Uncertain economic times may seem like the worst environment for starting a business. But, you might be surprised to discover just how many businesses opportunities there are during a recession.
The economy is naturally unpredictable, and the entrepreneurs who make it through the ups and downs unscathed are those who focus on ideas with staying power.
No matter what the predictions for 2020 show, you can start or grow a business with confidence if you choose a recession-proof industry and manage it strategically. Advanced planning, smart resource allocation and careful cash flow management can get you through the rough waters of an economic downturn – even when others flounder.
Recession-Proof Industries to Consider
The biggest question to ask when seeking a recession-proof niche is: Do customers need what you’re offering, or is it more of a luxury?
During recessions, customers cut back on extravagances before anything else. For this reason, businesses providing essential products and services tend to do best during recessions. Some business types even thrive during recessions, particularly those that allow people to save money on everyday items.
If you want to know how to survive a recession, take a look at how businesses in these industries fare:
- Essential services (like plumbing, cleaning, and other home services)
- Food and beverage
- Health care
- Information technology
- Repairs and maintenance
- Senior services
- Staple items, such as groceries or personal care
- Used items, including clothing and home goods
You’ll find business owners in these niches worry less about recessions because their products and services are always in demand. Customers go to them because they need what’s being offered, and trust the brands that have committed themselves to providing consistent, reliable service.
5 Recession-Proof Businesses for 2020
Before launching a new business or plan for growth, consider your audience and their current financial standing. How much are their purchasing habits likely to change if the economy slows down? Where will they cut back first, and how might that impact the success of your business?
You’re most likely weather a recession if you find out what customers want, and build your company on the premise of delivering it with their preferences in mind.
These five business ideas can provide stability for entrepreneurs seeking solid opportunities that endure economic changes:
- Consignment sales – Customers are always on the lookout for a bargain, and during a recession, they’ll want even more ways to save. Selling high-quality items on consignment at discounted prices gives people a chance to save money when they shop and make money getting rid of things they don’t want.
- Repair services – Things don’t stop breaking or malfunctioning just because the economy slows down. Performing repairs for homeowners and businesses or offering auto repair services will keep jobs coming in.
- Event planning – Nobody wants to miss out on celebrating milestones, and they’ll pay to have someone take the stress out of planning for birthdays, anniversaries and weddings, even if they’re trimming expenses elsewhere. Businesses also need event planners to assist with trade shows, experiential marketing and annual office parties.
- Bookkeeping and tax prep – Managing finances and keeping numbers straight becomes more important during a recession, and businesses and individuals alike would prefer to have someone else handle the math for them. Providing these services gives clients peace of mind and brings you plenty of work.
- Baby products and services – Babies need clothes, food, toys and diapers throughout the earliest years of life. Cater to busy but conscientious moms with products they feel good about using and can afford, and your business will become a brand they trust (even in tough times).
Strategies for Business Survival During a Recession
It never hurts to take additional steps to set your business up for success ahead of a potential economic downturn. It’s all about creating a competitive edge with smart strategies and well-planned tactics. Here’s how to prepare your business for a recession whether or not you’re in a “recession-proof” niche.
- Plan with profit and growth in mind, and renew and update your plan on a regular basis
- Create a specific recession plan identifying areas where you can cut back without going under
- Track business performance, and do everything possible to improve key industry metrics
- Determine how to increase efficiency through improved resource allocation
- Streamline and automate key business processes
- Shorten your invoice terms
- Give relevant incentives to employees who perform well
- Maintain a fun, motivational work environment
- Carefully evaluate large investments and long-term commitments to avoid overburdening your business with debt
- Cull the customers who always pay late, ask for more than you agreed to deliver or otherwise waste your time
- Sign multi-year contracts with loyal customers who enjoy your services
- Keep communication open with vendors and suppliers to facilitate beneficial business arrangements
- Create an aggressive recession marketing plan with incentives to boost sales
Above all, be awesome. Recessions are a bummer, and customers appreciate service that’s friendly and makes them feel special. You should always strive to provide excellent service and work on nurturing customer relationships, but it pays to take things up a notch when the economy is bad. Let your customers know how much you appreciate them, and go above and beyond to exceed their expectations wherever you can.
The Best Financing to Prepare for Recession Survival
To truly safeguard against a recession, your business needs reliable sources of cash. But taking on the responsibility of loan payments when an economic downturn could be on the horizon may put you in a vulnerable position. What’s the solution? Finance your business with loan options that don’t require going into long-term debt.
A revolving credit line offers a ready source of funding you can draw on and pay back as needed. If reduced consumer spending leads to a drop in sales, you don’t have to worry about how you’re going to pay employees or suppliers. Purchase order financing covers gaps when customers are slow to pay for orders, and selling your receivables to a lender puts money in your bank account before invoice due dates. All of these options allow you to access funding without committing to monthly payments, so there’s no impact on your cash flow.
Strategic business owners secure these sources of funding before they find themselves in tough financial situations. The Business Financing Advisors at National Business Capital can help you explore the best options to set your business up for success now and keep you going no matter what happens with the economy. Explore your options today, and you’ll be ready to weather any financial storm.