9 Businesses That Thrive in Recession
- Accountants. No matter what the economy is like, both people and businesses have to pay taxes and keep their finances in...
- Healthcare Providers. If any industry can be said to be recession-proof, it's healthcare. People will get sick in good...
- Financial Advisors and Economists. People who have substantial assets want to ensure that...
What type of businesses do well in a recession?
The Best Small Businesses to Start in a Recession
- Accounting Services. Who would guess that accounting services would prosper in a recession? ...
- Bulk Food Sales. When economic times are tough, many people buy food in bulk. ...
- Affordable Luxury Items. ...
- Debt Collection Agency. ...
- Resume-Writing Services. ...
- Auto Repair Services. ...
- Home Staging. ...
- Virtual Assistant. ...
- Tutoring Services. ...
- Food Truck. ...
How to start a business in a recession?
- Everything is cheaper. Let's face it: There is great value right now in this and in world markets. ...
- You can hire more and better-qualified people. ...
- People are looking to change suppliers. ...
- Ownership equals tax incentives. ...
- Family and friends don't want to (or can't) invest more money into the stock or real estate markets. ...
- Suppliers are giving better credit. ...
How do you start a business in a recession?
Summary for Starting A Business In A Recession
- In finding your niche or industry, make it simple, choose a business you can do at home or alone using simple equipment you can afford before you think of ...
- Do a proper research of the industry both physically and online before developing a business plan.
- Your family and friends should be your first advisers, assistants and customers.
Should you start a business during a recession?
Top 8 Reasons to Start a Business in a Recession
- Find answers to new problems. Difficult economic times lead to new problems. ...
- Cheaper, Better, Faster. As a fledgling business, there’s a good chance you’re starting from your home, have minimal employees and very little overhead to maintain at this point.
- More room for competition. ...
- Inexpensive supplies and materials. ...
- Better credit options. ...
What businesses do well during a recession?
Healthcare, food, consumer staples, and basic transportation are examples of relatively inelastic industries that can perform well in recessions. They may also benefit from being considered essential industries during a public health emergency like the COVID-19 pandemic.
What businesses do poorly in a recession?
Other Recession-Vulnerable Industries Retail, restaurants, and hotels aren't the only businesses often hurt during a recession. Automotive, oil and gas, sports, real estate, and many others see heavy declines during times like these.
How should a business respond to a recession?
To strengthen your business during an economic downturn you should consider the following strategies.Making customers a priority. ... Marketing strategies. ... Managing staff. ... Networking. ... Developing innovative practices. ... Seeking assistance. ... Also consider...
What should businesses do to prepare for recession?
Prepare Your Business For A RecessionBuild a cash reserve. The recommended supply of cash you should have reserved varies depending on who you ask, but the average suggested amount is between 6-12 months of operating expenses. ... Safeguard your cash flow. ... Establish your creditworthiness. ... Examine and evaluate operating costs.
What sells best during a recession?
Think about the kind of companies that perform well in recessions. Utility companies do well. Tobacco, alcohol, fast food, and soft drinks do well. Consumer staple companies like Kimberly-Clark, Colgate-Palmolive, Procter & Gamble, and Johnson & Johnson do well.
Who suffers the most during a recession?
Although young adults in their 20s and 30s bore the brunt of the economic downturn, many Americans ages 50 and older—including baby boomers nearing retirement—were also affected, either directly or indirectly, by rising unemployment, falling home values, and the decline in the stock market.
Is a recession coming 2022?
There are many different signs but there's no one indicator.” During the second quarter of 2022, growth slowed at a 0.9% annualized rate, which some economists would consider to be the start of the recession.
What should you buy before a recession?
During a recession, some sectors of the economy tend to outperform others as consumer needs shift....Sectors that tend to perform well during recessionsCommunication services.Consumer discretionary.Consumer staples.Energy.Financials.Health care.Industrials.Information technology.More items...
What gets cheaper during a recession?
A New House Like cars, houses also get cheaper during a recession because of falling demand — more people are leery of making a big move, so prices fall to entice the few buyers who remain.
How do you survive a recession in 2022?
Whether a recession is near, or a bit further away, here's what you can do to prepare.Update your resume. The labor market has been hot for job seekers, but that will change if a recession hits. ... Reduce expenses. ... Bulk up your emergency fund. ... Pay down debt. ... Stay invested.
How can a small business be recession proof?
Top tips to recession-proof your business.Look to the future. That means forecasting your balance sheet and what your revenue would be under various conditions. ... Check in with suppliers. ... Analyze labor costs. ... Check your prices. ... Check your expenses.
Do prices go down in a recession?
"Home prices will decline year over year if there's a recession, and they'll decline from their peak even if we don't enter a recession," Fairweather said. "But prices aren't likely to fall below pre-pandemic levels nationwide."
What jobs are not affected by the recession?
Top 6 best recession-proof jobsMedical professional. There are many jobs and specialties within the medical profession. ... Specialized care, therapy, and counseling. ... Law enforcement officers. ... Public utility services. ... Financial services. ... Education services. ... Construction and supporting industries. ... Home furnishing retail.More items...
What types of businesses are recession proof?
19 Amazing Recession Proof Business IdeasFood and Beverage Business. ... Healthcare Services. ... Pet Care Business. ... Renovation and Repair Industry including Plumber, Utility Services, and Auto Repair Services. ... Real Estate and Property Management. ... Baby Products Business. ... Child Care. ... Financial and Accounting Services.More items...•
What's a recession proof business?
Recession-proof businesses are traditionally defined as industries that either thrive during rotten economic times or at least survive unscathed. The global financial crisis of 2007-2009, however, rewrote the rules about recessions.
Is a recession coming in 2022?
There are many different signs but there's no one indicator.” During the second quarter of 2022, growth slowed at a 0.9% annualized rate, which some economists would consider to be the start of the recession.
What are the best businesses to have in a recession?
Businesses that thrive in recession are usually in essential services, like health care, senior services, grocery stores and maintenance such as plumbing and electrical. In our technology-driven world, streaming services, video games, computer equipment and cybersecurity and IT support are also among the best businesses in a down economy.
What are the traits of a business that thrive in a recession?
The best business in a down economy is always one that is run with purpose, vision and great leadership. But there are certain industries that may do better than others. So what businesses do well in a recession?
What are the first things people cut back on during a recession?
During a recession, the first thing people cut back on is nonessential goods. Businesses like restaurants, fashion retailers and other consumer goods are likely to take a hit. Although it is possible to enter these industries during tough times, if you’re wondering what businesses do well in a recession, you’re more risk averse than you think. No business idea is guaranteed, but you may be wise to avoid these industries and choose one that is almost certain to thrive.
What stores had the highest return in 2008?
While fashion, jewelry and other nonessential goods are generally not the best businesses in a down economy, there’s an exception for discounters. Dollar Tree, Walmart and Ross Stores had some of the highest-returning stock during the 2008 recession.
Why do people need to eat during a recession?
People always need to eat, and during a recession, they typically also cut back on eating out in restaurants and ordering takeout. That makes grocery sales skyrocket even more. 2. Health care. Like groceries, people need health care to live. That demand doesn’t decline when the economy does.
What happens when you enter a bear market?
When we enter a bear market, everyone starts worrying about their financial future. Individuals want to ensure their investments are stable or even invest in new opportunities. Businesses rely on advice from their accountants to help them survive tough times. These are valuable skills in any economy, but especially a down one.
Is alcohol sales profitable during recession?
Alcohol sales are another “guilty pleasure” industry that tends to be profitable during recessions. When larger purchases like electronics, vacations and new cars are out of reach, people tend to console themselves with alcohol. It isn’t a healthy habit, but it is one of the top businesses that thrive in recession. 5.
Why is it important to manage a business during a recession?
As economic experts discuss a potential economic collapse , it’s important to begin adopting strategies for managing a business during a recession. Doing so can help you stay afloat — and even thrive — during tough economic times.
How to protect your business from recession?
2. Buffer your cash flow. One of the best ways to protect your business against financial downfall is to maintain a healthy cash flow.
What is a recession plan?
A recession plan that includes diversifying your revenue can help you get more business in the short-term and grow your customer base in the long-term.
How long to wait for a client to pay in a recession?
Managing a business during a recession while maintaining cash flow requires balancing accounts payable and receivable. If you have to wait 30 or more days for client payments, you may want to negotiate different terms, Sjahli said. “Maybe you offer a discount if they pay you in 15 days to 30 days, or start charging interest for anything over 30 days.”
How to manage finances during a recession?
Another way to control your finances while managing a business during a recession is to cut costs. To prioritize your expenses, try doing an expense audit. “An expense audit is when you go through all recurring business expenses and ask two vital questions: 1) Do I need this expense? 2) Can I get this service or product at a cheaper cost?” Cofield said.
Why is it important to view your business with long-term growth in mind?
Viewing your business with long-term growth in mind can help you make smart choices and create a better recession plan right now. “Your business decisions during the recession must align with your why, your core values, and the culture you want to build,” Sjahli said.
How does recession planning work?
1. Recession planning works best when you focus on what you’re good at. Many business owners stretch themselves thin, trying to do everything, rather than focus ing on what they’re best at. If you offer multiple products or services, it may be time to reevaluate what works and what doesn’t.
What are the challenges faced by businesses in recession?
While each business will experience a recession in unique ways, the most common challenges faced by companies of all sizes include: Temptation to cut product size, quality and benefits – or raise prices.
How to deal with a recession?
A recession is hard on everyone, and while it can have a damaging impact on morale, you need your employees to be more efficient and productive than ever. You achieve this by understanding your employee’s personal needs. Listen to your employees.
Why do layoffs affect productivity?
Productivity can suffer when employees feel uncertain and unmotivated by bad news.
How to deal with layoffs?
What you fail to tell your workers can end up becoming a PR nightmare. Get ahead of rumors by having an honest dialogue with your team. Be transparent by being honest about hard truths, and your employees will respect you for it.
How to motivate employees outside of monetary compensation?
Offer intangible perks: Knowing how to motivate employees outside of monetary compensation is essential. Flexible scheduling — allowing employees to take time off or work remotely — is one popular intangible perk. As you implement these changes, closely monitor productivity. Don’t let relaxed oversight lead to decreased employee output.
What was the worst recession in history?
The Great Depression was the worst in U.S. history. The financial crisis of 2007-2009 was the worst of many of our lifetimes. Each happened for different reasons, and the next recession will have a catalyst of its own. It’s impossible to predict when a recession will happen or what will cause it.
What is economic recession?
Like spring, summer, fall and winter, an economic recession is a natural stage of an (economic) life cycle. And much like how any season can produce extreme weather, managing a business in a recession can present unique challenges for business owners and employees. The United States economy is complex and comprised of many industries.
What do businesses do during recession?
Many of the businesses that do well during recessions either provide goods and services that increase in demand directly due to recession conditions, offer cheaper alternatives to luxuries or big ticket purchases, or for which demand is relatively inflexible to changes in incomes.
What happens to dining out during a recession?
Supermarkets often see an increase in sales as people choose to cook more meals at home and even entertain their friends at home more often.
Why do people have substantial assets?
People who have substantial assets want to ensure that they're well taken care of, especially during a recession. Financial advisors often see an increase in work as people become concerned about the stability of their investments and seek guidance on how to protect their assets.
When the future of the economy is in doubt, what is the demand for financial and economic advice?
When the future of the economy is in doubt, demand for financial and economic advice goes up. Beyond matters of personal finance, people seek advice and insight regarding current and future economic trends or paths to recovery. Economists often see massive increase in demand for their services and consultants, government policy advisors, ...
Do accountants need help during a recession?
Accountants are likely to experience an increase in business during a recession, since many people and small businesses may require the help of a professional to ensure they're making use of all the tax benefits available to them, and that they have a clear understanding of their income and expenditures as cash flow tightens.
Is it hard to sell a house during a recession?
It is more difficult to sell a home during a recession, but some people have to do it. People who specialize in home staging thrive as the housing market becomes increasingly competitive. Home staging specialists might be real estate agents or interior design professionals, or both.
Is healthcare recession proof?
Healthcare Providers. If any industry can be said to be recession-proof, it's healthcare. People will get sick in good times and bad, so the healthcare industry isn't likely to experience the same level of cutbacks or job losses.
What are the best industries to work in during a recession?
This could mean daycare, or an after-school program , or even babysitting – all of these industries remain crucial during times of recession.
Is the Small Business Community still a resource?
The Small Business Community is now Small Business Resources.
Is there a possibility of a recession in 2020?
A recession within the coming year seems more than likely. While the economy is great today, more than a few economists believe a 2020 recession is quite possible.
Did grocery stores go belly up in 2008?
In a recession, you might expect the most expensive grocery stores would go belly-up. But this wasn’t the case in 2008. In fact, specialty food stores experienced growth throughout the recession. When someone really loves something (like candy!) buying it during a recession becomes a refuge. As such, specially made, hard to come by, or totally niche items can work.
Is candy a recession?
Yes, you heard right. Candy and recessions go hand in hand. Both Three Musketeers and Snickers were invented during the 1930’s depression, and in the U.S., candy sales went up by billions of dollars during the 2009 recession. When people can’t afford larger luxuries, they turn to the smallest - and sweetest - kinds. And that means a retail business can launch, or grow, using candy as a lure.
Why do auto repair shops rake in the cash during a recession?
Auto repair and maintenance shops rake in the cash during a recession when people will gladly fork over a few hundred dollars on repairs in order to avoid a monthly payment on a car loan
What to do if your business days are not going to end?
If the lousy business days are not tending to end and getting more challenging for you to cover your variable costs and meet your break-even point, you might be thinking of borrowing some money or getting a loan sanctioned.
Why are car repair businesses important?
Car repair businesses are handy in times of recession as cars are a necessity and if a car is damaged, people cannot avoid getting their car fixed no matter how expensive it is.
How much will the US economy shrink in 2020?
In the US, the economy will likely shrink by 5% in 2020, and in the eurozone, GDP may contract by about 13% in 2020. Speaking about the UK, there is also a shrink of GDP by almost 10%.
What to do if you are a small mid agency?
So if you are a small-mid agency, be flexible, optimize your processes, lower the cost and compete for clients who would typically go to expensive agencies.
Why do people need to repair their homes?
Home repair and maintenance business demand always stay constant. People will always need repairing services because anything can get damaged at any time. Also, many people will choose a do-it-yourself home renovation or upgrade rather than consider selling and moving during a recession.
Do spouses complain about recession?
People often complain that their spouses don’t have time to spend quality hours with them. It may sound funny, but the recession is the time for you. Families usually come closer during hard times.
How to survive a recession?
To survive the recession, it is important to reduce the chances your entire customer base will be negatively impacted. When you diversify your customer base, you won't be relying on only one source of revenue. Diversification increases the chances that your income will stay closer to normal as you weather the storm. Put your clients in a pie chart; if you have any one customer that takes up a majority of the pie, you should change that. Your business will be affected by how well they do, and it’s never good to allow another company to control the success of your business.
What happens if you don't pay your customers?
If customers aren't paying for your goods and services, you can't keep up with your financial obligations. When that happens, it doesn't matter if your industry is recession-proof; you may not be getting paid on your invoices as routinely as you have in the past.
Defining A Recession
Recession Impact on Small Businesses
- U.S. small businesses have impressive numbers in the aggregate. Defined expansively as those with fewer than 500 employees, they accounted for 43.5% of U.S. GDP in 2014, though that was down from 48% in 1998.3 Those with fewer than 100 employees still accounted for 30% of U.S. wages and 35% of employment from 2012 through 2016.4 Those figures shouldn't obscure the f…
Recession Impact on Large Companies
- Large companies aren't immune to recessions. In 2020, 244 sought bankruptcy protection, the most since 2009; energy, retail and consumer services were the hardest hit sectors.9 As the declines in revenue and profit show up on quarterly earnings reports, share prices may suffer deep declines, since bear markets often accompany a recession and may even precede it. If the profi…
Business Effects of A Recession
- Many recession effects touch companies large and small. Below we look at some of the most common challenges businesses of any size face in a recession.
Employee Layoffs and Benefit Reductions
- Businesses large and small may undertake layoffs to cut costs, especially if they need fewer workers to meet the reduced demand for their products and services. Productivityper employee may increase, but morale may suffer as workloads increase while pay gains slow or stop amid the risk of further layoffs. Wages are sticky, meaning workers are reluctant to accept cuts in pay eve…