If you have an entrepreneurial spirit, you may find it pretty easy to soar high on the fair winds of a booming economy. But what if times are lean and consumers are tight with their money? Is there a way you can realize profits by starting a recession proof business?
Top 11 Best Recession Proof Businesses
- Accounting and Financial Services
- Automotive Repair
- Health Care Services
- Children’s Goods
- Retail Arbitrage
- Cleaning Services
- Pet and Childcare
- Technology and IT
Do you know anyone who lived through the Great Depression? There are lots of incredible stories of lucky and plucky individuals who did what they needed to do, whether it was shining shoes, selling oranges, or waiting tables at a resort. They pinched pennies, sewed their clothes instead of buying new ones, and today are living off sizable nest eggs.
While we (hopefully) will not be going through an economic depression in our lifetimes, there may be a recession around the corner. And for those readers who were already in the workforce a decade ago, the recession that followed the housing bubble pop around 2008 is probably still fresh in your memory.
We often associate recessions with losing a job, cutting back on dining out, and eliminating family vacations. Some people even have to sell their home and downsize their living arrangements. But does a recession have any opportunities amid all the difficulty in terms of personal finance for an everyday consumer or retail investor? Indeed, it does. There are plenty of people who use economic downturns to make it big.
Have you heard of supermarket chain Publix? OceanSpray cranberries? Harley Davidson Motorcycles? All these companies were started during the Great Depression.
So, maybe a recession is not only a time to survive, but to thrive.
Top 11 Best Recession Proof Businesses
If you’re looking to start a business during tough economic times, consider pursing one these 11 recession proof industries:
1. Accounting and Financial Services
Only two things in life are certain: death and taxes. There are always going to be people who need their taxes filed. You might be wondering: can’t anyone just do their taxes online or with software? It’s true that they can, but if they don’t know the tax code, they won’t be able to take advantage of the many write offs and deductions available.
If you know anything about accounting, especially if you have an accreditation, this is an evergreen business that will always give you a stream of customers. And if you can offer related advice, such as how to structure a business, you’ll be able to build an even bigger client base.
2. Automotive Repair
People will always need help maintaining their vehicles. The great part about this business is that most people have no idea how a car works, and they have no time or interest in learning.
If you happen to have an interest in car mechanics, that gives you the opportunity to offer your services and charge accordingly. If you can’t afford the overhead of a shop and crew, you can always become a traveling mechanic doing oil changes, swapping out punctured tires, and performing other types of maintenance.
Utilities as an industry are probably not going to be something you run as a business, but it can be a great way to make money by investing during inflation. This is because much like food, water, and household items, utilities, like electricity, are things that consumers always need.
While exciting investment opportunities in the stock market or stocks tied to consumer discretionary spending (like entertainment) may fare poorly during recessions, consumer staples offered by conservatively financed and managed companies (like utilities) tend to do very well.
Alternatively, if you are out of work and looking for new work, this evergreen sector might be promising.
4. Health Care Services
If you like working with people and you are a registered nurse or other such provider, the healthcare industry is going to stays strong, even during an economic downturn.
Part of this is because the population is always aging, especially as boomers enter retirement. And even when consumers can no longer afford a weekly trip to the movies, they will be reluctant to cut healthcare expenses, or alternatively, they will have those expenses covered through something like Medicare or Medicaid.
For these reasons, the healthcare industry is good for individuals seeking a recession proof job, or entrepreneurial individuals looking for a space to pursue a recession proof business idea.
People will always need to eat, recession or not. If you own a grocery store, there’s a good chance your business will do well during a recession, especially because restaurants are going to offer less competition.
But if you don’t own a grocery store, this could be an excellent time to load up on stocks tied to food or grocery stores, such as Kroger, Coca-Cola, Pepsi, Nestle, or Kraft-Heinz.
Contrary to popular belief, most investors who made it big on Wall Street, like Warren Buffet, did not do so by getting lucky, but by investing consistently in prosaic but necessary industries, like food and beverage. If you don’t believe us, check out our book, Infinity Investing: How the Rich Get Richer and How You Can Do the Same.
The explosion of peer-to-per apps in the last 15 years has facilitated a new type of freelance industry, where gig workers offer rides, deliver food, and even grocery shop for consumers who are too busy to do it themselves. Apps like Instacart and UberEats allow you to work as much as you’d like. They also don’t care if anyone rides in the car with you. For these reasons, they’re considered some of the best side hustles.
Imagine killing two birds with one stone—taking someone from point A to point B through Lyft and Uber, and delivering PostMates at the same time. In fact, you will find that many gig workers are on several platforms, taking orders as they come in to maximize working time and profit. In a recession period where typical salaried job with benefits is harder to come by, gig working can be a great alternative for earning decent cash flow.
7. Children’s Goods
Children’s goods may come as a surprise as an evergreen business that is recession friendly, but kids always need toys, clothes, toiletries, and food. Even better: they tend to outgrow these items very quickly, meaning parents have to constantly shop for new stuff.
If a brick-and-mortar retail space is not for you in terms of cost and stress, opening an online store and doing a little social media advertising or email marketing can go a long way toward building a steady stream of income.
8. Retail Arbitrage
Retail arbitrage involves going to a typical retailer, like Target or Barnes & Noble, heading to their sales or clearance section, buying the items, and listing them on eBay, Amazon, or any of the many secondary marketplaces that exist. You may not think this results in anything other than pocket change, but with billions of potential buyers online, you’re going to find someone who is willing to pay retail price for the sale items you scored.
Surprisingly, it’s strategies like this that have helped many plucky individuals learn how to make a million dollars. If you don’t believe us, just ask the likes of social media influencer Gary Vee, who has made a fortune buying old sports trading cards at garage sales and selling them on eBay.
9. Cleaning Services
Cleaning is another evergreen business that can do fairly well in a recession. People always need their homes cleaned, but there may be additional opportunities to do well with this type of business during a recession if someone is job hunting or working overtime and can’t keep up with home maintenance.
Marketing a cleaning service business is also very easy because word tends to spread very quickly via word of mouth. The startup costs for this type of business are low, though it will take a lot of elbow grease to get started, even if you are managing a team of people to help.
10. Pet and Childcare
Petcare and childcare are also great recession proof businesses. As mentioned above, there are plenty of consumers going through the recession that have to search for a job, work two jobs, or work overtime. They may also have to take the first job that comes their way, even if they don’t like it or the hours that leave them with little room for family and pet time.
This is where you come in with dog-walking, babysitting, or daycare. Keep in mind that in most places watching children will need special accreditations and have to follow certain laws about provider to child ratios. Running this type of business in your home may also jeopardize your homeowner’s insurance policy, so it’s a good idea to look into that component as well. If you’re looking for something with a less legal paperwork on the backend, then the pet industry might be a better fit.
11. Technology and IT
Tech and information technology services are great recession proof business. You can offer your services to individuals who need help updating their computer and installing the right virus protection, or to a small business that needs an IT person. In fact, many small businesses are looking to hire IT professionals soon, because they don’t have the in-house know how to address such tasks. If you understand and/or like working with computers and similar equipment, this can be your golden opportunity to start a sizable business with very real growth potential.
What about Franchise Ownership?
Becoming a franchise owner in the United States is one way that many individuals with a desire to run their own business get started. A franchise opportunity allows them to run their own restaurant or store while taking advantage of the recognized branding and resources of an established corporate entity.
You can check a publication like the Franchise Business Review to gauge opportunities in your price range. Whether or not a franchise does well in a recession really depends on what the franchise sells. Restaurants not fare as well outside of a strong economy, but a franchise that offers any of the things mentioned above, like delivery services or accounting services, will always have a market.
Starting a Recession Proof Business Can Help You Thrive During Times of Economic Uncertainty
Any small business owner in any industry will tell you that running a business takes time and money. During times of economic uncertainty, it can be especially hard for a small business owner to see the hard work and money they’ve put into a business struggle during an economic recession.
Many businesses in an economic crisis shut down entirely, while others are forced to go through severe transformations or downsizing. But if you are a business owner in a recession proof industry or have a recession proof job, the tough times presented by an economic recession will have less impact.
In general, the foresight to plan for the ups and downs of economic times is not just limited to where and how you work. It can relate to other areas of personal finance as well, such as purchasing a home, managing your bills, and saving for retirement. You can learn more financial tips for surviving a recessive period by singing up for a free Infinity Investing membership.