As talks of an upcoming recession keep rolling in, small business owners start looking for recession-proof industries to adopt or adapt to their small businesses.
If you’re a small business owner, chances are you can’t avoid but stay concerned about the economic talks on the news, and it’s perfectly understood. Recessions are gentle to very few people in the world, and as you’ll see below, small business owners fare the worst during such.
But by no means is that inevitable for small businesses. There are steps for you to prepare your small business to wither the storm and thrive or even acquire a small business industry historically known to be recession-proof.
Here you will learn all you need to know about recession-proof businesses, as well as:
- If we’re currently in a recession or heading to such.
- Why do small businesses suffer the most in an economic downturn?
- The historically proven recession-proof business industries.
- Ways to make your small business recession-proof.
- What you need to do to prepare your small business if you sell elastic goods.
After this article, you’ll be ready for a recession and know how to act accordingly.
Are We in a Recession?
This question has spent a lot of ink on newspapers since the beginning of the year. It’s also the primary subject on almost every news outlet in the U.S. But the question fails to be answered, are we in a recession?
According to economic laws, we are currently in a recession — since the summer of 2022. As economists exhaustively point out, the two consecutive negative GDP yearly quarters indicate such. Although the Fed is trying to increase interest rates to combat inflation, that fails to counter the argument of the negative growth quarters in our country.
Simply put, we are technically in a recession. The stock market, the housing market, the treasury yield curve, and consumer confidence data all point to such. The a target=”_blank” rel=”nofollow noopener noreferrer” href=”https://www.nber.org/”>NBER is still not ready to classify the U.S. economy as being in a recession, so we are only technically — although the consumer market in your small business is probably starting to say otherwise.
What Does a Recession Mean for Small Businesses:
By far, small businesses are the ones that tend to suffer the most during hard times. As we see the economic conditions worsen, consumer confidence and spending drop, financial institutions tend to pass fewer loans, and as of right now, inflation is making the prices of essential inventory items and energy skyrocket. That factor continues to bleed more and more of the American small business owner’s money and confidence.
Unlike larger, more established companies with publicly traded stocks and good connections, small business owners can only rely on themselves to ensure their small business stays recession resistant. Even the Small Business Administration tends to tighten its belt, even for established small businesses with years of practice.
As we saw during the Covid pandemic, small business owners were hit the hardest, with more than 400.000 business establishments closing just in the first few months. Business funding is always hard to achieve in an economic crisis, and here at Biz2Credit, we know that very well. If you need funding during this economic downturn, be sure that Biz2Credit is here to help you.
Top Recession Proof Industries for Small Business Owners:
Here’s a list of recession-proof businesses that, although they’re not 100% resistant, tend to fare better in an economic downturn. Get to know these types of businesses and get a few recession-proof business ideas to adapt or acquire in the coming future.
People getting sick is an eventuality, and even hard times can’t stop that fact. The healthcare industry, especially with the advancements and discoveries made with new technologies available, is set to succeed in the upcoming years. If you want to look into this area, pharmaceuticals, nursing, and even mobile medical clinics could be great recession-proof business ideas to adopt.
No matter how much people save money during hard times, they’ll always need groceries. If there is one fact that we can be sure of it is that people need food, regardless of the state of the economy. Grocery stores are historically a recession-proof industry, but for a savvy entrepreneur, opening a grocery store in a busy area can be just as profitable as people tend to avoid the hassle of a big store chain — and some strategic promotions can sweeten the deal even more.
Childcare is another industry set to grow in the future, with a revenue forecast of 73.8 billion by 2027. More and more mothers are being empowered to join and remain in the workforce in our society. That creates a hike in demand for childcare as well as other related baby and child products. With the childcare industry growing, it will eventually require more products. These industries could be deemed very sturdy during tough times in the future.
On the other side of the coin, people also eventually pass. Although people don’t tend to think about this industry as a good investment, the fact is that we don’t choose when we die. And be in hard times or not, people want a dignified goodbye for their loved ones. It might be a bit morbid, but this is one of the best recession-proof businesses that you could think of.
Vehicles are essential in the world economy for personal or professional reasons. Americans need their cars to work and to live their personal lives. For that reason, auto repair shops will always be essential as long as we’re reliant on our personal vehicles — which we’ll be for many more years.
No business can afford to ignore their hygiene, and most don’t have dedicated staff to do their cleaning. Although some small businesses require less effort in this area, other services like hospitals or food processing plants must hire professional help. These businesses will always be in high demand for such, and with the world becoming more environmentally friendly, adopting a green cleaning service program will get you even more demand in the future.
Home Repair/ Utility Service Providers:
Although the real estate market suffered during these uncertain times, historically proven, it’s more than certain it will bounce back, as people will always need a home. While a real estate broker might have some trouble in the short term, other service providers like plumbers, home repair, home improvement contractors, and property stagers will always have demand in the area.
Financial planning is always essential for every small business. And with business owners concerned about their industry situation before the recession hits — or even during it — they don’t have time to look at numbers. Tax preparation, financial planning, bookkeeping, and other accounting services will always be essential for business owners — and their employees.
In recent years due to the social distancing imposed by the fight against the pandemic, the U.S. saw a rise in pet ownership amongst the newer generations. With it came new business opportunities as these new generations of pet owners don’t look at costs to assure the best quality possible for their pets. Veterinarians and other pet care services saw a hike in demand in the past few years, and with pet numbers not going down anytime soon, it’s showing itself as a sturdy industry for the future.
- Prioritize Your Inventory and Keep Tabs on Your Suppliers: With the recent strains on supply chains — even before the talks of recession — inventory fears are nothing new. Although you’ve probably dealt with some drawbacks, chances are they’re not going to improve if the recession hits. Prioritize your inventory and, if possible, stack some months’ worth of essential supplies. Also, getting on a call with your supplier and discussing how you’ll operate going forth can save you even more unpleasant surprises.
- Invest in Your Workforce: Although one of the first things that come to mind during a recession is staff layoff, this should always be your last scenario. Your team is the backbone of your small business, and all past recession-proof businesses have one thing in common — their specialized team. Be considerate of your team and help them prepare. Also, consider offering them new skills and education to make them even more valuable.
- Take Some Time to Study Your Customers: Your customers’ behavior will most likely change during an economic downturn. And while you can do little to nothing about the impact of a recession on your small business, you can study its effects. Studying your customer behavior, how they engage with your products, how much traffic is coming to your website, etc., can help you create a plan to improve sales or customer retention.
- Think Twice Before Big Investments: It’s tempting to opt for big changes when things don’t go to plan, but most often than not, big investments are a bad idea during a recession. Recessions mean uncertainty, and if you get stuck paying for state-of-the-art equipment you’re barely using can easily bleed your cash flow. Although it can make a difference for your small business, it might be better to go slow and invest small amounts in safe ROI-yielding projects.
- Get Business Funding Sooner Rather Than Later: As you saw throughout this article, financial institutions tend to tighten their belts when a recession hits. If you know you need funding, it’s best to do it now, as SBA loans and bank loans are famously time-consuming, and you don’t want to end up needing them and seeing your loan request still processing — or worse, denied. If you need fast funding, reach out to Biz2Credit today, and you’ll get funded within as little as 72 hours and be able to prepare your business!
Do You Sell Elastic Goods? A Few Ideas to Better Prepare Your Small Business:
If your small business sells luxury goods or any product or service your customers might deem unnecessary, it’s understandable to be worried about the next recession. Your products and services might not be essential, but by no means will they not have a market.
For example, Apple Macintosh launched in 1984, right after the early 80’s recession. Even when people were freshly out of one of the worst recessions after the great depression, it still sold well. Another good example is the iPhone 3, which launched in July 2008 and sold very well, with one million in the first week.
These examples show there’s a market for every product, even for high-end luxury goods, during hard economic times. With digital marketing continuing to evolve, it’s the perfect tool to position your goods or services to your customer. Social media was responsible for creating successful brands, and e-mail marketing still shows itself as extremely effective.
Also, influencer marketing is on the rise and has shown to be quite effective. You also have data analysis that tells you everything you need to know about your customer’s behavior and the effect of your marketing campaigns.
The bottom line is that every small business can become recession-proof with surgical investments and the correct positioning of your product. People will always need a new car, and for that special occasion, your customer can buy a special bottle of wine at your liquor store, which is running a wedding anniversary discount promotion.
Be Proactive and Create a Recession-Proof Business:
Although investing at this time can be risky, some small investments can make your business recession-proof. One of these surgical investments could be hiring a marketing team and rebranding your product or perhaps hiring a professional coach to prepare your team and teach them new skills.
For that to happen, you need to invest. If you need funding — or you’re already seeing the difficulties of traditional lenders tightening their belts — reach out to Biz2Credit, and you’ll have the funds you need with ease and speed.
Do the same as Phillip, Taj Lounge owner. Being a restaurant owner, he knows that getting funded in his area can be difficult. So, he reached out to Biz2Credit and got the funding he needed fast, and it’s running until today! Do the same as Phillip, and don’t hesitate to contact our small business funding experts today. Get to know the best funding option for your small business!