Look around at the current business climate, and it’s clear that some industries and individual businesses are faring better than others. Necessities like food, drink, medicine, healthcare and childcare, and auto repair services are always in demand, regardless of the economic climate. Consumers will also spring for a night out on the town, a new outfit, or a weekend trip.
Despite the uncertainty impacting the U.S. economy right now, there are certain businesses that thrive in these challenging conditions. Defensive businesses that sell essential, everyday products and services, for example, are generally less likely to be negatively impacted by downturns. If you’re starting a new business this year, here are 10 recession-ready options that you can start exploring today.
10 Businesses that Thrive in a Recession
1. Auto repair shops and service providers
People have to be able to get around, mass transit has to keep running, and businesses need to keep their wheels turning. Auto repair shops and companies that provide services like auto air conditioning system and windshield repairs are pretty much in constant demand, regardless of current economic conditions. And while travel continues to play an important role in our daily lives, not everyone knows how to change their car’s oil, repair a cracked windshield or rotate a commercial vehicle’s tires.
“Car repair businesses will continue to thrive during a recession due to their necessity and demand,” the U.S. Chamber of Commerce points out.[1] Auto shops are increasingly being called upon to help manage obsolete and replacement parts as automotive manufacturing processes continue to evolve and incorporate more technology, automation, and sensors.
2. Home repair and improvement businesses
High mortgage interest rates may be keeping new homebuyers on the sidelines right now, but existing homeowners still need help keeping their properties maintained and operating as expected. Rather than investing in a new appliance right now, for example, a homeowner may be more apt to repair the equipment that’s already in place. This opens the door for talented individuals who can bring a washer, dryer, refrigerator, or stove back to life.
“This option is both cheaper and more sustainable,” the U.S. Chamber of Commerce reports. “Buying new items may be more difficult in households with stricter budgets or are completely out of the question with the need to reallocate finances. Those interested in and skilled at home repair will have a perfect market space to retain customers for the long haul.”[2]
3. Plumbing and electrical services
Pipe leaks, bathtub drain clogs, and flickering light switches don’t stop just because the broader economy has slowed down. A real pain for the homeowner or building owner, these problems present a great opportunity for trained, licensed, and insured plumbers and electricians who are looking for a new business opportunity. After all, pipes still leak, drains will clog and electrical wiring issues can crop up at any time--and regardless of the prevailing economic conditions.
4. Food and beverage companies
Food and beverage companies are well positioned to ride out any economic uncertainty because humans need to eat and hydrate in any economic condition. Food manufacturers, distributors, retailers, and restaurants that offer good value for the money stand an even better chance of keeping their customers during a recession.
In fact, SmallBizTrends says that the food and beverage industry is “one of the most recession-proof industries due to the fact that everyone still needs food and drinks to live.”[3] Some good business opportunities to consider in this category include a convenience store (for essential food, drinks, and snacks), a restaurant that specializes in “comfort food,” or a company that makes snacks or drinks that appeal to health-conscious consumers.
5. Healthcare services
The total number of Americans aged 65 and older is expected to escalate in the coming years. According to the Institute of Medicine Committee on the Future Health Care Workforce for Older Americans, more of those older Americans will be living with illness and disability. This will drive a bigger need for care providers, healthcare services, and other resources designed to meet the growing need for those services. “Older adults use far more health care services than do younger groups,” the Institute explains. “Although older adults vary greatly in terms of health status, the majority of them have at least one chronic condition that requires care.”[4]
Increased attention being paid to mental health and general wellness are also driving a need for more healthcare support services. This opens the doors for new providers who can help meet the rising demand for their offerings.
6. All pet-related services and product offerings
Americans love their pets and aren’t willing to sacrifice when it comes to keeping their dogs, cats, fish, birds, hamsters, and rabbits well-fed and content. Last year, pet owners spent $136.8 billion on pet food and treats; supplies, live animals, and medicine; vet care and products; and other services (e.g., grooming, insurance, and pet sitting). The amount of money spent on pets continues to rise steadily year-over-year, according to the American Pet Products Association.[5] This presents a good business opportunity for entrepreneurs who want to start a mobile pet grooming business, open a doggie daycare or come up with a formula for a new, nutrient-rich cat food.
7. Residential and commercial cleaning companies
Residences, commercial businesses, and industrial operations all need help keeping their spaces clean, sanitized, and ready to use. This doesn’t change because money is tight, and in fact third-party cleaning services may even be called upon more frequently when budgets are constrained. This opens the doors for entrepreneurs that want to work with homeowners, business owners, or both.
Along with homes, SmallBizTrends says the list of organizations that require regular cleaning services includes: medical and care facilities; stores and shopping centers; beauty salons and spas; restaurants and other hospitality venues, plus all recreational facilities and public spaces where people gather.[6] “It doesn’t cost much to get started, especially if you work from home and use your personal vehicle,” Jobber points out. “You just need to create a basic business plan, purchase a few cleaning supplies, and bring out your can-do attitude.”[7]
8. Information technology (IT) support
We live in a technology-driven world where nearly everyone carries a mobile phone, consumes news on a tablet and uses a computer for work. Our refrigerators and stoves are connected via Wi-Fi, we’ve cut the cables in favor of streaming, and we drive cars that alert us when a collision is imminent. Of course, this technology isn’t infallible, nor is it always easy to use. Because of this, IT professionals who know their stuff will remain in high demand throughout any recessionary period.
In fact, Phys.org says the tech industry as a whole added 77,000 jobs during the 2008 financial crisis,[8] when many other industries were laying off and cutting back. IT businesses that install computer systems, provide consulting services or offer IT support are also always in demand.
9. Financial services
Accountants who prepare taxes and financial reports, financial advisors who help their clients plan for retirement, and consultants who help organizations navigate financial uncertainty are always in high demand. Even during difficult periods, taxes still have to be paid, retirement planned for, and college educations funded.
Other good business opportunities to explore include credit counseling to help individuals manage debt and improve their credit scores; investment advisory for those who want to make informed choices about their portfolios; and tax preparation services for individuals and/or businesses. Before you get started, be sure to research other financial service businesses in your area, the laws in your state that govern such businesses, and the licensing requirements.
10. Daycare and childcare services
The need for childcare doesn't subside in a downturn. Parents who work often need after-school care for children of all ages, and parents of young children often need full-time care if they work. LegalZoom says babysitting agencies, daycares and nanny businesses still see high demand.[9] After all, parents still need to work and their children need supervision — no matter the economic climate.
The proof is in the numbers: According to Grand View Research, the U.S. childcare market was valued at $60.4 billion in 2022 and will experience a compound annual growth rate (CAGR) of 4.18% between now and 2030.[10]
Setting Your New Business on the Right Course
During economic uncertainty, entrepreneurs may be tempted to “wait it out” and hope that a better climate is on the near horizon. This is a reasonable reaction, but in reality this may be the perfect time to start a company that 1) thrives during a recession, and 2) is well positioned to grow even further as economic conditions improve.
Whether your passion is caring for pets and children, helping people keep their properties and businesses operating well, keeping automobiles running properly, or any of the other opportunities highlighted in this article, take that first step and start exploring your options. Cull through the list carefully, choose the option that meshes well with your own experience and interests, and start developing your business plan.
From there, you’ll want to ask your banker about financing options, pick a location (if necessary), and develop a marketing plan that will help set your new business on the right course. Be sure to check with the occupational licensing, training, and insurance requirements in your state before working with customers.
