The global financial meltdown caused by the pandemic has been rough on most people, including small business owners. But some types of businesses consistently weather hard economic times better than others.
In retrospect, when a recession is officially declared, the economy has already been down for months. During such a period, companies are forced to scale back, thereby causing people to lose jobs. Businesses see a decline in sales as consumers’ expenditures are severely curtailed.
If tough economic times continue to persist, it would be tremendously difficult to bounce back. This is particularly true for businesses that had taken no preparations for such an event. Although, we couldn’t blame them. After all, who could exactly predict the next recession? Maybe we all need to learn a lesson or two about proactivity and precautionary measures.
And, to be honest, forging a career during this tough economic time is no easy feat, either. It can be frightening. As a consequence, the nation’s economic output is hampered by the downfall. Who or what else is bound to thrive at such a difficult time?
Ah, thankfully, recession-proof businesses will.
What is a recession-proof business?
Recession-proof businesses are the only industries to remain mostly unscathed during such an economic crisis. They are ideally the industries that supply the basic needs of the people — either in service or product form. They will likely thrive and resist the impacts of the crisis, since consumers’ demands are perpetually directed to their trade despite being financially stressed.
For more than a year now, the economic devastation is still mainly caused by the coronavirus — a health crisis that is still causing deaths and recession around the globe. But even with this tragic event, one can still create opportunities and lean into the obstacles.
Take Disney, for example. The company was founded alongside the Great Depression. In a time of deep despondency, the Disney brothers knew America needed to be cheered up once more. That opportunity led them to grow their business — successfully surpassing the challenges of the recession.
So, in this time of slump, every individual, business, and investor can reconsider and take refuge in the so-called recession-proof business.
Listed below, in no particular order, are the nine best recession-proof businesses for surmounting this critical period.
1. Grocery and Food Stores
Unsurprisingly, the food industry and grocery stores tend to thrive in an economic downturn. Profits earned in groceries, food chains, and stores remain fairly steady during a recession.
The frozen meal and coffee sector is a good case in point. Frozen meal firms were able to expect a 4.8% increase in total sales. On the other hand, the retail coffee market grew by 6%, a substantial growth from what was initially forecast as only 2%. No crisis of any kind will probably stop people from eating and drinking, not even an apocalypse.
That being said, this sector may still be susceptible to the effects of the recession. During the last recession, the food spending of each household decreased by 7%, presumably because consumers were inclined to buy sale and discounted items or look into cheaper alternatives to cut back expenses. The reality, however, is that people can only cut food spending by so much.
Interestingly, the eating habits of consumers in times of crisis are triggered and increased. People tend to crave and eat more when stressed out — particularly with sweets and alcohol. Snickers and Mars chocolate bars came into existence during the Great Depression. And, sales of Cadbury chocolates have reportedly surged by 30% along with McDonald’s remarkable growth in business during the 2008 recession. Hence, the food industry is one of the top recession-proof businesses.
2. Accounting and Tax Services
How tempting it must be to skip those taxes! However, recession or no recession, taxes must be paid on time or suffer the consequences.
What could be far worse is for an individual or a business to attempt bookkeeping themselves, thinking that it will spare them some bucks. While it seems like a quick win, so much risk is involved, and wrong calculations might backfire and lead to further trouble down the line.
The safe decision to make, especially during tough times, is to entrust a qualified accountant to deliver the job while you focus and target revenues.
Accounting firms are another sector in the business world that proves to thrive during recessions. It’s especially timely during recession periods for businesses to have a good accounting and bookkeeping system in place.
In times of negative economic growth, a business’s first impulse will be to cut costs and keep its finances in check. The truth is, many will need an accounting consultancy when cash flow is tightened. When a business is suffering, an accountant’s expertise is crucial to take a look at expenses, manage available resources left, and suggest sound bits of advice on how to alleviate financial struggles.
Unfortunately, most business owners are in the dark when it comes to taxes. Accounting assistance will have an understanding of where these tax benefits can be an advantage. More importantly, these professionals will help an individual navigate and comprehend the recent changes of requirements for businesses brought about by the COVID-19 pandemic. So, it’s important to depend on accounting support when an economic recession hits.
3. Financial Advisors
Recently, have you noticed that more and more financial advisors and money managers are coming out of the shadows? The simplest reason is that they’re in the business that people will need once the market declines. To put it bluntly, their work was made for this economic storm.
Much like business owners, investors and wealthy individuals want to secure their wealth and confirm that they’re well taken care of during the worst times.
With an economic downfall, it’s only natural for us to be concerned and defensive with our resources. It’s usually at this point that financial advisors rise in advancement with their profession in demand. Their sound advice will enlighten investors as to what type of investment accounts to choose.
4. Information Technology
In this modern world of technological advancements, I.T. careers are undeniably the profession high in demand. Its main work drives innovation leading to a business’s success. In fact, the current recession is one of the reasons for high traffic online, thereby leading to an increase in sales.
The business world in every department relies on information technology to optimize their work systems and strategy. Without information technology, a business ceases to operate. During this pandemic, the I.T. Industry demonstrates a lot of potential for businesses now that the work-from-home experience is fully embraced. More offices now are allowing their employees to work offsite.
Furthermore, information technology is one of the important elements that led to the growth of international trade and the market. Businesses that leverage information technology and invest in related assets get closer to the international market, thereby potentially increasing sales despite a recession.
We will even go as far as to say that every type of industry today will need to incorporate information technology to enhance productivity. Their service is proven to be valuable for offices. The future is bleak to businesses that refuse to adapt to technological advancements. Indeed, there are substantial reasons I.T. is considered the fastest-growing industry in the world. Their services are needed today and will be needed for a long time.
Alongside information technology, the telecom industry is here to stay, no matter what the economy is like. If anything, the repercussions of the COVID-19 crisis only proved the relevance of this industry today.
People need their phones, among other means, to communicate online. This made the industry intimately linked with the global economy. Because consumers are now globally interconnected, people have taken interest in learning how to speak naturally the native language of their clients. Furthermore, with the innovation of the telecom industry, online industries have also flourished alongside it.
The online industry has given a lot of people an opportunity to earn money from their homes and learn new things without the need to go outside. It’s also because of this industry that people can sell things online.
On top of that, the pandemic led universities to follow the same path. Telecommunication suddenly became a requirement in educational institutions alongside the instantaneous rise of study materials ever since social distancing was implemented.
Although some consumers may have downgraded their units, sales in telecommunications continually thrive, proving them to be one of the top recession-proof businesses. The industry had already proven its efficacy even before the pandemic began, and it will likely play an important role in the global crisis today.
6. Healthcare Services and Providers
Every now and then, someone will get sick. Even when finances are tight, if people are unwell, they will always seek a medical professional. This is why the healthcare industry can be said to be recession-proof — because of its price inelasticity.
Clinical institutions and medical careers are one of the few sectors that remain unaffected during a recession. It’s unlikely for this business to cut back in bad economic times.
By way of illustration, the Occupational Employment Statistics (OES) had surveyed nursing employment in the United States during the Great Recession. Focusing on the recessionary years, between 2007 to 2010, the survey concluded that while there was a national employment decline of about 7,257,090 million jobs lost, the nursing employment moved differently with an increase of 7.6% from the same period.
Healthcare and food (mentioned above) are among those essential industries that can perform well in recessions. We even have witnessed today the public health response to the COVID-19 outbreak and how healthcare providers demonstrate an important role during unparalleled financial chaos.
That said, we’ve also seen that, because of the specific circumstances and emergencies brought by the pandemic, some sectors in the medical industry like surgeries were forced to shut down and unable to thrive compared to previous recessions. Furthermore, we truly salute our COVID-19 front-liners who are bravely fighting the virus today, especially doctors and nurses serving on the front lines.
7. Auto Maintenance and Utility Services
Companies that focus on utility, repair, and maintenance will likely stay unharmed and thrive during recessions. As it happens, people are even swinging back to DIY crafts and repairing things on their own. However, some repairs are just beyond our control. This is how the service business comes in handy.
As time passes, things will eventually break down. For automobiles, the so-called wear and tear items will need proper care. For utilities, a leak in water pipes will need to be inspected by plumbers. The services offered by these handymen remain unscathed during critical uncertainties. This is also true for businesses catering to the tools and materials needed for home or car improvement.
Furthermore, with the current pandemic and new positive cases continually rising across the globe, coronavirus cleaning and disinfection services are taking the spotlight as they become useful to businesses and homes affected by the outbreak.
During a time of widespread uncertainty, the utility services stayed afloat and continued their operations alongside new cleaning-related businesses coming in. The simple reason behind this phenomenon is that such services are already deemed essential by the masses, especially amid today’s global health crisis.
Bottom line: Everyone seems to have a heightened focus and concern for hygiene, all due to the pandemic. Consequently, this meant a surge in demand for cleaning equipment and commercial cleaning services. The cleaning boom is certainly one of the few businesses that flourished in this COVID-19 age.
8. Children’s Goods and Dating Industry
A baby’s necessities, such as diapers, milk, and bottles, among others, are almost entirely recession-proof. When you’re raising a child, you need to provide for your kid regardless of the economic situation. It is for this reason that businesses in baby and childcare products can withstand a recession and rarely crumble.
Nowadays, parents are forced to keep their children in their homes for health security. Times have changed, and many parents are on their own to teach and entertain their kids. Consequently, these effects from the pandemic skyrocketed the number of purchases for children’s books, games, and crafts, among others.
For reasons both practical and emotional, even children’s toys and clothes are recession-resistant. Not long after the start of the pandemic, the total sales of children’s toys in the United States grew by 27%. Parents can’t simply ignore the fact that their toddlers grow up fast, hence needing bigger clothes and shoes. And, well, a toy is merely a “want” but parents will need it to pacify their kids.
Parents often would rather cut back expenses on other areas than sacrifice their children’s needs.
Furthermore, due to long-term lockdowns and community quarantine, another repercussion brought about by the COVID-19 pandemic today is disrupted family planning leading to unplanned pregnancies. As a result, childcare products can’t simply be overlooked when setting up a recession-proof business.
9. Courier Services
Rain, shine, or recession — packages are delivered!
This is what distinguishes courier services from other businesses. With the boom of e-commerce during this pandemic period, the freight and logistics companies are well-positioned and undeterred in the international market today.
As with maintenance and utility services, industries offering delivery services are staying afloat during recessions. In today’s crisis, the social distancing implemented across the globe impacted the freight industry positively. Even simple errands like grocery shopping are now offered by delivery companies. Of course, this implies that the industry has to adapt to the changes brought about by the pandemic.
That said, the industry has diversified enough to greatly benefit and earn profit from purchases done through online transactions. In addition to this, shipping giants can save millions as they capitalize on fuel, a commodity that usually drops in price during an economic downturn.
No matter what economic situation we’re in, courier services will continually prosper given that consumers are bound to send packages now and then, either for personal or business-related matters. Being able to function and offer that unique kind of assistance to consumers’ needs makes them less vulnerable to recessions. Besides, targeting both the business-to-customer (BTC) and business-to-business (BTB) markets deserves them a spot among the top recession-proof businesses.
Support your business in a recession
An economic downturn is an unavoidable event, but its unfavorable effects on our businesses can be mitigated. If you’re encountering a devastating drop in sales, your business needs to be strategic — both in finances and marketing.
The important thing to remember during an economic downturn is not to panic but instead plan effectively on how to bounce back. Marketing your business affordably might just strengthen it back. Actively strategizing smart decisions (such as digital marketing) to support your business might be your easiest ticket out of this unforeseen event.
With that said, businesses need to refocus on their core competencies now more than ever. What are the bestseller products they have? What services are more often demanded? Concentrate now on your business’s core products or services because that’s where you can generate more revenue.
Enhance the marketing tactics of your recession-proof business further today with digital marketing and enjoy the benefits of potentially reaching wider prospective clients. Some of the best online digital marketing certificate programs are readily available for you.
Customers are the priority
Alongside strengthening your business, it’s equally imperative to deliver quality customer service. Prioritizing your customers is about providing what the customers want and when they want it. If you can maintain and deliver effective customer service, you’ll probably retain existing customers while gaining more.
Make them feel seen, and keep your business interactive. This will help your market grow. Remember, reaching more people means more cash flow. Deliver this equation so that your business can withstand the economic slump.
Nowadays, with relevant and effective marketing strategies standing by, the internet has created countless ways for you to drive traffic to your recession-proof business and, hopefully, increase cash flow. All you have to do is make use of these tools to innovate and develop.
While recessions often spell troubled times for most of us, they aren’t permanent. Certainly, not all businesses are instantly doomed when it strikes. At least, not if we support and protect them with all our might.
Several new businesses have already been created and established during recessions because many clever people were quick to adapt to the structural change in the economy. But, more importantly, every recession is different. The key factor is considering the volume of demand by consumers, and such businesses will cope throughout the decline. The companies who could support and specialize in remote services have seen a boom and will probably perform well afterward.
Finally, you now have a good place to start with what might work for you. While we all considerably feel despondent at this time, it’s very possible to get back on our feet and once again rebuild that recession-proof career or business.
Disclaimer: The content on this page is for informational purposes only, and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.