When you think about things that you absolutely cannot live without, you’ve already taken the first step towards identifying recession-proof businesses. Industries, businesses and jobs that are able to weather the storm and make it through a recession are often those that provide essential services and those that people tend to prioritize.
Okay, let’s forget about the obvious recession-proof businesses for now (we’ll get to them in a bit), and rather focus on things that are essential now that perhaps may not have been in previous generations. I mean, have you ever tried to go a day without the internet, entertainment, your phone?! The worst.
So, it’s quite clear to see that some of these things may not necessarily be essential services, but because of how they have infiltrated pretty much every aspect of our lives, we would rather not live without them. Bingo! That is how you identify a recession-proof industry to explore, as well as the recession-proof businesses and jobs within it that you could venture into.
What makes a business recession-proof?
Apart from essential services and businesses that exist in crucial industries, you can identify a recession-proof business by its ability to withstand periods of financial strain and a decline in economic activity. In business hubs and busy parts of the world, the technology and digital space is booming, which means that it can be considered a recession-proof industry currently.
I’ll admit, I’m definitely one of those people who cannot think straight without my Wi-Fi. Also, when you think of the recent global events and how everyone was suddenly forced to work remotely or adopt a hybrid setup, we all know that technology and digital solutions became our best friends. Because of that and other reasons, the tech space seems to be one of those industries that are on an upward trajectory.
If you’re an investor looking to get into investing, or if you’re an entrepreneur exploring a new venture but want to gauge the risk associated with your industry of interest, consider this:
- Does the business offer essential and critical services or products?
- Does the business cater to a market that is relatively unaffected by economic downturns?
- Is there an evident increase in the demand for the services or products you wish to offer?
If the answer to any of the questions above is yes, great! You’re on the right track. Keep reading.
Starting a company during a recession
Any sane person can tell you that when you start to feel the pinch in your pocket, the first thing to do is probably cut back on all the fluff and unnecessary habits. Yes, I do mean stop buying coffee at the café downstairs every morning before work – that is if you’re lucky enough to still have a job during a recession – and quit buying takeaways every evening and just cook!
Don’t get me wrong, the food and beverage industry as a whole isn’t necessarily at risk during a recession, only those that may be deemed luxury purchases. In fact, some of the best recession-proof businesses in the industry were inspired and birthed by a recession. You’ll be surprised just how far you can stretch your brain and push yourself when your livelihood is at stake.
Although some people may be wary of starting a business during a recession, understandably so, there are several success stories that have proved that it is possible to win even during an economic downturn. For example, the first-generation iPod was introduced in 2001 while people were still reeling from the dire financial conditions of 2000.
While it might seem like a luxury purchase, it sure was a whole lot cheaper than the cumulative costs of going to a concert or buying a first-class TV and accompanying sound system. That was how Apple managed to hit the sweet spot – by being a cheaper alternative at the time.
Of course, not everybody has the liberty to explore different recession-proof businesses, especially during a recession, but being able to identify some of the things that people cannot live without is a step in the right direction. Interest in social media, at-home entertainment and gaming increased in 2020, so that’s a recession-proof industry I would bet on in the coming years.
Should you go for it now?
I’m all about early retirement. But early retirement DOES NOT mean stop working so you can sit on your porch and whittle a stick all day. It means having a reliable source of non-job income so that you can spend your time how you want to.
If the way you want to spend your time is being your own boss, I’m all for that. And I’ll suggest you hedge your bets by starting a recession-proof business.
Starting a company during a recession is often not the most popular choice, but it presents several exciting and potentially life-changing opportunities. Apart from the fact that being your own boss comes with a level of freedom and adventure that can be both exciting and nerve-wracking, it also means that you take on a whole new level of risk and potential rewards.
If you do your research and go in with a plan, you’ll get to find out how far you could take your idea as an entrepreneur. On the other hand, the worst that could happen is that you’d have to sell everything you own and move back home with your parents. The ball’s in your court.
While some might argue that companies that are most likely to survive a recession are well-established and faceless companies, it is not always the case. I have personally seen so many innovative and refreshing approaches to food services and delivery during times of financial constraints. Mobile food trucks and bars, food preparation services, picnic setups… I could go on and on, but I’m sure you get the picture.
What’s not on the list
There are some industries that may be recession-proof but I wouldn’t really bother including. For example, there will always be a need for discount and thrift stores but I’d rather sit through an eight-hour zoom meeting than sift through a mountain of other people’s stuff.
(That said, there are companies like Decluttlr that combine the thrift store with the digital and are killing it.)
Top 12 recession-proof industries that are safe
When it comes to weighing out your options and exploring recession-proof businesses, you have to be strategic and tactful in your thinking, approach and overall business model. Innovation is key. However, recession-proof businesses aren’t necessarily those that offer novel services and products, sometimes it’s those that present it in a new and more appealing way that meets customer needs.
To give you a better understanding of what I mean, I’ve jotted down some of the industries that are widely considered safe to explore during a recession.
1 – Financial services
We’ve heard it being said numerous times before that the only sure things in life are death and taxes. Bleh! So, there you go, the very first industry that is considered safe has to do with taxes. At the very core of a recession is finances and the economy, which means that in order to get a better view of their financial standing, people may seek advice from experts or make use of more online tools and digital solutions.
I’m just a regular guy and hate the idea of paying someone else to do my taxes. But that’s just me. In the normal world, the demand for accountants and auditors is growing steadily despite any financial downturns.
If you’re somewhat specialized, like with real estate investors or online entrepreneurs, consider yourself that much more of an in-demand unicorn.
2 – Technology and digital solutions
When it comes to convenience and ease, mobile apps and digital solutions have become such game-changers in recent years, meaning that the tech sector has room for many recession-proof businesses. These days, we all turn to our phones or the internet when we need something or are seeking information.
Several of some of the most successful tech companies today were actually launched during the financial crisis of 2008, which was followed by a recession. This goes to show that if you provide a solution to a potential customer’s biggest headaches and nuisances (and no, I’m not referring to their kids), then not even a recession should stop you from launching what could possibly be one of the best recession-proof businesses around.
Fintech, for one, is proving to be a space worth exploring. In the financial sector, banks and other financial institutions are leaning more towards introducing technological solutions that allow people to transact remotely and across the globe. Think of the likes of PayPal and Payoneer.
3 – Babies and kids
Amongst some of the best recession-proof businesses is anything that has to do with babies or kids. Have you ever seen a parent having to choose between getting something for themselves or their child at a store? The child wins all the time! That is why kids’ services and products can be regarded as recession-proof, because parents actively keep children-focused companies alive.
Think about it, 2020 was characterized by job losses, an increase in unemployment and financial uncertainty, and yet parents continued to prioritize their kids. In fact, some spent more on their kids during this time. This industry is very vast; if you really love kids and can put up with their demands and instructions – because let’s be honest, they actually call the shots – then you could consider something like an au-pair business or other equally appealing part-time jobs.
Gifting is also quite popular, especially for first-time mothers. So, things like gift baskets filled with goodies for newborns can be a great business pursuit in any economic climate. You could even take it a step further and plan baby showers, offer child-minding or tutoring services, baby clothing, the list is endless. Think about it, there are children being born every single day, surely that is an industry worth tapping into.
Personally, I believe that the growing interest in environmentally-friendly children’s products and the unserviced market in the less developed areas are worth exploring. Economic downturn or not, baby care is important to parents, so much so that by 2026, the projected worth of the industry is $88.72 billion, which is roughly $20 billion more than its value in 2020.
4 – Childcare
As a parent, I’m rather annoyed by how much I pay for childcare. As an opportunist, I’m intrigued. The need for childcare is never going away. In fact, in the event of a recession or economic downturn, the need for childcare may be even greater. While I wouldn’t personally want to run a daycare, there must be other creative ways to tap into this recession-proof industry.
5 – Veterinary and Pet care
Kind of like with babies and kids, people will spend their very last dollar on their pets. Want to hear some crazy numbers? In 2020, $103.6 billion was spent on pets! The year that half the world was stressed about money! Whether you want a dog walking business or pet fashion, there will always be customers willing to pay.
6 – Food
I’m about to let you in on a little secret. Are you ready for it?
People will always need food.
And if you’re a fan of the culinary arts or just nutrition, there are so many ways to give it to them! At the best of times, most of the population is looking for new foods to try or new diets to experiment with. But even during financially hard times, most people would be okay to splurge on something like custom cupcakes for a birthday, a green powder to make them healthier, or even consistent nutritious meals to save them time and effort.
Heck, I’m the biggest advocate of not wasting money on takeout, but I’d gladly pay someone to take care of all my meals so I wouldn’t have to think about it.
Actually, this past year has been really interesting for the restaurant industry. While in-house customers have declined due to restrictions, the takeout scene has been booming, leading some entrepreneurs to open up ghost kitchens just for takeout.
7 – Maintenance and repair
If you’re into fixing up cars, homes, or are handy in general, consider yourself in a recession-proof business. This industry could entail: homes, pools, garages, cars, landscaping, appliances, small household machines… Basically, things will always break down, and people will always need them fixed.
8 – Cleaning
My old office has nightly commercial cleaners taking care of the place. Even though the number of people coming in has been greatly reduced, they still get paid because the alternative could be disastrous.
9 – Health and long-term care
With the world population growing and aging, the health and long-term care industry is not going anywhere any time soon. Communities all over the world are looking for solutions to help promote an optimal standard of living. If you managed a fleet of nurses providing care, you could reap the rewards of a recession-proof business while making someone’s life better.
10 – Funerals
Want a slice of a 20-billion-dollar industry that’s not going anywhere? Funerals. I mean, seriously, what could possibly send the funeral industry into decline?
11 – Managing freelancers
If you’ve ever been a freelancer, you’ve probably cursed at the fees you pay to the platform. BUT what if you were the one taking that cut instead? As more and more people are discovering the world of virtual assistants and freelancers to be more effective, it’s not a bad idea to tap into this industry now.
Recession-Proof Businesses – Final Words
Are you thinking of starting a business? I’d love to know what’s driving you to go for it, and if any of these recession-proof business ideas struck a nerve.