Businesses that thrive in recession
Thinking about starting a business during a recession? Other people may call you crazy, but an economic downturn can actually be an excellent time to start a business. Just be sure you know the traits of businesses that thrive in recessions.
The best business in a down economy is always one that is run with purpose, vision and great leadership. But there are certain industries that may do better than others. So what businesses do well in a recession? And what are some specific ideas for recession-resistant opportunities?
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What businesses do well in a recession?
Businesses that thrive in recession are usually in essential services, like health care, senior services, grocery stores and maintenance such as plumbing and electrical. In our technology-driven world, streaming services, video games, computer equipment and cybersecurity and IT support are also among the best businesses in a down economy.
During a recession, the first thing people cut back on is nonessential goods. Businesses like restaurants, fashion retailers and other consumer goods are likely to take a hit. Although it is possible to enter these industries during tough times, if you’re wondering what businesses do well in a recession, you’re more risk averse than you think. No business idea is guaranteed, but you may be wise to avoid these industries and choose one that is almost certain to thrive.
12 businesses that thrive in recession
What businesses do well in a recession? You have plenty of options within the industries above – as well as a few that may surprise you.
Not surprisingly, grocery stores are the best business in a down economy. People always need to eat, and during a recession, they typically also cut back on eating out in restaurants and ordering takeout. That makes grocery sales skyrocket even more.
2. Health care
Like groceries, people need health care to live. That demand doesn’t decline when the economy does. Healthcare is always inelastic, meaning the demand for it doesn’t change based on its price. Demand for healthcare may even rise during a recession as people seek help with mental health.
Humans are driven to seek pleasure and avoid pain – no matter the economy – so it isn’t surprising that candy tends to be recession-proof. Snickers and Three Musketeers were both introduced during the Great Depression. And during the 2008 recession, Cadbury reported record earnings.
4. Beer, wine and liquor
Alcohol sales are another “guilty pleasure” industry that tends to be profitable during recessions. When larger purchases like electronics, vacations and new cars are out of reach, people tend to console themselves with alcohol. It isn’t a healthy habit, but it is one of the top businesses that thrive in recession.
5. Discount retailers
While fashion, jewelry and other nonessential goods are generally not the best businesses in a down economy, there’s an exception for discounters. Dollar Tree, Walmart and Ross Stores had some of the highest-returning stock during the 2008 recession.
6. Children’s goods
Baby products are almost entirely recession-proof: Parents can’t exactly pinch pennies on diapers, formula and clothes for a fast-growing baby. Even kids’ clothes and toys are recession-resistant. Parents will cut back in other areas so they can still spoil their kids, at least a little bit.
7. Pet industry
America loves its pets. If a beloved cat or dog falls ill, we’re not likely to scrimp on veterinary care. It doesn’t stop there. Americans are still estimated to spend $1.5 billion more on pet food and treats in 2020 than they did in 2019. Pets are big business, and those are businesses that thrive in recession.
8. Financial advisors and accountants
When we enter a bear market, everyone starts worrying about their financial future. Individuals want to ensure their investments are stable or even invest in new opportunities. Businesses rely on advice from their accountants to help them survive tough times. These are valuable skills in any economy, but especially a down one.
9. Cybersecurity and tech support
The current recession has driven activity online – we’re shopping, working, communicating and streaming more online than ever before. Businesses that thrive in recession always adapt to current trends, and those with the skills to stop cybercriminals and help newly remote office workers are discovering opportunities.
Even when the economy is slow, things are going to break. The recession won’t slow rain on the roof, water in the pipes and the need for auto maintenance. That’s why plumbers, electricians, mechanics, roofers and all-around handymen are likely to do well in a recession.
11. Debt collection
It’s a sad truth of recessions: When the economy tanks, many people can’t pay their bills. They get behind on car payments, medical bills and the electric bill. Debt collection may not be your passion, but it is certainly a recession-resistant business.
12. Freight operations
Businesses that thrive in recession tend to have products or services that people need no matter what or that make them happy in hard times. Freight and logistics delivers both the necessities and the comforts, making it consistently recession-proof.