Can you start a business during a recession?
With soaring inflation, and the Since 1857, a recession has occurred, on average, approximately every 3.25 years. Recessions are fairly common occurrences, and every generation will likely experience a number of them. Boomers, who were born starting in the mid-1940s, have already lived through nearly a dozen recessions. Since these economic downturns are unavoidable, it’s important to know which career paths are recession-proof. The top 11 best businesses to start in a recession are outlined below.
“There are certain products and services that will continue to see high demand, regardless of economic downturns. For instance, education will always be a necessary sector. People will perpetually need skilled workers to repair their homes and vehicles. We will always need to buy food,” said Raj Tulshan, founder of Loan Mantra. “We’ve compiled a list of the best businesses for people to start in a recession, and the financial experts at Loan Mantra are always ready to help entrepreneurs successfully fund their new endeavors.”
What are the best businesses to start during a recession?
The financial experts at Loan Mantra advise entrepreneurs to consider these 11 recession-proof business opportunities:
1. Alcohol Sales. An alcohol business is a great business to start since it’s an important part of entertainment for many people, whether they’re out at a bar or restaurant, or home having a beer or glass of wine after a long day. Despite the current economic turmoil, alcoholic beverage sales are still expected to grow to $1,684 billion by 2025. The alcohol industry is widely considered recession-proof, as alcohol sales don’t seem to be affected much during hard economic times. People drink even when the economy is down. For example, during the 2001 and 2008 recessions, hard liquor sales rose significantly, as wine and ready-to-drink product sales were either flat or increased slightly. Anyone interested in starting an alcohol business should check out these tips.
2. Handyman / Home Repairs and Maintenance Services. Repairs and maintenance are essential, recession-proof services. Most people are unable (or unwilling) to do necessary home repairs themselves, so they turn to professionals, even during economic downturns. During hard financial times, people often repair vs. replace items, and prefer hiring handymen instead of expensive contractors for many household jobs. Since there’s a constant demand for handyman services, you’ll stay busy (and profitable) in this line of work. Plus, starting a maintenance business doesn’t require much capital to get started. If you’re handy and/or a skilled worker, consider starting a handyman business or a repair and maintenance company.
3. Accounting Services. Regardless of economy, people and businesses must still pay taxes and keep their finances in order. In fact, this effort can be even more important (and complicated!) in difficult economic times. Accountants are likely to experience more demand for their services during a recession, since many people and small businesses require professional help to ensure that they have a clear understanding of their income and expenses as cash flow tightens. An accountant can also determine whether their clients are leveraging all the tax benefits available to them, if they’ll need a loan to get through the challenging times, and which government benefits or loans to consider.
4. Auto Repair and Maintenance. In any economy, people need their vehicles to run properly. Vehicles need to be regularly serviced and repaired, and will constantly need oil changes, tire rotation, filter changes, and more. Additionally, some states require certain types of inspections. For example, in Georgia, vehicle owners must get an emission inspection to renew tags every year. During a recession, people tend to avoid buying new vehicles, and they would much rather spend a few hundred dollars to repair their current vehicle to avoid taking out a monthly payment on a car loan. During good financial times, as well as recessions, there will always be a demand for auto repair and maintenance services, so this is a smart business to pursue.
5. Social Media and Ad Management. As more products and services become available, brands face growing competition to cut through the clutter and attract customers and prospects. Social media has grown significantly in recent years, and has proven to be a remarkable, cost-effective way to spotlight offerings, announce news, promote customer loyalty programs, and highlight discounts or incentives. Additionally, strategically placed advertisements can be a powerful way for brands to generate awareness, interest, and excitement about their offerings and drive sales. Some businesses might try and cut their marketing budgets during hard economic times, but that’s a mistake. If a company pauses ads, social media, or other marketing efforts, customers may forget about them. Plus, brands that don’t advertise will soon be overtaken by their competitors that do. Even if product sales decline during a recession, companies must still advertise to stay relevant. Starting a social media and ad management company doesn’t require a big investment, so this is a smart endeavor to launch during a recession.
6. Sales Distribution companies (multicultural, multi-lingual). As we continue to grow in the global market, having a multicultural company becomes more of a need than a want. We’re becoming more connected than ever before, and the ability to speak more than one language is a huge asset for businesses and individuals. In addition to knowing multiple languages, a solid understanding of other countries’ customs and cultures will help drive sales, provide better customer service, build more diverse business partnerships, and differentiate your businesses from the competition. Multiple studies have demonstrated that companies with more diverse workforces are more profitable. For instance, the 43 most diverse public corporations were 24% more profitable than the S&P 500. And nearly 95% of directors agree that diversity brings unique perspectives. Cultural diversity provides significant benefits, and as we continue to conduct business worldwide, multicultural and multi-lingual skillsets will be essential.
7. Robotics services. While it may sound like something out of a science fiction movie, robotics services are becoming an in-demand profession. Robotics companies are part of the growing artificial intelligence (AI) technology industry, and involves design, construction, operation, and use of robots. Robotics experts help design intelligent machines that can assist humans in their daily tasks, drive automation, increase safety, etc. The demand for robots is being propelled, in part, by investments in new car production capacities and modernization of industrial spaces. For instance, Hyundai Motor Group recently invested $400 million in advancing AI and robotics, and other automotive companies are making similar investments. The robotics services industry is expected to grow, so this is a good business to start in a recession. If you’re scientific-minded and good with technology, here are tips to start a robotics business.
8. Grocery Stores. People need to eat, regardless of the economy, so a well-marketed grocery store in a good, high-traffic location is always a good idea for a business. Studies show that, in challenging economic times, people often forgo expensive restaurant meals for more affordable meals at home, which means they’re buying more essentials at grocery stores. Some people avoid big box stores and superstores to limit purchases and reduce unnecessary spending, which means they’ll shop more (or exclusively) at grocery stores for their food needs during a recession.
9. Tutoring. The COVID-19 pandemic caused demand for online tutoring to soar, as students and families pivoted to remote learning, and many students fell behind their peers academically. However, even though in-person school has returned, there’s still high demand for tutoring services, due to the pandemic’s ongoing impact on education. Online tutoring is an effective, convenient, interactive way for students to receive additional support. Also, since it has become increasingly challenging for students to get into top-tier universities –with some schools accepting less than 3% of applicants – many students are leveraging tutors to get a competitive advantage for their college applications. The global online tutoring services market size was valued at $6.57 billion in 2021 and is expected to grow 14.7% between 2022 and 2030.
10. Transportation Services. Car rental, car sharing, and car-hailing continue to be essential services, especially since apps make it quick, easy, and convenient to schedule rides. In some areas, like New York City, the need for these services is greater than in other geographies, as many New Yorkers don’t have cars because parking is difficult and expensive. With apps like Uber and Lyft, drivers have the option of selecting times, days, and locations that are convenient for them to work. There’s also an opportunity to pick more profitable rides, such as customers with large groups that need to travel far distances. The ride share market is expected to continue increasing in the coming years.
11. Consulting. Whether you’re a financial advisor, PR professional or HR expert, the need for expert consultants is growing. Many companies rely on consultants because it’s less expensive – and more flexible – than hiring full-time help. Businesses can bring on consultants for a long-term or short-term projects. Public relations consultants can write and distribute press releases, issue company statements, and write articles on their clients’ behalf. IT consultants maintain computers and networks, boost network security, and troubleshoot when problems arise. Regardless of your area of expertise, starting a consultant business requires minimum overhead, provides flexibility, and consultants can pick and choose the jobs (and clients) they want.
“It may seem like a risky endeavor to start a business during a recession, but the key to success is to start the right kind of business,” Tulshan continued. “Certain jobs and sectors will remain in high demand during this recession – and during the recessions that are sure to follow.”
About Loan Mantra
Loan Mantra is end-to-end FinTech that democratizes the loan process by providing corporate sized services and access to new entrepreneurs, small, and medium sized businesses. Small business owners identify two obstacles to their success: access to capital and financial education. At Loan Mantra, we remove these hurdles. We believe borrowers of all sizes should have equitable access to the $5.4 trillion marketplace of SMB financial products, lenders, government programs, and services. How?
Our end-to-end portal, BLUE (“borrower lender underwriting environment”) is built on decision-tree logic, so borrowers answer questions in the manner they understand best and find the right financial products and lenders. With a few simple clicks, our users complete loan origination paperwork; upload documents; connect or communicate with financial partners; and manage their loan process--anytime and anywhere. Our best-in-class FinTech meets NIST v. 500 standards so borrowers can safely store their financial records, making it painless to acquire more capital if they need it down the road.
As a minority-owned business, Loan Mantra understands the challenges facing underserved borrowers. Our mantra? To improve the future of human entrepreneurship through best-in-class technology, financial literacy, and commitment to equitable market access. Reach out today at www.loanmantra.com.