Can you start or grow your business during a recession?
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. Likewise, you may wonder what is the best business to grow during recession?
Best business to start in a recession or during times of economic uncertainty:
“There are certain products and services that will continue to see high demand, regardless of downturns or tough economic times. 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 or get help from the healthcare industry,” 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.”
How can I start a profitable business 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 or grow because it’s an important part of entertainment for many people. Consumers buy alcohol at a bar or restaurant, or stock beer and wine at home to enjoy after a long day. Despite economic turmoil, alcoholic beverage sales are still expected to grow to $1,684 billion by 2025. The U.S. economy widely considers the alcohol industry to be recession proof, as alcohol sales don’t seem to be affected much during hard economic times. People drink even when the economy is down. During the 2001 and 2008 recessions, hard liquor sales rose significantly, as wine and ready-to-drink product sales stayed flat or increased slightly. Anyone interested in starting an alcohol business should check out these tips.
2. Handyman / Home Repairs, Plumbing and Maintenance Services.
Repairs and maintenance are essential, recession-proof services. Whether an individual is unable or unwilling to do home repairs themselves, they turn to professionals, even during economic hardship. During hard financial times, people generally repair vs. replace items, and hire 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. If you’re handy or a skilled worker, consider starting a handyman business or a repair and maintenance company, even if you have limited start up capital or equipment to begin.
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. Why? Many people and small businesses require professional help to ensure a clear understanding of their income and expenses as cash flow tightens. An accountant can also determine whether their clients are leveraging all available tax benefits available to them, including a loan for challenging times or government benefits.
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.
With global growth of brands, many face growing competition to cut through the clutter and attract customers and prospects. Social media has grown with this demand and has proven to be a remarkable, cost-effective way to spotlight offerings, announce news, promote customer loyalty programs, and highlight discounts or incentives. 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 are prone to be overtaken by their competitors that do. Even if product sales decline during a recession, companies must still advertise to stay relevant. The good news for digital experts is that social media and ad management companies don’t require a huge initial investment.
6. Multicultural & Multilingual Sales Distribution Companies
As the global economy and market grows, the need for a multicultural company becomes more relevant. 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 multilingual skillsets will be essential. In this model, the more people a company can serve, the better able it is to be a competitor even during recessionary times.
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 involve 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 propelled, in part, by investments in new car production capacities and modernization of industrial spaces. 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
People need to eat, regardless of the economy, so a well-marketed grocery store in a good, high-traffic location is always good business. Studies show that, in challenging economic times, people forgo expensive restaurant meals for more affordable meals at home, which means they’re buying more essentials at grocery stores. Some consumers also avoid big box stores and superstores to limit purchases and reduce unnecessary spending. This means they’ll shop more (or exclusively) at grocery stores for their food needs during a recession.
9. Tutoring or Educational Services
The COVID-19 pandemic caused a demand for online tutoring to soar, as students and families pivoted to remote learning, and many students fell behind their peers academically. Despite a transition back to the traditional educational model, 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. As 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 also leveraging tutors to get a competitive advantage for their college applications. The global online tutoring market 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 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 for selecting times, days, and locations that are convenient for them to work. Drivers can also optimize for profitable rides, like customers traveling with large groups that need to travel far distances. The ride share market is expected to increase in the coming years and to fare well during downturned markets.
11. Professional 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 the ability to pick and choose the jobs according to preference.
Start the Right Business
“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
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. Loan Mantra is end-to-end FinTech and advisory services group that democratizes the loan process. We provide corporate sized services and access to new entrepreneurs, small, and medium sized businesses.
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.