5 Top Recession-Proof Businesses

recession proof businesses

Most experts agree that a recession is headed our way, and sooner rather than later (if we aren't in one already). While no one would call this good news, it is a particularly alarming prospect for business owners whose finances are often directly tied to the health of the economy. 

Are there businesses that are immune to the effects of a recession? Do some companies and industries profit even more during economic recessions? In this article, we look at businesses that can be expected to thrive even when times are tight. We also look at ways any business can help itself withstand a recession. 

What Makes A Business Recession-Proof? 

Recession-proof businesses usually occupy industries that can’t be ignored, even when times are tight. While a family buttoning down the hatches may go out to eat less often, they won’t (as an example) be likely to ignore a medical situation or a necessary repair. On the flip side, some small luxury items or services may thrive during economic recessions because they are affordable luxuries when larger luxuries can't be purchased.

All of the 5 top businesses described below fall into this category. 

5 Best Recession-Proof Business Models And Industries

1. Childcare 

Usually (though Covid challenged this idea slightly) childcare is a service that families who need it can’t go without. No matter how tight things are, if the parents can’t be there with their children, they need to find someone qualified who can be. 

It is worth noting that on a family-to-family level, there are scenarios in which childcare may become impractical during a recession. This is particularly true in cases where the cost of care meets or exceeds the salary of the parent working — a scenario that isn’t so hard to imagine, particularly for families with multiple children receiving care. 

However, in the grand scheme of things, running a childcare facility can be a good business idea even during a recession. These days childcare facilities can charge a lot of money and parents don't have much of an option but to pay it or hire a nanny.

2. Automotive 

The automotive industry is similarly advantaged by necessity. People may not buy new cars during challenging financial times but they will maintain the ones that they have. 

Consumers may make slightly different decisions about how they service their vehicles — stretching the time out in between oil changes as long as they can, neglecting proactive repairs — but they won’t ignore their care entirely. There is always a need for vehicle repair services along with new or used cars and trucks.

3. Accounting 

Accounting businesses are, in some ways, more needed than ever during a recession. Accountants help families set budgets, file taxes in a way that is most conducive to significant returns, and generally plan their lives in a way that viably accommodates their finances. 

While people who are struggling may not reach out to an accountant for the first time during a recession, they may feel inclined to keep the accountant they have. 

4. Home Repair 

When a pipe leaks or a light fixture starts blinking, something needs to be done about it. Homeowners might not choose a recession economy as the best time to plan a home addition, or even paint the interior of their house but they will fix things that break. 

Nobody wants to go without air conditioning, heating, or ventilation during increasingly extreme weather patterns. Speaking of which, storms and other events will always cause damages to roofs, windows, and basements.

5. Freelancing 

Freelancing has become increasingly prominent over the last several years—especially since it has become easier than ever to work from home. Freelancers survive recessions by being flexible and knowing where to look for work. 

Because freelancers often collaborate with people all over the world, their fates are not necessarily intertwined with any single economy. If you are a writer in the Midwest, you may not even have any clients within three hundred miles of your home. 

Freelancers may experience the turbulence of fraught financial times, but they are well positioned to ride out the storm. 

How To Recession-Proof Your Business 

That is all great except your business does not fall into any of the above-mentioned categories. What can the average business owner do to make sure their doors stay open during the next recession? Below, we provide several tips on how to recession-proof your business. 

Be Proactive At Raising Capital 

One of the big recession pain points is liquidity. As margins tighten, it becomes harder to make maneuvers that could bolster your business capital and free cash flow. And, precisely because times are tight, banks and other lenders are usually much more selective about providing credit during a recession. 

The time to raise capital is now before loans and credit lines become highly competitive. You may not wind up needing the extra liquidity but it will be good to have on hand should a situation arise down the road. 

Think Carefully About Your Financial Moves 

Most businesses have a growth plan, which may involve new hires, new equipment, and new services, all designed to draw more customers in. While no one likes to pump the brakes, it may be a good idea to slow down in the face of a recession economy. 

If things do become tight, you won’t want all your capital tied up in new equipment, or a real estate deal. Be cautious with your finances and only make moves that are absolutely necessary. All recessions end eventually. When it does, you can resume your business plan in earnest. For now, it’s all about risk management

Be Thoughtful About Staffing 

Layoffs are unpleasant in every conceivable way. They are bad for the business owner, who undoubtedly wants the best for their staff. They are (obviously) bad for the person who has been laid off. And they can even be bad for the business itself, hurting morale and even negatively coloring public perception. 

Of course, sometimes layoffs are necessary for new businesses or struggling startups. However, if you are in a position to be strategic about your staffing practices, now is a good time to do it. Don’t make hires you think there is a chance you may need to terminate in the near future. 

Instead, learn to do more with less, and look for opportunities to use freelancers and other temporary employees during recessions. 

Talk To Your Suppliers 

Most businesses depend on a network of suppliers and partners. If yours falls into that category, it’s a good idea to start having conversations about the recession with them now. Find out what their plan for handling the recession is, and how it might impact your relationship down the line. If a new supplier or partner is necessary, they will be much easier to find before the full force of the recession hits.

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