Depending on who you ask, we’re either in for a major recession, a slight economic slowdown, or business as usual. No one is completely sure, but there is definitely a chance that the global COVID-19 pandemic will leave many countries with unstable economies.
Not only that, unprecedented shifts in socioeconomic conditions have led to massive staff shortages in some industries, and sweeping layoffs in other sectors. But it's not all bad news. People and resources are on the move and there is plenty of opportunity to start a small service business to safeguard your financial future.
If you’re feeling the approaching pinch, if you’ve been laid off, or if you’re just sick of going to the office (use headphones Cheryl!), it might be time to look into recession proof businesses that you can run from home or on the go.
What is a recession?
Without getting all Adam Smith about it, a recession is basically an extended period of downward trending economic activity. Recessions can happen on a small scale, such as in a single state or province, on a national scale, or globally. Most economists consider a recession to be happening when there have been two fiscal quarters (so, six months) of declining gross domestic product (GDP).
Recessions are caused by a lot of different factors, but ultimately it comes down to consumers and companies holding onto their money instead of spending it because they’re anxious about the economy. Businesses make less money, people lose their jobs so they spend less, and there is generally less activity happening in the marketplace. When this happens for years in a row, it becomes a depression.
But don’t freak out: we’re probably not heading into depression territory this time. Recessions are a normal occurrence in the modern economy—there have been three since 2000 and 20 more during the Twentieth Century.
What businesses thrive in a recession?
There are three types of businesses that do well during a recession. First, businesses with inelastic demand. That means enterprises that supply a product that people need to buy regardless of how much money they are earning. Think food, fuel, toilet paper…you get the idea. Government services also tend to offer jobs that are recession proof since people always need support from local, state, and federal leaders.
The second type of business that does well during a recession is one that satisfies a demand that is specific to hard economic conditions. Unfortunately, alcohol sales is one such business, as is unhealthy food such as candy, junk food, and fast food—these businesses supply a brief respite from the anxiety and sadness of financial desperation so they continue to make profits.
The third category of recession resistant businesses are services that people can’t live without, even when times are tough. These tend to be solo home services that either enable consumers to continue to work or that fill a need specific to the recession. These are also some of the easiest and cheapest small businesses to set up, so they are an excellent option for entrepreneurs looking for a quick way to get an enterprise rolling.
Which industries don’t do well in a recession?
Businesses that tend to decline or fail completely during a recession are ones that can be outsourced, automated, or easily cut from people’s budgets. Examples include manufacturing, restaurants and bars, new construction, and leisure and hospitality businesses, such as hotels, tourism, luxury entertainment, sports, etc. Retail is also usually hit hard during a recession, as consumers stop buying things they can live without, such as furniture, clothing, shoes, jewelry, etc.
10 recession proof business ideas
So, maybe there is a recession coming. Maybe you’re just looking to start a business. Either way, a small service business can be an amazing opportunity to protect your financial future while working for yourself. Here are our fave recession proof businesses ideas to start today.
1. Home improvement and maintenance
During recessions, people don’t travel much so they spend a lot of time at home. Staring at a linoleum floor and mint green bathroom sink starts to give folks ideas—renovation ideas. Recession proof blue collar jobs like handyman services, plumbing, small scale renovations, pressure washing, etc. all tend to be pretty reliable. Plus, those who need to sell their homes to stay afloat often have to fix them up for quick sale, which is where you and your hammer come in.
We're a few years in, and sadly the COVID-19 virus is still banging around town and there are protocols in place to mitigate the number of people who get sick. That means a lot of cleaning has to happen regardless of how the Dow Jones Industrial Average is doing. Plus, we’re heading into cold and flu season and people are increasingly returning to the office, so commercial cleaning is likely a safe bet.
While companies are less likely to hire full-time employees during a recession, they still need creative services to market and run their businesses. Freelance professions like writing, photography, and design can supplement lost wages or even become your primary source of income, and they don’t require an office. Work from anywhere! Work with no pants on! Work when your kids are finally asleep!
4. Online education and tutoring
Enrolment in post-secondary and continuing education tends to increase during recessions, most likely because retraining or learning something new feels productive and those who are laid off suddenly have the time to pursue their educational goals. While many heading back to school are applying to accredited institutions, there is ample opportunity to teach online classes or tutor those who need extra help.
When finances get tight, every little bit of saving counts, including on taxes. An accountant or bookkeeper can mean the difference between a business making it through the recession and…not.
6. Digital marketing
Traditional marketing is expensive. Television and newspaper ads, radio spots, print media, and events all cost heaps of dough. Digital marketing is relatively cheap thanks to social media and email marketing platforms. Companies that hope to make it through a recession still need to run marketing campaigns and your digital skills can help them do it.
7. Pet care
Do you think Fifi cares that the S&P is down a thousand points? She still needs her mats combed out and her nails trimmed. No matter how bad a recession gets, pets still have needs like grooming, walking, daycare, overnight sitting, and more.
Children are basically pets that can talk back. Their needs don't go away during a recession, and with all that financial stress, parents definitely need a break. Babysitting and daycare services tend to do well during recessions, so get licensed and start practicing your diaper skills.
9. Trash hauling
People do not stop producing waste when the economy is slow. In fact, folks who find themselves at home more might even take the opportunity to finally clean out the basement or garage. But one person's garbage is another person's gold—trash hauling is a great way to get exercise while getting paid.
10. Career coaching
Last but not least, and perhaps the most obvious on this list, career coaching is in high demand as people start to give their working lives a good hard look to see what has been working and what hasn’t. In person or online, if you have career coaching experience, you could start a profitable business while helping your country crawl out of the financial doldrums.
Tips to keep your business rolling during a recession
Once you’ve started your business (or if you already have one on the go) there are a few easy things you can do to help stay in the black during a recession.
- Pay cash: it’s easy to overspend when using credit, and interest adds up quickly, so pay cash for equipment and supplies whenever possible.
- Don’t sign up for anything you can’t cut: subscriptions, long-term financing deals, and big volume discounts can be convenient and save money during stable financial times, but during a recession you need the ability to cut costs on the spot. Avoid extended contracts.
- Buy used equipment: just good advice in general, used equipment saves money and you can often negotiate a lower price or even trades.
- Hire freelancers: if you need help running your business, hire freelancers rather than full-time employees whenever possible. You don’t want to have to hire someone and then fire them two months later because you can’t make payroll.
- Avoid lifestyle creep: if your business is doing well during a recession, great! But don’t buy the new truck, house, or diamond belly button ring until you’re absolutely sure you can afford it over the long term. Be happy with what you have, purchase essentials, and ride out the recession without stress.
And our last piece of advice
If you didn’t find an idea that tickles your fancy on this list, don’t worry, the well is far from dry. Check out our list of 31 Weird Business Ideas that You Can Start Right Now—it will help you think outside the box to come up with a business that gets you through whatever the economy does in the future.
No matter what type of service business you decide to start during a recession, you’ll need some good business tools to ensure it runs smoothly. And you can find those tools at Durable. Our AI website builder can create a professional site for you in less than a minute. Ensure that you get paid on time with automated invoices. Durable can help you start your recession proof business literally today.