefer to save money in other areas rather than sacrificing their children’s necessities.
Another consequence of the COVID-19 pandemic today is disturbed family planning, which leads to unwanted pregnancies, as a result of long-term lockdowns and community quarantine. As a result, while starting a recession-proof firm, childcare items cannot be disregarded.
On that topic, the pandemic outbreak has shown the corporate world that the dating industry is still thriving and recession-proof.
Courier Services
This is what sets courier services apart from other companies. With the rise of e-commerce during this epidemic, freight and logistics companies are well-positioned and unfazed in today’s global market.
Industries that provide delivery services, such maintenance and utility services, are able to stay afloat during recessions. During today’s crisis, social distancing established around the world had a good impact on the freight business. Even routine errands such as grocery shopping are now available through delivery services. Of course, this means that the industry will have to adjust to the pandemic’s changes.
However, the sector has become sufficiently diverse to reap significant benefits and profit from internet transactions. Furthermore, shipping behemoths may save millions by leveraging fuel, a commodity that often falls in price during economic downturns.
Regardless of the state of the economy, courier services will continue to thrive since consumers will need to send items from time to time, whether for personal or business reasons. Being able to function and provide that one-of-a-kind kind of support to customers makes them less vulnerable to economic downturns. Furthermore, their ability to target both the business-to-customer (BTC) and business-to-business (BTB) industries qualifies them as one of the most recession-proof companies.
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 shifted to online delivery when 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 assets were able to weather the Great Depression?
The Dow Jones Industrial Average began a downward trend on Oct. 24, 1929, with a 12.8 percent drop on Oct. 28 and an 11.7 percent drop the next day.
The Dow had fallen 89 percent from its 1929 high by the end of the bear market in 1932, wiping out all of the Roaring Twenties gains, and the country was in the throes of the Great Depression.
The Great Crash was caused by a variety of factors, including excessive speculation, a faltering global economy, and unethical investing techniques, according to historians. Even though the world is significantly different now than it was in 1929, the Great Crash and the economic devastation that followed can teach us a lot.
always-good pieces of advice
1. Diversify your portfolio. Even though stocks plummeted in the 1929 crash, government bonds provided investors with a safe haven. Bonds wouldn’t have totally protected you from stock market losses, but they would have substantially lessened the pain.
2. Maintain a cash reserve. Your most valuable asset is yourself, and if you lose your work, you’ll need some funds to keep your family afloat.
Furthermore, having a cash reserve can assist you in finding deals in the aftermath of a market downturn. During the Great Depression, mutual fund pioneer John Templeton put $10,000 into 104 companies and acquired shares for less than a dollar each. Near the conclusion of WWII, he sold them for around $40,000 each.
3. Never bet more money than you can afford to lose. In the run-up to the crash, buying stocks on margin was typical, with as little as 10% down.
You would double your money if your stock climbed 10%. You would lose your entire investment if it plummeted 10%.
Some mutual funds put their whole assets on margin, prompting other funds to do the same.
4. Try not to become engrossed in the hysteria. Stocks had had a long run-up to the 1929 crisis, and their prices were exceedingly high in relation to earnings.
Radio Corporation of America, for example, was a highly expensive high-tech stock at the time. Increasingly, even individuals who should have known better were enticed to enter the market by rising prices.
In September 1929, Yale economist Irving Fisher stated, “Stock prices have hit what appears to be a permanently high level.”
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 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).
Why did money become scarce during the Great Depression?
During the Great Depression, the money stock decreased mostly due to banking panics. Depositors’ faith that they will be able to access their cash in banks whenever they need them is crucial to banking systems.
Is cash useful during a downturn?
In today’s economy, where stock market circumstances are unpredictably volatile, knowledgeable investors are looking for more reliable assets to avoid losing money. While our economy appears to be improving, recent events have had a significant impact on the stock market. History has demonstrated the importance of having assets that can withstand a downturn. When it came to how to protect wealth amid a slump, the Great Depression was one of the finest teachers the world has ever seen.
Gold And Cash
During a market meltdown or downturn, gold and cash are two of the most crucial items to have on hand. Gold’s value has typically remained stable or only increased during depressions. If the market is falling and you want to protect your investment portfolio, it’s in your best interests to invest in and safely store gold or cash in a secure private vault.
As a general rule, your emergency fund should be at least three months’ worth of living expenditures.
While banks may appear to be a secure place to store money, safety deposit boxes are neither insured nor legally accountable if something goes stolen.
Furthermore, the Federal Deposit Insurance Corporation (FDIC) will not always be able to cover your money in banks.
Investing in physical assets such as gold, silver, coins, and other hard assets is preferable.
Real Estate
During a slump, real estate is also a smart strategy to secure wealth. Another investment possibility that often retains its value and appreciates is debt-free real estate ownership. Of course, the location is a big consideration. Near colleges is an area of interest for wise investors because these locations tend to weather depressions better. However, the long-term viability of this wealth-protection strategy is contingent on the soundness of the local economy.
Domestic Bonds, Treasury Bills, & Notes
During a depression, mutual funds and equities are considered high-risk investments. Treasury bonds, banknotes, and notes, on the other hand, are more secure assets. The United States government issues these things. When they mature, they pay the buyer a fixed rate of interest.
You can choose short-term bills that mature in as little as a few days depending on your demands.
If you’re searching for a longer-term investment, there are notes available that mature in as little as two years.
Foreign Bonds
Many experts in the past would have suggested foreign bonds as a depression-resistant investment option. Recent events have demonstrated that this is not always a safe bet. Pandemics and other market instability around the world have rendered this a risky investment, as all countries’ economies are affected.