“A recession is a significant, widespread, and prolonged downturn in economic activity.” (Investopedia)
While the United States government has adopted fiscal and monetary policies to prevent another Great Depression from happening, it is expected that the economy will experience a recession to some extent from time to time. There are various factors that lead to a recession, but it is often marked by:
- Decreased GDP (Gross Domestic Product): A country’s economic output shrinks.
- Rising Unemployment: Businesses cut jobs due to lower demand for products and services.
- Reduced Consumer Spending: People spend less, leading to lower sales and production.
- Decline in Business Profits: Companies experience reduced revenues, which impacts investments and hiring.
- Drop in Stock Market: Investors become more cautious, leading to falling stock prices.
It’s true that most businesses will suffer financially during a recession. However, “for a select group of professionals and companies, a recession may actually be an opportunity to thrive and grow” (Investopedia). This is known as a “recession-proof business”, and it typically provides essential goods and services. A few characteristics of a recession-proof business include:
- Consistent Demand
- Affordability
- Addressing Basic Needs
While no business is completely immune to a recession, the ones in these categories are better positioned to weather economic downturns, and in some cases, flourish.
20 Recession-Proof Business Ideas {2024}
There are many reasons to pursue franchise ownership. Not only does it come with a strong brand and proven business model, but you will also gain a solid support system with the franchisor. If you’re thinking about franchise ownership and want to find one that would continue doing well during an economic downturn, then you should consider the following recession-proof business ideas:
#1 – Grocery Stores & Supermarkets
These types of businesses serve a broad demographic range, from low-income to high-income households. They are less vulnerable to economic shifts since they provide essential items like food and household products that are always in demand, regardless of income level.
Even if people reduce their spending on food overall, grocery stores will benefit from the consistent foot traffic and steady flow of customers. There are also government programs, such as the Supplemental Nutrition Assistance Program (SNAP), that provide low-income individuals and families with grocery funds.
Furthermore, a recession will cause many people to limit dining out and instead cook meals at home to save money, ultimately increasing the demand for groceries.
#2 – Healthcare Services
Medical services, pharmacies, home care, and other healthcare services will continue to be necessities even during a recession. Life-threatening emergencies, childbirth, surgeries, and necessary treatments will continue, ensuring a stable flow of patients. Economic stress can exacerbate mental health issues, contributing to the demand for healthcare services such as therapy, counseling, and psychiatric care. Furthermore, the aging population will create a steady demand for nursing homes, assisted living, and home care services.
Additionally, the healthcare industry is supported by government programs (such as Medicare and Medicaid) and insurance companies that will continue to provide coverage even during a recession.
Telemedicine also makes healthcare businesses more recession-proof since it ensures healthcare providers can offer convenient and affordable care through virtual consultations, remote monitoring, and digital health services.
#3 – Discount Retailers & Thrift Stores
Naturally, consumers become more budget-conscious during tough economic times, leading them to seek affordable alternatives and second-hand goods. As a result, thrift stores become more popular during recessions as people look for ways to cut costs on items such as clothing, furniture, appliances, and more. Online platforms such as Poshmark, Depop, eBay, and discount retailers have also become more and more popular.
Consumers will also turn to money-saving DIY solutions for home repairs, crafting, upcycling old items, etc. Discount retailers and thrift stores can provide affordable tools, materials, and other supplies that will help customers complete their low-budget projects.
In addition to catering to consumers during a recession, these types of stores also benefit from flexible and low-cost inventory. This allows them to remain profitable even when sales volumes go down.
#4 – Repair & Maintenance Services
During tough economic times, people will prioritize car repairs, home repairs, and appliance services over replacements.
For example, essential services like plumbing, electrical work, HVAC maintenance, roofing repairs, and more are crucial to a safe and livable home. Additionally, regular maintenance in these areas will avoid costly breakdowns saving money in the long run.
Furthermore, consumers won’t have the luxury to splurge on new appliances like refrigerators or washing machines, so it’s more likely they’ll choose to repair them over replacing them whenever possible.
#5 – Cleaning Services
Hygiene, health and safety remain important in all economic climates. At first, you might think that cleaning services are not essential, but they’re a necessary cost for many people.
First, businesses and institutions typically rely on regular cleaning services to maintain their operations. The cleaning has to get done one way or the other, and hiring a cleaning service is generally the most efficient way to do it.
Second, families with young children, elderly residents, or individuals with health conditions will likely continue to hire cleaners to maintain a healthy living environment. Additionally, busy professionals often find it more cost-effective to outsource cleaning tasks, even during an economic downturn.
As a bonus, many cleaning businesses can rely on a predictable and steady revenue stream due to recurring service models that offer a schedule of weekly, bi-weekly, or monthly cleanings. This, along with low startup and operating costs, makes them more resilient in a recession.
#6 – Pet Care & Veterinary Services
Even during a recession, pet owners still need to care for their animals making veterinary care and grooming businesses more resilient. Most people will continue prioritizing the well-being of their pets, from grooming to medical needs.
The sale of pet food, supplies, and medications is generally stable, and regular grooming is necessary for certain breeds and important for pets’ overall health. Many pet owners will continue to rely on professional groomers, especially for pets with specific grooming needs.
There are always going to be circumstances where people need to leave their pets in someone else’s care, whether it’s due to travel, long work hours, or other commitments. This continued demand makes boarding facilities, pet daycare centers, and pet-sitting and dog-walking services recession-resistant businesses.
#7 – Childcare Services
In many modern households, both parents will work to support the family, and in a recession the need for two incomes is even more critical. As a result, childcare becomes an essential service that not only provides supervision, but also offers the early education and developmental activities that children need. It would be difficult for parents to compromise on this even during times of financial hardship.
It’s also difficult for parents to find suitable alternatives to professional childcare services since family members, friends, and neighbors are often working themselves. Fortunately, childcare providers often have flexible options to accommodate various parents’ financial needs and schedules. This includes part-time care, drop-in options, extended hours, and more.
Furthermore, many areas offer government subsidies, tax credits, and financial assistance programs to help parents afford childcare.
#8 – Funeral Services
It goes without saying that these services are necessary, recession or not. In fact, many cultures and religions have important customs and rituals associated with funerals. Moreover, jurisdictions typically have legal requirements regarding the handling of remains, making a funeral service unavoidable.
It’s also common for individuals to plan and pay for their funerals well in advance, which gives funeral homes a steady business. There are also government assistance programs available for those who need help covering the costs of funeral services.
In addition to having a consistent demand for business, funeral service providers can also benefit from diverse revenue streams. These sources include embalming, cremation, casket and urn sales, headstones, transportation, memorial services, and more. This allows funeral homes to remain profitable, even when customers choose more budget-friendly options.
#9 – Financial Advisory & Tax Services
Many people find themselves in need of financial advice at some point in their lives, and even more so during a recession. A recession often leads to financial stress due to job losses, reduced income, and increased costs. Effectively managing your savings, investments, and debts is crucial to riding out an economic slowdown, and financial advisors can help with this.
Businesses, both small and large, also need help from financial advisors during recessions to help navigate reduced revenues, cash flow challenges, and operational adjustments.
Financial advisors also play a key role in guiding those nearing retirement age through a recession, as declining markets can jeopardize their savings. A financial advisor can help individuals assess whether they need to start drawing funds from retirement accounts, optimize social security benefits, or even delay retirement.
Additionally, tax laws and filing requirements will remain during an economic downturn, so a significant part of the population, both individuals and businesses, will continue to hire tax services.
#10 – Utilities & Essential Services
When consumers start cutting their expenses during a recession, they typically focus on cutting non-essential expenses like dining out, vacations, and entertainment. Electricity, water, and waste management are necessities, so utility bills are often one of the last areas people try to save. Furthermore, waste management is essential for public health, so even in a recession, communities will continue to need regular trash collection and sewage management.
These businesses also remain profitable during an economic crisis because 1) their monthly billing model provides predictable revenue and 2) government regulations maintain price stability and governments often support utility providers to ensure essential services remain accessible to the population.
#11 – Home Repair & Renovation
Homes will always require ongoing maintenance, and many services are essential to avoid more costly problems down the line. This includes affordable renovations, appliance repairs, roof repairs, plumbing services, and more.
Furthermore, recessions often lead people to seek energy-efficient investments as a way to cut utility costs long-term. This increases the demand for contractors who specialize in energy-efficient solutions such as improved insulation, energy-efficient windows, smart thermostats, and more.
People are also less likely to buy a new home during a recession, and instead they’ll focus on improving their current living space. They may even choose to rent instead of buying a home, which incentivises landlords to invest in maintaining or upgrading rental properties to remain competitive.
#12 – Senior Care
Senior care is not an optional service, it’s a necessity. Many senior care centers will provide 24/7 support that families can’t manage at home. While recessions might cause families to look for affordable alternatives to expensive nursing homes or assisted living facilities, seniors with health issues, mobility limitations, or cognitive impairments will still require ongoing support. In-home care services can be a cost-effective solution.
Additionally, financial assistance from the government via Medicare, Medicaid, and Veterans Affairs helps cover long-term senior care costs.
#13 – Online Education & Tutoring
Even in a recession, parents will continue to prioritize their children’s education, however they might look for creative ways to make it more cost-effective. This might include online education and tutoring for subjects like math, science, and reading. Adults may even look for alternative learning opportunities during an uncertain job market. An online option also offers flexibility in learning formats from self-paced courses to interactive group classes, making it easier for everyone to integrate education into their daily lives.
Scalability is a major benefit of online education platforms since providers can reach a global audience with minimal overhead costs.
#14 – Legal Services
Divorces, wills, and other legal needs won’t disappear during a recession. In fact, they’re likely to increase as economic hardship leads to broken marriages, custody disputes, bankruptcies, foreclosures, contract breaches, debt collection cases, and more.
There will also be an increased demand in legal services as companies face the need to downsize, restructure, or renegotiate contracts.
Additionally, a recession will often prompt people to ensure their estate plans are settled and their assets are protected.
#15 – Insurance Providers
There are many types of insurance that are mandated by law, making health, auto, and home insurance essential services. For example, auto insurance is required to some extent in most states and businesses are typically required to offer workers’ compensation coverage. Additionally, other specialized insurance products become more relevant during a recession such as income protection insurance, which covers loss of income due to illness or job loss.
The health insurance industry is especially recession-proof as people seek health coverage to avoid the financial burden that comes with medical expenses.
Life insurance is also more relevant during times of economic uncertainty as people are particularly aware of the need to secure their family’s financial future.
Furthermore, most insurance policies require a long-term commitment, and the recurring nature of insurance premiums ensure a stable and consistent cash flow for insurance companies.
#16 – Auto Repair & Parts Stores
During a recession, people will typically hold onto their vehicles for longer periods, increasing the demand for auto parts and auto repair services.
Regular maintenance services such as oil changes, tire rotations, and brake replacements are also vital for extending a vehicle’s life. These are small but consistent services that generate regular income for auto repair shops.
Furthermore, in an effort to save money during a recession, many consumers will attempt to complete minor vehicle repairs and maintenance on their own. As a result, auto parts stores will receive a steady demand for replacement parts, tools, and accessories.
#17 – Mental Health & Counseling Services
Recessions naturally lead to economic stress, which is associated with increased anxiety and depression. This increases the demand for mental health support and counseling. Fortunately, online options and certain insurance plans have made therapy more affordable and accessible.
More specifically, financial stress is a major contributor to marital problems and relationship breakdowns. Couples therapy, family counseling, and abuse victim support are even more crucial during a recession.
Furthermore, economic downturns correlate with an increase in substance abuse and addiction, which increases the need for addiction counseling, rehabilitation programs, and other mental health services.
#18 – Freight & Logistics Services
While companies might reduce inventory, optimize routes, or consolidate shipments in order to cut costs during a recession, they’ll still require freight and logistics services for the efficient movement of goods.
Logistic services are also critical to other recession-resistant industries such as healthcare, utilities, agriculture, government operations, and more. Freight companies can count on these types of businesses for consistent demand as they continue to operate at a high level.
Freight and logistics companies are also key to solving supply chain disruptions with quick adaptations such as rerouting shipments, managing inventory flows, and finding alternative suppliers and transportation methods.
#19 – Debt Collection & Credit Counseling
A recession will inevitably lead to job loss, reduced incomes, unexpected expenses, and other situations that make it harder for individuals and businesses to meet their financial obligations. This causes a spike in delinquent accounts including credit card balances, personal loans, medical bills, and more. All of which increases the need for debt collection agencies.
The demand for credit counseling services also goes up as people seek guidance on budgeting, debt repayment strategies, and financial planning in order to regain financial stability.
#20 Technology Support & Cybersecurity
There is an increased demand for IT services and cybersecurity as businesses, both small and large, continue to digitize and depend heavily on technology for their daily operations.
Additionally, as companies implement more remote work opportunities, there is an increased need for IT services to troubleshoot issues and secure networks.
Furthermore, cyber threats will not only continue during recessions, they’ll likely increase as cybercriminals exploit economic uncertainties using tactics such as phishing and ransomware. E-commerce businesses and other businesses using online transactions will also need effective cybersecurity measures to protect customer data and payment information.
Interested in Buying a Recession Proof Franchise Business?
If you’re hoping to buy a recession-resistant business, FranNet is here to help. Our expert franchise consultants can help you find an opportunity that aligns with your lifestyle and your goals. We’ll walk you through the process of buying a franchise from start to finish. Getting started is simple – just reach out to schedule a free consultation today!