As a business owner, experiencing slow seasons and fluctuations in the economy is to be expected. However, what happens when a downturn is long-term and becomes a recession? Despite the obvious challenges that a recession can pose for businesses, the fact is some businesses have a better chance of surviving than others; these are so-called “recession proof” businesses.
What is a recession proof business?
A recession proof business is one that can survive economic downturns, like recessions, without taking a major hit to their profits.
How do they do it?
There are several strategies. They can adjust prices more easily as market conditions change. Or it may be that their overhead is very low. And in other cases, these businesses might carry products or offer services that are always in demand. For example, businesses in the healthcare industry tend to be fairly recession proof because demand for their services remains constant.
How does a recession impact businesses?
Without the steady cash flow that a strong economy brings, most businesses must rely on creative ways to keep going during a recession. They may need to dip into cash reserves, take out loans, or lay off valued employees. This in turn hinders the ability of the business to run properly and effectively. Morale may also take a hit while customers can be dissatisfied with poor service, leading to a decrease in revenue.
It’s a bad cycle that is difficult to reverse.
And that’s why it’s smart, especially in a volatile economy, to look at investing or starting a recession proof business.
15 recession proof businesses
Having a recession proof business means that your business can thrive, even in tough times. Additionally, it can be good for your brand and the bottom line, as you can continue serving customers even during tough times, building trust and loyalty. Finally, a recession proof business can be attractive to investors and lenders because it shows the business is financially stable and able to withstand unexpected economic shocks.
Examples of businesses and industries that historically have been recession proof include:
1. Financial advisors and accountants
Financial advisors and accountants are recession proof businesses because they offer essential services that individuals and businesses need, regardless of the economic conditions. For example, during a recession, people and businesses may face financial challenges such as budgeting, debt management, and tax planning. Financial advisors and accountants are needed because they can help clients navigate through such difficult financial difficulties.
In fact, according to the Bureau of Labor Statistics, the financial advisor sector is projected to grow 15 percent from 2021 to 2031.
2. Child services
Child services (which includes child goods and childcare) are considered recession resistant businesses as working parents seek childcare services.
According to Grand View Research, the global baby product market is due to grow at a compound rate of almost six percent between now and 2030. This growth is driven by factors such as the increasing number of births, the rising demand for sustainable products, and the growing population of young families.
3. Health care
As mentioned, the healthcare industry and its related business fall into this category due to the constant demand for medical services regardless of economic conditions.
The healthcare industry includes a wide range of business types, such as hospitals, medical laboratories, private practices and clinics. According to a report by the Bureau of Labor Statistics, healthcare is projected to be one of the fastest growing industries in the United States from 2021 to 2031, with a growth rate of 13%. This growth is attributed to factors such as an aging population, increased rates of chronic diseases, and advances in medical technology.
4. Auto repair
Auto repair is often considered to be a recession proof business due to the constant need for car maintenance and repair. Additionally, because of Covid, the average age of vehicles on the road has increased, leading to a higher demand for maintenance and repair services. And finally, in a recession, people buy fewer new cars and instead repair their current cars, thus making auto repair a good example of a recession proof business.
5. Property management
Property management is another recession resistant business as there is a near constant demand for rental properties, as well as related needs for maintenance and repair services for those properties. Furthermore, according to the New York Times, rental housing demand is expected to grow as millennials (the largest demographic) are increasingly choosing to rent instead of buy homes.
6. Home repair/contractor
Another recession proof business is that of home repair and contracting. Homeowners will always need help maintaining their houses as things break, pipes leak and homes require regular maintenance, regardless of the economy.
7. Cleaning services
Both residential and commercial cleaning services are often considered to be recession proof businesses because they provide essential services that individuals and companies need regardless of economic conditions.
And once again, Covid has played a big part in why this industry will continue to grow. There is a higher demand than ever for disinfection and sanitization services with cleanliness and hygiene being considered vital for businesses, homes, health and safety.
8. Grocery store
If any business is recession proof, it’s the good, old-fashioned grocery store. These stores sell products that people always need, regardless of economic conditions. According to Grand View Research, “The global food & grocery retail market is expected to grow at a compound annual growth rate of 3% from 2022 to 2030.”
Similarly, during economic downturns, people typically opt for cheaper food options and thus cook meals at home instead of dining out, again leading to increased demand for grocery stores.
9. Beauty business (makeup and hair)
The beauty industry, including makeup and hair services, has historically shown resilience during economic downturns as consumers often view personal grooming as a necessary expense. Additionally, with many individuals now working remotely and attending meetings on Zoom, there has been increased demand for at-home beauty and grooming products and services.
10. Freelancing
We are living in the Gig Economy and that shows no sign of slowing down. Freelancing is good (and therefore recession proof) for both the worker and the hiring company:
For the freelancer, remote work allows them to work from home, when and how they want. There is an ever-increasing demand for this sort of work flexibility.
And for the hiring company, gig workers are not on payroll, thereby saving the company on taxes, insurance, overhead, etc.
11. Pet care
Pet care is often considered to be a recession resistant business as pets are increasingly viewed as members of the family and owners are often willing to continue spending on their care during economic downturns. Additionally, with many individuals working remotely since the pandemic, there is an increased demand for pet-related services such as dog-walking and pet-sitting, and that will be equally true in a recession or a booming economy.
12. Dating industry
As people seek companionship, the digital revolution has meant that the dating industry is a growth industry, even in economic downturns. According to Statista, “In 2022, there were over 366 million online dating service users. By 2027, it is estimated that there will be 440 million people seeking love through online platforms.”
13. Technology support
Technology support, including cybersecurity and IT services, is now considered a recession proof business as the demand for technology-related services only continues to grow in this digital age. As we rely on technology, for both work and personal, the number of devices we use is ever increasing. That means that demand for technology support is here to stay and is recession proof.
14. Courier services
As we all know and experienced, courier services were in high demand during the pandemic, proving that that industry is recession resistant. Whether it’s delivery of food, Amazon products, or running errands, courier work is the new normal.
According to Statista, In 2021, global parcel shipping and delivery amounted to about 159 billion parcels. By 2027, this number is expected to increase by 8.5 percent. Additionally, with the continued shift towards online shopping and same-day delivery options, the courier services industry is only expected to continue to grow.
15. Online selling and e-commerce
Online selling (also known as e-commerce) has grown exponentially since the pandemic as remote shopping became the norm. According to Census.gov, e-commerce sales grew by an incredible 43% during the pandemic. And given that selling online is easier than ever for a small business (on Amazon, Etsy, eBay, etc.), the online selling industry is expected to continue to grow.
Recession proof businesses make sense
It’s smart to invest in a recession proof business as their products and services will continue to be in demand. When a recession comes, you will be happy you did.
