Just a few days ago, CNBC published a news piece titled “Main Street says America has dodged recession so far, but economic downturn is coming.” It discusses the ongoing economic uncertainty, layoffs, and how small businesses prepare for a potential recession.
Suppose you are a new business owner or an aspiring entrepreneur. In that case, thinking ahead and planning for the future is essential.
And, what's better than looking for recession-proof businesses to invest in or start-up. That's why, in this post, we have listed more than ten recession-proof business ideas that can provide you with some income stability.
We believe in these businesses and know they will continue to thrive no matter where the economy goes. So if you're looking for a reliable investment, you will find something here.
Before we dive in, let's get some basics clear.
What Is A Recession Proof Business?
To understand this, you need to know what happens during a recession. So, let's understand that.
During a recession, you will experience a decrease in demand for your products resulting in a decline in sales and profits. This is often caused by increased unemployment, uncertainty, and decreased spending. As a result, many businesses must cut costs and/or lay off employees to stay afloat. It is a vicious cycle – the spending goes down, companies lay off employees, and those laid-off employees cannot spend money.
A recession-proof business can sustain this situation, stand firm, and thrive, even in times of economic downturn. These businesses do well regardless of the state of the economy since people still need access to essential goods and services when their finances are tight.
Examples of these types of businesses range from food and medical supplies to services like daycare, babysitting, pet care, mobile phone repair shops, plumbing, and computer maintenance businesses.
It takes foresight and careful planning for a company to become recession-proof. But, if done right, it can be an incredibly profitable endeavor.
Why Have a Recession-proof Business?
By now, the answer to this question is obvious. It would be best if you thought about a recession-proof business because it can withstand the impact of a recession and bring financial security to entrepreneurs. It also helps offset any possible loss in other companies, employment, or income sources and maintain the status quo. If you are strategic, profits are too.
Besides that, by diversifying investments, you can protect yourself from potential downturns, continue growing your enterprise, have a constant cash-flow, and ultimately succeed in any financial climate.
How to Spot a Recession-Proof Business Idea?
There are two simple ways to understand whether or not your business idea is recession-proof.
First, understand that spending power takes a hit when a recession hits. In other words, the demand for non-essential products and services will go down. Ask yourself if people can eliminate your product/services from their budget without much impact. You might have found a recession-proof business idea if the answer is no.
In short, the primary product/service needs to be of an “essential” nature with relatively “inelastic” demand. That means, budget or not, these are consumer staples, and they NEED to spend on them.
Second, go through the stock market ups and downs during the Great Depression to get an idea of how your product/service might perform. For example, the stocks of Dow Jone slipped. Still, the stocks for utility companies like American Water Works or Waste Management Inc fared well. This means you can look for a business opportunity in the utility industry.
Now let's look at some of the best recession-proof businesses or ideas for 2023:
12 Recession Proof Businesses
1. Healthcare Services, Pharmaceuticals, and Pharmacies:
Healthcare services and pharmacies provide vital services such as prescriptions, care, and treatments. As long as humans stay on Earth, they will need healthcare services and medications filled, no matter the current economic situation.
An investment in this business is safe since they are primarily secure from stalling or outright shutdowns. This is because of their products and services essential nature and demand, even during economic uncertainty.
If you think about it, pharmacies can easily transition from in-person to online, making them even more resilient than many other businesses. Similarly, all healthcare providers need certain products and equipment that never go out of need, no matter what time. For example, masks and scrubs.
Some of your business options include:
- Starting a pharmacy
- Medicine delivery
- Medical transcription services
- Medical billing services
- Nursing homes
- Imaging centers
- Medical cleaning and sanitizing
- In-home healthcare services
- Manufacturing or selling of medical equipment
2. Grocery Stores, Food, And Delivery Businesses:
Grocery stores, affordable diners, and food delivery remain stable in a downward market, as people need to buy their essential items and eat food no matter what.
To be more price-conscious, people shift to economical restaurants and outlets instead of fine dining establishments and opt for food delivery instead of going out.
Food delivery is becoming increasingly popular amongst people who want to economize on gas costs while having access to eat something great without leaving home. Therefore in times of recession, these types of businesses can remain evergreen. It is definitely a recession-resistant business to look at.
Some of the small business options include:
- Vending Machine
- Food Delivery
- Fast Food
- Grocery Store
- Food Truck
- Cloud Kitchen
- Dollar Stores
3. Logistics And Transportation:
Logistics and transportation services are an essential part of the global economy and remain largely unaffected by economic trouble. This is mainly because these services are still necessary for people and companies to move goods from one place to another.
Transportation is necessary even if there is a decrease in demand for certain goods and services. For example, medical materials like vaccines or other grocery essentials would be transported – no matter what.
Some of your options include:
- Trucking & Haulage
- Warehousing and Storage
- Courier Services
- Moving and Logistics Company
- Freight Brokerage
- Auto Repair Services
- Shuttle Service
- Food and Medicine Delivery
- Gas Station
4. Childcare Services And Products:
During financially uncertain times, one thing that can remain certain is the need to care for and nurture kids.
Daycare and child-related services are essential, as they support working parents who would otherwise be unable to do so. With both parents working, there is an increasing reliance on these services, even when the economy suffers. Furthermore, supplies such as diapers and formula milk remain in constant demand for families with young children.
Despite changing economic landscapes, daycare and other services related to children will likely remain recession-proof.
Some of your options include:
- Daycare Centers
- Babysitting Services
- Items for children
- Schools and Universities
5. Utility Services :
Utility services are remarkably recession-proof, as people will always need to use them regardless of financial conditions.
Households and businesses rely heavily on electricity, water, heat, cooling, and internet connections. If anything goes wrong, they must call a repairer, adding to the utility services' already secured income.
Therefore, investing in a business that provides these services is a great idea.
Some of the business options include:
- Maintenance Services
- Cleaning Service
- HVAC Repair
- Home Repair
- Automotive Repair
- Internet Services etc
6. Accounting, Tax Preparation, Financial Planning, And Bookkeeping:
Accounting, tax preparation, and bookkeeping services are also recession-proof businesses.
People and businesses will always need help with their finances and legal compliance, so they are willing to pay for the expertise. Furthermore, when taxes are due, people need help to file them and prepare their returns to ensure they get the refunds they are owed.
In light of this, investing in a business related to these services can be beneficial during tough economic times.
Some of your options include:
- Accounting Services
- Tax Preparation and Planning
- Bookkeeping Services
- Financial Consulting Services etc.
7. Funeral Services
Funeral services are another type of business that can remain relatively resilient during economic recessions. This is because death is inevitable, and mourners will continue to pay their respects regardless of financial hardship.
Furthermore, funeral services provide a wide range of options, such as embalming, cremation, and burial services, allowing them to appeal to various tastes and preferences.
As long as you offer the basics, such as caskets, flowers, and other decorations, you can be sure that your business will remain recession-proof.
Business ideas to start:
- Funeral Home Services
- Cremation Services
- Memorial Services
- Burial Services
- Grave Markers etc.
8. Pet Services And Products:
According to Business Review, the pet care market is growing at over 6% per year. In fact, the noticeable thing is that this industry grew even during the 2007 financial crisis with twice the US GDP growth rate.
And hence, pet services and products are considered recession-proof. People will always take care of their pets whether there is or there isn't any economic downturn.
People have a deep emotional connection with their pets and thus remain willing to purchase necessary food, toys, and grooming supplies in challenging financial situations.
Some of the best business ideas include:
- Pet Grooming Services
- Pet Sitter
- Boarding Services
- Pet Supplies Products
- Veterinary Services
- Pet Food Products
- Dog-Walking etc.
9. Employment And Staffing Services:
Many people need help finding jobs or filling empty positions during a recession.
When times are tough, the demand for these services increases as businesses look for ways to cut costs. So, they either look for contractual hires, independent contractors, or temporary staffing instead of full-time employees.
Furthermore, those who do not have a job may seek assistance from these services to find employment.
Some of the businesses to start:
- Recruiting Services
- Headhunting Services
- Staffing Services
- Employment Agencies
- Consulting Services
- Temporary Staffing Solutions
10. Dating, Love, Relationship Services:
Although dating and related services may not be the first thing on people's minds during recessions, they can still be considered relatively recession-proof businesses.
This is because people will continue to look for companionship even in difficult times, as loneliness can become an even bigger problem when budgets are tight.
Let's be practical; people will always look for someone to share their life with regardless of financial circumstances.
Some of the profitable business options include:
- Matchmaking Services
- Dating Websites/Apps
- Relationship Coaching Services
- Love Consultants
11. Reselling or Thrifting:
Reuters, in an article on October 5, 2009 (yes, during the Great Recession), talked about how 64.1 percent of resellers saw an increase in sales — with an average increase of approximately 31 percent.
When most businesses struggled to stay open, the success stories of these two companies opening up new stores are inspiring – Half Price Books and My Sister's Closet. Both of them buy and resell used products.
In short, resellers see an increase in business during a recession mainly because people are looking to save money, and used items are more affordable.
This type of business can also prove beneficial during recessions, as people often look for ways to save money by buying used items.
Therefore, reselling or thrifting can be profitable during economic downturns, as people will always be looking for cheaper alternatives, no matter the financial situation.
Some of the lucrative business ideas include:
- Thrift Stores
- Vintage Clothing Stores
- Secondhand Furniture Shops
- Online Reselling Platforms etc.
12. Freelance or Consulting Business:
According to Bloomberg, 78% of business leaders said they are more likely to hire freelancers than full-time employees while economic conditions remain uncertain.
Many companies and businesses prefer to lay off employees during the economic slowdown and look for freelancers who can help them with their projects instead. The benefit of this is that they can hire a freelancer for only the time they need them, reducing their labor costs.
That means freelancing is an excellent option for those looking to start a home-based business during recessions. It could also be a great side business. You can either create a consulting firm or get into a business like a freelancing marketplace.
A consulting firm could also be an online business with a globally distributed team, which makes it more effective in cutting down costs during a recession.
Some of the best-selling services to make money include
- Digital Marketing
- IT/Tech Assistance
- Social Media Management
- Content Marketing
- Freelance Writing
- Search Engine Optimisation
- App Developer
Frequently Asked Questions
What Is the Most Recession-proof Industry?
The most recession-proof industry is the one with non-elastic demand. That means it can be FMCG, the healthcare industry, utility, and groceries, as people will always need these regardless of their economic situation.
While you can always start from scratch, you should also look at franchises in the abovementioned industries.
Is a Recession a Good Time To Start a Business?
Yes, a recession can be an excellent time to start a business. Not only are there fewer competitors, but there is also an increased demand for specific products or services. If you have a detailed business plan, you can make profits. However, you should always know the risks associated with starting a company during an economic downturn.
What Products Sell Well During a Recession?
We have already discussed this at length. Just ask yourself – can people stop using your products or services when budgets are tight? If yes, then your product might take a hit during the recession.
In short, products that sell well during a recession include essential everyday items such as food, toiletries, and household cleaning.
Additionally, any service or items that help people cut costs and save money (like DIY projects) may also be in high demand. Other popular products during economic uncertainty include products and services related to children, pets, care for baby boomers, healthcare, and legal compliances.
How Do You Create a Recession-proof Business?
First and foremost, you need to do thorough research on the industry and understand how it works and how likely it is to be affected by an economic slowdown. It would be best to look at starting a business or investing in essential products or services for everyday life.
Second, you should always try and diversify across multiple recession-proof industries and businesses. It will help reduce the risks associated with an economic downturn.
Finally, stay updated on market trends is essential to anticipate changes and adjust accordingly.
How Do You Create a Recession-proof Business?
Any business where the demand is elastic is not recession-proof. Your product relies on discretionary spendings, such as luxury goods and services. For example, leisure travel and tourism may struggle during a recession due to decreased consumer demand.
Similarly, entertainment, construction, or luxury food items and restaurants take a hit during the recession.
Are You Ready To Start Your Recession-proof Business?
We're going, to be honest. It can be daunting to start a business during a recession. But, with strategic planning, it can be profitable.
These were some of the most recession-proof business ideas for you in 2023. While all businesses take some time to generate revenue and break even, these businesses give you peace of mind during a slowdown and decrease in income capabilities.
Remember to do thorough research on the market of your choice before starting out. Take risks, and explore new ideas but plan each of your steps for success!