Recession-proof businesses with the right plans are crucial during an economic downturn. Recessions are notoriously difficult times for businesses. People have less money to spend, demand for goods and services plummets, and companies that aren’t prepared go out of business.
However, the recession offers an excellent opportunity for savvy entrepreneurs and small business owners to launch recession-resistant businesses or move existing ones forward with a revised business plan.
Even though it feels like we will be recovering from the Great Recession forever, at some point, business conditions will improve once again.
The best businesses thrive in an economic recession because they understand how to realise opportunities to make their firms stronger and more profitable in the long run.
Every business is affected by recessions in some way. However, some businesses see significant growth during these challenging times. The businesses that keep operating when others fail are those that cater to people who are frugal, thrifty or just plain cheap.
Top 8 recession-proof business ideas:
Recessions create a lot of uncertainty and instability for businesses, making it seem like an ideal time to start something that makes money during any economic condition.
Let’s find some of the best recession-proof business ideas that tend to do well in recessions.
Grocery stores
While people may be more careful with their money during a recession, they still need to eat. When people feel uncertain about their financial future, they tend to eat more comfort foods to make themselves feel better. This is good news for grocery stores because they will not stop making money.
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Grocery stores are in the business of selling food, which is something that everyone needs to survive and thrive regardless of the economic climate. Grocery stores can weather the storm of a recession because people will still need to buy food.
Discount retailers
People may be more careful about how much they spend on clothing and other items during a recession, but they will still need new clothes and other products.
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When the economy tanked in 2008, many discount retailers were caught off guard. There was no time to recover from the switch from a leisure-oriented society to one of the immediate and frugal necessities.
Due to the lack of inventory and sales, several retailers went out of business, causing their suppliers to cut back on deliveries. This added more stress to the already-tense situation, and many companies couldn’t stay afloat.
Discount retailers should be able to survive the recession by taking a few specific steps.
First, they must ensure that they have enough shelf space in their store locations to meet demand. Secondly, they must keep up with product inventories to maintain a steady supply of inventory at all times. Finally, they should regularly check competitor prices to ensure they are not losing sales by paying too much for merchandise.
Recession is an excellent time for discount retailers to thrive in their businesses if they can provide what people want at a lower price than competitors. People have less money to spend, so they will shop where they can find quality items at lower prices.
Wine & Liquor
Good times or bad times – people always drink alcohol. Drinking is a form of escapism for some people when the time is terrible.
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People may be more careful about how much they spend on alcohol during a recession, but they will still drink.
Wine and liquor stores are in business and will be in business even during a recession. Liquor stores do well during a recession because people still need to drink, even if they don’t have as much money to spend.
Wine and liquor stores are likely to do well in a recession because they will still be in demand when people may like to stay home and drink.
Pet products and services
The pet industry is an $83 billion-a-year business in America, with annual sales growing at a rate of 6 per cent each year. More than 50 million dogs and cats live in American homes today, and Americans spend roughly $65 billion a year on their pets. That’s a lot of money!
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Per projections, people in the USA will spend more than $100 billion on their pets by 2022. In 2021, $50.0 billion was spent on Pet Food & Treats alone. There is a constant demand for pet foods and supplies. The pet products industry is one of the fastest-growing industries in the country. And they’re a recession-proof business that can survive even when other sectors struggle.
The Pet products industry performs well in recessions. This is true because pet owners are more financially stable than the average person. They’re also more likely to have disposable income and to be willing to spend on their pets.
With all this demand for pet products, it makes perfect sense for entrepreneurs to start businesses selling them.
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Freight and Logistics
Freight and Logistics companies face a challenging environment in which to operate. Over the last few years, not only has the economy been volatile but also how goods are transported has changed dramatically.
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In the 2008 recession and Covid-19 crisis, businesses tumbled due to decreasing consumer spending, but as soon as the economy revived, e-commerce businesses witnessed a sudden spike in sales growth. With online sales, demand for delivery services also surges.
And with many people choosing to live in urban areas, there is also more demand for freight and logistics services to help people get products from point A to point B.
Courier services are recession-proof because they provide both necessities and comforts. Because of the recent boom in e-commerce, logistics firms are currently well-positioned and stimulated in the international market.
Education & Childcare
When people are uncertain about their financial future, they are more likely to want to ensure their children get the best education possible.
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An increase in demand for daycare services and a decrease in childcare costs make it easier for business owners to open new establishments and hire more staff.
Parents are willing to spend more on private schooling, tutoring, and other educational programs. Because of this, educational services are never going to be out of business.
Every parent wants to provide their children with the best quality education possible and is willing to spend money.
Repairing Services
Major home appliances, computers, and other items are made with less durable and more breakable parts. This makes them more likely to break or need maintenance and repair.
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When something breaks, people are more likely to throw it away and buy a new one rather than attempt to repair it.
However, in bad economic times, people will be more inclined towards repairing their broken goods and appliances instead of spending money to buy new ones.
During a recession, maintenance businesses for necessary goods like automobiles, roofers, plumbers, and other home repair services will likely have as much work as when times are good. Starting your own home repair company is ideal if you are handy around the house, a plumber, an electrician, or an HVAC technician.
By tapping into a niche market that is already financially strapped, repairing businesses can have a ready supply of customers looking for low-cost solutions.
Professional Cleansing Services
Recessions are a common occurrence in the U.S., and as a result, demand for cleaning services is also on the rise. Recessions have spurred increased demand for janitorial services in some cases.
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While starting a professional cleansing service during a recession may seem counterintuitive, it can be a great time to get your business off the ground. For one, people are generally more cost-conscious during economic downturns and may be more likely to hire a professional service to save on cleaning costs. Additionally, many businesses close their doors during a recession, creating opportunities for entrepreneurs to fill the void.
Of course, starting any business comes with risks, and a professional cleansing service is no exception. However, do your research and develop a sound business plan. You could find that starting a professional cleansing service during a recession can be a great way to get ahead of the competition.
Check the video below for additional information on different business ideas that thrive in Recessions.
Bottom Line
The best businesses thrive in a recession because they are prepared for it. They know that bad economic times are coming, so they are more careful about how they spend their money and are willing to invest in long-term projects that will bring them more significant benefits in the long run.
And when the recession finally ends, these companies will be stronger than ever and ready to thrive in the new economic situation.
There are many recession-proof businesses that you can look for and prepare for the next recession. However, ensuring your business plans are in place is essential before the economy turns sour. Don’t be afraid to take risks if necessary. The worst thing you can do is sit around and wait for the economy to recover. Instead, take action and start a business before the challenging time hits.
Frequently Asked Questions (FAQs):
Cash is the most valuable thing in any economic downturn. So, keeping enough cash for rainy days is very essential. However, selling stocks and other investments for cash during a bad economic phase is not an ideal suggestion.
Healthcare, freight, consumer staples and food manufacturing industries will likely grow during recessions.
Grocery stores, discount retailers, pet products and services and Freight and Logistics businesses mostly perform well and grow in a recession. This is not an exhaustive list. However, these businesses are positioned effectively in the market to cater for the demand for products and services even during an economic recession.
