An economic recession is a scary time to think about starting a new business. Consumers are more discerning with their money and less likely to spend it on items that aren’t necessities.
Other businesses are cutting back on expenses and likely laying off employees because of the decreased revenue they have coming in. If you’re thinking about starting a business in a certain industry, however, it could be smart to do during a recession. Competition may be lighter, and some industries are more recession-proof than others.
What are some smart business ideas to start in a recession? Here are 13 businesses that are particularly resilient during an economic downturn:
1. Online Freelance Services
3. Debt-Collection Agency
4. Fast Food Franchisee
5. Retail Consignment
6. Device Refurbishment
7. Repair Services
8. Cleaning Services
9. Event Planning/Management
10. Childcare Business
11. Security Services
12. Home Staging Business
13. Property Management
Some of these businesses are brick-and-mortar based businesses, while others are ones that can be done remotely and from the comfort of your own home. Some are even a mix of both, with elements of online work as well as in-person service.
For more information about each business idea, including why it’s recession-proof, read on!
Business Ideas to Start in a Recession & Bad Economy
There are plenty of reasons to be apprehensive about starting a business during a recession; tightening wallets and companies cutting back on expenses are two main reasons for that.
However, there are a surprisingly high number of industries that are highly resistant to a recession. These are mainly businesses that cater to the essential needs of either consumers or other companies; a recession could be a fantastic opportunity to meet those needs while competitors downsize, as well as build a long-term base of satisfied customers.
Online Freelance Services
Several platforms exist that are designed to connect high-quality freelancers with clients who need assistance. Your skills could be in anything from writing to web design: basically, anything you can do with a computer and internet connection.
While it may not give you enough income to pay the bills immediately, a recession is a good time to start offering these services, and there are plenty of web-based businesses who will pay for it.
Plenty of people have made online freelance work a business and have made a good income from it, and there’s no reason you can’t do the same. It also scales well if you’ve been able to hold your job through a recession, as it’s something you can do that has flexible hours and can be done from your home.
Once you’ve got a few clients, you can leverage your experience and recommendations to build your portfolio and grow your business effectively.
Get a ton more online business ideas in my article here
Bookkeeping and Accounting
Starting a bookkeeping or accounting service during a recession may sound counter-intuitive at first. Won’t companies be trying to cut expenses, including services they might be able to conduct in-house? This isn’t true of bookkeeping, however, where companies might find it necessary to tighten up their financial records during a recession.
If you have experience in the industry, a book-keeping or accounting service is something that will do well in a recession. Companies are looking to make sure they’re accounting for every penny, and they want less stress and worry when tax season comes around. You can provide that service for them and build a good base of long-term clients that will survive after a recession as well.
Companies are always looking for ways to reduce their tax burden and save money overall, and a quality book-keeper can help them accomplish this goal. Nowhere is this more apparent than during a recession. This business is one that you can start in your free time, and you can scale as you acquire more customers.
One thing to consider is that you should have at least some relevant experience and educational background in the field, as you don’t want to be learning the trade with someone’s actual money.
Naming Tips: How to Come Up with a Catchy Business Name
Debt Collection Agency
Unfortunately, a recession means that many people will no longer be able to pay for things they purchased on credit while the economy was in better shape. As such, starting a debt-collection agency will provide you the opportunity to be hired by companies to repossess assets that consumers have defaulted on, or to collect outstanding balances on debts.
It’s a necessary service and one that will thrive during a recession. Usually, once something goes to a debt collection agency, the original holder of the debt will have given up on gotten the full amount of money back, but you will still stand to make between 25% and 50% of whatever is paid.
One note is that this business will require you to set your emotions aside to a certain extent because the people you’ll be dealing with will likely have fallen on some hard times. If you’re looking for a business idea that will take-off during a recession, though, this is undoubtedly one of them.
Fast Food Franchisee
Food and beverages are necessities, so this business idea is particularly resistant to a recession. During an economic downturn, luxury purchases and some services start to decrease as people become hyper-vigilant to how much they’re spending.
They still need to eat, however, and cheap fast food is more resilient to a recession and tightened budgets than more upscale restaurants. As much as we might like to think otherwise, fast food will always be a staple of some Americans’ diets.
If you’re looking for a business that will both do well in a recession but will also thrive when the economy recovers, look no further than fast food franchise ownership. People still need the basics, and with a more significant proportion of their paycheck going to these services, it’s a lucrative industry for a would-be entrepreneur.
The food industry can have its drawbacks, but the love of fast food is probably not going anywhere, anytime soon.
Retail Consignment Business
During a recession, people may be looking to increase their cash on hand by selling unwanted belongings, as well as by purchasing items used or refurbished. This is where you come in by starting a new retail consignment company.
The basic business model involves taking people’s unwanted items and selling them, as in a thrift store, but you and the individual split the proceeds from the sale.
Items that are sold in consignment shops are generally higher quality than items found in a traditional thrift store (which are typically donated or purchased for extremely low rates), and there are many ways you can attract higher-class clientele.
You can have a general-purpose consignment shop, where you take in a variety of items or find a more specific niche, like clothing, children’s items, tools, or household items.
Naming Tips: How to Come Up with a Catchy Business Name
Electronic Device Refurbishment
Recessions aren’t likely to lead to people getting rid of their devices altogether; people are too attached to their smartphones, tablets, and other electronics that this won’t be the case. However, people will likely be less willing to shell out hundreds or thousands of dollars on an expensive, brand-new replacement when a refurbished model can fit their needs just fine.
Likewise, people during a recession might be more willing to part with a broken device if they can get some cash from the transaction. Both situations are not outside the realm of possibility during good economic times and will undoubtedly be more common during a recession.
A device refurbishment business fits both needs nicely. This is a flexible business in that it can be done online and in one’s local area relatively easily, with little to no overhead costs. You will need some experience in fixing broken devices, and getting things “certified refurbished” will take some learning. Still, it’s a smart business idea for an entrepreneur looking to start a business during a recession.
Refurbished devices sell well to cost-conscious consumers during good times as well, so you’ll always have a market if you take the time to establish a good business.
Similar to refurbishment, many people in a recession will be more likely to get their devices repaired rather than replacing them with a new model. You can start a repair service that will fix people’s electronics for a fee. During a recession, it’s vital to come up with business ideas that allow customers to save some money, and repair services do just that.
Your repair business certainly does not need to be confined to just consumer electronics, however; you can easily start a company that focuses on repairing appliances, cars, or other mechanical items someone might own.
The point of repair services is that you can help bring value to your customers by fixing something for a lower cost than it would be to buy a new model outright, which is an excellent business model during a time when people are trying to cut their expenses and make their dollar go farther.
Particularly in an environment where the recession has been caused by a viral outbreak, cleaning services can be another successful venture.
Providing a sanitized, healthy work environment has become much more important, and larger companies who aren’t impacted by the recession may be more willing to pay a cleaning company. Smaller businesses who are striving to provide a healthy work environment to their customers and employees could be clients as well.
Get naming inspiration from my list of cleaning business names here
Even your local government could be a potential client, as they take more of an interest in keeping common areas, workspaces, public buildings, and city parks cleaned and sanitary.
This can also be applied to providing residential cleaning services, as more people are aware of health and sanitation and are willing to pay for someone else to do it right.
Event Planning Management
Starting an event planning and management business can take advantage of an economic downturn and put you in a position to have a successful business during, as well as after a recession has ended.
Companies will still put on events for customers, perhaps even more so in a recession where people will be more interested in the freebies that usually come with such activities. Corporate sales events will become more frequent as they try and attract customers away from their competition. Likewise, people will still be getting married, so event planning and management can include wedding planning services as well.
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Your event planning business could expand its clientele by engaging families that are interested in throwing family get-togethers or parties to take their minds off their problems. You could provide value to these families by offering more than just corporate event planning services.
Even an idea to throw low-cost birthday parties, bar mitzvahs, sweet sixteens, graduations, or any similar party directed at kids and family could be a smart idea during a recession.
Local groups and organizations that aren’t necessarily a business or a family are yet another option. While it may require some hustle, there are plenty of opportunities during a recession for an event planning business to thrive.
Working parents will still need childcare during a recession, and this could be a perfect time to create a business model that is specifically adapted to leaner times. While many parents might lose their jobs and therefore won’t need childcare, others might be working more hours or spending that time hunting for a new job, and that’s where your business can provide a valuable service.
There’s also the fact that formerly single-income families might need the other parent to return to the workforce, thus requiring childcare for children that were previously watched at home. Without some radical shift in the culture, there will always be a need for childcare, and thus starting a business in childcare during a recession could be a smart business idea.
Whether or not the statistics bear it out, people have the impression that crime rates rise during recessions. Desperate economic times and a loss of legitimate opportunities will inevitably lead some to a life of crime. This has been true for almost every recession in the U.S. besides the 2007-2009 Great Recession, and it’s still a widespread perception that people maintain.
Starting a business in the security industry, whether that means selling home security systems or security services for hire by commercial entities, is a smart idea during a recession. People are more willing to pay to protect their property against a rise in criminal activity, and your business could provide them a little peace of mind in an uncertain time.
Home Staging Business
While the real estate market generally falls when a recession hits, there are still people out there trying to buy and sell houses. Increased competition among realtors and sellers means any small advantage might make a home sell in a trying time. While a recession may not be the best time to become a realtor, it could be a smart idea to start a home staging business.
In an uncertain market, realtors may be even more willing to try to get the leg up on the competition by attractively staging a house they’re selling, and your business can provide them that advantage.
You might want to check how much competition you have in your local market, as well as how home-buying trends have been affected by the recession, but it’s a viable option. You’ll also need some capital to purchase furniture and get your business up and running, but you can find quality used furniture online or at local consignment or thrift shops.
During a recession, more people may be renting their residences rather than buying. If you don’t have the capital to start buying up investment properties, you may instead be interested in starting a property management company. Renters and landlords still need an intermediary to handle property management for them, and if you’re in the right market, you could do very well for yourself.
If your business is high-quality, it may even be a great time to land some long-lasting clients for when the recession is over, as landlords are often eager to off-load the responsibility of dealing with tenants to someone for a small fee.
Property management firms usually make anywhere from 8-10% of the rent charged for a property, so you can make some good money with only a few clients. Commercial property management is another area where you can make great money by managing the commercial real estate that businesses lease.
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While recessions are fraught with economic uncertainty and billions in lost money, they can be excellent opportunities to start a new business in the right industry.
If you have a good idea for a business and you can adapt it to be successful in a bad economy, starting that company is a smart idea, particularly if it’s in one of the industries described above. It also allows you the opportunity to establish yourself as a quality business, and you can build a portfolio of satisfied clients or customers who will be loyal to you for the long term.
Want more business ideas? Check out my big list of hundreds of profitable small business ideas here
Check out my guide on how to start your business right with tons of useful tips I learned by successfully starting, building, and selling multiple companies.