It might go without saying, but a business can’t thrive if it can’t survive — and you, as a business owner, are almost bound to be confronted with situations that throw you into survival mode at some point. A recession is one of the more probable, pressing challenges that can put you in that position.
Broader economic uncertainty and turmoil can kneecap virtually any business’s operations. But devastating as it might be, an economic downturn doesn’t have to be hopeless. You can take certain strides to ensure that your business is recession-proof.
Here, we’ll go over what a recession-proof business is, take a look at some recession-proof business ideas, and review steps you can take to recession-proof your company.
Businesses that are typically considered inherently recession-proof are often “need-oriented.” They sell products or services that people can’t get by without — no matter what the state of the economy might be.
But the ability to withstand a recession isn’t necessarily limited to those kinds of companies. Virtually any business can take strides to “play the odds” and bolster itself against the impact of an economic downturn.
Before we review how your business can improve its chances of surviving a recession, let’s take a look at some more conventionally recession-proof business ideas you might consider pursuing if you’re looking to start a company well-equipped to handle less-than-ideal economic conditions.
So-called “defensive industries” are often considered the most reliably recession-proof. These kinds of businesses — ones that consumers will need to buy from, regardless of circumstance — are some of the best-equipped to handle economic turmoil.
Of those industries, healthcare might be the most prominent. No matter the state of the economy, people will still look out for personal well-being. That trend — coupled with a need for consistent advancements in science and medicine — makes companies in healthcare services some of the most reliably sustainable businesses through economic turmoil.
Pharmaceuticals, in-home care for seniors, contraceptives, walk-in clinics, and other healthcare ventures present viable opportunities for entrepreneurs and investors alike. If you’re looking for a business that will hold up through uncertain economic times, you could start by looking at services that people literally can’t live without.
2. Accounting and Financial Advisory
Accounting and other financial advisory services are almost always in demand amid a recession, and it makes sense — one of the more straightforward, practical ways to deal with financial insecurity is by seeking financial guidance.
Individuals and businesses alike need to know how to navigate murky economic waters to ride out recessions, and that’s a tough task to approach without professional, insider insight.
If you have the know-how, skillset, education, and knowledge to provide that — whether that be through something like bookkeeping, accounting, or financial planning — you can set yourself up to sustain a successful business through ugly economic circumstances.
3. Home and Car Repair
Utility services, like home and car repair, comprise another key defensive, recession-resistant industry. Most people lack the necessary resources and knowledge to handle routine maintenance on their homes and automobiles — let alone major renovations, construction, or part replacements. But the need will always be there.
Even in a recession, the average person will have a hard time living with a termite infestation or major water damage. And car owners will always need to get from point A to point B.
The repair behind those kinds of issues isn’t intuitive or accessible to most — so if you know how to reliably provide it, you might just have the basis for a lucrative, recession-proof business on your hands.
4. Certain Food and Beverage Retailers
You might have noticed a consistent thread between the points on this list — recession-proof businesses revolve around necessity. And last I checked, you need food to live. Now, this particular point doesn’t apply to every last food retailer.
Some restaurants often struggle to stick it out during a recession, but there’s a host of other food and beverage businesses that tend to thrive through economic uncertainty. Bulk food outlets, grocery stores, and fast-food chains have a history of holding up during economic downturns.
5. Candy and Comfort Food
Now, this one might sound counterintuitive. You don’t need sweets to survive. They’re essentially micro-luxuries — but oddly enough, that’s what makes candy and comfort food recession-proof.
People are still bound to splurge a little bit from time to time mid-recession — after all, everyone needs some kind of respite in the middle of economic turbulence. Candy and other comfort food provide a relatively inexpensive outlet for that spending.
In the throes of the Great Recession, Hershey’s sales actually increased. As I said, candy is a micro-luxury — a lot of people need some of that during uglier economic times.
6. Online Education
A recession comes with a spike in unemployment — and spikes in unemployment come with a significant portion of the workforce scrambling to refine their skills and bolster their rèsumès. That trend helps create a market for online content for personal and professional development.
Programs that offer professional certifications or other educational materials that can ultimately make job-seekers more competitive in their respective markets often see a big-time boost mid-recession.
If you have specialized knowledge in a field and the resources to put compelling educational content together, you might want to look into creating an online education business that can hold its own in uncertain economic times.
7. Baby Products
A lot of people will spend less on themselves in the middle of a recession, but very few will skimp on spending for their kids. Even as families with infants and toddlers cut back on spending during an economic downturn, they’ll still spring for higher-quality products for their children.
Businesses selling baby products — like bottles, cribs, and baby clothes — generally hold up better than most during a recession. Parents will almost always look out for their children, no matter how the economy is faring. If you’re looking to invest in or start a recession-proof business, consider looking into products that cater to that market.
How to Recession-Proof Your Business
1. Build up your business credit.
Creditors tend to raise their lending standards when a recession hits, so prioritizing credit-building is in your best interest if you want to brace for an economic downturn. While it’s not a given, there’s a good chance you’ll need financing should the economy take a nosedive.
That’s why taking the proper strides to position yourself as a reliable, trustworthy investment for creditors serves you when you’re trying to recession-proof your business.
Have your financial documentation in order, invest in a business credit card to take some strain off your personal credit record, diligently stay on top of any payments you need to make, and take other relevant actions that will set you up for success if you need a loan in the midst of a recession.
2. Forecast carefully.
Effective sales forecasting is central to sustainable business success — regardless of economic circumstances. But if you want to get ahead of any potential surprises that might come with economic turbulence, you need to forecast thoughtfully and comprehensively.
You can’t forecast with starry-eyed optimism exclusively. You need to be pragmatic. Your forecasts should account for best-case scenarios, realistic courses, and “code red” outcomes — and you have to make plans around all three.
Those less-than-ideal forecasts might include considerations about potential economic turbulence. Recessions can be unpredictable, but they’re part of the natural ebb and flow of any economy. Make sure you have a picture of what your business can expect if one happens, so you have some kind of plan in place to weather those kinds of conditions.
3. Maintain strong relationships with customers.
Your existing customers can be an invaluable lifeline during economic uncertainty. Customer acquisition can become considerably harder during a recession, so retaining your existing base is vital if you want to stay afloat when the economy is in a tough spot.
Make sure you’re consistent (but not pushy) in staying in touch with your clients once you bring them on board. See how they’re enjoying your product or service, and ensure any major concerns they might be having are addressed quickly and comprehensively. Maintain a solid, approachable, constantly accessible customer support infrastructure that can handle customers’ minor issues and inconveniences as they arise.
One way or another, take the necessary strides to delight and assist your existing base — do what you can to make sure they’ll stick with you when it comes time for them to make spending cuts.
Successfully riding out a recession means gaining what business you can while losing as little as possible. The latter starts with developing and maintaining strong customer relationships.
4. Have a solid grip on your numbers.
You’ll have a hard time navigating a recession if you don’t have a firm grasp of where your business stands financially. If you don’t know your most pressing KPIs — related to cash flow, profit margin, budget, production costs, inventory, and sales — you won’t be able to plan for worst-case scenarios.
Keep consistent, careful tabs on the numbers behind your business’s performance, day-to-day operations, and financial history. Those figures will let you understand where you stand going into a recession and help guide you through economic turbulence as a result.
5. Keep investing in marketing.
Businesses are naturally inclined to start making cuts across the board when a recession hits — and a lot of the time, those companies are quick to turn to marketing before evaluating other departments.
In some cases, businesses see marketing as more of a “nice-to-have” than a “need-to-have” amid economic uncertainty, but you need to avoid falling into that trap. Sometimes, the best defense against a recession is a good offense.
Attracting new business is often central to weathering economic turbulence, so avoiding significant cuts to your marketing budget can be a good bet when you’re trying to recession-proof your operations.
6. Consider pursuing multiple revenue streams.
Being stuck in a single lane can be tough in the midst of a recession. If you’re all-in on a single revenue stream during economic turbulence, you’re making yourself particularly vulnerable to a lack of prospects’ interest or waning needs.
Diversification — whether that be through pursuing more target markets, offering more products or services, or adding more distribution channels — can help you alleviate that risk. Having multiple revenue streams makes your business more dynamic.
A recession naturally shifts prospects’ needs, interests, and priorities — if you want to maximize your odds of riding out economic turbulence, you need to be willing and able to shift with them.
Recessions will almost always mean trouble for your business — but they don’t have to be catastrophic. If you take the right steps, stay on top of your operations, and remain sensible both before and during economic turmoil, you’ll be in a good position to keep your business as solid and recession-proof as possible.
SOURCE: Sales – Read entire story here.