15 Best Recession Proof Business Ideas

You have this desire to be your own boss, but with headlines constantly reminding you of a looming recession, are you concerned about finally making the leap? You aren’t alone. Not only are there a lot of small business owners who worry that a recession is coming (Reuters reports that 93% of business owners are worried), but I have had several people ask if this is a bad time to start a business.

While there isn’t usually a perfect time for someone to start a business, I would like to review the impacts of the last recession, along with a list of historically considered recession-proof businesses.

Using history as a guide

While most analysts will define a recession as two consecutive quarters of negative growth, other indicators also define a recession, which can include a reduction in Gross Domestic Product (GDP), fewer retail sales, higher unemployment, and slowdowns in manufacturing.

One such recession that we can draw data from regarding the impact on small businesses is the Great Recession, which took place from 2007-2009. Even though both big and small businesses were hit hard by job losses during this period, it was the smaller businesses that took a much bigger blow. It is estimated that 1.8 million small and medium-sized businesses in the U.S. were driven out of business due to the Great Recession. Not a great number to consider if you want to start a business.

Manufacturers who relied heavily on external financing suffered the most during this period as the banks that were considered “too big to fail” drastically limited the funding that businesses relied on for operations. A study of the Great Recession’s effects revealed poor sales and economic unpredictability as the main culprits, making recovery difficult compared to larger establishments that suffered less due to these issues. Lack of available credit certainly affected some mom-and-pop stores, but plummeting consumer demand for their services, especially luxury retailers, drove revenues down further.

As a result of the widespread impact on businesses, both large and small, being an employee was not necessarily safer and was, in fact, a catalyst for the start of many new businesses. Even though the start of new companies plummeted from 715,000 at its peak in 2006 down to 560,000 by 2010, the research from the Federal Reserve showed that workers who lost their job during the recession largely responded in part by starting their own small businesses.

While history can teach us some valuable lessons, every recession will impact businesses differently. If you are worried about starting a business during a recession, I see some important lessons to take away from this research. These include; keeping your expenses low (both business and living), having a stockpile of cash that you can live off of for at least one year (the average recession lasts ten months), and not exclusively selling luxury products and services.

What businesses do well in a recession?

When the economy takes a downturn, small businesses can be hit especially hard as people cut back on their spending. Certain industries tend to take more of a blow than others, as luxuries and many services are usually one of the first to feel its effects. While there is no way to know how the next recession is going to affect the economy, here is my list of the best types of businesses that are considered to be able to survive an economic downturn better.

Plumbing

Plumbing is an essential service as homeowners and businesses are going to maintain their homes’ basic sanitation and hygiene, and as a result, there will always be a demand for plumbers, regardless of the economic situation.

Plumbing systems require ongoing maintenance and repair work, and these needs cannot be postponed indefinitely. People may try to save money by delaying non-urgent repairs during a recession, but they cannot completely neglect their plumbing systems. In addition, there are few substitutes for plumbing services, which means that people cannot easily replace or do without these services, even during tough economic times.

Electrician

Like plumbing, electrical work is an essential service required to maintain the basic functioning of a home or business. As a result, there will always be a demand for electrical services, regardless of the economic situation.

Electricians cater to a wide customer base, including residential and commercial clients, which makes their services less dependent on a single industry or sector. As technology continues to advance, the demand for skilled electricians is likely to increase as more homes and businesses require specialized electrical work.

Pet-based businesses

According to the American Pet Products Association (APPA), 70% of U.S. households, or over 90 million families, own a pet. With so many people owning pets, it is never a bad time to consider a pet-based business.

With so many pets and needs from their owners, there is a wide range of needs for products and services, including pet food, toys, grooming services, veterinary services, and more. While pet-based businesses may not be entirely immune to the effects of a recession, they are often considered more resilient compared to other industries for a few reasons.

Emotional attachment: People have a strong emotional attachment to their pets and are willing to prioritize their needs even during tough economic times.
Necessity: Pet owners consider their pets as a necessity rather than a luxury, and they will continue to spend money on their pets’ basic needs, such as food, medicine, and grooming, even during a recession.
Increased pet ownership: During times of economic hardship, many people opt to adopt pets as a source of comfort and companionship, leading to an increase in pet ownership and demand for pet-related products and services.

Related: Guide to starting a pet store

Handyman business

A handyman business is considered recession-proof because there is always a need for repair services, especially during a recession when people find it more affordable to fix their existing equipment rather than purchase new.

Handyman businesses provide a diverse range of services, including home repairs, maintenance, and renovations. This diversity means they can adapt to changing demands and provide various services that are always in demand. Also, during a recession, people may not have the financial resources to hire specialized contractors for every job. A handyman business can offer a cost-effective option for small to medium-sized jobs.

Freelance Services

Overall, freelancing can be a recession-proof business option for those who are self-motivated, have a valuable skill set, and are willing to put in the effort to build and maintain their business. However, like any business, freelancers may still be impacted by economic downturns, and it’s important to have a plan in place to weather any challenges that may arise.

A few advantages to a freelance business include:

Low overhead costs: Freelancers typically have low overhead costs, as they do not need to maintain a physical office or hire employees. This means they can more easily weather economic downturns, as they have fewer fixed costs to cover.
High demand for flexible work: Many businesses and individuals seek out freelancers during a recession because they can offer a more flexible and cost-effective alternative to hiring full-time employees. This means that freelancers may be able to find more work during a downturn.
Wide range of services: Freelancers can offer a wide range of services, from writing and graphic design to website development and consulting. This versatility means they can adapt to changing demands and provide various services that are always in demand.
Ability to work remotely: With the rise of remote work and online communication tools, freelancers can work from anywhere, which makes them more resilient to economic shocks that may disrupt physical workplaces.
Diverse client base: Freelancers can work with clients from various industries, which means they are not dependent on a single sector or industry. This diversification can help protect them from the economic ups and downs of any particular industry.

Bookkeeping

The famous quote by Benjamin Franklin goes: “In this world, nothing can be said to be certain, except death and taxes.” This quote highlights the fact that taxes are an unavoidable part of life and that they will always exist in some form.

When it comes to running a bookkeeping business, this quote applies in several ways. First, bookkeepers play a critical role in ensuring that businesses comply with tax laws and regulations. Taxes are a major concern for businesses of all sizes, and accurate financial records are essential for fulfilling tax obligations and avoiding penalties.

Second, taxes provide a steady source of work for bookkeepers. Businesses and individuals need to file tax returns every year, which means there is always a demand for bookkeeping services. This makes bookkeeping a potentially lucrative business, especially during tax season when demand for services is highest.

Finally, the quote also underscores the fact that bookkeeping is an essential service that will always be in demand. Regardless of the economic climate, businesses need to keep track of their financial records and manage their cash flow. Bookkeepers often develop long-term relationships with their clients, providing ongoing support and advice. This repeat business can help maintain a steady stream of work, even during a recession.

Real Estate

Not all real estate businesses are recession-proof, as some services can be heavily impacted by economic downturns during a recession, the housing market can slow down, and people may be less likely to buy or sell property.

That said, people will always need a place to live, even during a recession. Real estate businesses that focus on owning property, property management, rentals, or affordable housing may be less affected by economic downturns.

Additionally, businesses that rent housing, may see an uplift as people can’t afford to buy or stay in their current property.

Auto Repair

An auto repair business is considered a recession-proof business because people still need to maintain and repair their vehicles, especially during an economic downturn.

For many people, their car is an essential mode of transportation, and they need to keep it in good working condition. Even though some maintenance on a vehicle may be deferred, eventually, it will need to be fixed. This means that even during a recession, people still need to visit a mechanic to maintain their vehicles.

A recession may even boost an auto repair business during a recession because people may be more likely to repair their vehicles rather than replace them. This can lead to an increase in demand for auto repair services as people try to extend the life of their cars.

Grocery Stores

A challenge of a new grocery store is often the high operating expenses due to the cost of the facility and inventory, plus profit margins can be low as well.

Despite that, grocery stores, convenience stores, and dollar stores are essential services as people will always need to eat and purchase household essentials. During times of economic hardship, people tend to be more budget-conscious and seek to minimize their spending on food and other basic necessities, so more expensive items may not sell very well.

Daycare

Overall, daycares are often considered resistant to recessions because they provide a necessary service, but it is important to note that their success relies on parents having employment that requires the need for childcare, which isn’t guaranteed during a recession.

Parents who work outside the home still need a safe and reliable place to take care of their young children, even during an economic recession, and while some industries may experience layoffs or hiring freezes during a recession, the need for childcare often remains constant.

Another benefit to daycares is consistent government support. Many families receive government assistance to help cover the cost of childcare, which can provide a steady stream of income for daycare businesses even during tough economic times. Also, once parents find a daycare provider they trust, they are often reluctant to switch to a different provider, even if times are tough.

Related: Guide to starting a daycare

Baby Products

Baby product businesses are not necessarily considered to be recession-proof, as the demand for these products can be affected by changes in consumer spending during economic downturns. While parents will always need to buy basic necessities for their babies, such as food, diapers, and clothing, they may cut back on discretionary items, such as luxury baby gear and toys, during a recession.

That being said, baby product businesses that offer essential items and cater to lower and middle-income families may be more recession-proof than those that focus on luxury or high-end products. For example, businesses that sell affordable baby clothing, diapers, and formula may experience less of a decline in sales during a recession than those that sell expensive strollers or high-tech baby monitors.

Overall, while baby product businesses are not necessarily recession-proof, businesses that offer affordable, essential products for babies and families may be more likely to weather an economic downturn than those that focus on luxury or non-essential items.

Healthcare-related businesses

The healthcare industry overall is considered stable, regardless of the economy, due to the demand, the essential nature of the services, and government assistance. A few popular healthcare businesses include:

At-home healthcare: As the population ages, the demand for home healthcare services continues to grow. Home healthcare businesses provide services such as nursing care, physical therapy, and medical equipment rentals to patients in their own homes.
Medical equipment suppliers: Companies that supply medical equipment, such as wheelchairs, walkers, and oxygen tanks, are essential for patients with chronic conditions or those who are recovering from surgery.
Medical transportation service: Medical transportation businesses provide a critical service to patients who cannot drive themselves or require special assistance during transportation. Some patients may have physical disabilities or medical conditions that make it difficult to use public transportation or ride-sharing services.
Physical therapy and rehabilitation centers: These businesses provide physical therapy and rehabilitation services to help patients recover from injuries, illnesses, and surgeries.
Medical billing and coding: Medical billing businesses help healthcare providers manage their billing and insurance claims, and are in high demand due to the complex and constantly changing healthcare regulations.

Digital Marketing

Digital marketing is often considered to be recession-proof, as businesses still need to promote their products or services during economic downturns in order to attract customers and maintain revenue. In fact, some businesses may increase their marketing efforts during a recession in order to stay competitive and maintain their market share.

Additionally, digital marketing can be a cost-effective way for businesses to reach their target audience, as it often requires less investment than traditional forms of advertising such as TV or print ads. This can make digital marketing an attractive option for businesses looking to cut costs during a recession.

However, it’s worth noting that the demand for digital marketing services may vary depending on the industry and the specific needs of businesses. Some industries may experience a greater decline in demand for digital marketing services during a recession than others, while businesses with limited budgets may be more likely to reduce their marketing spending.

Retail Consignment

A retail consignment business can be a great business to own during a recession because they offer affordable and sustainable shopping options. However, it’s worth noting that consignment businesses may face challenges during a recession if consumers significantly cut back on discretionary spending or if there is a decrease in the supply of high-quality, gently used items to sell.

Courier Services

Depending on the customers being served, a courier service can be an excellent business to own in a recession. Courier services often provide essential services such as delivering medical supplies, legal documents, and other important items that need to be transported quickly and securely. During a recession, the demand for essential services like these is less likely to decrease, as businesses and individuals still need to receive and send important items.

Also, with the growth of e-commerce, courier services have also grown, as more consumers are shopping online and expecting fast delivery times. This trend is likely to continue during a recession as consumers may turn to online shopping as a way to save money and time.

Another plus for courier services is that during a recession, businesses may look for ways to cut costs and increase efficiency. Using a courier service can be more cost-effective than maintaining a fleet of vehicles and paying for employee benefits, which can make courier services an attractive option for businesses looking to save money.

Related: How to start a courier service

Final thoughts

In conclusion, if you’re an aspiring small business owner who is concerned with the current state of economic uncertainty or wants to start a recession-proof business, there are numerous possibilities to choose from. From freelancers, daycares, to courier services, the options for recession-proof business ideas are virtually limitless.

Moreover, many of these opportunities require minimal capital investment and offer the potential for high returns on investment. While the work is never easy and success never guaranteed, these businesses can be successful in both a good or bad economy.

To learn more about how to create your own recession-proof venture and become an entrepreneur extraordinaire, be sure to check out our state guides to starting a business.

https://startingyourbusiness.com/best-recession-proof-business-ideas/

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