Part of being an entrepreneur is the willingness to take risks. During a recession, the mere thought of starting a business–putting out the money in an attempt to generate more–is a high risk in and of itself. However, it isn’t entirely implausible to start one that has a chance of success.
Some businesses can thrive even in the midst of a difficult economy. In fact, small businesses born during a recession that managed to survive will most likely thrive as the economy recovers.
Entrepreneurs need to be able to choose a recession-proof industry and manage the business strategically. This involves advanced planning, smart allocation of resources, and careful management of cash flow.
Recession-proof industries have at least one of five characteristics:
- Provides critical repair services
- Sells staples and essentials
- Serves commodities insulated from downturns such as energy resources
- Provides mandated products or services
- Sells proprietary or specialized products
These characteristics bank on the same thing: providing products or services that you need and can’t replace, in order to survive. Industries like health care, food and beverage, and repairs and maintenance are in demand, especially during recessions. Others like IT, education, and events are also necessary despite trying times.
Here is the list of 10 small businesses you can consider starting during a recession
1. Accounting Services
During a recession, financial management is one of the top issues, especially for business owners. Financial advisors, economists, and accountants are especially in demand during these hard times, as they are considered the experts in this area. Budgeting, figuring out what to cut from your expenses, and thinking of ways to raise profits are pressing issues that need to be addressed decisively and quickly, with expert accuracy. Having an accountant as a business advisor during a recession can help the business ride a recession through.
2. Food and Staples Trade
No matter how rough times are, people need to eat and drink to survive. Groceries and food markets have a relatively inelastic demand despite the recession, simply because they offer basic needs. People tend to buy their food in bulk orders, as this saves them more money, so providing this service will help your business.
Cleaning items like soap and detergents, as well as other staple products also have a stable demand during a recession. Consumer behaviour during this Coronavirus crisis is leaning towards hoarding sanitary products in bulk to ensure they don’t get out of the house as often as before.
3. Repair Services
Things break. Cars, pipes, electrical lines continue to be used and consequently need repair and maintenance. People would rather pay for repairs than make avoidable purchases (for replacement) during times of recession.
Offering repair services has almost no initial investment required–all it takes is the proper tools, the right knowledge, and well-practised hands to do the job.
4. Thrift Stores
When budgets are tight because of a recession, people opt to buy other necessary items–like clothes–from thrift stores.
5. Home Health Care Services
People get sick. Therefore health care will always be a necessity. During a recession, a lot of people won’t be able to afford basic medical attention from hospitals, due to loss of jobs and subsequently their health insurance. As long as there are proper qualifications and training, propping up a home health care business is a wonderful way to earn money and help others.
6. Tutoring Services
Education is important and should be continued despite a difficult economic status. Children or adults alike benefit from tutoring services, either by learning the basics or mastering a new and potentially profitable skill set.
7. Creative Digital Design
A lot of new businesses will prop up during a recession. People are looking for ways to generate more income and arrive at a conclusion to start their own business. Logo and web design will be in demand. Video editing for website content and marketing is also going to be a hit—bank on your skills and creativity by starting a digital design business.
8. Resume-Writing Services
Unemployment and underemployment rates will skyrocket during a recession. A lot of people will want to revamp their resume and look for new opportunities. However, there are still a lot of people who have no clue how to make their resume stand out. This is an excellent opportunity to whip out your resume writing skills.
9. Rental Services
Everyone needs a roof above their heads. People who can’t afford to buy a house, or are forced to sell the house due to the recession, will probably rent. This is either a short-term solution or the only option. As a result, rental agents, landlords, and property management companies can thrive during recessions.
10. Budget Luxury Items Trade
Recessions mean tough times. People tend to have low morale and feel deprived of the simple pleasures in life. Little things they don’t necessarily need but make them feel good about themselves can feel like a luxury. Starting retail on affordable “luxury” items gives your customers some sense of relief during difficult periods.
While these businesses are able to thrive in difficult economic situations, they also remain relevant and in-demand when the economy starts to recover.